    [Senate Hearing 105-776]
    [From the U.S. Government Publishing Office]

                                               S. Hrg. 105-776, Pt. 1

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 1999

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

                                    HEARINGS

                                    before a

                              SUBCOMMITTEE OF THE

                COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                           ONE HUNDRED FIFTH CONGRESS

                                 SECOND SESSION

                                       ON

                               H.R. 4103/S. 2132

      AN ACT MAKING APPROPRIATIONS FOR THE DEPARTMENT OF DEFENSE FOR THE
         FISCAL YEAR ENDING SEPTEMBER 30, 1999, AND FOR OTHER PURPOSES

                                   __________

                             PART 1 (Pages 1-650)

                             Department of Defense
                           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
    46-114 cc                   WASHINGTON : 1998

    _______________________________________________________________________
                For sale by the U.S. Government Printing Office
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                                     20402
                               ISBN 0-16-057900-7

                          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, Mary C.
                    Marshall, John J. Young, and Tom Hawkins

                             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 26, 1998

                                                                       Page

    Department of Defense: Office of the Deputy Secretary............     1

                            Wednesday, March 4, 1998

    Department of Defense: Department of the Air Force: Office of the
      Secretary......................................................    47

                           Wednesday, March 11, 1998

    Department of Defense: Department of the Navy: Secretary of the
      Navy...........................................................   131

                           Wednesday, March 18, 1998

    Department of Defense:
        National Guard Bureau........................................   333
        Youth Challenge Program......................................   395

                            Wednesday, April 1, 1998

    Department of Defense:
        Surgeon Generals.............................................   409
        Nurse Corps..................................................   471

                           Wednesday, April 22, 1998

    Department of Defense: Ballistic Missile Defense Organization....   503

                             Wednesday, May 6, 1998

    Department of Defense: U.S. Pacific Command......................   569

                              Monday, May 11, 1998

    Nondepartmental witnesses........................................   613

                            Wednesday, May 13, 1998

    Department of Defense: Office of the Secretary...................   785

                            Wednesday, May 20, 1998

    Department of Defense: Secretary of the Army.....................   821

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 1999

                                  ----------

                          THURSDAY, FEBRUARY 26, 1998

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 2:32 p.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Ted Stevens (chairman) presiding.
        Present: Senators Stevens, Cochran, Domenici, Hutchison,
    Inouye, Bumpers, and Dorgan.

                             DEPARTMENT OF DEFENSE

                         Office of the Deputy Secretary

    STATEMENT OF HON. JOHN HAMRE, DEPUTY SECRETARY

                     opening statement of hon. ted stevens

        Senator Stevens. The subcommittee will come to order. The
    subcommittee meets today to consider the administration's
    appropriations request for the Department of Defense for fiscal
    year 1999. We are glad to welcome before us the Honorable John
    Hamre.
        Dr. Hamre is now the Deputy Secretary of Defense. We have
    relied upon you heavily, not only Senator Inouye and myself,
    but the whole committee, for your advice during the time you
    were Comptroller. I am hopeful we can build on the relationship
    we already have with you and your colleagues, and we really
    congratulate the President on giving you this new
    responsibility and additional trust in the Department of
    Defense.
        Dr. Hamre. Thank you, sir.
        Senator Stevens. But today we are here to review the fiscal
    year 1999 defense budget. There is a very difficult series of
    financial choices we must make in terms of allocation of funds.
    I too believe that we are short going in. I think we could use
    some more money. I do not know whether in the process of what
    is going to go on this year we are going to get any additional
    moneys, but I know you are struggling to maintain the readiness
    of combat forces. We all want to improve the quality of life of
    our people in uniform, no matter where they are, and the
    contingencies that we face now are awesome.
        So we do not want to get involved in any particular issues,
    but clearly we have talked in the past about some of the
    meetings we have had with members of the armed forces around
    the world and how they have reported to us the excessive
    demands on them and the time that they have been away from
    their families. Now that is increasing rather than decreasing,
    and we have a situation here now where we have some burdens on
    our accounts because of moneys that have been spent in the
    past.
        I am not sure that the increase that is indicated, for
    instance, in operations and maintenance [O&M] of $3.3 billion
    really adequately takes into account some of the deficits that
    we have going into 1999. I am hopeful that we can work with you
    and to deal with the difficulties that we have here.
        I would say that, as staff has pointed out to me, we
    believe we are about $2 billion below in terms of the
    acquisition account in the modernization effort. It is not
    going to be, as I just told some of my colleagues, a pleasant
    year for appropriators. The House just told me, Dr. Hamre, that
    they feel they have 52 days left in session. We think we have
    about 70 days left in session.
        I am glad to see the chairman of the Budget Committee here.
    I think he alone is going to take the 70 days.
        Senator Domenici. Whatever you say.
        Senator Stevens. I mean, the issues involved that we have
    to face, we face them after he resolves his problems, is what I
    am saying.
        But I do again welcome you, and I am really delighted as
    the chairman of this committee to know that you are going to be
    working with us on these very difficult issues.
        Senator Inouye.

                       statement of hon. daniel k. inouye

        Senator Inouye. Thank you very much, Mr. Chairman. I wish
    to join you in welcoming Dr. Hamre. It is always a pleasure
    having you here with us. We have seen you go through your
    manhood rites to come to where you are today, and so we are
    well aware of your capabilities and potentials.
        Many commentators have said that we are increasing defense,
    and as far as I interpret it I look upon it a little
    differently. Although the dollar figures will show a $1.1
    billion increase in personnel, for example, actually it is a
    decrease when you consider inflation. And we are decreasing
    personnel in the Navy by 14,000, Army by 8,000.
        The same thing can apply to O&M funds. There is an
    increase, I believe, as far as dollars are concerned, of $0.4
    billion, but it is actually a real reduction of about 1.5
    percent. So I am, like you, concerned not only about
    modernization, but about readiness, and I do hope with your
    budget we will be able to accomplish those missions. You can be
    assured of our support.
        Thank you, sir.
        Senator Stevens. Senator Hutchison.

                     statement of hon. kay bailey hutchison

        Senator Hutchison. Mr. Chairman, I would just say that I
    too am very concerned. I was not quite sure what Senator Inouye
    meant when he said we have watched your rites of manhood, but I
    do not think I am going to pursue it.
        What I would like to say is that clearly we are building up
    in the Persian Gulf and Secretary of Defense Cohen has said
    that the edges are getting frayed with our defenses because of
    the troops we have in Bosnia, which now look like they are
    potentially going to be there for a longer term. And I would
    like for you to address in your testimony just how we are going
    to support another theater where there is a buildup in
    Southwest Asia.
        Certainly I am going to tell you right up front, I support
    a buildup there. I do not want to be over in the Persian Gulf
    with too few people. So I think that is a legitimate U.S.
    security interest. But if the Secretary of Defense says our
    edges are getting frayed, I want to know from where are these
    forces coming and how do you propose to deal with that and also
    ask for the continued troop commitment in Bosnia.
        So with that, I will just wait for your testimony and then
    ask you specific questions.
        Thank you, Mr. Chairman.
        Senator Stevens. Senator Dorgan.

                         statement of hon. byron dorgan

        Senator Dorgan. Mr. Chairman, I have no formal statement.
    Thank you for calling the hearing. I am anxious to hear the
    discussion today. And I thank you for opening the curtains. It
    is very unusual in committee hearings in Congress to have open
    curtains.
        Senator Stevens. Really?
        Senator Dorgan. It is. You almost never see them.
        Senator Inouye. See what you have done.
        Senator Hutchison. Fresh air.
        Senator Stevens. I did not know I had done it, but I am
    glad I did it. [Laughter.]
        Senator Dorgan. Well, thank you anyway.
        Senator Stevens. Well, we could get into some Alaskan
    comments about curtains. We put ours up in the summertime and
    take them down in the wintertime. You have to understand that.
        Go ahead, Senator Domenici.

                       statement of hon. pete v. domenici

        Senator Domenici. Well, I do not want to be a pest or a
    nuisance, but let me make sure that I understand. You intend to
    send us a supplemental for Bosnia?
        Dr. Hamre. Yes, sir.
        Senator Domenici. And the military will not have to go find
    that money? You will ask that it be over and above what was
    provided as the capped amount in the budget?
        Dr. Hamre. Yes, sir.
        Senator Domenici. So you ask that it be designated an
    emergency?
        Dr. Hamre. Yes, sir.
        Senator Domenici. Now, how much is that going to be?
        Dr. Hamre. Sir, we are in the final stages of----
        Senator Domenici. I do not know that we are supposed to be
    asking questions. Why do I not do that. I have got to wait my
    turn. I have got to wait.
        Senator Stevens. I thought perhaps you were leaving.
        Senator Domenici. No; let me turn it into a statement.
        Senator Stevens. We would be glad to have you ask a few
    questions.
        Senator Domenici. No; I will not do that. That is not
    right.
        I am just going to say that I am concerned that we not find
    ourselves once again in the position where the various chiefs
    have to come running to our offices saying they have to redo a
    budget which they thought they had already submitted, in order
    to find money for reprogramming and the like for Bosnia or
    Iraq. And I hope you can explain to us why--if we are going to
    have a different policy this year, what that policy is.
        I think everyone here should know that this issue was
    raised by Senator Stevens and I as we talked with the
    administration spokesman about Iraq.
        In addition, I hope you would address--[coughs]
        Senator Inouye. See what happens when you open the
    curtains.
        Senator Domenici. I have a little cold.
        Senator Stevens. It is all those neutrinos that are coming
    in through the window. [Laughter.]
        Senator Domenici. I am trying to be calm, too.
        Dr. Hamre. We need you to live through the markup, sir.
        Senator Domenici. I hope you will explain what we are to do
    about the different estimates of what your program costs
    between CBO and OMB. That is a lot of money. You estimate it at
    $3.7 billion less, which means if we follow your program we
    have to look for $3.7 billion to get down to, under CBO's
    number, to get to your budget.
        I do not think we ought to bear that whole problem. I think
    that ought to be borne by you all.
        Thank you very much, Mr. Chairman.
        Senator Stevens. I note the arrival of the distinguished
    Senator from Arkansas.
        Senator Bumpers. You noticed.
        Senator Stevens. Yes.
        Senator Bumpers. I do not have an opening statement. I know
    that breaks your heart.

                           introduction by dr. hamre

        Senator Stevens. Yes; I am delighted. It is going to be a
    nice afternoon. We are in the sunshine and the open.
        So we can proceed with your statement. I understand you
    have a series of charts. Is there any way that the public can
    see those charts? We have them in front of us.
        Dr. Hamre. Sir, I do not know. I know we did bring extra
    copies.
        Senator Stevens. Turn it around and let them see it. We
    will watch this one.
        Dr. Hamre. We will see what we can do to try to get it
    adjusted so that people can see it.
        Can I just say by way of introduction first off my sincere
    thanks for inviting me to come up. This is the first time I
    have had a chance to come before you as the Deputy Secretary. I
    think it is why our national motto is ``In God We Trust'' that
    I am here, and I am grateful that you would let me come up.
    Thank you.
        I also would say, on a very personal note, probably the
    most unusual privilege that anyone has is a chance to serve as
    a comptroller because in that capacity you get the chance to
    work with Congress in the most professional and responsible
    ways. The courtesies that you extended me, Mr. Chairman and
    Senator Inouye, to bring me into your trust so that I could
    help build a program was an enormous professional honor and
    experience, and I am very grateful for it and I thank you for
    much.
        Today I would like to try to go through very briefly an
    outline of the President's proposal that Secretary Cohen would
    have given had he been here, and he will go through, of course,
    with you later on in the year. I will be very quick so that we
    can get into the questions because I think that those are more
    important to you.
        Sir, we did have copies that were distributed, so I think
    that people in the audience----
        Senator Stevens. People out there have them?
        Dr. Hamre. I hope they do. I think we brought a bunch of
    copies.
        Senator Stevens. All right, very good. Thank you.

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

                              New Defense Strategy
        Shape international environment
      --Sustain presence and support engagement
        Respond to full spectrum of crises
      --Protect readiness and force structure by reducing overhead
        Prepare now for uncertain future
      --Accelerate modernization and exploit Revolution in Military Affairs
                         QDR Program is strategy driven

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

                              New defense strategy

        Dr. Hamre. Let us begin. First, this budget is the first
    budget that the Secretary is actually submitting, because this
    is the one that reflects the quadrennial defense review,
    reflecting the strategy that he helped build last spring. There
    were three large elements to that strategy: to help shape the
    future, to respond to crises that come up, and then to prepare
    for the long term.
        Shaping the future is obviously probably one of the
    smallest parts of our budget, but I would argue one of the most
    important parts. For example, you the Senate are prepared to
    now enter into a discussion about whether we should expand NATO
    and bring in three new partners. That is very much an issue of
    shaping the future. I know it is going to be a controversial
    subject, one that is going to take a lot of debate, and there
    should be a lot of debate because it is an enormously important
    issue. But how we approach that is the way in which we are
    shaping our security forces, our security posture in the
    future.
        Responding is very much the day-to-day business of the
    Department, and, of course, these last 2 months have shown that
    we still live in a perilous time and there still are demands.
    We just this hour are still flowing forces into the Persian
    Gulf region as we are bringing everybody into theater that the
    Secretary and the President mobilized in the last weeks or so.
    This is the bread and butter business of the Department, to be
    able to respond to emergencies like we are seeing right now.
    That obviously consumes a major portion of our budget.
        I think this also is where we have the readiness
    challenges, and I will talk about that in a few minutes.
        Then finally, preparing for the future is very much about
    building the weapons systems and building the personnel for the
    future. It is not just weapons, although we clearly need to do
    that, and we have gone too far in our procurement holiday, as
    the Secretary says. We really need to start getting
    modernization back, as you said, Mr. Chairman, in your opening
    statement. And I will talk about each of those in subsequent
    charts.

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

                            BALANCED BUDGET AGREEMENT
                       [Function 050 dollars in billions]
    ------------------------------------------------------------------------
                                                  Fiscal year--
                                   -----------------------------------------
                                    1996  1997  1998  1999  2000  2001  2002
    ------------------------------------------------------------------------
    Administration Proposal.......  257.
                                     8    254.
                                           4    ....  ....  ....  ....  ....
    Congressional Adds............  +8.2  +11.
                                           8    ....  ....  ....  ....  ....
                                   -----------------------------------------
          Total...................  266.
                                     0    266.
                                           2    ....  ....  ....  ....  ....
                                   =========================================
    National Defense Topline......  ....  ....  267.
                                                 6    270.
                                                       6    275.
                                                             9    283.
                                                                   8    287.
                                                                         1
    Projected Deficit.............  107   22    10    ( \1
                                                      \ )   ....  ....  ....
    ------------------------------------------------------------------------
    \1\ Deficit calculations include $3 billion allowance for costs of
      extending Bosnia peacekeeping mission and domestic emergencies.

             Agreements sets zero-sum framework for budget changes

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

                  Fiscal resources--balanced budget amendment

        First let me just frame the overall fiscal context. What I
    am showing you on this chart is the budget resources. If you
    look, everything to the right side of that red line, vertical
    line, the 1998 through the year 2002, those are the dollars
    that were agreed on in the budget resolution last year, the
    balanced budget amendment and the budget resolution. And those
    are the dollars to which we have built a defense program.
        Now, I need to point out, as Senator Domenici raised
    earlier, in 1998 and in 1999 there are additional funds that
    will be required for a supplemental for Bosnia and for Iraq in
    1998 and for ongoing operations in Bosnia in 1999. Those are
    issues that go beyond the balanced budget amendment, so it does
    require an emergency designation in fiscal year 1998 so that it
    does not come from the Department of Defense totals.
        For fiscal year 1999 it would come out of the allowance
    that was included in the budget submission, and the President's
    budget included $3 billion for Bosnia and for any other
    emergencies that might come up.
        Senator Stevens. Your chart is interesting, Doctor, but I
    notice the projected deficit. That was not part of the budget
    agreement. The budget agreement was it would be zero in 2002.
    And I know we are projected to get there sooner.
        Dr. Hamre. Yes, sir.
        Senator Stevens. But the impression might be made to some
    people that it's the defense spending that is leading to the
    deficit.
        Dr. Hamre. I am sorry, I do not mean to mislead anybody,
    and you are right to point it out. At the time the balanced
    budget amendment was reached, of course, the projected deficit
    was not going to get to zero until further out into the future.
    The economy has performed better and it has obviously brought
    it back, so that we are getting to it sooner.
        Defense, we are staying on the path that we were given last
    year, and we have built a program around that path. We could
    not accommodate the extra costs of Bosnia and Iraq inside that
    spending cap, and that is why we are going to have to ask for
    supplemental funding and it is being made an emergency
    designation.
        Next chart.

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

                          Major Readiness Initiatives
    People
        Address perstempo concerns with new unit management systems and
    reducing lower priority exercises
    Training
        Maintain OPTEMPO levels
    Equipment
        Increase funding for maintenance and spares
             Maintaining high readiness requires constant vigilance

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

                          major Readiness initiatives

        Let me first talk about readiness, and this is simply to
    organize. These are to organize my thoughts. But obviously your
    concerns are foremost about readiness, and I know you have
    heard many concerns. You have been out in the field and you
    have heard concerns about readiness, and I think we do have
    readiness issues and problems that we have to deal with.
        Obviously, I think there are three major ones. One is, of
    course, the problem with pilots and the pilot shortages we are
    experiencing in the Air Force and the Navy, and that is very
    serious. It is very hard to deal with that problem because the
    airlines are hiring and the optempo is high and it is very
    stressful. Everything that the Air Force was planning to do to
    try to mitigate some of that, of course, now had to be set back
    when we had to deploy to the Persian Gulf. So it is a problem.
    That is a real challenge this year.
        Senator Stevens. If I could interrupt you again, it is
    worse than that. The reenlistment rate of our pilots throughout
    the services is abysmal. If you think about it, whether it is
    flying the no-fly zone in Iraq or the so-called cap over Bosnia
    or the protection in South Korea, these people who are trained
    to be high performance combat pilots are out there flying
    squares 4 and 5 hours a day, month in and month out.
        I think that none of us have really looked at the
    disincentive to someone, to train them to be high performance
    people and then get them out there to fly what could be flown
    by people in their first year as a pilot. I do not know what
    the answer is, but it is going to get worse before it gets
    better until we find a solution for that drudgery duty that has
    been given to pilots in terms of these peacekeeping activities.
        Dr. Hamre. Sir, we saw the reenlistment rates fall sharply
    last year, and that was an early warning signal that we had
    problems. We put out more money and put out bonuses to try to
    get a higher reenlistment rate, but frankly it has fallen
    short. And that is going to be a problem, to hold onto good
    pilots.
        Senator Hutchison. Twenty-nine percent this year.
        Dr. Hamre. Yes, I know.
        Senator Hutchison. A $60,000 bonus.
        Senator Bumpers. What is that, Kay?
        Senator Hutchison. A $60,000 bonus they offer, and 29
    percent took them up on it this year.
        Senator Stevens. We had a 29-percent reenlistment rate.
        Senator Hutchison. As opposed to 60 percent last year.
    Unbelievable.
        Dr. Hamre. Yes; it is going to be a real challenge. That is
    clearly a major challenge.
        A second area where we were having I think readiness
    problems was in the area of infantrymen in the Army. There were
    lots of stories about holes in infantry units and squads out in
    the Army, and as they were sending units to Bosnia, for
    example, they were filling them up to 100 percent and that left
    even more shortages out at home station here.
        That was really a product of the Army fell short on their
    recruiting goals for 11 Bravos, for infantrymen. We put on some
    extra funds, the Army did. They put on extra recruiters. They
    needed to basically recruit an extra 5,000 people. And I
    actually think that problem is starting to get fixed, although
    it is going to take us another couple of months to start seeing
    that in the force.

                                  Spare parts

        A third area that I think we have real readiness challenges
    is in spare parts. Through your help--and frankly, it would be
    a lot harder this year if it had not been for your help last
    year. We asked you to provide an extra $600 million for spare
    parts for the Air Force and for the Navy, and you did that, and
    I thank you for it, because if it had not been for that we
    would have a much more serious problem in spare parts this
    year.
        Based on that, we added an extra billion dollars this year
    for spare parts for the Navy and for the Air Force. Part of
    this is we are operating older fleets. These air fleets are now
    starting to age almost year for year because we are not buying
    sufficient numbers of replacement aircraft, and older things
    take more maintenance every year. And our models were not
    properly calculated to capture the cost of this aging
    inventory. So that was a big reason why we were falling behind.
        You helped us get caught up on that, and you will see in
    the chart in just a minute we have added a fair amount of money
    in O&M to try to avoid those kinds of readiness problems.
        But let me show you the next chart, actually, that paints
    that picture.
    [GRAPHIC] [TIFF OMITTED] T02FE26.000

                    Operation and maintenance [O&M] funding

        A year ago our budget was on that lower blue line on the
    right, where it says ``Pre-QDR,'' quadrennial defense review.
    That is where we had planned on budgeting. And what I am
    showing you here is O&M dollars by end strength, so I am trying
    to normalize for changes in force structure.
        As you can see, we have added a fair amount of money to get
    us back on a trend line to support readiness in the out-years.
    So we recognize that this is something we are going to have to
    watch and monitor very closely.
        Next chart.

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

                              Contingency Funding
        Extend Bosnia operations beyond June 1998
        Propose emergency supplemental for fiscal year 1998 and fiscal year
    1999 costs (being developed)
        Additional fiscal year 1998 funds for Southwest Asia
        Rapid approval essential to protect readiness

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

                              Contingency funding

        On contingency funding--and Senator Domenici initiated
    this--the President has decided and NATO has asked that we
    extend in Bosnia past June. We will be submitting, I believe on
    Monday--we are submitting to OMB by Friday, I believe--our
    estimates of the supplemental costs for Bosnia. We hope to be
    able to get it by Friday as well for Iraq. We will be
    submitting that to you, I hope, by the end of next week.
        What we know now for the Bosnia operation, to extend
    through fiscal year 1998 is probably going to be around $600
    million. It will cost us about $600 million more for Bosnia in
    fiscal year 1998, and we will have to be asking for help on
    that as an emergency designation. That does begin the process
    to finally bring us down to the new levels, to 6,900 personnel
    in Bosnia.
        For Iraq, I know everybody is questioning where are we on
    Iraq. All I can tell you right now is that I know what the
    costs are associated with the actions that have been taken to
    date, that is to deploying the extra forces over there, to put
    the extra carrier there, to put in the brigades and that sort
    of thing. Right now we have either spent or committed ourselves
    to about $600 million more.
        The question that we face is what do we do at this stage,
    and are we going to keep that force at this level? Obviously,
    we see the agreement that has been initialed by Iraq, but I
    think, as the President said and I think most Members of
    Congress have said, we have to see the proof in the pudding. We
    want to see if that is going to be honored or not.
        So we are going to be keeping those forces in theater for a
    while longer. There are some important policy decisions that
    are underway right now to decide how much longer and at what
    level, and that will ultimately decide what the level is we
    will ask for your help. Hopefully, we will get that next week.
        May I just ask--and I know how pressed you are going to be,
    but it is very important, if possible, to get passage of a
    supplemental by the first part of April. It is I know very
    difficult to do that, and I know you have got other challenges
    with the IMF issue on your plate, and I know that there is the
    U.N. arrearages issue that is on your plate. Obviously, now
    with the tornadoes in Florida there will be some real
    challenges.
        We are right now borrowing against our fourth quarter
    optempo funds to pay for the situation in Bosnia and Iraq,
    because we have told people not to change their training
    program because we intend to ask for a supplemental to get
    additional funding. So we really do need to secure that, if
    possible, by the first part--by the end of the second quarter,
    which would basically be April 1, if that can be possible.
        Next chart.
        [GRAPHIC] [TIFF OMITTED] T02FE26.001

                                  BRAC funding

        Senator Stevens. We are not even going to get that until
    the week after next, as I understand it?
        Dr. Hamre. I believe they are going to try to get it up to
    you by the end of next week, sir. That I believe is the goal.
    So that gives 4 weeks to review, and I know that is not a lot
    of time. But we will bend any effort to provide any information
    that people need to try to review it during that period.
        May I show you--as you know, the Secretary has asked for
    two more rounds of BRAC. I know there is no more controversial
    issue that I could bring up than BRAC, but I did want to put
    before you what has been our history with base closures so that
    you have a chance to see. We genuinely are saving substantial
    sums from the four rounds of base closures.
        The heavy green portion shows you the net cumulative
    savings that we have achieved from the four rounds of base
    closures. And as you can see, by 2002 we will be saving
    annually $5.6 billion. The green line on the top is how much we
    are saving each year and the red line is how much it costs, and
    it has cost a lot of money to move things around and to
    modernize facilities. But the net savings are positive, they
    are occurring right now, and it is substantial savings. It is
    5.6 billion dollars' worth of savings by 2001 and from that
    point on.
        We are asking for legislation----
        Senator Bumpers. Is that on an annual basis, Dr. Hamre?
        Dr. Hamre. Yes, sir, that is the annual savings, $5.6
    billion a year.
        We will be asking and we are asking legislative authority
    to have two more rounds of base closures, one in 2001 and
    another round in 2005. Of course, we are dependent on your
    sufferance to do that. We understand that. But it is so very
    important for us to be able to shrink that infrastructure. But
    again, I understand this is very controversial.
        Next chart.

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

                                                        PERSONNEL
                                               [End strength in thousands]
    ----------------------------------------------------------------------------------------------------------------
                                                               Current
                                                                 end
                                                     Fiscal    strength    Fiscal     Fiscal   Additional
                                                   year 1998    floors   year 1999  year 2003  reductions   QDR goal
                                                                fiscal
                                                              year 1998
    ----------------------------------------------------------------------------------------------------------------
    Active Military:
        Army.....................................        492        488        480        480  ..........        480
        Navy.....................................        396        387        373        369  ..........        369
        Marine Corps.............................        174        173        172        172  ..........        172
        Air Force................................        377        372        371        344          -6        339
                                                  ------------------------------------------------------------------
          Total Active...........................      1,439      1,419      1,396      1,366          -6      1,360
                                                  ==================================================================
    Selected Reserves............................        920        886        877        837          -2        835
    Civilians (FTE's)............................        786        770        747        672     \1\ -32        640
    ----------------------------------------------------------------------------------------------------------------
    \1\ These additional reductions will result from further A-76 competitions proposed as part of the Defense
      Reform Initiative.

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

                            Personnel end strengths

        These are our personnel strength levels. I do need to point
    out one thing particularly and that is if I might bring your
    attention to 1998, the column that I have in the red box. The
    reason I have to point that out to you is those numbers that
    were stipulated in that column were actually mandated in the
    authorization bill, which was passed last year after you passed
    the appropriations bill. You did not appropriate enough money
    to maintain these force levels. You actually appropriated what
    we asked for. But we were directed in the authorization bill to
    maintain more forces than we need.
        So we are being forced to divert between $100 million and
    $200 million to cover more forces than we need by the
    authorization act. So I just want to point out, we do not yet
    have a basis for covering that, but that is going to be
    something we are going to have to do during this year. It will
    probably be the subject of a reprogramming later in the year.
        Next chart.

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

                         Reserve Component Initiatives
    Process
        Reserve Components play greater role in budget process
        2 new major generals to advise Chairman, JCS
    Resources
        Increased OPTEMPO funding
        Higher Reserve Component equipment spending
    New missions
        Respond to domestic use of weapons of mass destruction
        Redesign to increase combat service support

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

                         Reserve component initiatives

        On the issue of Reserves--and I know that there was a great
    deal of controversy up here in Congress last year on the issue
    of Reserves, especially with the National Guard and the active
    duty Army. We have taken this very seriously. We cannot have a
    house divided. We need very much for the Army and the National
    Guard and the Army Reserve to be working together, and we have
    taken a lot of steps to try to correct that problem.
        We have brought in the Reserve components this year as we
    never have before into the budget process. This year I made
    sure that each of the Reserve component chiefs sat in our DRB's
    to go over our budget with us. This year, for the first time in
    the five budgets that I helped build at the Department, the
    first thing on the Army's list when they wanted an addon was
    actually for National Guard optempo this year, and we put
    additional funds for National Guard optempo.
        This 5-year plan adds $2.5 billion for equipment for the
    National Guard for the division redesign. So we have made very
    substantial efforts to try to address the problems that were I
    think underlying the dispute between the Army and the Army
    Guard last year, and would ask to have a chance to talk with
    you in greater detail about that during the year.
    [GRAPHIC] [TIFF OMITTED] T02FE26.002

                             Weapons modernization

        On the issue of modernization, the Secretary made a very
    high priority on trying to stay on that ramp. You will recall
    the last 3 years, every year we gave you a forecast of
    increasing spending in the out-years, and we never made it.
    This year we are on the path that we outlined this spring and,
    as you can see at the right-hand side where it talks about the
    budget, the solid line and the dashed line, they overlay each
    other.
        The solid line is what we said we wanted to do in the QDR
    and the dashed line is what we achieved and have submitted to
    you in the budget. And we have made our procurement goals. We
    are going to get up to $60 billion by 2001 with this budget
    plan.
        Senator Stevens. Let me make sure I understand it before
    you leave there.
        Dr. Hamre. Yes, sir.
        This is what we had said we wanted to achieve in the
    quadrennial defense review when the Secretary did it back in
    May, and this is the budget we are submitting to you. We fell a
    little short in 1999, about $300 million short. Last year we
    fell about $4 billion short in procurement compared to our
    forecasts. But we made it in the out-years, with the exception
    of $300 million short in 1992. But basically, this year we were
    able to sustain the modernization plan that we had forecast.
        Senator Stevens. Well, I hate to put it this way and sound
    political, but you are assuming the administration that comes
    after this one is going to be a lot more favorable to defense
    than you have been. That is a tremendous increase if you look
    at it. It is going from $54 billion to $61 billion, and then
    there is another $3 billion in there. We are talking about an
    increase of $19 billion over this year's budget.
        Dr. Hamre. Senator Stevens, we are doing this, but it is
    inside the top line, inside the balanced budget agreement top
    line that we reached between the executive and the legislative
    branches. So we think it is sustainable. We hope we can do it.
        And it is solidly priced. I would say I think there is a
    good program here, and it is in detail in the FYDP we submitted
    to you.
        Senator Stevens. I would be a lot more confident if that
    curve was up there right now.
        Dr. Hamre. Yes, sir, I would, too.
        Senator Stevens. Thank you.

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

                       Recruit and Retain Quality People
        Compensation: 3.1 percent pay raise
        Commissaries: Increased funding and returned to Services control
        Medical: Increased funding and Medicare subvention pilot
        Housing: Privatization used to leverage housing budget
         Maintaining high quality people critical to Joint Vision 2010

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

                       Recruit and retain quality people

        Dr. Hamre. Finally, on our people. And, of course, this
    always is our first priority when we build a budget. There is a
    3.1-percent pay raise for the troops in 1999 and the full legal
    pay raise throughout the FYDP. We have fully protected the
    commissary benefit, and we have returned the management of the
    commissary system back to the services, so that they now are
    the board of directors for the commissaries.
        Last year when we gave you our budget we had a hole in our
    medical program and this year we have added about $2.5 billion
    across the FYDP to plug that hole. So I think that this year we
    are not going to give you a broken program with medical. There
    is a minor issue, about $30 million, but this year I think it
    is not broken like it was last year. We have a better
    Comptroller this year.
        Finally, on privatization for housing. I will be honest to
    say I am disappointed with our numbers for housing. We are not
    doing an adequate job in building housing, replacement housing
    for the military. Frankly, we cannot do it without the
    privatization program and authorities that you gave us, so we
    need to build on that. But it is not adequate even at this
    level.
        Last chart, Bob.

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

                                    Summary
        Balanced QDR strategy of shape, respond, and prepare drives fiscal
    year 1999 program
        Readiness and force structure depend on DRI proposals to reduce
    overhead
        Modernization targets achieved
        Joint Vision 2010 concepts exploit RMA
        Treat people as our most important asset

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

                                    summary

        Finally, I think what we are submitting as a budget, it is
    capped by the dollars that were in the balanced budget
    amendment. We think it is a balanced program, and it is a
    program that grows out of the strategy that was developed by
    the Secretary this spring.
        Obviously, it depends on getting supplemental funding to
    pay for the ongoing operations in Bosnia and Iraq. We cannot
    hold the program together without that. We will have very
    serious readiness problems. We already have significant
    readiness challenges. We will have very serious readiness
    problems if we do not get supplemental funding.
        We think that we are able to sustain the modernization
    program because it is inside the overall targets. Finally, let
    me say, again, to say thank you to you, Mr. Chairman, and to
    all this committee for consistently being a bedrock support for
    the Department of Defense. I know that you are confronted by so
    many pressures, this committee confronts so many pressures, but
    that you have consistently been with the Department and with
    its personnel through tough times and good times. We are very
    grateful for that, and I especially appreciate being invited to
    come up today.
        Thank you, sir.

              BRAC savings--personnel cuts and environmental costs

        Senator Stevens. Well, thank you very much for being here.
    I cannot say that we are overly pleased, at least that I am
    overly pleased, with this budget as far as defense is
    concerned, because I see so many shortfalls right now, and I do
    not really know how we are going to correct those without
    money. Hopefully, we will get into some discussions later about
    how much will be involved in the emergency part of the
    supplemental.
        You think we will get that by next Friday?
        Dr. Hamre. Sir, as a matter of fact there is a meeting
    going on at 4 o'clock today to work out the final details.
    Everybody's plan is to have it up to you by the end of next
    week, yes, sir.
        Senator Stevens. Well now, tell me. A significant portion
    of that green you had up there was savings in people, not in
    operation of bases, was it not?
        Dr. Hamre. A lot of it was people, yes, sir.
        Senator Stevens. You could save that--that does not come
    from closing bases. That comes from discharging people, not
    reducing end strength, right?
        Dr. Hamre. Sir, I will have to give you a breakout as to
    what portion of that was people and what part is actually
    overhead and O&M dollars that go with facilities, and I will be
    glad to do that.
        [The information follows:]

        Sir, as I stated the bulk of the net savings from BRAC
    depicted in the green shaded area of my slide is related to the
    elimination of military and civilian personnel. Between fiscal
    year 1996 and fiscal year 2002, the Department estimates that
    it will generate net savings of about $17.5 billion. Of this
    amount, we estimate that 60 percent, or about $10.5 billion,
    can be attributed to BRAC savings from the elimination of
    personnel. These BRAC savings exclude savings from force
    structure reductions that would have occurred with or without
    BRAC. The personnel that have been eliminated here are directly
    involved in base operations support (BOS). BRAC savings can be
    grouped into those that recur and those that are one-time
    savings. The vast majority of BRAC savings are recurring, i.e.,
    they represent a permanent, ongoing reduction in planned
    spending. Personnel positions eliminated through BRAC are an
    example of recurring savings. One-time savings do not recur
    year after year. For example, the cancellation of a planned
    construction project would represent a one-time saving. Over
    time, the value of recurring savings is the largest and
    therefore most important component of BRAC savings. While the
    exact number of positions eliminated by BRAC is subject to some
    uncertainty, I believe the savings estimates related to
    personnel reductions are reasonable.

        Senator Stevens. Now, are the accumulated environmental
    costs for the bases that have been closed, are they quantified
    in there?
        Dr. Hamre. Sir, what I showed you were the annualized costs
    of environmental cleanup, but not the full liability associated
    with cleanup of those bases. Some of those liabilities will go
    out for some time into the future.
        Senator Stevens. I am told the environmental cost deficit
    is greater than the savings so far.
        Dr. Hamre. Sir, the environmental costs are there whether
    we close the base or do not close the base, because of the
    liabilities to clean it up if we are there or not there. What
    we budget is showing you the annual increment, and I have
    showed those on a net basis, but just for what we have been
    spending in those years for the cleanup.
        But the environmental bills are large, yes, sir.
        Senator Stevens. Well, I am not going to argue that, but I
    do think that some of those costs do not really occur until
    there is a thought to turn it into a nondefense activity, at
    which time there is an obligation to clean up the environmental
    accumulation of years of use as a military base. But those, we
    are not cleaning all of those up. We are making them habitable
    and eliminating the hazardous environmental concerns, but we
    are not really restoring the soils and all that throughout the
    bases that are continuing to be operated. Am I wrong?
        Dr. Hamre. No, sir, you are not wrong. When we transfer a
    facility, we will probably have a negotiated arrangement for
    the continuing cleanup, for example, of a subsoil pollution
    source, that we will continue to do even after the transfer,
    and will bear the responsibilities for doing that. The costs
    for that will go beyond the 5-year plan that is shown here.
        But in many cases we will have the cleanup accomplished
    before it is actually turned over. Most cases not.

                              NATO expansion costs

        Senator Stevens. As far as I am concerned, the jury is
    still out on NATO expansion. I do not think that there are many
    that still share my views on that, but I understand you have a
    $400 million cost now for 10 years for the portion of the NATO
    costs and that is all it is. It is down from over $100 billion
    to $400 million?
        Dr. Hamre. Sir, we submitted an analytic study that
    outlined what was the hypothetical cost associated with NATO
    expansion, and I think it was something like $27 billion in our
    estimate.
        Senator Stevens. That was yours. There was one that was
    over $100 billion.
        Dr. Hamre. Yes; CBO had a great big one. I think ours was
    something like $27 billion. There were a number of things that
    differ here. One is at that time that study assumed that there
    were four countries involved. It was not based on any detailed
    engineering or detailed inventory of the state of the
    facilities. It basically assumed we had to build brand new
    facilities in these new countries, which it turned out we did
    not have to do. It also had some operative assumptions about
    that their command and control was going to have to be totally
    replaced and we would have to buy all new things, that sort of
    thing.
        This new estimate, which is the $1.5 billion, of which the
    United States share is $400 million, that is based on a fairly
    detailed study that NATO conducted, looking at each country,
    looking at each installation, looking at all of their command
    and control systems, and finding out what genuinely has to be
    bought new. And our cost share would be about $400 million.
        We would be glad to provide that to the committee and to go
    through it with anybody to evaluate it and assess the
    underlying assumptions and numbers.
        Senator Stevens. The Secretary told us that the details of
    the costs of NATO expansion would be available to us long
    before the vote on the NATO enlargement, and now it seems that
    you are relying upon a NATO analysis rather than your own. You
    are throwing out your own that was $26 billion over 10 years
    and taking theirs that says $400 million over 10 years.
        Dr. Hamre. Sir, the study that we did that said $27 billion
    or whatever the number was was an analytic study that was done
    totally independent of being on the ground and looking at real
    facilities and knowing what had to be done. So I will get the
    study up to you that shows what this $1.5 billion is comprised
    of and why, frankly, why it does differ. And we are glad for
    it. We would rather not have to replace runways or buy new
    communications systems if there are things in place now that
    are adequate.
        A NATO team did that survey and we are taking that as being
    right. We did have team members with them on it.
        Senator Stevens. Do we still pay 26 percent of NATO?
        Dr. Hamre. Yes, sir.
        Senator Stevens. So that means that that is roughly one-
    quarter of the total cost of the expansion of NATO?
        Dr. Hamre. Yes, sir, the $400 million would be roughly one-
    quarter.
        Senator Stevens. From their point of view, from the NATO
    people, analysts' point of view?
        Dr. Hamre. Yes, sir. Yes, sir.
        Senator Stevens. Well, then I assume there would be no
    opposition from the administration to my reservation on the
    treaty that will say that there will be no increased cost of
    maintaining our involvement in NATO from this enlargement?
        Dr. Hamre. Sir, forgive me for not being in a position to
    speak for the administration on your reservation.
        Senator Stevens. I understand. I did not expect you to
    answer, John, but I just think somehow or other----
        Dr. Hamre. Yes, sir.
        Senator Stevens [continuing]. I think their computers must
    have been set to go to zilch in 1998, not the year 2000.
        Well, I have got some other questions to answer. I am
    really not going to get into the Iraq thing. I think we ought
    to wait for the basic information that is going to come with
    the supplemental.

                   cost control and equipment needs of CINC's

        I do have one problem, though. As we have traveled around
    the world--and we do travel excessively, my friend and I, and
    some of the others, too--I think that the CINC's still have no
    real cost control, on the one hand. On the other hand, the CINC
    equipment is deteriorating and I am not sure they are getting
    the priorities they should have with regard to new systems,
    such as new aircraft, particularly in the Pacific.
        Are you supporting any new aircraft for CINC's this time?
        Dr. Hamre. Senator, I wish I had prepared more fully. I do
    recall we had a program that was basically going to use some
    older 135's. I think that that program has been rejected, and I
    think we are looking at new aircraft. But I do not know exactly
    what we are looking at. Can I get back to you on that?
        [The information follows:]

        Senator, the Air Force has a plan that utilizes both new
    aircraft and existing KC-135R aircraft. The KC-135R aircraft
    will be modified to accommodate unique CINC requirements for
    secure communications and have some modest interior
    improvements. The Air Force is working closely with the CINC's
    to satisfy their support concerns.

        Dr. Hamre. I just want to lead that into this request to
    you. I saw your comment in your presentation about the
    privatization for housing. I would like to follow that up with
    a concept in this bill this year of privatization for noncombat
    equipment to the extent that it is possible. That is
    particularly true with transportation for the CINC's,
    transportation for the--what do they call it, the executive
    fleet? The 89th Wing. And I think we have got some other areas
    where we can experiment on privatization.
        I believe that the new leasing companies that are there on
    a global basis are capable of providing a substantial advantage
    to the Department to lease vehicles. Even in a host country,
    for instance, we might be able to lease vehicles that are there
    and not have to transport them over. I think we have to start
    looking for some savings at every corner, and the privatization
    angle has a lot of appeal right now to help us get over this
    crunch in the O&M accounts. So I would urge you to look at it
    and if you have any further comments to make about that as we
    go along, we would like to work with you on it.
        Senator Stevens. Senator Inouye.

                    National Guard and military construction

        Senator Inouye. Thank you.
        I am certain the Senator from New Mexico will be asking
    questions on Bosnia and the supplemental, and I am certain the
    Senator from Texas will be touching upon recruitment and
    readiness. I would like to touch upon the National Guard and
    military construction.
        Up until recently, it has been part of the tradition of the
    executive-legislative relationship that the Congress adds
    Milcon projects for the Guard, and very seldomly requests came
    in from the Defense Department. Second, in recent times and in
    this presentation of yours we have added new missions to the
    Guard, one a very important one on how to cope with the
    potential threat of biological and chemical weapons that may be
    easily carried into the United States, and we have told the
    Guard that it is your mission to protect us.
        Yet, if you look at the budget there is almost nothing for
    Milcon for the Guard. Now, if we put in and initiate projects
    for the Guard and the administration's policy is that the line
    item veto will be used for those projects that have not been
    requested by the administration, what happens to the Guard?
        Would you support us if we put in projects for the Guard,
    though not requested by you?
        Dr. Hamre. Sir, we have I think a sad history of asking for
    Milcon for the Guard. As I say, I am a Lutheran by background
    and we have it good: We like to sin and God likes to forgive,
    and it all works out real good. It is a little bit how we deal
    with Milcon. I mean, we decide not to ask for money and you
    like to give it to us, and both sides feel pretty good about
    that. That is historically what we have been doing.
        We are now at a point where we cannot do that any longer.
    The top line is fixed and everything now is being traded off.
    We need to be embracing Guard Milcon requirements just as
    sincerely as we embrace active duty Army Milcon requirements.
    We have not had a history of doing that, and we need to start
    doing that.
        We tried very much to do that for their modernization
    program this year, and we did indeed move $2.5 billion into the
    Guard for equipment. But we have not done a good enough job on
    Milcon and so we have to correct that problem.
        Sir, on the issue of weapons of mass destruction, again we
    listened very carefully to what you and other Members of the
    Congress were telling us and tried very much to embrace this.
    This budget proposal adds $49 million to start developing a
    quick response program for Guard units so that they can quickly
    come in to augment, not replace local responders, not replace
    the fire department or the emergency response teams, but to
    quickly augment them, to come and bring in biological detection
    equipment, to bring in chemical detection equipment, to be able
    to do early diagnostics, to get there within 4 hours and be
    able to help the local early responders so they can get ready
    and cope with an emergency.
        We have added $49 million this year and altogether about
    $250 million over the 5-year plan.
        Senator Inouye. But there is no Milcon in there.
        Dr. Hamre. But there is no Milcon in that, sir, because
    that was off of existing units and existing organizations.
        But I take your criticism very seriously and you are right,
    we need to be doing a better job on treating Milcon for the
    Guard. It is especially hard, as you say, when we talk about
    not having addons that are not in the 5-year plan. If the Guard
    is not in the 5-year plan, then they get cheated. It is a
    double hit. So that is why we had to develop--we had to make a
    very concrete effort to try to get them included at least on
    the equipment side in the 5-year plan, and we will have to do a
    better job on Milcon, too.
        Senator Inouye. Maybe we should have a conference where we
    can tell you what we would like to put in and you say OK.
        Dr. Hamre. Sir, I am at your disposal. [Laughter.]

                        consequences of BRAC disapproval

        Senator Inouye. Well, I am aware that you are counting on
    BRAC as part of your budget presentations. But what will you do
    if BRAC does not get approved?
        Dr. Hamre. Sir, we are counting on BRAC. Of course, inside
    the 5-year plan that we are presenting to you BRAC has
    virtually no savings; it only has costs, because the first
    round of BRAC would only occur in the year 2001 and the costs
    associated with that first round would be in the 5-year plan,
    but virtually none of the savings. So we would get the
    anomalous condition where if you say no to us on BRAC we
    actually get a slight benefit in the short term; in the long
    run, we lose the purchasing power that it is going to take to
    support facilities we do not need.
        We are still going to have to address excess capacity
    somehow. We have got to get our hands around that problem. We
    have got too much capacity. We believe honestly that BRAC is
    the fairest way for everybody because it is out in the open,
    there is an explicit process, it is evaluated on the merits,
    people can look at it and debate it and discuss it. And if
    there is dissatisfaction with the way that BRAC proceeded this
    last time, Congress should change the rules. You can change the
    rules on how BRAC would proceed, and we would honor that.
        But we do need to tackle the excess infrastructure, the
    excess bases, and that is why we would be delighted to sit
    down. And if there is another way that we could do BRAC or an
    improved way to do BRAC, we would be glad to work with you on
    that.
        Senator Inouye. Can DOD on its own initiative close bases
    without going through BRAC?
        Dr. Hamre. Sir, DOD has--yes, we can, but there are all
    kinds of laws and rules and regulations that govern any closure
    of an installation. For example, what BRAC basically did was
    let you clear some of those hurdles on a wholesale basis rather
    than a retail basis. So for example, environmental impact
    statements, things of that nature, we would have to go through.
    It is a cumbersome process, but yes, we can do that.
        Senator Inouye. Some have argued that DOD should bite the
    bullet and do that job, instead of hiding behind BRAC. For
    example, there is no question BRAC may be open, but it is
    subjected to lobbying that makes our lobbying seem very small
    and slight.
        Dr. Hamre. Yes, sir, I understand.
        Senator Inouye. You might have members in there that are
    already inclined to close bases in Texas and California. Some
    believe that is what happened and we had to come back to rescue
    you. Now, that process in the eyes of many seemed to be a bit
    tainted. It might be a bit more honest if we dealt eyeball to
    eyeball with you. That is just one thought.
        Thank you very much.
        Dr. Hamre. Oh, good, I do not have to answer that.
    [Laughter.]
        Senator Stevens. I do not think anyone can really answer
    that now.
        Senator Hutchison.
        Senator Hutchison. I think it was a very good point,
    however, Senator Inouye. I certainly saw more lobbying there
    than I have seen anywhere in Congress.
        I would like to--I am going to go on the same line that
    Senator Inouye did on another readiness issue, and then I want
    to ask you on the bigger picture.

                          SAC hearing on Supplemental

        But I want to ask the chairman a question first. Are we
    going to be able to have hearings on the supplementals,
    particularly the Bosnia supplemental, so that we will be able
    to discuss the whole policy in Bosnia for which the money will
    be spent?
        Senator Stevens. It would be my feeling we should have
    hearings. But in all probability the hearings on the
    supplemental will be by the full committee, because it will
    contain more than just items for this subcommittee. That will
    be a difficult decision to make, but I want to talk to Senator
    Inouye and Senator Byrd about that.
        I do believe all members should be involved in the review
    of the supplemental.
        Senator Hutchison. Well, I do not have any suggestion on
    whether it be the subcommittee or the full committee, but I do
    think if you are saying, as the President is now, that we are
    going to have an unending commitment in Bosnia, then you come
    in with supplementals rather than putting it in the defense
    budget, I think we need to know exactly what the plan is. So I
    am hoping we will have those.
        Senator Stevens. Fiscal year 1999 is not considered
    emergency. Only the fiscal year 1998 is considered emergency.
        Dr. Hamre. Right. And for 1999 we will be actually
    submitting details of that as well by the end of next week. So
    we will have both 1998 supplemental and 1999 budget amendment,
    I guess as we would say it, or using this allotment that was
    set aside to cover for Bosnia.
        Senator Stevens. Mr. Cortese reminds me, we do have a
    hearing scheduled on the 1999 Bosnia. My answer to you was
    concerning the supplemental for Bosnia and Iraq and the other
    matters that would be in the supplemental. There are some
    nondefense matters in the supplemental.
        Senator Hutchison. Well, I just want to make sure that we
    have the opportunity to have congressional input on Bosnia at
    the appropriate time. And I think a hearing is going to bring
    out what the plan is, and I am looking for a plan on Bosnia and
    I am looking for an exit strategy if this is going to happen.

                         status of Privatization in DOD

        Let me ask you--one of the readiness issues besides BRAC is
    privatization. We have heard from every expert in the
    Department of Defense, from the Vice Chairman of the Joint
    Chiefs, the Chairman, the chiefs of each service, the Secretary
    of Defense, the Deputy Secretary of Defense before you, that
    privatization is one of the key ways that the Department of
    Defense can save money and use that money for other operations
    that are necessary.
        What is the status of privatization? Are you satisfied with
    it, and what do you think needs to be done to allow that money
    be used in the best and most efficient way?
        Dr. Hamre. Senator Hutchison, I presume you mean in this
    case privatization as things that we are currently doing, not
    the housing privatization, but the ongoing work, for example,
    in DOD, putting it in the private sector?
        Senator Hutchison. Yes; well, actually you could speak to
    all of it.
        Dr. Hamre. OK.
        Senator Hutchison. But I was thinking of the privatization
    of maintenance, however.
        Dr. Hamre. Yes, yes; the budget that we have submitted
    assumes that we are going to compete for privatization--it is
    not automatically privatizing, but using the A-76 process to
    compete for privatization--150,000 jobs. Now, we are assuming
    that we will save $2.6 billion through that. Let me explain
    briefly how we do that.

                          A-76 process for competition

        The A-76 process--and I will come back to that in a
    minute--it is very cumbersome, but it is designed to give a
    fair, level playing field, private sector-public sector, to do
    work. There have been about 2,000 A-76 studies over the last 13
    years. On the average, one-half of the time the Government has
    won and one-half of the time the private sector has won.
        When the Government wins the competition, the savings have
    averaged 20 percent. When the private sector wins the
    competition, the savings averaged 40 percent. So there are
    enormous savings that would come from this competition.
        What we did in this budget was we are assuming that we are
    going to compete 150,000 jobs, and we assumed that in every
    case the Government won, because that is the conservative
    assumption. So we took only the 20 percent savings against that
    work base, the 150,000 jobs. I actually think it will be larger
    than that, but what we have actually put in the budget is $2.6
    billion. That is the annual amount that we save.
        This is going to be a challenge, frankly, because we will
    be doing more A-76 privatization competitions this year than
    were done in the last 10 years combined. There is a tenfold
    increase in A-76 competitions between 1996 and 1997. Frankly,
    in some places we have had to relearn the process because it
    lay fallow.
        I think I am encouraged. We have had several detailed
    meetings with the services and I am very encouraged. I think
    that we are going to make this work.
        Senator Hutchison. Do you have enough flexibility under the
    law as it is now to do everything that you feel you can do in
    this area?
        Dr. Hamre. I think that there are definite constraints in
    the A-76 process, and I am not here to litigate the process.
    But it takes almost 2 years to conduct a competition. It is
    enormously intensive, labor-intensive, to conduct a
    competition.
        I think also we need to have a process where we do a better
    job of evaluating the proposal before we submit it, because too
    often we have organizations that do not want to lose their jobs
    that get to design the competition. Well, you know, there is an
    incentive not to design it in a way--or to design it in a way
    where it is harder for industry to win, the private sector to
    win. We need to change that.
        I also think there are an awful lot of work practices that
    cut across multiple organizations, and the A-76 process is
    really designed to work inside a single organization. So we
    need some changes here.
        Senator Hutchison. That is what I was trying to find out.
    You do need changes in order to make sure you can achieve the
    savings you need to come within this budget?
        Dr. Hamre. Ma'am, I think most of them are things that we
    can do internally. But I will get back to you if there is
    something that we think we need either legislative or
    regulatory relief.

                restrictions on Depot maintenance privatization

        Senator Hutchison. Well, does the 60-40 rule, that is now
    50-50----
        Dr. Hamre. Well, that is a different matter. That is a very
    different matter, because that is not governed by A-76, and
    that is enormously more complicated.
        Senator Hutchison. Do you think that is an artificial
    restraint----
        Dr. Hamre. Oh, yes, ma'am.
        Senator Hutchison [continuing]. That will keep you from
    being able to do the privatization?
        Dr. Hamre. Oh, absolutely. I think that the 60-40, now 50-
    50, rule definitely makes it harder to hold competitions.
        Senator Hutchison. Do you think that you have the same
    accountability in a public sector contract that you do in a
    private sector contract?
        Dr. Hamre. Let me try redefining your question and then I
    will try to answer it, and maybe I got the right question or
    not. Is it possible for a Government proposal to have the same
    set of liabilities and obligations as a private sector
    proposal? No; in the sense that we can impose--you can impose a
    fixed price bidding requirement on the private sector and you
    cannot really impose that on the Government. By definition,
    Government proposals are almost cost-plus.
        So you have to really develop other means to try to get the
    fiscal discipline associated with the bid in the public sector.
    We are trying to do that where we can.
        Senator Hutchison. Well, I just hope that you will let us
    know what you think would help make this more efficient and get
    the savings, but keep the readiness that we all want to
    preserve; and second, that you will work to maintain at least
    what you have now and not have other restrictions placed on the
    ability to do the privatization if you are counting on it for
    part of the savings that would allow you to do your job
    efficiently.
        Dr. Hamre. Yes, ma'am. We are counting on it and we need
    it.

                                Missile defense

        Senator Hutchison. Let me just ask one last question, and
    that is on--in your budget you have money for missile defense.
    One of the concerns that I and many others have had is that we
    have not deployed to the fullest the technology that would give
    us the missile defense systems that we need, either in theater
    or intercontinental. I want to ask you if you think that the
    Department is going to be able to move toward having the
    missile defense systems that we must have within this budget
    constraint--I think $3.6 billion is what you have--and if we
    need to have changes in the ABM Treaty in order to continue to
    go forward for this missile defense.
        I happen to believe the biggest security threat the United
    States faces is ballistic missiles, either into our country or
    into a theater where our troops are. I want to make sure that
    we are going full force with technology, and if we need to
    address the ABM issue then we need to do that.
        So where are we with this $3.6 billion that you have in
    your budget?
        Dr. Hamre. Senator, of course the $3.6 billion here and the
    full funding throughout the 5-year plan we honestly believe
    brings forward the development of a national missile defense
    system, but not the procurement of that national missile
    defense system. We do not have procurement money in our 5-year
    plan for it, but we do have the development and the funds that
    are required if we do need to make the deployment decision to
    invest in it inside this 5-year plan.
        I think that is properly funded. As you know, not all the
    testing has gone all that successfully in some of the programs
    and so we really are pushing them about as far as we can right
    now.
        I think the real question you are asking is where is the
    procurement money, and that is again an issue that has divided
    the Congress and the executive branch for the last 3 or 4
    years. We have moved a lot closer under Dr. Perry and under
    Secretary Cohen, because we now are funding the same
    development program. We are all seeking that same thing. We
    just do not have the funds to buy it inside this 5-year plan.
        We do not think we need to make that decision right now.
    When we have to make that decision, we think we can and it will
    be under the same timetable, because we are developing it.
        Senator Hutchison. To the fullest extent?
        Dr. Hamre. We think so. We think it is honestly paced by
    development risk, not by funding constraint. Now, I will go
    back to the experts and find out, to make sure that I am right
    on that. But that was as I recall it when we were building the
    budget back in December.
        Now, as to your question about the ABM Treaty, it is my
    understanding there is nothing that we are doing inside this
    development program right now that requires us to change the
    ABM Treaty. Obviously, deployment is a different issue and I
    would have to come back to you with an answer on that.
        Senator Hutchison. Right.
        Thank you.
        Senator Stevens. Thank you very much.
        Senator Domenici.
        Senator Domenici. Thank you very much, Mr. Chairman.
        First of all, it is good to be with you. Many of us have
    known you for a long time. You worked with a very good Senator
    for a long time.
        Dr. Hamre. Thank you, sir.
        Senator Domenici. Our good friend Senator Nunn.
        Dr. Hamre. I got good training.
        Senator Domenici. You got good training. We are glad to
    have you here and congratulations on your Deputy Secretary of
    Defense designation.
        Dr. Hamre. Thank you, sir.
        Senator Domenici. I have two parochial questions and I will
    submit them separately.
        Dr. Hamre. Fine. I will be glad to--I will be responsive.

                       more flexible Contingency funding

        Senator Domenici. Let me ask this question. Since we have
    been involved in Bosnia and contemplating getting involved in
    Iraq, I have been concerned about the fact that the domestic
    budget of the United States and all of its agencies are not
    bound to 5-year budget numbers, but the Defense Department of
    the United States is. It seems to me that for contingencies if
    any Department ought to be given some flexibility, it ought to
    be the Defense Department. We are learning more about that need
    for flexibility with every contingency that comes along.
        It seems to me that either we provide more flexibility or
    we change our budgeting practices to provide literally for a
    rather significant contingency fund. The reason I raise this is
    because, I tell you the truth, as a matter of course the Chiefs
    come and see me one time in my office to talk about things that
    relate to my State, and I have been more impressed over the
    last 18 months with their genuine concern about the process of
    budgeting under their command.
        I am concerned that they have to constantly move things
    around in this budget because they are now in Bosnia or about
    to go to Iraq. I just want to lay before you that I do not
    believe we ought to put that onus on military men, leaders of
    this U.S. Defense Department.

                              Funding constraints

        I say that with even more assurance when I find that we do
    not bind any domestic Department to anything but 1 year, and
    somehow or another, even in so-called austere times, we find
    $60, $80, $120 billion more to spend on domestic programs and
    not a nickel for defense. It is stuck with this 5-year number.
        I am talking about the President's budget. I am not
    agreeing with his spending $65 billion in cigarette settlement
    for 12 new programs, but he found it. He found some money to
    spend. And yet we are up here asking for emergency money for
    the Defense Department of the United States to break their cap
    in a legal way.
        So I just want to lay before you that I believe the
    ultimate job of a good Comptroller is to try to give these
    Chiefs and the Joint Chief of Staff more assurance that they do
    not have to be so clairvoyant and so certain that 3 years from
    now they are still bound by something they said before the
    world changed. Frankly, I do not know how they can do it
    myself, with technology changing like it is and all the needs
    and demands. We are asking for multiyear budgets, but 5 years
    is a long time.
        I guess the other thing I would ask you is, do we stick the
    number before the Chiefs or do we ask them what they need? I
    think that is a very important question. We have numbers. Now,
    do we ask the Chiefs when they prepare their quadrennial or
    whatever, do we say, what do we need to keep the men and women
    satisfied in this All-Volunteer Army? They have got to work,
    they have got to be trained, we need R&D. Tell us what we need?
    Or do we say: That is the number, $268.3 billion; live within
    it. Which do we do?
        Dr. Hamre. Sir, it is largely the latter, but we do try to
    accommodate the changes that we need to make on the margin. It
    tends to be on the margin. We basically give people a spending
    path and say, you need to develop and build a program to this
    path, but then on the margin tell us what more you need and in
    what areas.
        So we try to do that. But in all honesty, it is within the
    constraints of the overall funding that we forecast is likely
    to be available. But we would have to do that. Otherwise we
    would get very distorted kind of plans if we did not, I think.
        I understand the sincerity of your position, however.
        Senator Domenici. I have not served in the capacity that I
    am around here not to know that any department of Government,
    if you ask them, what do you need? They will ask, what is
    available? And God knows where that ends up.
        But I do think when you put a 5-year shackle around
    defense, with the kind of changes we are talking about, it is a
    pretty risky business when it comes to preparedness and
    contingencies.

                       fiscal year 1999 Funding allowance

        Now, I was going to ask you how much you are going to ask
    for for the buildup in Iraq, but I am not going to. I will wait
    until that comes up.
        Dr. Hamre. It will be there next week.
        Senator Domenici. You did have a contingency fund of about
    $3 billion in the 1999 budget, did you not?
        Dr. Hamre. Sir, I think it is called an allowance. It was a
    new term I had never seen before. But yes, there was a
    reservation of about $3 billion, yes, sir, in 1999.
        Senator Domenici. Could that be kind of the fund that I
    have been just talking with you about?
        Dr. Hamre. Yes, sir; that is exactly what I think it is
    best to use it for.

                      Privatization and DOD personnel cuts

        Senator Domenici. Now, let me ask another generalized
    question about the questions that my friend from Texas asked. I
    understand that if the privatization and contracting out
    contemplated in your budget do not work in whole or in part,
    that the military will be left with a situation where they were
    expected to have less end strength in personnel but no way to
    pay for them.
        Dr. Hamre. Sir, the budget that we put for privatization is
    really only on the civilian side, not on the military side. It
    does indeed assume that there will be a 20-percent savings
    against that 150,000 civilian jobs that we are competing. So
    yes, if none of it occurs then we would be short. But we
    actually think it is going to occur, and I have seen the
    planning for it. I actually think we will do a little bit
    better than that.
        Senator Domenici. Now, there is no military end strength
    that is reduced by privatization or contracting out?
        Dr. Hamre. Sir, there might be some small examples, but the
    bulk of it is not. I mean, there are small cases, but most of
    it is on the civilian jobs.
        Senator Domenici. Could you give us the specifics?
        Dr. Hamre. I surely will, yes, sir.
        [The information follows:]

        Sir, of the 150,000 full time equivalent positions that the
    Department intends to compete in accordance with OMB Circular
    A-76, we expect only about 20 percent to be military. The exact
    numbers are very difficult to accurately predict before the
    actual cost comparison studies are identified and announced.
    However, this year we will be conducting a Department-wide
    inventory of all civilian and military positions that will
    provide greater insight into which positions are inherently
    governmental in nature, which positions are commercial
    activities that are exempt from competition, and which
    positions are commercial activities that are subject to
    competition. This effort should improve the study
    identification process substantially.

        Senator Domenici. So if one of the Chiefs says one of our
    most difficult problems is going to be the end strength
    contemplated by privatization?
        Dr. Hamre. I think there are end strength cuts that are
    independent of the privatization, and they may be confusing
    that, or I may not have understood your question. We have end
    strength cuts that are coming against military that are totally
    independent of the privatization goals on the civilian side.
        Senator Domenici. Are they built upon some contingency or
    are they just what we are going to agree upon as an end
    strength reduction?
        Dr. Hamre. Sir, they were built on fairly detailed modeling
    that was done during the quadrennial defense review, where we
    looked through each of the forces. We have very detailed plans
    for all of that.
        Senator Domenici. Would you give us for the record the end
    strength reduction, both civilian and military, in a summary?
        Dr. Hamre. Absolutely.
        Senator Domenici. And tell us how we are going to get
    there?
        Dr. Hamre. I surely will.
        Senator Domenici. What backs them up.
        Dr. Hamre. I surely will.
        [The information follows:]

        The QDR process began by developing an overarching defense
    strategy, and followed with assessments of the necessary force
    structure, readiness, and modernization that would be required
    to implement the strategy. The resulting program recommended by
    the QDR is based on: modest reductions and restructuring of our
    military force structure that will still meet present threats,
    adequate modernization funding necessary to meet future
    challenges, and a conscious decision to reduce infrastructure
    and support activities as much as possible. Initiatives
    identified during the QDR that will safely result in reduced
    infrastructure and personnel include reengineering
    infrastructure to achieve better business practices,
    consolidating many logistics activities, reducing layers of
    management oversight at headquarters and operational commands,
    and competing and privatizing infrastructure functions that are
    closely related to commercial enterprises. The Secretary has
    established the Defense Reform Initiative (DRI) and the Defense
    Management Council (DMC) to continue and monitor ongoing
    efforts to reduce infrastructure.
        The approaches employed by the Services to effect personnel
    savings varied in accordance to their needs, their individual
    management structures, and their force structure requirements.
    The Army plans to restructure parts of its force to reflect
    increased efficiencies in support activities and in
    anticipation of further organizational change, including the
    redesign and downsizing of its heavy divisions as it integrates
    the results of ongoing warfighting experiments. The Navy plans
    to reduce force structure and retire surface combatants and
    submarines as newer and more capable systems are added to the
    fleet. The Air Force is consolidating its fighter, bomber, and
    theater airlift squadrons, increasing the number of aircraft in
    each squadron while decreasing the number of squadrons. It is
    also reducing intermediate headquarters to streamline its
    command structure, and will aggressively pursue infrastructure
    efficiencies.
        The QDR reflected the following personnel reduction goals:

    ----------------------------------------------------------------------------------------------------------------
                                                                                               Marine
                                                                      Army         Navy        Corps      Air Force
    ----------------------------------------------------------------------------------------------------------------
    Active Military.............................................       15,000       18,000        1,800       26,900
    Reserve Military............................................       45,000        4,100        4,200          700
    Civilian Personnel..........................................       33,700        8,400          400       18,300
    ----------------------------------------------------------------------------------------------------------------

                     Inflation savings and outlay forecasts

        Senator Domenici. My last question has to do with the
    savings on inflation rates being lower than contemplated in the
    previous 5-year plan.
        Dr. Hamre. Inflation, yes, sir.
        Senator Domenici. Do I understand that in this budget you
    left whatever savings accrue from inflation reduction in the
    budget for the Defense Department?
        Dr. Hamre. Largely. We lost a little bit, but we largely
    were able to hold onto the inflation savings.
        Senator Domenici. I congratulate you.
        Dr. Hamre. Thank you, sir.
        Senator Domenici. I think it is high time that we not
    expect to swallow every bit of inflation savings that one
    contemplates. That too changes. You make them eat it all and
    then it changes back up again, and we are in another mess.
        My last question is: CBO and OMB, which you are bound by,
    disagree on the cost of your program, of your budget that we
    are talking about.
        Dr. Hamre. Yes, sir.
        Senator Domenici. Do you and CBO and OMB get together and
    try to analyze where those differences come from?
        Dr. Hamre. Sir, we try to. But this year we have not been
    given access to any of the details in CBO's outlay forecasts.
    They have not provided us anything this year.
        Senator Domenici. Well, is that different than last year?
        Dr. Hamre. Yes, sir, it is.
        Senator Domenici. Do you have any reason to suggest to us
    as to why it is different?
        Dr. Hamre. I do not know. As a matter of fact, I just
    learned that as I was getting ready for this hearing. I did not
    know that until today.
        Senator Domenici. I think it would not be bad, Mr.
    Chairman, if we asked them, if we asked CBO and OMB to confer
    on these differences. They are giving us a $4 billion thing
    that we have got to pay for because their number estimates are
    less.
        Dr. Hamre. We would like that.
        Senator Stevens. If they do not confer, we will get them
    both here at the same time, because we cannot make a choice
    between them.
        Senator Domenici. Good.
        Thank you, Mr. Chairman.
        Senator Stevens. Thank you.
        Senator Cochran.
        Senator Cochran. Mr. Chairman, thank you very much.
        I have a couple of questions that relate to research
    activities which I will submit for the record. If you will be
    kind enough to respond for our record, I would appreciate that.
        Dr. Hamre. Absolutely.

                        procurement for Missile defense

        Senator Cochran. Senator Hutchison asked you some questions
    about the ballistic missile defense situation and where we were
    with the administration's plan. I am concerned that you pointed
    out, and you had to, that there is no money in this plan really
    for procurement. The fact of the matter is that if we are going
    to develop a system that can be deployed under the so-called
    three-plus-three national missile defense program we are going
    to have to obtain some materials, long lead materials, at some
    point. It does not appear to be possible to meet the schedule
    of three-plus-three without some long lead equipment being
    purchased prior to a scheduled deployment decision in the year
    2000.
        What the administration I guess is assuming is that they
    will not ever get to there. It is kind of like the economist
    who says that the out-years--do not forget, the out-years never
    get here. So the administration is hoping, I guess, that they
    will not have to get to the point where they have to decide
    that they have to deploy.
        Is that why we do not have to put any procurement money in
    the plan?
        Dr. Hamre. Sir, I think the administration's Three-Plus-
    Three Program, it is a rolling three-plus-three, and it is
    triggered by the concrete intelligence evidence that suggests
    we really have to do something finally. And we just do not see
    that right now. When that happens, we are always trying to be
    in a position so that we can reach out and get something in 3
    years. So that is the basis of it. That is why there is no
    precise date when it has to be put in the budget.
        Senator Cochran. Well, we have heard testimony from people
    like Lieutenant General Lyles, who calls the program extremely
    high risk. And I assume that means it is unlikely that we will
    reach the schedule or meet the schedule. I was wondering what
    your interpretation of it is.
        One of the CEO's of the competitor companies for the
    national missile defense lead system integrator contract says
    that you cannot be ready to deploy for the year 2003 unless you
    have some long lead equipment purchased prior to the scheduled
    deployment decision in the year 2000.
        Do you disagree with those assessments?
        Dr. Hamre. What I have to tell you is I do not think I know
    enough to be able to answer one way or the other right here. As
    to General Lyles, I have talked with him several times and I
    think I always understood his assessment of the high risk was
    associated with bringing the technology on in this time period.
    But I will go back and talk with him about that, too.
        Senator Cochran. Well, these are serious concerns and we
    hope that the appropriations that we are able to provide for
    this program permit us to be able to make a decision to defend
    the security of the country against ballistic missile attack if
    it does develop, as some think, that we are going to be
    confronted with that threat sooner rather than later.

                                  Shipbuilding

        Let me ask you this about shipbuilding. The Secretary of
    the Navy testified the other day before the Senate Armed
    Services Committee that the future years defense plan provides
    an adequate amount of support to meet the projected need of 300
    ships for our Navy, but beyond that future years defense plan
    this rate of production that we have now will not permit us to
    maintain the required ship inventory.
        What are we going to do about that?
        Dr. Hamre. We need to buy more ships. Right now we are able
    to take and sustain a 300-ship Navy because, frankly, we are
    still able to live off of the larger inventory we had from the
    past. But obviously, if we take the nominal service life of a
    ship is 30 years and you need 300 ships, you have got to buy
    more than 6 a year.
        Senator Cochran. Right. You have got to buy about 10 a
    year.
        Dr. Hamre. Yes; I mean, we just have to buy more ships.
        Senator Cochran. Well, I am hopeful that the committee will
    support a schedule of that size. I think it is certainly
    justified, and that is what the Secretary of the Navy said in
    his testimony, that the operational commitments undertaken by
    the Navy and Marine Corps today require a certain force level
    to satisfy worldwide presence missions. As we see the U.S.S.
    John Stennis steaming off to relieve the George Washington,
    Senator Lott and I gave the captain a U.S. Senate flag to carry
    on that mission. He said he would fly it while they were
    underway on the first deployment of the U.S.S. John Stennis. We
    are very proud of that.
        We appreciate your assistance to the committee and your
    presence. We look forward to continuing to work with you, Dr.
    Hamre.
        Dr. Hamre. Thank you, sir. I am glad to be invited. Thank
    you.
        Senator Domenici. Are you finished, Mr. Chairman?
        Senator Stevens. No; Senator Inouye had some questions.
        Senator Inouye.
        Senator Inouye. Thank you, Mr. Chairman.

                            selective Privatization

        I would just like to make an observation. I realize that
    privatization has become a very popular concept because of
    possible savings that may come about. We speak about fiscal
    discipline. I am old enough to remember an event that happened
    in 1941, and at that time when the bombs fell private workers
    who were doing construction work somehow did not report, but
    all of the Federal civilian civil service workers, they all
    reported to work, and many of them were casualties.
        That is my concern. When they were doing privatization for
    men and women in uniform, you lost your operational discipline.
    Did you take that into consideration when you adopted
    privatization?
        Dr. Hamre. Sir, the 150,000 jobs that we are going to
    compete are those where we have done a fairly detailed analysis
    and believe these are really commercial-like activities. I
    personally believe that we can count on contractors to be with
    us if we have to. We had over 800 contractor tech reps in
    Bahrain during Desert Storm and they were under the same range,
    Scud range, as our active duty people.
        We have to be sensible about it, of course, and there are
    things that you do have to have. I am a firm believer there are
    things you have to have Government employees do. And there are
    things that, as your fiduciary responsibilities as a
    Government, I think are a responsibility of Government. I would
    not contract out certain activities.
        So we studied that very carefully. But there still is, I
    think, a fair amount of room for us to look at commercial-like
    programs, people for example who do payroll here in the United
    States, things of that nature. And those are the things that I
    think it is fair for us to look at.
        Government may still win that competition. So we will see
    what the result is.
        Senator Inouye. Thank you very much.
        Thank you, Mr. Chairman.
        Senator Stevens. I have some questions, but do you have
    questions?

                status of spending resulting from Veto override

        Senator Domenici. I just have one with reference to the
    veto override. You understand we have done that.
        Dr. Hamre. Yes, sir.
        Senator Domenici. It is finished.
        Dr. Hamre. I surely do. That is why I did not think I would
    have to answer anything.
        Senator Domenici. You understand that you are supposed to
    pay for those projects and programs now, right?
        Dr. Hamre. Sir, the money is out the door.
        Senator Domenici. Now, we called up to find out where it
    all stood and we were told it is going to be a long, long time.
    Could we ask you how long it is going to take before some of
    these things we just put back in the appropriated cycle, how
    long it is going to take?
        Dr. Hamre. Sir, yes, I will call you back before the day is
    out. What I do not know is the technical process of the
    allotment process with OMB under a veto environment. But it is
    not going to take more than a day for us to get it through the
    Comptroller's office, I know that.
        Senator Domenici. So the point is there will be no holdups
    because it is an override? You are full speed ahead?
        Dr. Hamre. Full speed ahead.
        Senator Stevens. Well, Senator, with due respect to you and
    to Dr. Hamre, there still is the rescission process, and I was
    told it might be considered. So let us not spend our money
    before we get it.
        Dr. Hamre. OK, I will go back to make sure.
        Senator Stevens. I hope it is not. I hope we do not have to
    run that route on this one. This was a sheer mistake and we
    have corrected it, and Congress has spoken twice now, three
    times on these.
        Dr. Hamre. Eighty votes does not look like a rescission
    margin to me.
        Senator Stevens. I have to tell you, it only takes two
    people in the Senate to say no to rescission, and that is me
    and Senator Byrd, and they are not going to come out of this
    committee on this bill. We have done enough on these now. We
    just do not have time to go back and live that thing again now,
    that is all. I hope that you will carry that message for us,
    doctor.
        Dr. Hamre. I shall.
        Senator Stevens. We have got so much going forward. If we
    have to do those projects again, it will just be wrong.

          Federally funded research and development centers [FFRDC's]

        Let me ask you a couple questions. It is no secret what we
    have done about FFRDC's, and now I understand that the
    Department has decided that FFRDC's contract advisory and
    assistance services [CAAS] will be considered providers, and
    they are to be cut by 15 percent by the Department. Is that
    right?
        Dr. Hamre. Sir, you are asking me a question I do not know
    the answer to. I will have to find out. They will be, I am
    sorry, what providers?
        Senator Stevens. Do you know whether there is any moneys
    that are going to be reprogrammed to restore the fiscal year
    1998 level of FFRDC's?
        Dr. Hamre. Forgive me, I will have to get back to you. I am
    not aware of that, but I will find out.
        [The information follows:]

        Senator, as you know, Section 8035 of the fiscal year 1998
    Appropriation Act established limits on both the number of
    staff years of technical effort at Defense FFRDC's (6,206) and
    staff years for defense studies and analysis FFRDC's (1,105).
    Section 8035 also reduced the amount appropriated by $71.8
    million. In addition, the accounts funding FFRDC activities
    were impacted by the $300 million reduction for Contract
    Advisory and Assistance Services (CAAS) in Section 8041. All
    RDT&E accounts, including those funding FFRDC activities, were
    also affected by the pro rata reductions directed in Sections
    8043 and 8048. It is my understanding that the Military
    Departments used below threshold reprogramming authority (less
    than $4 million) to fund some FFRDC efforts. It is not unusual
    for FFRDC taskings to be identified during budget execution
    which were not foreseen during budget development. However, I
    am not aware of any case where a FFRDC's fiscal year 1998
    funding level was restored. The Department is executing the
    fiscal year 1998 program within all the staff year constraints
    established in Section 8035.

        Senator Stevens. I have a second question then. Will you
    give us an update on the current reprogramming regulations that
    would apply to the concept of FFRDC's? I understand that there
    is a procedure to make multiple reprogrammings to accumulate
    millions of dollars to restore the FFRDC's reductions. I would
    urge you to consult with us before you do that, because not
    only this committee, but the authorization committees, have
    reduced FFRDC's and particularly for this year.
        Can you tell us what is projected for expenditures for each
    defense FFRDC for this year? Would you give us that for the
    record?
        Dr. Hamre. I surely will. I do not have it today.
        [The information follows:]

        Fiscal year 1998 projected expenditures for all DOD-
    sponsored Federally Funded Research and Development Centers
    (FFRDC's) Staff Years of Technical Effort (STE) is estimated at
    $1,188,400,000. The following table provides projected funding
    for each FFRDC.

            FFRDC                                                   Millions

    Studies and Analyses (S&A):
        RAND NDRI.................................................     $23.0
        RAND Arroyo Center........................................      20.5
        RAND Project Air Force....................................      23.3
        CNA.......................................................      47.2
        LMI.......................................................      28.0
        IDA-S&A...................................................      61.4
        IDA-OT&E..................................................      14.6
                        --------------------------------------------------------------
                        ____________________________________________________

          S&A subtotal............................................     218.0
                        ==============================================================
                        ____________________________________________________
    Systems Engineering:
        MITRE.....................................................     346.2
        Aerospace.................................................     304.7
                        --------------------------------------------------------------
                        ____________________________________________________

          Systems Eng subtotal....................................     650.9
                        ==============================================================
                        ____________________________________________________
    Laboratory:
        MIT-Lincoln Lab...........................................     260.9
        IDA-C&C (NSA).............................................      32.8
        SEI.......................................................      25.8
                        --------------------------------------------------------------
                        ____________________________________________________

          Laboratory subtotal.....................................     319.5
                        --------------------------------------------------------------
                        ____________________________________________________

          Total for DOD FFRDC's..................................\1\ 1,188.4

    \1\ Does not include the potential for up to an additional $30,000,000
    in new work resulting from funds added by the Congress for new programs
    and increases in ongoing programs over that requested in the President's
    budget. Specifics regarding new work was reported to the four Defense
    Committees by the USD(A&T) on March 7, 1998.
    ---------------------------------------------------------------------------

              Theater high altitude area defense [THAAD] missiles

        Senator Stevens. We are talking about fiscal year 1998 now.
        Dr. Hamre. Yes, sir, I understand.
        Senator Stevens. Last, I agree with the Senator from New
    Mexico and others about the importance of the missile defense
    programs, but we are informed that the THAAD has missed four
    intercept attempts and the fifth one has now been delayed, not
    once, not twice, but three times delayed. In this request that
    is before us is $180 million to purchase 40 of those missiles,
    and it is based upon a single intercept being successfully
    completed.
        With that track record so far--and incidentally, we have a
    similar situation with the Patriot. Their design has been
    changed substantially since it did have an intercept, I guess
    two intercepts, and now there is going to be no further attempt
    to test it before we purchase 48 missiles at $97 million.
        We want the missile defense programs to go ahead, but is
    the Department really going to spend that amount of money on
    procurement before there is real assurance that the design and
    production model is capable and the right ones in each instance
    to deploy?
        Dr. Hamre. Sir, I do not believe that we have changed our
    policy goal of seeing a series of successful tests on THAAD
    before we obligate the money. I think we have been pretty
    aggressive in budgeting for procurement, but I think there is
    high risk in this area.
        Senator Stevens. I do not want you to misunderstand me.
    There is no committee of the Congress that is more interested
    in these missiles.
        Dr. Hamre. I understand very well.
        Senator Stevens. And as a matter of fact, I do not think
    Patriot would have become an antimissile missile if it had not
    been for this particular subcommittee. But we want the upgrades
    to be upgrades that have been successfully demonstrated before
    we put our money on the line.
        Dr. Hamre. Yes, sir.
        Senator Stevens. I hope that the Department will agree with
    that.
        Dr. Hamre. Absolutely. And I think we do have that as part
    of the--that we are not going to obligate it until, I forget
    what the series of successful tests. But I will find that out
    and report it to you.
        [The information follows:]

                   Theater High Altitude Area Defense [THAAD]

        In accordance with the Milestone I Acquisition Decision
    Memorandum (ADM), two criteria must be satisfied prior to
    exercising the contract option for 40 User Operational
    Evaluation System (UOES) missiles: Hardware in the loop
    demonstration of guidance and control systems, and one body-to-
    body intercept using the THAAD radar.
        Of these two criteria, a successful body-to-body intercept
    has not yet been achieved. It is still the Department of
    Defense (DOD) plan to exercise the missile option following a
    successful intercept. However, because each intercept test
    failure to date has had a different root cause and because of
    differences between the current test configuration and the UOES
    missile, there is concern within DOD regarding the risk of
    buying 40 UOES missiles on the basis of only one intercept. As
    a result of these concerns, DOD, BMDO, and the Army have agreed
    to revise the plan for exercising the option. Formal contract
    initiation is planned following the first successful intercept,
    but a phased implementation strategy that includes two interim
    progress reviews (IPR's) and a subassembly review will be
    pursued. The first IPR will follow the completion of flight
    test number 8 (FT-08), ground tests on the block upgrade (BUG)
    configuration, and a 60-day planning session. This IPR would
    give authority for partial contract execution to buy long lead
    items. A second IPR will be conducted prior to the full
    contract execution of hardware purchases. Finally, a Government
    subassembly review will be conducted following FT-10, if
    necessary, to review plans to complete assembly of the
    missiles. This phased approach limits government financial and
    technical risk by allowing additional ground testing and flight
    testing prior to purchase of all hardware components.

        Senator Stevens. I am told that the intercepts of the prior
    design for pack 3 are being used for now the purchase of a
    subsequent design that has not been tested.
        Dr. Hamre. Forgive me for not being current on that, sir. I
    will find that out.
        Senator Stevens. If you can let us know, we would
    appreciate it.
        Dr. Hamre. I will.
        Senator Stevens. But do not take it as any indication of an
    intent to delay that.

                         Additional committee questions

        We do thank you and look forward to working with you. I
    think it goes without saying that we are grateful to you for
    what you do to help us do our task.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
                   Question Submitted by Senator Ted Stevens
                                ffrdc reductions
        Question. Secretary Hamre, can you provide the Committee with an
    update on the current reprogramming regulations highlighting the
    procedures which would allow the Defense Department to make multiple
    reprogramming to accumulate tens of millions of dollars to restore
    FFRDC reductions?
        Answer. The Department has no intention of reprogramming tens of
    millions of dollars into FFRDC's. There are no recent changes to the
    reprogramming regulations. Current reprogramming regulations limit the
    amount of funding that can be added to any line item and the Department
    will continue to comply with the existent regulations. The Department
    has implemented the fiscal year 1998 Congressional reductions pursuant
    to sections 8035 (FFRDC reduction) and 8041 (Contract Advisory and
    Assistance Services). The impact of these reductions represents a
    ``double cut'' to the FFRDC community. Although the fiscal year 1998
    reduction lowered funded technical staff years below the 6,206 level,
    the Department will attempt to execute the fiscal year 1998 FFRDC
    program at the fiscal year 1997 funded level. The Department will
    execute the fiscal year 1998 program within all the constraints
    outlined in Section 8035.
                                     ______

                  Questions Submitted by Senator Thad Cochran
                                    demining
        Question. Mr. Hamre, recently the Defense Reform Initiative moved
    program management of the Humanitarian Demining Program from the Office
    of the Assistant Secretary of Defense for Special Operations/Low
    Intensity Conflict to the Defense Security Assistance Agency. Some
    reports on this change leave the impression that the program will no
    longer support research and development on mine detection technologies.
        (a) Will this program continue to explore new technologies for mine
    detection?
        (b) I understand that acoustic detection was among the research
    areas being explored under the program's prior management. Will that
    research continue?
        Answer. (a) The Defense Reform Initiative had no impact on the
    OASD(SO/LIC)-directed demining technology research and development
    effort. In fact, the program has recently refocused its efforts on new
    mine detection technologies to more effectively support the needs and
    requirements of indigenous deminers. More specifically, aggressive
    projects are planned to focus on individual deminer protection and
    enhanced handheld mine detection equipment.
        (b) The SAC previously directed that acoustic techniques for mine
    detection be included in the candidates evaluated for humanitarian
    demining applicability. Acoustic detection remains a promising research
    area that will continue to be pursued.
                              counterdrug training
        Question. Mr. Hamre, the Regional Counterdrug Training Academy was
    established in Meridian, Mississippi in 1992 as part of the
    congressionally mandated Gulf States Counterdrug Initiative.
        Are you aware that since its inception, the Academy has trained and
    graduated over 9,000 police officers and personnel from Alabama,
    Louisiana, Mississippi, Georgia and the Armed Forces in counterdrug
    operations?
        The Academy's success has led to a decision that will soon add the
    anti-terrorism training mission to its curriculum. Will the Department
    support providing the additional funding that may be needed for this
    expanded mission?
        What are your plans for this program over the next few years?
        Answer. Academy has trained and graduated since its inception in
    1992, but it has been quite active. In just fiscal year 1997 it ran 63
    iterations of 31 counterdrug-related classes, training over 2000
    people.
        The Department has no authority to provide any funding for this
    expanded anti-terrorism training mission. While the Academy's decision
    to add an anti-terrorism training mission to its curriculum
    demonstrates initiative, it was not requested by or coordinated with
    DOD. As you state in your introduction to these questions, the Regional
    Counterdrug Training Academy was established as part of the
    congressionally mandated Gulf States Counterdrug Initiative. It is
    authorized annually as one of DOD's counterdrug activities. Finally,
    funds are appropriated for it annually as part of DOD's counterdrug
    appropriation. DOD's authority to provide funding for the Regional
    Counterdrug Training Academy is limited to counterdrug training.
        DOD budgeted $2.2 million for the Regional Counterdrug Training
    Academy for fiscal year 1999 and fiscal year 2000. Its budget increases
    slightly to $2.3 million for fiscal year 2001 and fiscal year 2002.
    Finally it increases once more in fiscal year 2003 to $2.4 million.
                                     ______

                Questions Submitted by Senator Pete V. Domenici
                             location of new agency
        Question. Is one of the goals of the new Defense Threat Reduction
    and Treaty Compliance Agency to find a single location for the entire
    agency?
        Answer. It is our intention to make every effort to find a single
    location for the new agency. Or alternatively, to establish the
    organization in facilities that are in close proximity to each other.
    Our goal is to create synergy among the technical expertise in the
    field of weapons of mass destruction as well as to anticipate creative
    functions for the future. This can be accomplished by locating the
    personnel in a convenient geographical area that is also cost-effective
    and meets a high standard of excellence for the personnel assigned to
    the agency.
                        function of dswa's field command
        Question. If so, what are your plans regarding the important WMD-
    related missions performed by DSWA's Field Command at Kirkland Air
    Force Base?
        Answer. Current plans call for the integration of Field Command
    DSWA and the mission it performs within the new agency. However, groups
    have been appointed to review some aspects of the new agency's
    activities including several performed by Field Command.
                           defense reform initiative
        Question. Is the DOD going to use the Defense Reform Initiative as
    a way to change in any way the separate but complimentary nuclear
    mission of the DOD and DOE?
        Answer. No, we do not intend to change the nuclear missions of the
    two Departments in any fundamental way. The reorganizations envisioned
    by the Defense Reform Initiative will enable DOD to complete its
    nuclear mission more effectively because agencies with complimentary
    missions are being merged. The fundamental mission of DOD with respect
    to nuclear missions, however, will not change.
        Question. If so, why?
        Answer. Not applicable. See response to previous question.
                      redundancy of nuclear responsibility
        Question. Does the DOD perceive any redundancy between the two
    departments in the nuclear area.
        Answer. The Defense Department does not believe that there are any
    redundancies between the DOD and DOE regarding nuclear
    responsibilities. There is close coordination between the two
    Departments, particularly on nuclear stockpile support and operation of
    simulators for the leveraging of capabilities and avoidance of
    redundancies. Any transfer of work between the departments would
    necessitate a comparable increase to the workforce of the receiving
    department or result in the elimination of other work in order to
    accommodate the new mission.
                    management of nuclear weapons stockpile
        Question. The management of DOD's nuclear weapons stockpile
    involves accountability for weapons and components, logistical support,
    and inspections. This mission is the responsibility of DSWA. I have
    heard that the Department is considering splitting and transferring
    these efforts to other organizations rather than transferring as an
    entity to the new WMD agency. Why would the Department want to lose the
    synergy that currently exists among these efforts and the additional
    WMD missions to be performed by the new agency?
        Answer. Current plans call for the integration of Field Command
    DSWA and the missions it performs within the new agency. We are not at
    this time adding or deleting from these missions for the new agency.
    However, groups have been appointed to review some aspects of the new
    agency's activities.
                           nuclear surety inspections
        Question. In the case of inspections, why would the Department want
    to use the nuclear Commander in Chief (CINC)--Strategic Command--to
    inspect other CINC's on nuclear surety? Wouldn't an independent
    inspection process be more prudent?
        Answer. Nuclear surety inspections are currently performed by the
    Defense Special Weapons Agency (DSWA) and present plans call for the
    transfer of this function to the new agency. Whether the inspections
    could be more effectively performed by another DOD organization,
    including a CINC, is the subject of ongoing review chaired by the Joint
    Staff.
                                     ______

                   Questions Submitted by Senator Judd Gregg
            national guard role in consequence management operations
        Question. Dr. Hamre, you indicated that the fiscal year 1999 budget
    request provides approximately $49 million for National Guard units to
    bring in NBC equipment to augment early responders in a crisis. Please
    provide additional explanatory information on the subject, to include,
    but not limited to: detailed funding breakout for fiscal year 1999 and
    the outyears.
        Answer. $49.2 million for fiscal year 1999 implementation has been
    requested for fiscal year 1999 in the President's Budget with the
    following recommendations: $19.9 million to stand up, train, and equip
    National Guard Rapid Assessment and Initial Detection elements; $15.9
    million for patient decontamination and WMD reconnaissance element
    training and equipment in the Army and Air National Guard, and the Army
    and Air Force Reserve; $6.9 million to establish and staff a
    Consequence Management Program Integration Office; $3.3 million to
    train and prepare medical personnel to provide medical care to nuclear,
    chemical, and biological casualties; $1.8 million for additional
    Emergency Preparedness Liaison Officer training and equipment; and $1.4
    million to upgrade simulation systems and conduct civil-military
    response exercises.
        All states and territories will benefit from this substantial DOD
    effort. The benefits from the expenditure of these funds, for the
    purposes identified above, will develop through fiscal year 1999 and
    into the future. Outyear funding requirements are currently under
    development.
        Question. Types of units and the tasks and missions that the units
    will perform.
        Answer. During the development of the plan approved by the Deputy
    Secretary of Defense, Services were asked to identify units that might
    perform the response tasks identified in the interagency WMD response
    plan and to indicate if those units were adequately organized, trained,
    and equipped to perform these specific tasks. This survey dramatically
    displayed existing gaps in procedures, training, and equipment
    necessary for appropriate response.
        The Response Task Force Commanders, Defense Coordinating Officers,
    and Emergency Preparedness Liaison Officers from all services are
    identified and trained to work in the interagency environment. The task
    force commanders, however, have only a limited number of specifically
    focused response assets to call on--and their capacity for large events
    may not be sufficient. This program will dramatically increase those
    elements that are prepared to respond quickly. The consequence
    management program integration office, being established now, will
    develop the organization of each element as well as the training and
    equipment necessary for that element. These elements will range in size
    from 5 or 6 people to 50 or 60. During the first year of the program,
    we will establish three types of elements: Assessment, Decontamination,
    and Reconnaissance, and begin training some of the medical personnel.
        The rapid assessment elements will form the tip of the federal
    military spear for response to WMD attacks. They are designed to
    rapidly deploy to an incident site to assist local, state, and other
    federal agencies in assessing the situation and initiating requests for
    additional state or federal response assets needed. Twenty-two full-
    time National Guard soldiers and airmen, commanded by a Lieutenant
    Colonel, will undergo intense technical training. Specific courses for
    each position have been identified. These elements will also be
    equipped with state of the art detection and analysis equipment, as
    well as computer models for various types of attacks. As a National
    Guard element, they may be employed by the Governor or be federalized
    and deployed to respond with other federal assets. The location of the
    RAID elements to be fielded in fiscal year 1999 in each Federal
    Emergency Management Agency Region will be determined by a modeling
    process that analyzes specific stationing criteria. Some influencing
    factors are demographics of a quick response area, geographic
    orientation, National Guard airlift response availability, existing
    response assets, and interstate compacts.
        These elements are created out of existing force structure. We are
    able to leverage the National Guard and Reserve Component capabilities
    by focusing existing units on the consequence management mission tasks,
    providing specific training, and delivering supplemental equipment to
    enhance their current capabilities. This capitalizes on the current
    structure and leverages their current training. Using National Guard
    and reserve elements already stationed throughout the United States
    also improves the response time to incident sites. The National Guard
    elements may be employed as state assets or as federal assets under the
    Response Task Force.
        We believe this program will develop capabilities required by our
    nation to meet the overwhelming challenges from the use of Weapons of
    Mass Destruction. These are the same capabilities we require in the DOD
    to respond to the use of WMD against our forces anywhere in the world.
        Question. Time lines for activation of the units.
        Answer. Ten rapid assessment elements will be fielded in fiscal
    year 1999 (the plan is to field one in the 1st Quarter, and 3 in each
    subsequent quarter).
        The force structure for the Reconnaissance and Decontamination
    Elements is already in existence. Army Reserve and National Guard
    Chemical Units and Air Force Reserve/Air National Guard Medical Patient
    Decontamination teams will be receiving additional training and
    equipment in fiscal year 1999 and fiscal year 2000 to perform this
    mission.
        Question. Training that the units will receive.
        Answer. While many military units possess basic skills and
    capabilities that can be applied to WMD response requirements, few have
    been specifically focused on the precise tasks or equipped with the
    appropriate assets to immediately respond to such an event.
        For many of the WMD response tasks, focusing units on the missions
    they may be asked to perform and developing their awareness of the
    Incident Command System (ICS) is all that may be necessary. For others,
    specific tasks will require training. In a WMD scenario, selected
    members will be tasked to deploy to the Hot Zone and operate for
    extended periods of time, quite different from our wartime practices.
    Even more demanding, the tasks requiring total decontamination must be
    anticipated. These are very different practices when compared to our
    military doctrine today. Here again, the value of training to the same
    standards, using common terminology and exercising with first
    responders, we have the opportunity to prepare for this most demanding
    mission.
        Question. Explanation of how the National Guard units will be
    integrated with Active component units.
        Answer. This is a major step forward for the Guard and Reserve into
    the Total Force concept. In Secretary Cohen's September 4, 1997 Memo on
    the integration of the active and reserve components, we received our
    marching orders. He called on the military services to provide the
    National Command Authorities with a total force that provides the
    flexibility and interoperability necessary for the full range of
    military operations. He went on to challenge us to identify and tear
    down any remaining barriers to effective integration. The use of the
    Guard and Reserve during an actual WMD event will clearly demonstrate
    just how effective we have become in implementing the Total Force
    concept.
        With a major emphasis being place on special training to manage
    chemical and biological disasters, our Guard and Reserve will be better
    able to respond to other disasters that may unexpectedly involve
    hazardous materials. And if called to active duty, these Guard and
    Reserve forces will step right in with their active duty counterparts
    without significant additional training in these areas.
        Question. Explanation of how the National Guard units will
    coordinate with and receive information from local, state, and federal
    authorities.
        Answer. I see that this new role will serve to improve the
    relationship that Guard and Reserve forces have with their local
    counterparts. By bringing them together more often during local, state,
    and federal exercises, they will have the opportunity to practice their
    various roles. So, in the event of an actual disaster, all will know
    exactly what to do and how to work together.
        As a nation we will also benefit as we will continue to have one of
    the most capable military forces in the world.
        And every citizen in our nation also benefits. With a larger force
    of well-trained and well-equipped responders, we will have more experts
    in more communities throughout the country. Having the right people
    with the right training and the right equipment responding at the right
    time to the right threat means more lives saved in any disaster.
                                     ______

                Questions Submitted by Senator Daniel K. Inouye
             bosnia--costs, strategy, and number of people involved
        Question. Dr. Hamre, I understand the Administration's plans for a
    follow-on force in Bosnia are now being formulated. Can you tell the
    Committee what the size of the force will be and your estimates of the
    costs for the balance of 1998 and for 1999?
        Answer. NATO has selected a mission option for the follow-on force
    for SFOR. The U.S. has announced that its contribution to that follow-
    on force will represent a reduction in the current U.S. contingent from
    8,500 to 6,900. It is too soon to say what the savings will be;
    however, the costs associated with logistics tail will remain
    relatively fixed. As you know, the President has requested $486.9
    million in supplemental appropriations to support U.S. operations in
    Bosnia for fiscal year 1998, post June 30, 1998, as well as $1.858.6
    billion for fiscal year 1999.
        Question. When will the President certify these plans to the
    Congress?
        Answer. Pursuant to the National Defense Authorization and
    Appropriations Acts for Fiscal Year 1998, the President submitted a
    certification and related report to the Congress on the need for
    extending the U.S. deployment in Bosnia and on other matters as part of
    the request for fiscal year 1998 supplemental appropriations, which was
    dated March 3, 1998.
        Question. Is there an agreed upon exist strategy for pulling U.S.
    forces out of Bosnia?
        Answer. The goal of U.S. policy in Bosnia is to create a
    sustainable peace where a sizable NATO presence is no longer necessary
    and diplomatic, institutional, and economic levers are sufficient to
    sustain peace in the region. Ten benchmarks have been established which
    would likely create the conditions needed for a NATO ground troop
    withdrawal:
        1. Local police forces need to be restructured, re-integrated, and
    re-equipped such that they can.
        2. A phased and orderly process for returns of refugees and
    displaced persons should be in effectively deal with civil disorder in
    accordance with western standards.
        3. Less political party control of the media, more accessibility
    for all political parties, and a more formidable ``independent'' media.
        4. The military balance will require confidence and security
    building measures, arms control, and greater inter-entity military
    cooperation.
        5. Functioning Joint-Institutions that decrease official corruption
    through the creation of legitimate revenue/disbursement mechanisms.
        6. Democratization. The September 1998 elections must be conducted
    in a free and fair manner. The need for OSCE supervision/arbitration
    should reduce. Local, entity, and national governments should function
    transparently.
        7. Economic reconstruction. The interim currency should be in
    circulation, public corporations formed, transparent budgets in place,
    and an IMF program in place.
        8. A multi-Party solution to the administration of Brcko should be
    in place.
        9. A improve party cooperation on the war crimes issue.
        10. International organizations should be able to function without
    a large NATO presence.
        Question. What is DOD's policy for the troops currently assigned to
    Bosnia--will they be replaced or asked to stay on for the duration?
        Answer. Some troops will be replaced. Generally, DOD is using Army-
    wide sourcing and continued participation by the Reserve Components to
    lessen the impact on EUCOM of OPTEMPO and PERSTEMP requirements. For
    some combat/combat-service support units such as Military Police,
    logistics, maintenance, etc., duty in Bosnia is enhancing their skills
    and readiness.
                            recruiting and retention
        Question. Recently, the Air Force Chief of Staff brought his
    concerns on pilot retention to my attention. I am told the other
    services are also concerned with their ability to meet their recruiting
    and retention goals. What does your 1999 budget request do to ensure
    that the services can meet their personnel requirements?
        Answer. Last year the Department requested and Congress approved
    legislation to increase the maximum amounts for Aviator Career
    Incentive Pay (ACIP) and the Aviator Continuation Bonus (ACP). The
    Services budgeted funds to cover the increases. In general, across the
    Services both retention and bonus take rates are declining, pilot
    separations are increasing, and airline hiring--which may have peaked
    at 3,854 new hires in 1997--is projected to stay above 3,000 over the
    next several years. Applying current retention models with the expanded
    authorities provided in the Fiscal Year 1998 National Defense
    Authorization Act, the Services project they will retain adequate
    numbers of aviators to meet mission requirements through fiscal year
    1999. The Services are also working hard to reduce the strain of high
    operational tempo on the quality of life of our pilots and their
    families. While pilot retention is of concern, the Services are not now
    indicating a short-term readiness impact. We are concerned, however,
    about longer-term issues and are studying options to address this
    problem on a priority basis. We expect to provide a report to Congress
    on the progress of this effort by March 31.
        Question. Are you confident the request provides adequate resources
    for recruiting and advertising?
        Answer. The fiscal year 1999 budget request for recruiting and
    advertising provides what we felt to be an adequate level of investment
    for the planned accession missions. That said, a strong economy,
    coupled with record-low unemployment, continues to force the Department
    to apply additional resources to sustain success in military recruiting
    programs. After facing resource shortfalls in recruiting and
    advertising, the Army reprogrammed funds in fiscal years 1997-98 for
    advertising, enlistment bonuses, and education benefits. Today, the
    Army has adequately budgeted recruiting for fiscal year 1999. In fiscal
    year 1998, the Navy cut recruiters and other resources; as a result,
    the Navy probably will miss its accession objectives. However, the Navy
    has taken steps to correct that problem for fiscal year 1999, resulting
    in an investment-per-recruit ratio similar to the level employed during
    the successful recruiting years of 1996-97. The Navy's action will fund
    an expansion in the number of recruiters and will boost investments in
    enlistment incentives and advertising. The Air Force and Marine Corps
    recruiting and advertising budgets appear to be satisfactory for fiscal
    year 1999.
        Question. Can you assure this Committee that sufficient funding has
    been set aside for bonuses and other incentives to retain key military
    personnel?
        Answer. Our assessment is that the Services have allocated
    sufficient funding to retain individuals who have highly marketable
    civilian skills. This has always been a challenge for us, even during
    the drawdown. In order to be competitive, we use the special and
    incentive pays authorized by Congress such as selective reenlistment
    bonus; aviation continuation pay; medical specialty pays for doctors,
    nurses and dentists; and nuclear officer bonuses. We appreciate the
    strong and continuing support of Congress for these special pays. The
    fiscal year 1999 budget request is adequate to meet current needs, but
    we see indications of potential problems in the next few years and may
    be putting forth requests for some increases in existing pays and
    possible additions of new pay authorities in the near future.
                  medical care for retirees and fehbp coverage
        Question. Dr. Hamre there is a great outcry among our military
    retirees that their health needs have been forgotten by the Defense
    Department. One proposal which may come up this year to redress this is
    to place our retirees under the Federal Employees Health Benefits
    Program. Can you present the arguments in favor of and in opposition to
    this plan and why DOD might not be supportive of the idea?
        Answer. Undoubtedly, this nation owes a great debt of gratitude to
    the men and women who served, especially those who risked their lives
    and fought the nation's wars. The Department feels a sincere and
    abiding responsibility for the health care of all our beneficiaries,
    including those who are retired. While the Department deeply
    appreciates the health care needs of our military retirees, legislative
    proposals mandating access to the Federal Employees Health Benefits
    Program (FEHBP) for military retirees who are Medicare eligible raise
    significant cost concerns. The CBO has estimated that the total
    government cost of offering FEHBP to this population is approximately
    $1.5 billion annually. Moreover, allowing major segments of our
    beneficiaries to enroll in FEHBP poses serious readiness implications
    for the Military Health System, since retention of our retiree
    population within the direct care system is critical to training and
    readiness. While the DOD places a high priority on the importance of
    providing access to affordable health care to our retirees, their
    spouses, and survivors, absorbing the cost of FEHBP on an annual basis
    is prohibitively expensive. The Department strongly endorses the use of
    Medicare dollars through Medicare subvention to expand capacity and
    services to our Medicare-eligible beneficiaries. The Department is
    aggressively pursuing the Medicare subvention demonstration program
    authorized by the Balanced Budget Act of 1997 as an important first
    step in bringing Medicare subvention nationwide.
        Question. How would such a proposal impact on the military
    treatment facilities?
        Answer. Proposals to offer FEHBP enrollment to Medicare eligible
    military retirees would have a dramatic impact on military treatment
    facilities and the entire Military Health System. As stated above,
    absorbing the cost of FEHBP on an annual basis would dramatically
    reduce the ability of the Military Health System to meet its readiness
    mission and would have detrimental effects on the training and skill
    maintenance of physicians and other medical personnel. Moreover,
    requiring the Military Health System to absorb the cost of FEHBP
    premiums for some or all retirees would actually reduce the capacity of
    the MHS to provide services to retirees on a space available basis.
    This reduction in the current level of effort would, in turn,
    jeopardize the flow of Medicare dollars into the MHS, which is critical
    to the success of the Medicare subvention program.
                                   b-2 bomber
        Question. Mr. Secretary, last year the Congress provided $331
    million to start the procurement of additional B-2 bombers. The
    President has not indicated that he intends to use these funds for
    other purposes. Have you decided to buy more B-2 bombers, and if so,
    how many?
        Answer. The President will indicate his intentions with respect to
    procuring additional B-2 bombers in fiscal year 1998 after he receives
    the recommendations of the Congressionally-mandated Long Range Airpower
    Panel. The Department of Defense position remains unchanged; there is
    no need to procure additional B-2's beyond the current fleet of 21
    aircraft.
        Question. If the President determines that no more B-2's will be
    purchased what plans have you made for spending the $331 million
    appropriated?
        Answer. The Air Force will use the $174 million requested in the
    fiscal year 1998/1999 President's Budget to support the B-2 bomber
    baseline program identified to Congress in justification material
    provided in February 1997. The remaining $157 million will be applied
    to continuing the B-2 Multi-Stage Improvement Program. The following
    requirements are currently unfunded:

                                                                    Millions

    Low Observable (LO) Maintainability Improvements..................   $50
    Deployable Shelters...............................................    22
    Beyond-Line-of-Sight (BLOS) SATCOM................................    58
    Radio/Mission Management 810 Center Instrument Display...    36
    WCMD Integration..................................................    39
    Auto-throttles/Digital Engine Control.............................    11
                            -----------------------------------------------------------------
                            ________________________________________________
          Total.......................................................   216
                                     ______

                Question Submitted by Senator Ernest F. Hollings
                               funding for jrotc
        Question. Mr. Secretary, I am receiving reports from students,
    educators, and parents from all across South Carolina telling me that
    funding for Junior ROTC has been cut and that this cut is adversely
    affecting this important youth program. Why is this so? Will this
    year's budget adequately fund JROTC?
        Answer. No Service has expanded the number of JROTC units; however,
    because of the need to trim back overall, the Navy has reduced funding
    for existing units. It did so only after it had reduced its JROTC
    headquarters staff by about one-half. The funding adjustments by the
    Navy represent a 30-percent reduction in its JROTC budget for fiscal
    year 1998, relative to 1997. This includes cuts in funding for student
    travel, which in turn may limit field trips. A separate concern from
    South Carolina, expressed during a meeting of state legislators and
    educators sponsored by the Senate Armed Services Committee staff on
    March 6, centered on the State's preference to establish new JROTC
    units. During that meeting, we reported that the Services are not
    currently in a position to expand their JROTC presence in South
    Carolina because of budgetary constraints. We also noted that the JROTC
    program is significantly over-represented in South Carolina relative to
    the national average. About one-half of South Carolina high schools now
    have JROTC units compared to approximately 10 percent nationwide, with
    many of the latter group now on a waiting list.
                                     ______

                Questions Submitted by Senator Patrick J. Leahy
                                   deployment
        Question. Last spring the GAO completed a report, which was
    entitled, ``Medical Surveillance Improved Since Gulf War, But Mixed
    Results in Bosnia.'' In short, the GAO reported that DOD had initiated
    changes to improve medical surveillance for deployments, but that
    medical assessments and record keeping were still incomplete. What, if
    anything, Dr. Hamre, is DOD doing differently in the current deployment
    to avoid repeating the mistakes made seven years ago?
        Answer. The Department has learned many lessons from the Gulf War
    experience. After the Gulf War, the Assistant Secretary of Defense for
    Health Affairs and the Joint Staff undertook a complete review of
    doctrine, policy, oversight, and operational practices for medical
    surveillance and force health protection. A number of changes were
    incorporated for subsequent deployments to Somalia, Rwanda, Haiti, and
    Bosnia. In August 1997, the Department issued DOD Directive 6490.2
    ``Joint Medical Surveillance'' and DOD Instruction 6490.3
    ``Implementation and Application of Joint Medical Surveillance for
    Deployments.'' The directives establish the Department's policy and
    requirements that will improve health assessments, surveillance, and
    record keeping during deployments. The directives require: pre-
    deployment and post-deployment health screenings, including mental
    health assessments, blood sample collections; health threat briefings;
    and the collecting, analyzing, and documenting of an expanded range of
    health surveillance data during deployments.
        The Joint Staff and the Services are implementing these
    requirements. Currently, joint publications are being rewritten to
    include changes in doctrine regarding force medical protection.
    Additionally, the warfighting Commanders in Chief have revised theater
    operations plans to include the force medical protection requirements.
        For current operations in Southwest Asia, USCINCCENT recognized the
    importance of improved medical surveillance, immunization tracking, and
    record keeping. USCINCCENT requested and received augmentation by a
    Joint Medical Surveillance Team (JMST) in March 1998. The JMST will
    coordinate, monitor, and evaluate force medical protection measures
    during current operations. The 8-person team includes one 2-person
    element augmenting the CENTCOM Surgeon's staff in Florida, while three
    2-person elements deployed to augment the medical staff of the Army,
    Air Force, and Navy components in theater.
        For the future, the Services and the Director, Medical Information
    Management, Technology and Reengineering, TRICARE Management Activity
    are establishing the information system requirements to support medical
    record keeping during deployments and throughout the Military Health
    System. The computerized patient record (CPR), Theater Medical
    Information Program (TMIP), and the personal information carrier (PIC)
    are major information system initiatives designed to create an
    effective medical tracking system and health record before, during, and
    after deployments.
        For the current operations in Southwest Asia, actions related to
    specific lessons learned include:
        Learned.--Perform and document pre-deployment health assessment.
        Action.--USCINCCENT requires health assessment before deployment.
    In theater health assessment standardized and entered in central
    database.
        Learned.--Improve medical record keeping in theater.
        Action.--Immunizations documented by: USAF using Military
    Immunization Tracking System; USA using MedPROS; and USN using SNAP
    Automated Medical System afloat.
        Health care encounters in theater documented by: USAF and USA using
    ``Medical Surveillance--Theater'' system; and USN using ``SNAP
    Automated Medical System'' afloat.
        Requirements being developed for documentation of use/issue of
    preventive countermeasures.
        Learned.--Improve medical surveillance in theater.
        Action.--USCINCCENT requires weekly reporting of disease and non-
    battle injury (DNBI) data to the CINC Surgeon.
        Joint Medical Surveillance Teams deployed at USCINCCENT request to
    oversee surveillance and monitor immunization tracking and record
    keeping.
        USAF and USA using ``Medical Surveillance--Theater'' system.
        USN using ``SNAP Automated Medical System'' afloat.
        Learned.--Improve exposure assessments and record keeping in
    theater.
        Action.--Laboratories deployed (biological and environmental
    capabilities).
        Documentation of pesticide usage required during deployment.
        Database of environmental sampling results retained.
        Learned.--Perform and document health assessment at redeployment.
        Action.--In theater health assessment standardized and entered in
    central database.
        Learned.--Need licensed products for BW/CW countermeasures.
        Action.--Ongoing efforts among OASD(HA), Food and Drug
    Administration (FDA) and Army Medical Research and Materiel Command
    regarding pyridostigmine bromide (PB), botulinum toxoid, and future
    products.
        Learned.--Improve health risk communication efforts.
        Action.--Predeployment health threat briefings (``what are the
    threats'').
        Health threat briefings (``what actually was experienced'')
    required on redeployment.
        Information packets on health issues (especially for BW/CW
    countermeasures) for military member, unit leadership, and medical
    personnel.
        Plan to distribute results of post-deployment health assessments.
        Learned.--Assess health of force post-deployment.
        Action.--U.S. Army Center for Health Promotion and Preventive
    Medicine has mission for central analysis of deployment and
    postdeployment health experience.
        Learned.--Improve VA/DOD coordination during and after deployment.
        Action.--Active VA/DOD Executive Council.
        Military and Veterans Health Coordinating Board evolving out of
    Persian Gulf Veterans Coordinating Board.
        Question. Last year this subcommittee added funding to develop
    advance medical information management technologies. Health Affairs has
    begun an effort out of those funds which would put critical medical
    data about each deploying service member on a ruggedized magnetic
    dogtag, called a Personal Information Carrier (PIC). The dogtag would
    capture massive amounts of data about each person's particular health
    situation before, during, and after a deployment. This prototype
    carries the digital equivalent of 15,000 pages worth of text, and costs
    about $20. Unfortunately, while the Administration is planning a
    33,000-person demonstration of these carriers in the future, there is
    no funding in the Administration's request to begin this project. As
    our forces once again head back to the Gulf, I can't help but think we
    can do a better job of monitoring the health risks that our service
    members encounter when they are deployed. What will DOD be doing to get
    technologies like the PIC out of the laboratory and into the field?
        Answer. Current joint-service efforts directly support President
    Clinton's November 8, 1997 statement and the Fiscal Year 1998 DOD
    Authorization Act requirements (Section 765: Medical Tracking System).
    These directives establish the Department's policies, and the Composite
    Health Care System II (CHCS II) objectives regarding joint medical
    surveillance during deployments, which support Force Health Protection
    initiatives. They require pre-deployment and post-deployment health
    screenings, including mental health assessments, blood sample
    collections, health threat briefings, and the collecting, analyzing,
    and documenting of an expanded range of health surveillance data during
    deployments. This data will be captured in a database built on
    technology used for assessing Persian Gulf Illness. Furthermore, the
    Computerized Patient Record (CPR), Theater Medical Information Program
    (TMIP), and the Personal Information Carrier (PIC) are major
    information system initiatives designed to create an effective medical
    tracking system and health record prior to, during, and after
    deployments.
        In order to meet the critical, immediate need for the database and
    this device, DOD is following an acquisition strategy of ``buying a
    little, testing a little and deploying a lot''. DOD is employing full
    and open competition to obtain the technical solution--a PIC device
    that will interface with existing databases. Interested vendors will
    provide hardware prototypes by May 5, 1998. After conducting hardware
    destructive tests, a proof of concept test will be performed this
    summer to ensure that medical data can be captured in the database, and
    written to and read from the PIC devices.
        A review of DHP funding priorities is currently occurring to
    determine how to best pay for the $32 million needed for PIC. Software
    development will continue, and a formal Request for Purchase (RFP) will
    be issued October 1, 1998 for a proposed Low Rate Initial Production
    (LRIP) quantity of 33,000 PIC hardware devices. These devices are
    scheduled to be operationally tested in Southwest Asia starting in
    March 1999.
                                     ______

                  Questions Submitted by Senator Byron Dorgan
                             inflation adjustments
        Question. My understanding is that the Administration's budget has
    allocated to the Department of Defense another $21.2 billion over the
    next 5 years in additional spending power, as a result of lower
    inflation estimates. (These savings amounted to approximately $2.8
    billion for fiscal year 1999.)
        Could you please describe how the Administration's process for
    distributing these inflation savings works? Has the Department always
    been allocated these savings?
        In the past, have some of the savings been retained by OMB to
    provide budgetary flexibility elsewhere in the budget? Do you know what
    OMB's thinking was in allocating all of these savings to DOD?
        Answer. The Administration (OMB) issues economic assumptions in
    late November or early December each year to all federal departments
    and agencies for purposes of preparing the annual budget for submission
    to Congress by the first Monday in February. The economic assumptions
    include separate projections for military and civilian pay raises, fuel
    prices, medical costs, and for all other non-pay purchases.
        The revised economic assumptions can result in either a savings or
    an increase to the Department's plan. For the last several years, the
    historically low inflation rates have resulted in savings. President
    Clinton has allowed DOD to retain these savings. In some prior years to
    this Administration, the OMB took some of the savings for deficit
    reduction since a reduction for inflation does not take reduce real
    program.
        OMB allowed DOD to keep all the inflation savings in the fiscal
    year 1999 budget because the Balanced Budget Agreement was in terms of
    nominal dollars--not constant dollars--and DOD had a number of fact-of-
    life unpaid bills such as civilian pay.
                                 base closures
        Question. Secretary Cohen's Defense Reform Initiative includes the
    recommendation that Congress authorize two more rounds of base closure,
    in 2001 and 2005. Comptroller Lynn's chart on the base closure issue
    asserts that 2 new BRAC rounds ``will produce $3+ billion in annual
    savings.'' However, the chart fails to predict when those savings will
    materialize.
        Looking at the most recent BRAC round, according to DOD estimates,
    the 1995 round will not begin to produce annual savings until 2002 or
    later--seven years after the base closure commission made its
    decisions.
        Is it fair for us to project this record forward? Can we conclude
    that a BRAC round in 2001 will not produce net savings until 2008, and
    that a BRAC round in 2005 will not yield net savings until 2013 or
    later?
        Answer. No. A BRAC round in 2001 will produce annual net savings in
    2005. A BRAC round in 2005 will produce annual net savings in 2009.
    Together, these two rounds will yield annual net savings in 2008 that
    build to more than $3 billion per year after 2011 and to a total of $21
    billion by 2015. Annual savings tend to exceed annual costs in the
    fourth year of implementation. For example, annual savings exceeded
    annual costs associated with BRAC 88 in 1994 (5th year), BRAC 91 in
    1995 (4th year), BRAC 93 in 1997 (4th year) and BRAC 95 in 2001 (6th
    year).
                        tracking infrastructure savings
        Question. Is there adequate accounting throughout the services and
    the agencies, to track savings attributable to outsourcing and
    privatization? If so, what are those accounting procedures and systems?
    Are they compatible and consistent across agencies and services? Is
    there guidance, and are there standard criteria and methodologies, for
    counting costs and savings? Are you confident that Deputy Under
    Secretary Goodman is adequately tracking these savings?
        Answer. All organizations, not just DOD, must estimate the savings
    produced by management reforms, consolidations, and reorganizations.
    Accounting systems keep accurate records for costs; however, no
    parallel systems exist to track savings. Therefore, savings must be
    estimated. The fact that organizations must estimate savings, however,
    does not mean that the savings are not real. The primary reason that
    business and government reform management practices, consolidate
    operations, and improve organizational structures is precisely to
    generate these savings.
        The Components were not issued specific guidance concerning
    standard criteria and methodologies for counting costs and savings;
    however, various estimating techniques confirm the general level of
    savings associated with outsourcing and privatization efforts. Further,
    we are developing a questionnaire to be used to consistently track
    savings for future rounds and I am confident that John Goodman has a
    good handle on these savings.
                         $60 billion procurement target
        Question. We often hear about the Department's goal of a $60
    billion annual procurement or modernization budget. And I note that the
    President's budget proposal achieves that goal for fiscal year 2001,
    2002 and 2003. Could you please explain how this $60 billion target was
    arrived at? Was it a threat-based analysis?
        Answer. The $60 billion target is a departmental goal. There is
    universal agreement that the level of procurement funding has fallen as
    far as it should. There is an undisputed need to invest in the
    recapitalization of our forces. Current inventories are aging and new
    technologies offer enormous potential to improve our combat
    capabilities across all mission areas. As the level of procurement
    funding dropped below $40 billion in the fiscal year 1996 budget, the
    Department's leadership felt it was important to focus attention on the
    need to increase funding for modernization. The establishment of a
    departmental funding target serves that purpose. Both the Secretary and
    I have testified in the past that it is important not to become fixated
    with any particular number. The $60 billion is not an end in itself.
    What is important is recognition of the need to increase procurement
    funding in order to pursue a focused modernization effort that will
    ensure this country can maintain the qualitative battlefield
    superiority we need to have. The Quadrennial Defense Review (QDR)
    reaffirmed the desirability of achieving a modernization level of
    roughly $60 billion. As you noted, our budget proposal achieves that
    level in fiscal year 2001 and stabilizes funding at that level through
    fiscal year 2003.
                                 cbo reestimate
        Question. Press reports this morning suggest that the Congressional
    Budget Office will conclude that the fiscal year 1999 budget would
    result in outlays that are $3 billion to $4 billion higher than
    permitted by the bipartisan budget agreement. In short, the
    Administration underestimated the cost of its defense program by $3 to
    $4 billion.
        Could you please respond to these reports? What kind of a
    difference are we dealing with? How do DOD's budget estimation and
    projection methods differ from those of CBO? To what parts of the
    defense budget can we attribute these billion-dollar differences in
    outlay projections?
        Answer. The CBO reestimate of the President's budget request is
    $3.6 billion higher than the OMB estimate of the program. In general,
    CBO and OMB differ in these estimates because CBO does not adjust their
    model for anticipated policy changes, program level changes, or
    emerging trends in spending patterns. OMB/DOD projects outlays based on
    program content changes such as modifications; Congressional changes to
    the original budget request; and actual program execution experience.
    Within the defense budget, the major outlay differences are found in
    the following accounts: Working Capital Funds; RDT&E, Air Force;
    Shipbuilding and Conversion, Navy; Base Realignment and Closure;
    Operation and Maintenance, Air Force; National Defense Stockpile; and
    Aircraft Procurement, Navy.

                              subcommittee recess

        Senator Stevens. This will complete this hearing and we
    will resume the subcommittee again on March 4, when we take up
    the Air Force budget.
        Thank you.
        [Whereupon, at 3:58 p.m., Tuesday, February 26, the
    subcommittee was recessed, to reconvene at 10 a.m., Wednesday,
    March 4.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 1999

                                  ----------

                            WEDNESDAY, MARCH 4, 1998

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:41 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Ted Stevens (chairman) presiding.
        Present: Senators Stevens, Cochran, Domenici, Bond, Shelby,
    Bumpers, Harkin, and Dorgan.

                             DEPARTMENT OF DEFENSE

                          Department of the Air Force

                            Office of the Secretary

    STATEMENTS OF:
            HON. F. WHITTEN PETERS, ACTING SECRETARY OF THE AIR FORCE
            GEN. MICHAEL E. RYAN, CHIEF OF STAFF

                     OPENING STATEMENT OF HON. TED STEVENS

        Senator Stevens. General Ryan, Secretary Peters, I think I
    will start. I will ask Senator Bond also to make a statement.
    We hope that the rest will get here who intend to get here, but
    the vote has just been on for a few minutes. We have made
    arrangements so that we will not be interrupted again this
    morning.
        This is the first appearance that both of you have made
    before this committee and we welcome you. There is going to be
    some question about your budget. I do think you have done an
    excellent job of building on what is available. We feel that we
    are going to have to go into some of the negative trends that
    we have seen as far as the Air Force is concerned.
        I am disturbed that the O&M account is basically flat for
    fiscal year 1999 compared to fiscal year 1998, and that is in
    spite of the fact that the Air Force must absorb $800 million
    in price increases and program transfers within the available
    budget.
        I think that we are all going to have questions about
    readiness. But my long-term goal, of course, is the F-22. We
    have to make sure that our modernization program stays on
    course.
        The space-based infrared system and the Joint Strike
    Fighter are moving to costly phases now, and that is going to
    produce substantial problems for us unless we can find some way
    to hold those costs down.
        It looks like the defense budget is going to be flat
    through 2003. I am disturbed about that because I think we have
    had to absorb some costs that I still believe were emergency
    costs for Bosnia and some of the Iraq costs which we will try
    to address in the supplemental. But, clearly, that projection,
    now that the balanced budget is going to occur actually this
    year rather than in 2002, is going to put enormous strain on
    defense spending because I am certain that that is going to be
    the goal, to keep it that way through the period ahead.
        Hopefully, we will have a balanced budget from now on.
        But I am just increasingly disturbed that this subcommittee
    has had to sort of swallow some costs that were not really
    basically defense costs and they are going to impact our future
    as far as having funds available for the modernization program.
        I will have some specific questions after you gentlemen
    make your statements.
        Let me yield now to Senator Bond.

                     STATEMENT OF HON. CHRISTOPHER S. BOND

        Senator Bond. Thank you very much, Mr. Chairman.
        Mr. Secretary, General Ryan, I join with the chairman in
    welcoming you before the committee today to address some really
    prominent questions concerning the Air Force.
        As we all know, today, once more, the Air Force is being
    asked to do more with less. Mr. Secretary, I know that I join
    with the rest of the members of this committee when I voice my
    concern over the ability of the Air Force effectively to meet
    its mission requirements. That, basically, is what we are all
    about. At the same time, we cannot be making deep cuts in the
    supply stocks and accelerating depreciation of life cycle times
    of equipment, not to mention stretching personnel to their
    limits through the increased deployment schedules.
        We have all heard about and are very much concerned about
    the abysmal retention rates of pilots. We are sympathetic to
    your efforts to find an answer. But I submit that just throwing
    money at these individuals may not be the sole answer.
        As I understand, most join the military service to live the
    experience of doing something significant for their country, to
    lead a superlative group of men and women and to provide a fair
    lifestyle for their families.
        Of course, this includes financial considerations, but it
    is not the be-all and end-all. As I understand it, a program to
    give pilots a considerable bonus package has met with something
    less than an enthusiastic response.
        The exodus of the individuals from the Air Force has
    spanned the rank structure, and I anticipate that, when these
    bonuses run their course, you will, once again, see another
    exodus only at higher, and arguably more critical, grades.
        Over the years, individual tactical training flight time
    has been drastically reduced. Operations and maintenance
    funding has been creatively shifted around so that contingency
    operations may be fully resourced while other phases of
    readiness training are critically short of funds, and
    operational flights, in large part, are spent flying figure
    eights in the sky, waiting, just waiting for skills to be
    called on--but not honing the edge of these superb pilots.
        Rather, operational flying by its nature these days permits
    that edge to be dulled from a lack of training. I wonder if you
    are looking into improving the availability of high quality
    training opportunities during deployed operations and other
    measures like that to improve pilot morale.
        I suggest that this kind of thinking might be applied, as
    well, to junior and senior enlisted ranks.
        That said, we recognize the awesome burden facing our Armed
    Forces, both in terms of its increase in mission requirements
    and concurrent decrease in the funding available to meet those
    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. I think we are now caught in another emergency crack
    where there has been low-balling and overexpenditure.
        As I understand it from Mr. Hamre's comments last week, you
    are already expending funds from the fourth quarter of the
    fiscal year 1998 budget to pay for missions being flown today,
    and we are only in March, Mr. Secretary.
        Over the past 6 years, this Congress has increased the
    defense budget by billions of dollars. Some critics have
    attacked us for those increases. But the Department and the
    administration have routinely come back to us pleading for
    more, as you see once again this year through emergency
    supplementals--primarily because of the burgeoning contingency
    operations costs.
        Some of those operations have extended way beyond
    contingency status and we have contested your financial
    planning for them. I don't think it is adequate. I don't think
    you are giving us a fair assessment.
        On a more happy note, 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. As someone, I can assure you, who is 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 with the
    military fighting force.
        If they were here, I would call upon the leadership of your
    sister services to take note of how you do it successfully. If
    you have a chance, you might share with them that it can work
    and you do make it work. There are some people who just think
    there ain't no way, but you all have done it.
        I do have some concerns regarding the upgrading of National
    Guard general purpose squadrons to insure the 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.
    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 a gulf war three time Mig killer, and I am sure that
    the service would benefit from insuring his continued full
    integration in the fighter force.
        General Ryan, when it comes to my question time, I would
    like for you to address how the Air Force intends to insure
    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 or even convert these units to F-15E
    squadrons, which we would like to see.
        I also congratulate you both on your dedication to
    providing the Air Force with a program to insure the Air Force
    will continue to meet its airlift mission requirements well
    into the future. We will address this, too, in the questions
    and answers as well as the questions submitted for the record.
        Mr. Chairman, I thank you for this time and I appreciate
    the opportunity to hear what the Secretary and the General have
    to say.
        Senator Stevens. Thank you very much, Senator.
        I don't think we will wait any longer. There may be others
    who will come later.
        We would be pleased to have your statements, gentlemen.
        Mr. Secretary, General, please proceed.
        Mr. Peters. Thank you, Mr. Chairman. Thank you, Senator
    Bond.
        We appreciate the opportunity to appear this morning before
    you to discuss the Air Force's future plans and priorities and,
    in particular, our proposed program for fiscal year 1999. I
    would also like to thank this committee for its past support
    for Air Force programs, which has been tremendous.
        For fiscal year 1999, the Air Force has three budget
    priorities: people; readiness; and modernization. People come
    first because we cannot have a ready force today or tomorrow
    unless we attract, train, and retain the highest quality men
    and women to operate our 21st century technologies.
        Readiness and modernization are equally key to our present
    and future national security and in our constrained budget
    environment, we must assume some risk in current readiness in
    order to pay for modernization that is key to our future
    security.
        We believe that we have properly balanced our 1999 budget,
    increasing funding for readiness-related items by some $1
    billion while also providing increased funding for key
    modernization programs in air superiority, global mobility, and
    space.
        Importantly, over the Future Years Defense Program, we have
    achieved 15 percent real growth in our investment accounts.
        Our three budget priorities directly support the
    ``Quadrennial Defense Review'' [QDR] strategy, the report of
    the national defense panel [NDP], and the chairman's ``Joint
    Vision 2010.'' In fact, the national defense panel reaffirmed
    that aerospace power plays a significant role in shaping,
    responding, and preparing for an uncertain future.
        Let me turn first to people:
        As I have said, people are central to our efforts to shape
    the international environment and to run our modern Air Force.
    Over the past year, our airmen have been engaged around the
    world and have flown into virtually every country in the world.
    Our forces, for example, have supported peacekeeping operations
    in Bosnia, humanitarian firefighting operations in Indonesia,
    and noncombatant evacuation operations in Albania and Sierra
    Leone.
        We also contributed significantly to shaping events by
    participating in 53 joint and multilateral exercises worldwide.
    And, of course, the Air Force has been heavily engaged in
    Southwest Asia where, on a typical day, 8,500 men and women
    have launched about 150 sorties over Iraq. Today that number
    has risen to about 14,000.
        These operations are not without cost. The deployment rates
    of our total force have increased dramatically since the end of
    the cold war. Altogether, last year some 14,000 total force
    airmen were deployed on any given day, a fourfold increase over
    1989, despite a 35-percent decrease in total end strength since
    the end of the cold war.
        Two years ago, many of our men and women were deployed well
    over our goal of 120 days per year. In 1997, until the recent
    developments in Southwest Asia, we had substantially reduced
    deployment rates for many units through global sourcing,
    creative use of Reserve and Guard units, and increases in
    manning in highly stressed specialties. However, these efforts
    have placed a heavy burden on our Reserve forces.
        During 1997, our Reserve component deployed during every
    contingency tasking. In 1997, our Air National Guard and Air
    Force Reserve air crews served an average of 100 days in
    uniform with their support teams averaging 80 days.

                                Quality of life

        Strengthening the quality of life for all of our airmen
    must, therefore, be our highest enduring priority. We owe it to
    our airmen to ensure that their faithful service is rewarded
    with pay, housing, medical, and community support services that
    meet their needs.
        Over the past year, we have worked hard to decrease the
    stress of deployments. We have increased the amount of time our
    men and women in home stations can spend with their families
    after deployment, and we have improved family support during
    times of deloyment.
        For example, we have reduced the Air Force participation in
    joint exercises by about 15 percent and we have tried to
    combine our own operational readiness inspections with other
    operational activities.
        We have also tested an ombudsman program at five Air Force
    bases to assist families of deployed airmen. In addition, in
    1999 we will continue our efforts to improve dormitories and
    family housing, increase child care spaces, and provide teen
    and family centers.
        About one-third of our Milcon budget is devoted to these
    quality of life improvements.
        We are also working hard on readiness, which is absolutely
    essential to support the respond portion of the QDR strategy.
    Today, 91 percent of our units are at readiness ratings of C-1
    or C-2, with our front-line units in PACAF and USAFE
    significantly higher. However, some readiness indicators are
    dropping. Our mission capable rates, for example, have declined
    6.8 percent since the gulf war. Engine readiness has also been
    a major problem. And as General Ryan will discuss in more
    detail, pilot retention remains an extraordinarily grave
    concern.
        The reasons for these declining readiness indicators are,
    in fact, very complex and go beyond money.
        With respect to engines, turmoil in our air logistics
    systems work force, coupled with a shortfall in spare parts
    funding in 1997, have caused lower than average productivity.
    Elsewhere, about one-third of our depot work is moving to new
    locations with attendant disruption.

                            Equipment modernization

        Across our fleet, old age has increased the difficulty of
    keeping aircraft running and has raised the cost of readiness.
    To overcome these challenges we increased our readiness-related
    funding in 1998 and also in 1999. We also plan in the current
    program to fund additional engine modules for the F-15 fleet
    and to fund new engines for our RC-135's.
        We have also started an engine recovery program and this
    month will activate a TF39 engine repair facility at Travis Air
    Force Base in an effort to improve the reliability of our C-5
    fleet.
        Later this year, the F-100 engine core workload will begin
    transferring to a more stable work force at Oklahoma City.
    Finally, we are upgrading our old equipment. For example, in
    fiscal year 1999, we plan to invest in the PACER CRAG Program,
    which upgrades avionics suites on 191 KC-135's with state-of-
    the-art glass cockpit systems.
        We have also programmed over $500 million for C-5 engine
    and avionics upgrades.
        We are optimistic about the result of these changes, but it
    will take time to see the effects.
        Ultimately, our readiness improvements will depend on
    modernization. In this regard, we have increased procurement
    funding for our breakthrough capabilities identified in the QDR
    and the national defense panel, such as the F-22, the airborne
    laser, SBIRS, and EELV.
        We are also funding programs to defend against the
    asymmetric threats identified by the national defense panel
    report. For example, in 1999, we will invest approximately $225
    million in passive chemical/biological defensive measures and
    in the area of $150 million in active defensive measures.
        In addition, as part of our defense in depth against cyber
    attack, we have implemented the automated security incident
    measurement system at all 108 Air Force bases to detect network
    intrusions, and we are working on installing firewalls.
        To fund this modernization effort, the Air Force has
    achieved significant cost reductions through ongoing efforts to
    bring about a revolution in business affairs. Since 1995, we
    have cut headquarters manning by 1,700 positions. Through the
    recent C-5 depot competition, we should save $190 million over
    the next 7 years.
        Recent and planned A-76 competitions will yield savings of
    over $1 billion, and acquisition reform has saved $7 billion
    and avoided over $11 billion in additional costs.
        This year's Air Force posture statement is itself tangible
    proof of how we are saving resources. Last year, we produced
    20,000 paper copies. This year, using electronic publishing, we
    produced less than 2,000 paper copies and put a downloadable
    copy on the web.
        There is still, however, much more that needs to be done.
    We continue to pay for excess support structure. Prudent BRAC
    decisions are vital to our ability to bring our infrastructure
    into line with our force structure. We need Congress to approve
    two more rounds of BRAC in 2001 and 2005.
        Simply put, BRAC is tomorrow's readiness decision that we
    must begin making and planning today.
        Finally, the administration, I believe, this morning has
    submitted its emergency nonoffset supplemental for
    consideration by this committee and the House to cover the
    unfunded costs of Bosnia and other operations in fiscal year
    1998 and the total costs of Bosnia for fiscal year 1999.
        The Air Force portion of that is just over $400 million in
    each year to cover our costs. Once this emergency supplemental
    is submitted, we urge congressional approval quickly so that we
    can plan effectively and avoid disruption to our readiness and
    modernization accounts.
        Your support is absolutely essential if we are to transform
    the world's premier air and space force of today into an
    indispensable aerospace force of the 21st century. As we plan
    for the future, our principal focus will be on building a
    seamless, total aerospace force, one that is ready to meet the
    challenges of the QDR whenever and wherever they are presented.
        Again, I thank you for the opportunity to meet with you
    today and after General Ryan has had a chance to address the
    committee, we will be happy to take your questions.

                             Deployment challenges

        Senator Stevens. Thank you, sir.
        General.
        General Ryan. Good morning, Mr. Chairman and distinguished
    members of the committee. I am pleased to join you today, along
    with the Secretary, and I would like to thank you for your
    continued support of the Air Force.
        Today we are globally engaged and, as we speak, there are
    almost 15,000 Air Force members deployed and in support of
    contingency operations around the world: 9,000 in Southern
    Watch in Southwest Asia and another 1,000 in Northern Watch;
    3,000 in Bosnia; and the rest support about 11 other
    contingencies ongoing.
        This represents a fourfold increase in the deployments
    since the end of the cold war with over 35 percent fewer
    personnel to cover those commitments.
        More than ever, the U.S. Air Force is an expeditionary
    force. Our Air Force men and women are meeting every challenge
    they face with a consummate commitment that reflects service
    before self.
        Many of our members will spend 1 out of the next 3 years
    deployed in support of contingencies. It is our job. But our
    continuing deployment tempo highlights the force infrastructure
    mismatch which has been created over the past 10 years.
        I have just returned from Southwest Asia, where I had the
    opportunity to visit with many of our young men and women
    serving there. You would be proud of their professionalism and
    their unsung sacrifices. For the most part, they live in
    austere conditions. The majority are in tent cities which they
    erect and maintain, sleeping 8 to 10 to a tent. Privacy is
    minimal. Trust is essential. The hardships shared are
    foundations for enduring relationships.
        They are very proud and they do their job monitoring the
    no-fly zone in Iraq, ready for any contingency we can throw at
    them, flying the aircraft, fixing the aircraft, and keeping
    their morale up.
        For their commanders, each morning brings the hope of
    discovering new ways to make things better for the young men
    and women who live there. Each day brings new operational
    challenges and successes, and each night brings the realization
    that the next day could bring combat.
        The 15,000 people who are currently deployed in contingency
    operations rotate in and out of their original home bases. It
    has been that way since the early 1990's, with Iraq, Bosnia,
    African and humanitarian operations, and others.
        I do not see a major change in the way of doing business
    that we have experienced over the last 8 years. In effect, we
    are operating many additional bases without the resources or
    people to make up the difference. So the home station people
    feel the OPTEMPO as well as those who are deployed. In effect,
    we are taking this out of hide.
        Bases do not get additional personnel to make up for those
    who are deployed in order to keep the base running. The
    workload just increases on those who remain. The bases must
    still be guarded, the remaining aircraft maintained, and the
    families still need medical care and attention, and the
    remaining personnel must still train.
        We need to restructure our Air Force to deal with this
    tempo by consolidating our forces into larger bases, more
    robust bases, that have the breadth and depth to support both
    deployed operations and operations at home base.
        For that reason alone, we need BRAC legislation, not to
    mention the savings that accrue for the future.
        We also must take action to fend off the adverse effects of
    tempo that is evident in our readiness rates and retention. As
    Mr. Peters said, our overall readiness is still high, but we
    are beginning to see some adverse trends. Mission capable rates
    of our operational flying units have dropped in the last 8
    years, since the gulf war, by about 7 percent.

                               Equipment upgrades

        I attribute that to the aging nature of our aircraft fleet.
    In 1999, the average age of our Air Force aircraft will be 20
    years old. Predicting breakage is getting harder and harder.
    That is why modernization is so important for our future
    readiness.
        Three systems under development are very important for us
    to remain the preeminent aerospace force into the 21st century:
    the F-22; the Joint Strike Fighter; and the airborne laser
    [ABL].
        These systems are vital to ensuring that our young men and
    women always have the advantage of technologically superior
    weapons. We never want a fair fight. The F-22 possesses
    stealth; the ability to supercruise; has integrated avionics;
    and large air-to-air weapons payload, which makes it the
    dominant aircraft for air superiority into the 21st century. It
    allows all our forces, and not just Air Force forces, the
    freedom to operate where we choose and when we choose.
        The integration of air-to-ground capability in the F-22
    could also make it our high-end attack aircraft as well.
        The Joint Strike Fighter, or JSF, will provide a less
    expensive, multirole partner for the F-22. The F-22 and the
    Joint Strike Fighter are intended to be complementary, not
    substitutable. Together, they represent a synergistic high-low
    mix because the F-22's ability to gain air dominance makes it
    possible for us to design the Joint Strike Fighter as a
    multirole aircraft, which is less capable and, therefore, less
    costly.
        Finally, we are developing the airborne laser to provide
    protection for our forces against theater ballistic missile
    threats.
        The ABL system provides the Nation with a rapidly
    deployable global capability that this Nation needs to be able
    to defend against theater ballistic missiles. It will be a key
    component of our missile defense architecture necessary to
    counter that threat.
        At the same time, we must continue our migration into
    space. The Air Force is proud to be the leading military force
    in the use of space and we will continue to be good stewards of
    space. The key to protecting and exploiting space will be the
    seamless integration of our assets. We plan to migrate those
    functions to space which offer better capabilities when
    accomplished in space.
        This transition and tradeoff will be done as technology
    makes it both physically and fiscally possible.

                             Retention methodology

        While modernization is very important to tomorrow's
    readiness, retaining quality people is the key factor in
    maintaining readiness now and in the future. While enlisted
    retention rates are down slightly, and we must improve in that
    area, our biggest concern is pilot retention. It represents the
    majority of our front-end, warfighting capability. We simply
    must retain more of these selfless warriors as well as our
    combat and support personnel who go into harm's way to support
    our national commitments.
        We have worked hard with your help to counter this trend.
    One of the indications of future retention shortfalls is our
    pilot bonus acceptance rate. Last year, 33 percent of the
    eligible pilots took the long-term commitment offered with the
    bonus and another 10 percent took shorter options. While this
    is below our target of 50 percent, we are hopeful that this
    legislation will assist us even more this year and provide us a
    stepping stone to improve our retention into the future.
        We are focusing on several other areas to counter our
    retention decreases. They include reducing the effects of this
    OPTEMPO on our forces, improving care for our families,
    improving quality of life and improving the support programs.
    Our experience since the fall of the Iron Curtain has
    reinforced the lessons about the pivotal nature of air and
    space power, power which maximizes the flexibility of the
    military and allows solutions to national security threats with
    less risk to American lives.
        We want to ensure the U.S. Air Force remains the preeminent
    air and space power in the world we are today, and our deployed
    men and women are confident in their mission, their equipment,
    and their own capabilities.

                               prepared statement

        We thank this committee for your support in making that
    happen in the past, today, and in the future.
        Sir, that ends my statement. The Secretary and I are
    prepared for your questions.
        [The statement follows:]
     Prepared Statement of Hon. F. Whitten Peters and Gen. Michael E. Ryan
                      air force role in national security
        Mr. Chairman, members of the committee, 1997 was a defining year
    for U.S. defense policy. Together, the Quadrennial Defense Review (QDR)
    and the independent analysis by the National Defense Panel (NDP)
    significantly raised the level of defense debate. Each of these
    undertakings will undoubtedly have far-reaching defense policy
    implications. We are proud of our Service's contributions to these
    efforts.
    The Quadrennial Defense Review
        One of the most significant outcomes of the QDR was the emergence
    of a new national military strategy. That strategy includes a new
    special emphasis on the critical importance of an early, decisive halt
    to armed aggression to provide wider options for the use of military
    force and to create a window for diplomatic resolution of a crisis.
    This new strategy is also reflected in the President's National
    Security Strategy, the Secretary of Defense's Defense Planning
    Guidance, and the latest edition of the Chairman of the Joint Chiefs of
    Staff's National Military Strategy. It is heavily dependent on the
    speed, range, agility, and overwhelming firepower of aerospace forces.
        One of the greatest strengths of aerospace forces lies in their
    ability to project lethality with less vulnerability. With the advance
    of technology, a more agile aerospace force can substitute for large,
    slow-arriving forces and deliver more firepower in the process. This
    capability minimizes the number of friendly casualties, helps to
    solidify political support for military action, both at home and
    abroad, and buys critical time for diplomatic initiatives and potential
    follow-on military actions. This rapid halt capability also minimizes
    the amount of territory that would have to be retaken should a
    counteroffensive be necessary. We firmly believe this strategy to be
    appropriate, cost-effective, and consistent with American values.
        Another important aspect of the QDR was the reaffirmation of the
    importance of the total force. We embrace the total force concept--we
    depend on it. Air National Guard and Air Force Reserve forces provide
    the necessary wherewithal for our Service to effectively accomplish its
    entire range of military missions.
        We are implementing a balanced, time-phased modernization program
    to build the force necessary to meet the requirements of the QDR
    strategy and enable the successful conduct of joint warfare in the 21st
    century. To help fund this modernization, we are taking steps to
    achieve personnel, business, and force structure efficiencies. The QDR
    reminded each of the Services that in fitting our force structure to
    future needs, we must make hard, but necessary recommendations on
    infrastructure. We will need the support of the Congress to implement
    these recommendations. Dollars saved through these actions will be
    invested in Air Force modernization, providing the nation with a force
    fully prepared for the increasingly complex and diverse security
    challenges of the future.
    The Report of the National Defense Panel
        The National Defense Panel articulated several desired military
    capabilities to meet their postulated future national security
    challenges. Many of these capabilities are present in today's Air
    Force, or will be in the aerospace force planned for the future. For
    example, the panel recognized the imperative to achieve air superiority
    against an enemy's air-to-air, surface-to-air, ballistic and cruise
    missile threats. We are fielding the F-22 and the Airborne Laser to
    address this need.
        The Panel also observed that projecting military power on short
    notice into the backyard of a major regional power demands forces that
    can deploy rapidly, seize the initiative, and achieve national
    objectives with minimal risk of heavy casualties. Aerospace forces
    possess these capabilities. We believe they will be increasingly called
    upon in the future.
        The NDP recommended an increased emphasis on information systems
    (including situational awareness) and information operations; a
    migration to unmanned and space-based systems; a lighter, more mobile
    force; and greater emphasis on precision, speed, stealth, and long
    range strike. The Air Force program stands up well when measured
    against this template because our corporate vision statement--Global
    Engagement: A Vision for the 21st Century Air Force--articulates the
    importance of many of these same priorities.
    Global Engagement
        Global Engagement addresses the range of Air Force activities--
    operations, infrastructure, and personnel--to provide a comprehensive
    map to shape the Air Force during the first quarter of the 21st
    century. It defines the Air Force core competencies which stem from the
    speed, global range, precision, flexibility, unparalleled access, and
    awareness afforded by aerospace forces--competencies that contribute to
    the Chairman of the Joint Chiefs of Staff's Joint Vision 2010 goal of
    Full Spectrum Dominance. Global Engagement establishes the vector our
    Service will follow into the 21st century. The guidance provided by
    Global Engagement, in conjunction with our long range planning efforts,
    form the prism through which we view our near-, mid-, and far-term
    priorities.
        The priorities outlined herein represent our three-fold commitment:
    first, to maintain a ready and capable force to conduct our
    contemporary military mission; second, to size, shape, and streamline
    our Service to implement QDR guidance; and third, to continue the
    evolution of our aerospace force to provide the capabilities necessary
    to protect America's security interests into the next millennium.
                       contemporary air force operations
    Readiness
        The Air Force is expected to maintain a high state of responsive
    readiness across the force due to the critical need to get aerospace
    power rapidly to any crisis. During peacetime, high readiness gives us
    the flexibility to deploy a tailored force anywhere in the world in
    response to emerging crises--to gather essential intelligence, deter
    potential enemies, protect friendly forces and U.S. citizens, apply
    force, or provide humanitarian aid. Airlift, tanker, fighter, bomber,
    space, communications, reconnaissance, intelligence, and many other Air
    Force units are also the first forces called upon in wartime. Aerospace
    power is vital to rapidly halt advancing enemy forces, and critical to
    the success of a Commander in Chief's (CINC) extended campaign plan.
        We judge readiness through objective and subjective assessment of
    several interdependent elements which include personnel, equipment,
    training, logistics, and financial resources. A shortfall in any of
    these areas will negatively impact our overall readiness level.
    Maintaining high readiness in today's environment poses the challenge
    of balancing present requirements with the need to acquire new
    technologies and modernize current systems for the future.
        Since 1986, the Air Force has downsized by nearly 40 percent, while
    military operations other than war have greatly increased. In 1989, our
    Service averaged 3,400 personnel deployed daily for contingencies and
    exercises. Since the conclusion of the Gulf War, that average has grown
    over fourfold to 14,600 in fiscal year 1997. For the foreseeable
    future, aerospace forces are likely to remain in high demand.
        We have taken several steps as a Service to mitigate the effects of
    our high TEMPO, such as reducing deployment lengths, reducing the
    number of headquarters inspections of units, and instituting standdowns
    after lengthy deployments. Additionally, we have introduced the use of
    a TEMPO tracking system and associated metrics to better manage the
    TEMPO of our airmen. This tool gives us an accurate way to identify and
    address TEMPO problems before they occur.
        While 91 percent of our active and Air Reserve Component units are
    maintaining good readiness levels, caution indicators have surfaced in
    some areas--most notably, pilot and navigator retention have decreased
    markedly, some critical second-term reenlistment rates are declining,
    and we are dealing with some serious engine and spare shortages. We are
    taking steps to address each of these readiness challenges.
        Today, our Air Force remains the best in the world and ready to
    answer the nation's call. The pace of current operations has required
    our people to work harder, smarter, and longer hours to maintain our
    readiness and they have risen to the challenge. However, the
    combination of several eroding trends have peaked our concern regarding
    current and future readiness working harder, smarter, and longer is not
    enough. We will continue to pursue a family of initiatives to protect
    Air Force readiness our contract with the CINC's.
    Operational Risk Management
        Maintaining our combat edge depends on our ability to train
    realistically and safely. This involves accepting, but managing risk.
    Fiscal year 1997 was the second safest year in our history in the
    categories of ground fatalities, Class A flight mishaps, and flight
    fatalities. We are working to keep these numbers low by continuing to
    make mishap prevention an integral part of the mission by emphasizing
    Operational Risk Management (ORM).
        ORM is key to maintaining readiness in peacetime, dominance in
    combat, and a crucial component for force protection. It is a decision-
    making tool to systematically identify risks and benefits and help
    determine the best courses of action for any given situation. ORM is
    designed to enhance mission effectiveness by minimizing risks in order
    to reduce mishaps, preserve assets, and safeguard the health and
    welfare of our people. Although historically our Service has been very
    successful in executing its mission with minimum losses, there is still
    room for improvement both in terms of mission accomplishment and mishap
    prevention as our low mishap rates have ``plateaued.'' This fact
    reinforced our decision to implement the ORM process Air Force-wide.
        Proper application of the ORM process and tools will minimize all
    dimensions of risk and reduce mishap rates without compromising mission
    objectives. We are emphasizing ORM in multiple educational programs and
    have initiated formal education and computer-based training to instruct
    our people in the use of ORM. All Air Force personnel should receive
    this training by 1 October 1998.
    The Total Force
        Today, more than ever, the Air Force relies on its total force--
    Active Duty, Air National Guard, and Air Force Reserve working together
    to meet today's peacekeeping and wartime commitments. The total force
    was used extensively during 1997 as Air National Guard and Air Force
    Reserve forces participated in every major deployment and contingency
    tasking. This trend will continue as Guard and Reserve forces play an
    increasing role in a variety of worldwide operations.
        Air National Guard and Air Force Reserve aircrew members serve an
    average of 110 days a year in uniform. During 1997, an average of 6,000
    Guard members and Reservists were deployed each month to support
    exercises, contingencies, and military operations around the world. On
    a volunteer basis, members of the Air Reserve Component deploy on a
    rotational schedule, helping to reduce active duty TEMPO without
    jeopardizing their civilian employment.
        In some cases, the Guard and Reserve are paired together to provide
    extended support to the active force. An example of a joint Guard and
    Reserve mission is the 24 July to 25 October 1997 deployment to perform
    sustainment airlift from Ramstein Air Base, Germany, to the forces in
    the Balkans. Other major deployments in 1997 included the deployment of
    security forces to Saudi Arabia; the deployment of civil engineers,
    firefighters, and Air National Guard air traffic controllers to Taszar,
    Hungary, as part of Operation Joint Guard; the use of KC-135's to
    refuel fighter aircraft enforcing the no-fly zone over Bosnia; and the
    use of F-15's and F-16's to enforce the no-fly zone over Northern Iraq,
    as well as the use of rescue crews to provide combat rescue support for
    those forces. The Air National Guard and Air Force Reserve also
    participated in over 60 exercises worldwide.
        In addition to officially becoming a major command on 17 February
    1997, the Air Force Reserve expanded its missions in several areas. For
    example, in January 1997, an associate undergraduate pilot training
    program was initiated at Columbus AFB, Mississippi, and Vance AFB,
    Oklahoma. This program employs full-time and part-time Reserve airmen
    as instructor pilots to offset a shortfall in active duty instructors.
    The Reserve is also conducting a three year study to determine the
    feasibility of integrating Reserve pilots and maintenance personnel
    into active duty fighter squadrons.
        In May 1997, associate AWACS crews from the Air Force Reserve
    Command's 513th Air Control Group (ACG) at Tinker AFB, Oklahoma,
    participated in their first operational deployment--testing the Western
    European integrated air defense system in exercise Central Enterprise
    97. Since beginning operations in March 1996, 513 ACG personnel have
    performed over 2,000 man-days of service, alleviating some of the TEMPO
    of our active duty crews. These Reservists also prove invaluable at
    home station by performing various duties such as preparing aircraft
    for upcoming missions and performing supervisor of flying duties. The
    associate AWACS Reserve unit also provides a way for the Air Force to
    retain its investment in highly trained personnel who would otherwise
    be lost separating from active duty.
        In September 1997, the Air Force Reserve Command's 8th Space
    Operations Squadron (SOPS) and the 310th Space Group were activated at
    Falcon AFB, Colorado. The 8 SOPS provides near-real time backup support
    to the primary Defense Meteorological Satellite Program operations
    conducted by the National Oceanographic and Atmospheric Agency.
        In October 1997, the 439th Security Forces Squadron (SFS) at
    Westover Air Reserve Base, Massachusetts, achieved full operational
    capability. The Reservists of the 439 SFS augment the 820th Security
    Forces Group at Lackland AFB, Texas, with a deployable force protection
    unit.
        In 1997, the Air National Guard flew over 3,200 readiness support
    airlift missions, 700 airborne transport missions, 500 fighter
    deployment air refueling missions, and performed a variety of other
    challenging missions. For example, in October 1997, three 153rd Airlift
    Wing C-130 aircraft, crews, and support personnel from the Wyoming Air
    National Guard deployed to Jakarta, Indonesia, to fight widespread
    forest fires. The crews flew hundreds of hours during their 60 day
    deployment using their specially equipped C-130's to suppress fires
    over a 3.5 million acre area. During their deployment, the 153rd
    extinguished more than 70 fires in open forest areas in the face of
    incredible challenges posed by heavy smoke and extremely dry
    conditions. This support allowed the Government of Indonesia sufficient
    time to develop an effective firefighting plan of its own and organize
    follow-on indigenous and commercial support to battle the remaining
    fires.
        In 1997, we transferred several new missions from the active
    component to the Air National Guard including the operation of a mobile
    ground station by the 137th Space Warning Squadron of the Colorado Air
    National Guard and an increased share of the international military
    flying training program.
        Air National Guard and Air Force Reserve personnel remain an
    integral part of our total force as they work side by side with active
    duty airmen to accomplish the Air Force mission.
    Force Protection
        We are committed to taking the necessary steps to protect our
    people. We have addressed and corrected the deficiencies identified by
    the Downing Commission and strengthened our force protection posture
    throughout Southwest Asia. This included the rapid deployment of
    additional security forces to Saudi Arabia to relocate our people after
    the Khobar Towers tragedy. These forces assisted with moving airmen
    from Dhahran to Prince Sultan Air Base in Al Kharj and military and
    non-combatant personnel from vulnerable facilities in Riyadh to a more
    secure location outside the city. We have also enhanced our force
    protection equipment and integrated intelligence assets and are
    adjusting our doctrine, strategy, policies, and training accordingly.
    Additionally, we are expanding the scope of our force protection
    program to address our growing Aerospace Expeditionary Force (AEF)
    requirements.
        In 1997 we established the Air Force Security Forces Center at
    Lackland AFB, Texas, comprised of the 820th Security Forces Group (SFG)
    and the Air Force Force Protection Battlelab. The 820 SFG is a rapidly
    deployable, self-contained unit integrating essential force protection
    functions provided by security forces, intelligence, Office of Special
    Investigation, medical, communications, and engineering personnel. This
    organization provides AEF commanders with the flexibility to tailor a
    force protection package to meet the needs of their deployed location.
    Today, squadron-sized security forces units deploy with each AEF to
    provide a comprehensive stand-alone security and antiterrorism force
    protection capability. Equipment like the Tactical Automated Security
    System, which uses motion and thermal detection capabilities for
    perimeter defense, is used to enhance installation commanders' force
    protection situational awareness. In 1997, the 820 SFG deployed three
    times: twice to Bahrain to support the 366th Air Expeditionary Wing
    (AEW) and the 347 AEW, and once to Egypt to support the Bright Star
    exercise.
        The other component of our force protection program is the Force
    Protection Battlelab. This battlelab is a compact, multi-disciplinary
    ``think tank'' chartered to objectively examine force protection
    concepts to identify and define unmet needs. Once needs are identified,
    the battlelab searches for creative, near-term solutions through
    modeling and simulation, changes in training or policy, available or
    easily modified technology, or possible new uses for existing
    technology. The Force Protection Battlelab has three ongoing
    initiatives. The first aims to improve security at the South American
    ground-based radar sites that support counter-drug operations. The
    battlelab is exploring new ways to use existing thermal imagers to
    expand current perimeter monitoring capabilities. The second initiative
    involves exploring the use of unmanned aerial vehicles to provide
    defense force commanders with real-time ground situational awareness.
    The third initiative deals with increasing our ability to detect
    vehicle explosive devices by using different configurations of existing
    commercial off-the-shelf detection capabilities.
        We will continue to emphasize investments in force protection
    technology and its applications to provide a safer environment for our
    airmen as they conduct operations worldwide.
    Sustained Theater Operations
        Since the NATO-led Operation Joint Endeavor/Joint Guard began on 20
    December 1995 to maintain the peace between the formerly warring
    factions in Bosnia-Herzegovina, we have maintained over 2,900 personnel
    in direct support of this operation and flown over 4,200 missions--25
    percent of the coalition total. Our missions include close air support,
    combat air patrol, suppression of enemy air defense, air refueling,
    combat search and rescue, and intelligence collection sorties. We have
    also deployed space support teams to furnish critical space-based
    communications, weather, navigation, and missile warning support to the
    coalition forces.
        In Southwest Asia we have deployed over 7,000 personnel since
    August 1992 and have flown over 110,400 sorties--70 percent of the
    coalition total--in support of Operation Southern Watch to ensure
    continued Iraqi compliance with the April 1991 United Nations Security
    Council Resolution (UNSCR) 688.
        Similarly, we have deployed over 1,200 personnel and flown over
    3,325 sorties--72 percent of the coalition total--in support of
    Operations Provide Comfort and Northern Watch to enforce the no-fly
    zone over Northern Iraq. Additionally, our space support teams are
    integrated into the combined air operations center to provide deployed
    forces with support from our space-based assets.
        Southwest Asia continues to be a very volatile region. Our AEF's
    have proven to be an effective tool to strengthen relations with
    coalition partners and respond to crises.
    Aerospace Expeditionary Forces
        Our Service is exploring and refining concepts of operations and
    logistics associated with the deployment and employment of AEF's. We
    tailor AEF employment packages that provide CINC's with the necessary
    command, control, mission, and support elements to create a desired
    operational effect within 72 hours of initial notification to employ
    forces. Our first AEF deployed in October 1995 to supplement Operation
    Southern Watch. In 1997, we deployed five AEF's for exercises and
    contingencies. In each case, we created a tailored AEF by combining an
    appropriate mix of squadron-level units. By varying the mix, an AEF can
    support a broad range of missions, from humanitarian relief to
    contingency operations.
        In the combat configuration used in Southwest Asia, our AEF can
    produce 70-80 combat sorties a day and may include bombers employed
    from a home station or forward operating location. This AEF's portfolio
    includes air-to-ground, air-to-air, suppression of enemy air defenses,
    air refueling, and intelligence, surveillance and reconnaissance
    assets. AEF's provide CINC's with a wide range of airpower options to
    meet their specific theater needs. Additionally, the AEF's ability to
    rapidly and decisively project aerospace power into a theater of
    operations will allow greater flexibility in determining the forward
    deployed forces necessary to meet a CINC's requirements.
        We are institutionalizing this expeditionary mindset within our
    Service's culture by emphasizing the fundamentals of expeditionary
    warfare in our exercises and training. This includes rapid crisis
    response, an ability to operate out of austere bed-down locations with
    minimum initial support, robust and secure C\2\ linkages, robust force
    protection, and rapid, effective employment. In this way, our forces
    focus their logistics techniques to determine the absolute minimum
    support required to deploy rapidly and employ immediately upon arrival.
        To supplement our field tests, the Air Force AEF Battlelab is
    exploring several ideas to improve our expeditionary capabilities. One
    initiative is to demonstrate the use of commercially available
    equipment to calibrate targeting and sensor systems on multiple
    aircraft platforms. The current calibration systems are unique to each
    aircraft, require extensive logistics support, and can only be used in
    controlled environmental conditions. This battlelab initiative would
    use a calibration system common to all aircraft that requires less
    logistics support, less set up time, and operates under any
    environmental condition. We conducted a successful field demonstration
    of this system last year during an AEF deployment and continued to
    refine our expeditionary capabilities during deployments to Southwest
    Asia.
        In October 1997, the 366 AEW from Mountain Home AFB, Idaho,
    deployed F-15's, F-16's, B-1 bombers, and KC-135's to Shaikh Isa,
    Bahrain. During its deployment, the wing flew 444 sorties in support of
    Operation Southern Watch. Later that month, the 347 AEW deployed to the
    Middle East in response to Saddam Hussein's refusal to comply with
    United Nations mandated weapons inspections. This AEF deployed on short
    notice and included F-15's, F-16's, B-1's, KC-135's, and an Army
    Patriot battery. These forces joined F-117's and B-52's already in
    theater to provide the CINC with highly flexible airpower options.
        Maintaining an internationally recognized ability to deploy
    rapidly, execute upon arrival, and sustain complex operations will
    significantly enhance our ability to deter potential adversaries. We
    currently have the capability to conduct both lethal and non-lethal AEF
    operations worldwide. For the long-term, we expect AEF's to continue to
    mature as effective tools for crisis response and cooperative
    engagement with potential coalition partners.
    Cooperative Engagement
        An expectation that the U.S. military will need to be able to
    incorporate the military capabilities of friends and Allies makes it
    essential for us to broaden our relationships with the militaries of
    other countries. These ties facilitate cooperation with the U.S. when
    crises arise, whether this be the need for quick overseas basing
    access, or the need to build a coalition of willing and capable allies.
    We are committed to cooperative engagement programs and initiatives
    that increase mutual understanding and enhance interoperability.
        During the 1990's, Air Force Special Operations Command (AFSOC)
    forces conducted over 150 operations in 22 countries, including over 30
    exercises in the Pacific and numerous military-to-military training
    events in Latin America, Africa, and Europe. AFSOC special tactics
    teams often help train foreign militaries in subjects such as air
    operations, combat medicine, air traffic control, and airbase defense.
        Recently, the focus of our cooperative engagement and stability
    enhancement efforts have been in our Partnership for Peace (PfP)
    participation, our Military Contact Program, the Armaments Cooperation
    Program, and our Security Assistance efforts, which include Foreign
    Military Sales (FMS) and International Military Education and Training
    (IMET).
        In 1997, our Service participated in over 20 exercises with
    approximately 25 PfP countries and conducted over 200 focused Military
    Contact Program events in Europe alone. We maintain 220 agreements
    under the Armaments Cooperation Program in an effort to encourage the
    exchange of information with our coalition partners. These involve
    cooperative research and development, scientist and engineer exchanges,
    equipment loans, and scientific and technical information exchanges.
        Additionally, our FMS program is currently managing over 4,600
    active contracts for aircraft, spare parts, munitions, and training
    totaling over $107 billion, while the IMET program continues to provide
    all types of training--from flying training to professional military
    education. In 1997 over 5,000 foreign military members representing
    approximately 100 countries received some form of training under the
    IMET program.
        In April 1997, our Service hosted a gathering of the leaders of the
    world's air forces. Eighty-four air chiefs participated in this
    ``Global Air Chiefs Conference,'' a truly landmark event. General Peter
    Deynekin, then Commander of the Russian Air Force, characterized it as
    one of the most significant events of the 20th century. The
    significance of the conference lies in the fact that despite widely
    differing languages and customs, each of the air chiefs shares an
    appreciation for the unique capabilities of airpower and for the
    revolutionary capability that can be achieved when space-based assets
    can be effectively integrated into aerospace operations.
    Space Operations
        An ability to conduct missions better from space will certainly
    benefit all U.S. forces. Space operations figure prominently in our
    plans for the future. Our joint-use space-based systems are
    increasingly responsible for the information stream and global
    awareness that we cannot take for granted. In particular, 1997 saw the
    Air Force and the National Reconnaissance Office achieve unparalleled
    levels of cooperation in enhanced space support to theater warfighters
    and National Intelligence users. Today, it is difficult to contemplate
    how a significant U.S. military operation could function without
    integrated space-based support.
        That range of support is gradually becoming transparent to the
    users. Our aircrews rely heavily on intelligence and weather data
    derived from space systems. The command and control of air, land, and
    sea forces is melded together with space-based communication. Navstar
    Global Positioning System (GPS) satellites guide aircraft and weapons
    precisely to targets and help avoid collateral damage. In the future,
    near-real time targeting sent from sensors directly into the cockpit
    will allow us to improve our aircrews' lethality.
        1997 was the busiest year thus far for Air Force space operations.
    Our two major ranges, Vandenberg AFB, California, and Patrick AFB,
    Florida, conducted 45 successful space and missile launches, including
    range support and support services for every government and commercial
    launch of the Space Shuttle, Pegasus, Atlas, Delta, Titan IV, and
    Athena II boosters. In addition, our Satellite Control Network
    maintained a 99.5 percent mission effectiveness rate with over 159,000
    satellite contacts.
        On 23 February 1997, the first Titan IVB was launched to insert a
    Defense Support Program (DSP) missile warning satellite into orbit. The
    Titan IVB's upgraded solid rocket motors give it a 25 percent increase
    in payload capacity as well as greater reliability. On 7 November 1997
    our Service set a new mark with the third successful launch of
    America's heavy lift Titan IV within a 23 day period, eclipsing the
    previous record of 65 days set in 1996. The Titan IV has a 95.7 percent
    success rate since launching the first of 23 mission payloads into
    space in June 1989.
        Despite the failure of a Delta II launch vehicle in January 1997,
    there was a total of 10 successful Delta launches in 1997. These
    included the launch of a next-generation GPS satellite in July 1997 to
    replenish the GPS operational constellation of 24 satellites and ensure
    that a continuous GPS signal will remain available for precise
    navigation operations worldwide.
        In the area of military satellite communications, MILSTAR
    satellites are now providing secure, jam-resistant, nuclear-survivable
    command and control communications to the East Atlantic and European
    theaters. In Bosnia, the Joint Broadcast System used direct satellite
    broadcasts to transmit live unmanned aerial vehicle images and other
    large digital products to theater commanders and supporting forces--
    dramatically increasing their global situational awareness. Meanwhile,
    the Global Broadcast Service is progressing toward its first launch in
    1998 and will give our forces similar broadcast services worldwide.
        Today, without question, space-based capabilities are a vital
    component that we depend on for the success of joint military
    operations. Recently, the Air Force, the National Reconnaissance
    Office, and the Defense Advanced Research Projects Agency, have all
    agreed to have a joint space-based Moving Target Indicator
    demonstration using technology, expertise, and resources from all
    three. Enhancing space support to the warfighter remains a top priority
    for our space operators.
                          maintaining a quality force
        People remain our most vital resource. The intense demands placed
    on our airmen of all ranks as they perform Air Force missions around
    the world require special individuals who are highly motivated, well
    trained, and responsibly led.
    Recruiting Quality People
        We are committed to recruiting and retaining the high caliber
    people necessary to lead our Service into the 21st century. In fiscal
    year 1997 we achieved our recruiting goal of 30,200 recruits--99
    percent of whom were high school graduates. We were also successful in
    reenlisting 110 individuals to fill critical specialties who had
    previously left the Air Force. To date, new enlistment contracts for
    fiscal year 1998 are running slightly ahead of our target--but
    recruiting remains a challenge. Ample opportunity to attend college, a
    robust economy with low unemployment, military drawdowns, and highly
    visible U.S. commitments abroad have decreased the pool of interested,
    qualified potential recruits. Annual youth attitude surveys show the
    interest of young men in serving in the Air Force has dropped from 17
    percent in 1989 and has stabilized at 12 percent. The interest of young
    women in serving has remained relatively constant (around 7 percent)
    over the same period; however, we did see a 1 percent drop in fiscal
    year 1997.
        Despite the fact that we have been able to recruit adequate numbers
    of personnel, there has been a decrease in the number of enlistees
    scoring in the top half on the Armed Forces Qualification Test, down
    from 88 percent in 1989 to 79 percent today. To address this trend, we
    have directed our recruiters to concentrate their efforts on the
    college and college-bound candidates. Additionally, it is becoming
    increasingly difficult to fill the mechanical, pararescue, and combat
    control career fields. To improve our success in manning these
    specialties, we have directed a larger portion of our advertising
    budget toward the technical market and have raised enlistment bonuses
    in the most difficult-to-fill skills. Overcoming these recruiting
    challenges is essential to maintain the caliber of airmen necessary to
    effectively serve in our technologically sophisticated aerospace force.
    Developing the Airmen of the Future
        After we recruit and induct young airmen, we invest in their
    education and training to prepare them for today's demanding
    operational environments and for future challenges. The high standards
    of behavior expected of our personnel demand a strong moral and ethical
    foundation. On 1 January 1997, we published an Air Force Core Values
    pamphlet. Air Force core values--integrity first, service before self,
    and excellence in all we do--apply to all airmen of the Air Force,
    whether officer, enlisted, civil servant, or contractor.
        Our people are living these values every day. Like the members of
    the 31st Civil Engineer Squadron and 31st RED HORSE flight from Aviano
    Air Base and Camp Darby, Italy, who assisted with local disaster relief
    after earthquakes devastated central Italy. Or the members of the 9th
    Reconnaissance Wing at Beale AFB, California, who volunteered countless
    hours to help 9,000 area residents displaced by massive flooding--
    volunteers who provided victims with food, shelter, and medicine and
    went the extra step to comfort frightened children with toys, cookies,
    and a friendly smile. This scene was repeated by the men and women of
    Grand Forks AFB, North Dakota, who assisted over 25,000 flood victims
    in that area.
        Strong core values bind our people together and demonstrate to the
    American people that our military forces are worthy of their trust and
    support. Air Force men and women exhibit integrity, selflessness, and
    excellence every day, in every corner of the world, working side by
    side to accomplish their mission. This effective working relationship
    begins on the first day of basic training and is reinforced by
    integrating core values into every aspect of our education and training
    programs.
                Gender-Integrated Training
        Every year our Service trains more than 30,000 basic trainees--24
    percent of our graduates are women. The Air Force has successfully
    employed gender-integrated basic training since 1976.
        In late 1997, Senator Kassebaum-Baker's advisory committee on
    gender-integrated training released its report, calling for changes in
    the structure of basic and operational training. We are currently
    reviewing our training practices in light of the Kassebaum report, and
    will forward our recommendations to the Secretary of Defense in March
    1998. As part of this effort, we are reevaluating our basic training
    physical conditioning program to ensure it meets the needs of our
    airmen and the needs of the Air Force.
                Leadership Training
        As an expeditionary force, we must assure the development of
    ``warrior-leaders'' who can successfully lead air forces and others
    with a wide variety of capabilities into a hostile, austere
    environment. To win in combat, the development of warrior-leaders is
    every bit as important as fielding the increasingly sophisticated
    weapon systems necessary to fight a war. The superior technology the
    United States can bring to bear will only be successful if we have
    trained, capable leaders to employ it.
        As a result, leadership preparation continues to be a cornerstone
    of our education and training programs. To supplement leadership
    preparation provided in the various levels of professional military
    education, additional training is provided by major commands for
    individuals selected as squadron commanders and by Air University for
    individuals selected as group or wing commanders. This training covers
    the everyday aspects of command such as military and civilian personnel
    management, resource management, legal issues, and complaint
    processing. Our highest level of leadership training occurs in the
    Senior Leader Orientation Course where new brigadier generals and
    civilian equivalents receive training on key issues and on how to be
    effective representatives of the Air Force.
                Aircrew Training
        The Air Force is the lead Service for the Joint Primary Aircraft
    Training System (JPATS) program. This joint Air Force and Navy program
    is acquiring 372 JPATS aircraft for the Air Force, with deliveries
    beginning in 1999. The T-6A Texan II will replace the aging T-37's and
    vastly improve our undergraduate flying primary training capability.
    The T-6A incorporates several features that are not on current Air
    Force and Navy trainers. Improvements include: missionized ejection
    seats, improved birdstrike protection, electronic flight
    instrumentation and digital cockpit display, pressurized cockpit, and
    flexibility to accommodate a wide range of male and female pilot
    candidates. We are also modernizing our T-38 fleet, allowing pilot
    candidates to train on modern avionics representative of the front line
    systems they will eventually fly in combat.
        To address the growing pilot shortage, we plan to increase our
    yearly pilot production from 900 pilots per year to 1,100 pilots per
    year by fiscal year 2000. We are also examining various alternatives to
    maximize the utilization of our T-38 fleet. Our increase in pilot
    production has resulted in a corresponding shortfall in active duty
    instructor pilots. Unable to pull more instructors out of mission area
    cockpits, we have established an associate undergraduate pilot training
    program to employ Air Force Reserve pilots as instructors. We initiated
    this program at Columbus AFB, Mississippi, and Vance AFB, Oklahoma, in
    January 1997. In the 12 months since the first instructor pilot started
    training, we have hired a total of 43 of the 50 pilots scheduled to
    participate in the program. Over 30 of these individuals are now fully
    mission qualified and have flown well over 250 student sorties in
    support of the specialized undergraduate pilot training mission. Each
    Reserve instructor pilot will contribute one-third of the number of
    sorties produced by an active duty instructor pilot. Once the remaining
    Reserve instructor pilots complete their training, we estimate that
    they will contribute over 1,600 student sorties per year.
        We are rapidly expanding this program to all student pilot training
    bases and to other training aircraft to include the T-37, T-1, and AT-
    38 missions. When completed in the summer of 2000, this program will
    employ over 539 Air Force Reserve pilots (114 full-time and 425 part-
    time) and produce a sortie rate equivalent to 225 active duty
    instructor pilots.
        We are also pursuing the development of revolutionary new ways to
    train our operational aircrews. Distributed mission training will use
    state-of-the-art distributed simulation technology and advanced flight
    simulators to permit aircrews to remain at their home units while
    ``flying'' and training in synthetic battlespace, hooked electronically
    to other aircrews located at distant airbases. This will improve the
    quality and availability of training while reducing aircraft operation
    and maintenance costs, as well as limiting the amount of time our
    personnel will have to spend away from home.
                Professional Military Education
        Educating our airmen to be effective leaders, supervisors, and
    managers is vital to our continued success. Enlisted Professional
    Military Education (PME) broadens enlisted members' perspectives and
    increases their knowledge of military studies, communication skills,
    leadership, and supervision to prepare them to assume more
    responsibility. In 1997, we conducted a review of all three levels of
    our enlisted PME curriculum. We implemented a revised curriculum for
    the Airman Leadership School in 1997 to eliminate those items better
    taught at field level and place more emphasis on the profession of
    arms. We are validating revised curriculums for the Non Commissioned
    Officer Academy and the Senior Non Commissioned Officer Academy that
    include subject areas like stress management, suicide prevention,
    project management, and diversity awareness.
        For newly commissioned officers and selected civilians we are
    developing an Air and Space Basic Course to provide a common frame of
    reference for understanding and employing aerospace forces. This course
    will focus on the history, doctrine, strategy, and operational aspects
    of aerospace power. We will conduct the first class in July 1998.
        Follow-on professional military education for our officer corps
    consists of Squadron Officer School, Intermediate Service School, and
    Senior Service School. These schools teach the skills necessary for
    good officership, command, and staff. They also educate senior officers
    in the strategic employment of aerospace forces to support national
    security objectives. Our officer professional military education is
    currently undergoing a complete curriculum review to ensure each level
    is appropriately tailored to its audience. Additionally, we are
    pursuing legislation to authorize granting Masters degrees to graduates
    of Air Command and Staff College and Air War College.
    Retaining Quality People
        Training and educating our people is of little value if we cannot
    retain them to benefit from their skill and experience. Unfortunately,
    there are troubling trends in this area. Our first- and second-term
    reenlistment rates have declined in each of the past two years. Two
    initiatives we are implementing to reverse these trends include
    expanding the Selective Reenlistment Bonus (SRB) program to include
    additional Air Force specialties and increasing SRB bonus rates in
    specialties where manning and retention rates are low. Additionally, to
    ensure our first- and second-term airmen have the information they need
    to make an educated reenlistment decision, supervisors are now required
    to address the benefits of an Air Force career during semiannual
    feedback sessions.
        For the officer corps, we are concerned that pilot and navigator
    retention rates have declined each of the past three years. Since
    fiscal year 1995, pilot retention has fallen from 87 percent to 71
    percent and navigator retention has slipped from 86 percent to 73
    percent. Leading indicators are also showing increasingly downward
    trends. For example, the number of pilots accepting aviator
    continuation pay is down from 59 percent in fiscal year 1996 to 33
    percent as of mid-January 1998. This is a 48 percent drop from the
    record high fiscal year 1994 level of 81 percent. Similarly, pilot
    separations increased 27 percent between fiscal year 1996 and fiscal
    year 1997 and continue to rise.
        One of the major factors that weighs heavily on an individual's
    decision to stay in or leave the Service is the issue of compensation.
    The Air Force appreciates Congressional support in 1997 for legislation
    to restore the original value of the aircrew compensation package. We
    are closely monitoring aviator retention and are cautiously optimistic
    about the impact of the new incentive at this point. Compensation is
    but one of several quality of life initiatives that we are pursuing to
    make military service more attractive to our personnel. These
    initiatives should create positive incentives for all Air Force members
    and positively impact retention in a variety of career fields.
                Enhancing Quality of Life
        Quality of Life (QoL) investments have the greatest rate of return
    in terms of recruiting and retaining quality airmen for our highly
    technical aerospace missions. Based on feedback from the field, our
    corporate strategy is to pursue initiatives supporting seven quality of
    life priorities that satisfy a broad range of needs and expectations:
    (1) fair and equitable compensation; (2) balanced TEMPO; (3) quality
    health care; (4) safe, affordable, and adequate housing; (5) a
    stabilized retirement system; (6) community programs; and (7) expanded
    educational opportunities.
        Fair and Equitable Compensation.--Adequate compensation has the
    most impact on our people's standard of living and remains a key
    element of our total force QoL agenda. Continued Congressional support
    for competitive annual pay increases, cost of living allowance
    increases, and improvements to permanent-change-of-station cost
    reimbursements are critical to maintaining the value of this important
    QoL component.
        We continue to support the commissary benefit as an important non-
    pay entitlement upon which our active duty personnel, reserve
    personnel, and retirees depend. Our people count on savings from
    commissary purchases to extend already stretched incomes--offsetting
    lagging pay raises, inflation, and out-of-pocket housing and moving
    costs. To young enlisted families, elimination of the commissary
    subsidy would have the same impact as a 9 percent pay cut.
        To reduce the out-of-pocket expenses members incur during changes
    of station, we have approved $101 million in nonappropriated funding to
    construct 420 new Temporary Lodging Facility (TLF) units and repair
    another 305. Surveys show 88 percent of members needed an average of 14
    days in temporary quarters upon arrival at their new duty location. The
    average off-base lodging cost at the locations where we are building
    new TLF's is $70 per day compared to $24 on base. Building these units
    will save money for both the members and the Air Force.
        Balanced TEMPO.--Air Force TEMPO was very high in 1997--supporting
    numerous major contingency operations and over 180 coalition, allied,
    and joint exercises around the world. Since 1989, deployment
    requirements have quadrupled, while permanent forward basing has
    decreased by 66 percent. Endstrength has decreased by 39 percent since
    1986, the beginning of the drawdown.
        TEMPO is inextricably linked to both readiness and QoL. Our
    objective is to maintain a reasonable TEMPO that balances the needs of
    our contemporary military mission with our people's QoL. We have
    established 120 days per year as the ``desired maximum'' number of days
    individuals should be away from their home station for any reason. Air
    Force management initiatives that were implemented between fiscal year
    1994 and fiscal year 1996 (Global Military Force Policy, Global
    Sourcing, and increased Air Reserve Component participation), resulted
    in a reduction in the number of weapons systems/skill areas that
    exceeded our 120-day rate from 13 to 4.
        However, despite continued aggressive management of resources, the
    number of systems/skills above the 120-day mark increased to ten in
    fiscal year 1997. We are addressing this increase by taking steps to
    mitigate each of the factors contributing to high TEMPO--operational
    deployments, inspections, and exercises.
        We have reduced typical aircrew deployments from 90 to 45 days and
    instituted post-deployment standdowns to give people a break after
    deployments of 45 or more days, allowing time to reacquaint with family
    and return to normalcy. Additionally, in 1998, the length of unit
    inspections will be reduced by 10 percent with an additional 20 percent
    reduction in fiscal year 1999. There is also an effort underway to use
    real-world deployments to inspect operational readiness as an
    alternative to using simulated scenarios for the purpose of inspection.
    This initiative was used to inspect the 366 AEW from Mountain Home AFB,
    Idaho, in 1997 during its deployment to Bahrain in support of Operation
    Southern Watch. In the short- to mid-term, there are also efforts on
    the Joint Staff and the Air Staff to reduce exercises. The joint goal
    is to reduce exercise man-days by 15 percent before fiscal year 2001,
    and we anticipate a 10 percent reduction in Air Force exercises by
    fiscal year 2002.
        On 1 October 1997, we implemented a new system to track TEMPO. The
    objective is to provide senior leaders with the information they need
    to identify highly-tasked weapon systems and career fields and, if
    necessary, take action to reduce their stress. We distributed this new
    management system to all major commands and military personnel flights
    with an easy-to-use database that identifies the number of days a
    person has been on temporary duty in a 12-month period. This database
    tool allows Air Force commanders, using laptop or desktop computers, to
    view TEMPO information from the Air Force, major command, base, and
    unit level by Air Force specialty code, weapon system, or social
    security number. This system gives commanders a tool they need to help
    manage the TEMPO of their units.
        Our efforts to balance the impact of TEMPO are designed to offset
    the effects of increased TEMPO levels. We are closely monitoring the
    situation to determine our ability to sustain this level of activity.
        Quality Health Care.--We have an obligation to provide high-
    quality, affordable health care for all of our beneficiaries. The Air
    Force operates 46 of the Department's 115 hospitals and 33 of its 471
    clinics. Each of these facilities is accredited by the Joint Commission
    on Accreditation of Healthcare Organizations, and meets the same
    standards as civilian hospitals.
        For the past five years, average accreditation scores for military
    hospitals have exceeded the average civilian scores. Furthermore, 17
    percent of Air Force facilities received accreditation with
    commendation--the highest rating available--compared to 12 percent in
    the civilian sector.
        The TRICARE health plan which combines military and civilian
    medical capabilities to provide care for active duty and CHAMPUS-
    eligible individuals is a vital tool to complement Air Force hospitals
    and clinics. While the TRICARE program has experienced some problems in
    the early going, it has proven to be a success on the whole. A survey
    last year of TRICARE Prime enrollees found that 80 percent of TRICARE
    participants rated their care good to excellent and 9 out of 10 would
    reenroll. Problems that patients have experienced, such as multiple co-
    payments for a single episode of care and the portability of Prime
    enrollment, will be resolved in 1998. Although TRICARE will be fully
    implemented by Spring 1998, the law prohibits Medicare-eligible
    retirees from participating in TRICARE. A tri-Service task force is
    looking into alternatives for their care, as space-available care
    becomes more limited.
        One step in meeting the commitment to care for this group is
    Medicare Subvention legislation that allows Medicare reimbursement for
    medical care provided in Department of Defense (DOD) facilities to
    Medicare-eligible beneficiaries. We strongly support this approach.
    This is clearly the first step in meeting the health care needs of our
    seniors. Our Service will be participating in the Congressionally-
    mandated Medicare Demonstration project for military retirees over age
    65. We are also evaluating other medical alternatives for these older
    retirees, such as the Federal Employees Health Benefits Program and
    expansion of the National Mail Order Pharmacy Program.
        Safe, Affordable, and Adequate Housing.--Access to safe,
    affordable, and adequate housing should be available for every member
    of our military forces. Last year we completed a dormitory master plan
    to clearly identify housing requirements for our unaccompanied enlisted
    force and instituted a phased plan to accomplish it. The first step in
    this plan is to eliminate the remaining permanent party, central-
    latrine dormitories.
        The second step, which will begin in fiscal year 2000, is to
    provide new dormitories to meet our projected 17,000 room deficit. We
    remain firmly committed to the DOD ``1+1'' dormitory construction
    standard for all new permanent party dormitories. This provides for
    two-person occupancy of an apartment-like unit with a shared bathroom
    and kitchen and separate, private sleeping quarters. The first unit of
    this type has been built at McChord AFB, Washington, and is a big hit
    with our airmen.
        The third step calls for the future replacement or conversion of
    our existing adequate dorms as they wear out. We will not convert or
    replace these adequate ``2+2'' dormitories until their facility
    condition warrants a capital investment. Until these existing units are
    replaced or reconfigured, we are phasing in a private-room assignment
    policy that will authorize private rooms for all our unaccompanied
    airmen by fiscal year 2002.
        The combined strategy of eliminating central-latrine dorms,
    building new ``1+1'' dorms to meet our deficit, and implementing a
    private-room assignment policy goes a long way toward improving the
    quality of life and retention of our unaccompanied airmen. This
    commitment to our airmen extends to our men and women stationed
    overseas, especially in areas such as South Korea where the lack of
    unaccompanied on-base housing has force protection and readiness
    implications.
        For Air Force families, we must revitalize over 61,000 housing
    units that have an average age of approximately 35 years. Although the
    Air Force owns or leases more than 110,000 homes, 41,000 families
    remain on base housing waiting lists. It appears that privatization may
    offer an opportunity in this area.
        At Lackland AFB, Texas, a privatization project appears feasible to
    replace 272 housing units and construct an additional 148 units on
    base. At Robins AFB, Georgia, we are developing a privatization project
    for 670 units on land currently owned by the Air Force that will be
    conveyed to a developer to create a new neighborhood immediately off
    base. Under the privatization approach, housing units are leased by the
    privatization owner to Air Force members who pay rent and utilities
    equal to what they receive as basic allowance for their housing.
        Privatization provides an opportunity to bring substandard housing
    units up to standards in significantly less time than it would take
    under the current system. We will implement this innovative approach
    where it is economically and financially feasible to do so.
        Stabilized Retirement System.--Because of the critical link between
    retirement, retention, and readiness, we continue to support
    preservation of the current retirement system. The 1980's reforms to
    military retirement devalued it as a retention tool. Members affected
    by these reforms are telling us two things about retirement. First,
    having lost 25 percent of its lifetime value during these reforms,
    military retirement is no longer our number one retention tool. Second,
    our members are uncertain that the retirement plan they signed up under
    will be there when they do reach retirement eligibility. We continue to
    closely monitor our officer and enlisted retention rates to ascertain
    what impact military retirement (and other personnel programs) play in
    our members' decision to stay in or leave the Service. We believe it is
    imperative to preserve the current retirement system. The mere
    suggestion of a change to the military retirement system causes serious
    concern throughout the force. We need Congressional support to
    stabilize and preserve the military retirement system. Our readiness
    depends on it.
        Community Programs.--Air Force community programs are designed to
    help active duty members with their dual responsibilities as military
    members and parents. They provide child care, before- and after-school
    programs for children 6-12 years of age, youth centers for teens, and
    family support centers to help individuals cope with family
    separations.
        At the end of fiscal year 1997, our Service was able to provide 57
    percent of the 86,000 needed child care spaces. Facility projects and
    funding are in place to increase this to 65 percent by 2002. Enhancing
    and expanding the before- and after-school programs for children 6-12
    years of age is a major part of our efforts in this area. These
    programs offer direct supervision for children who may currently stay
    at home alone before and after school and during holidays.
        Teen issues continue to be on the front burner in all Air Force
    communities. An Air Force-wide Teen Forum was held to identify issues
    and begin planning initiatives to improve services. To improve program
    quality, youth programs are being affiliated with the Boys & Girls
    Clubs of America, and new or expanded youth centers are under
    construction at many installations.
        Expanded Education Opportunities.--A fully-funded tuition
    assistance program and exploitation of distance learning technologies
    are two key components of our quality of life-related educational
    programs. Both of these programs provide exceptional educational
    opportunity which is consistently cited by our new recruits as the
    number one reason they enlist in the Air Force. Our Community College
    of the Air Force also continues to provide our enlisted force the means
    to earn job-related Associate degrees. This incentive not only
    motivates our airmen to achieve educational goals, but also serves to
    provide technically-proficient personnel for the Air Force's mission
    requirements. The opportunity provided by the 1996 Veterans Benefits
    Improvement Act to allow Veterans Educational Assistance Program
    contributors to convert to the much more advantageous Montgomery GI
    Bill was well received--61 percent of those eligible in the Air Force
    made the conversion.
                Promoting Equal Opportunity
        The Air Force gains its strength through diversity. Racial minority
    representation in our Service has risen from 14 percent in 1975 to 23
    percent today. Women now comprise 17 percent of the force--16 percent
    of the officer corps and 18 percent of the enlisted force. Our people
    feel that they are being treated fairly and know programs exist to
    bring complaints of discrimination and harassment to the attention of
    their supervisors.
        We have two such programs that military and civilian personnel may
    use--the military equal opportunity program and the civilian equal
    employment opportunity program. We are conducting a top-to-bottom
    review of both programs to see if they can be managed more efficiently
    and effectively and to determine if staffing, training, and funding are
    adequate to carry out their respective responsibilities. The review is
    expected to be complete in early 1998.
        The Air Force equal opportunity program will continue to stress
    command commitment and accountability, clarity of policy, effective
    training, and fair complaint handling. Our goal is to promote
    individual opportunity and professional growth in an environment free
    from discrimination and harassment.
        preparing for the 21st century--strengthening core competencies
        Our people deserve to be equipped with the right tools to
    accomplish our missions. The Air Force modernization program is
    designed to enhance the unique capabilities embodied in our specialized
    core competencies--Air and Space Superiority, Precision Engagement,
    Global Attack, Rapid Global Mobility, Information Superiority, and
    Agile Combat Support. These competencies provide the rapid, precise,
    and global response that gives our combatant commanders and the
    National Command Authorities the necessary options to respond to
    regional crises.
    Air and Space Superiority
        Air and space superiority is a fundamental requirement for all
    operational concepts in Joint Vision 2010 and is a prerequisite to
    achieving full spectrum dominance. It is essential that U.S. and allied
    forces, both in-place and those deploying to theater, be protected from
    enemy air attacks early in the conflict. As potential adversaries
    acquire more capable fighter aircraft and, importantly, longer-range
    air-to-air missiles, it will become more difficult for a small
    expeditionary force to defend friendly airspace effectively and to
    secure air superiority quickly.
        The National Defense Panel pointed out that legacy systems procured
    today will be at risk in the 2010-2020 time frame. That is precisely
    why our Service is investing in the leap-ahead capability embodied in
    the F-22 Raptor. Three distinguishing factors: supercruise; stealth;
    and integrated avionics make the F-22 truly revolutionary. The F-22's
    ability to engage enemy aircraft before being detected by them will
    allow our forces to shoot down large numbers of enemy aircraft while
    minimizing the number of our fighters lost in air-to-air engagements.
    This high exchange ratio, coupled with the F-22's ability to operate
    effectively in the vicinity of surface-to-air missiles, will enable our
    forces to achieve a dominant air defense posture and air superiority
    within the early days of a major theater war. The F-22 will enable the
    United States to dominate the air arena and deny our adversaries
    sanctuary--giving every member of the joint team the ability to operate
    free from attack and free to attack. Additionally, in the future, the
    integrated air-to-ground capability of the F-22 could make it our high-
    end attack aircraft.
        The Raptor successfully completed its first flight in September
    1997, begins flight testing at Edwards AFB, California, in early 1998,
    and will enter operational service in 2005. Funding stability for this
    critical modernization effort is essential for program stability.
        In addition to the threat posed by advanced enemy aircraft, the
    National Defense Panel also recognized the importance of defending key
    regional coalition partners against enemy missile attack. We are
    developing the Airborne Laser (ABL) to counter this threat. This truly
    revolutionary weapon will change the military's concept of defense and
    open the door to a new era of warfare. Its ``speed-of-light''
    capability to shoot down Theater Ballistic Missiles (TBM's) in their
    vulnerable, boost-phase portion of flight can deter the use of these
    weapons by our adversaries by forcing them to face the possibility of
    their weapons falling back on their territory. This year, the ABL
    showcased its shooter, sensor, battle management, and communications
    capabilities as part of a joint multi-layered theater missile defense
    architecture in the Roving Sands 97 wargame. In this simulated
    scenario, the ABL shot down 16 of 17 targets it engaged and provided
    missile launch warning, launch and impact point predictions, and
    trajectory data to the joint force.
        The ABL program is on track, meeting all its milestones, and will
    demonstrate its lethality with an actual TBM shootdown demonstration in
    2002. The ABL will reach initial operational capability with three
    aircraft in fiscal year 2006 and full operational capability with seven
    aircraft in fiscal year 2008.
        Space-based assets will enhance the success of the ABL. For
    example, the Space-Based Infrared System (SBIRS) will provide cueing
    for the ABL as well as all other missile defense systems. SBIRS will
    consist of constellations of satellites in high and low orbits and will
    provide improved detection and warning of strategic and theater missile
    launches. The SBIRS High component satellites are necessary to replace
    the current Defense Support Program (DSP) constellation that provides
    warning of missile attack. The last DSP satellite will be launched in
    2003 and a follow-on system is needed to maintain global coverage.
        SBIRS High will provide complete coverage of the northern
    hemisphere and most of the southern hemisphere, providing warning of
    hostile missile launches, missile tracks through burnout, launch point
    and initial impact point prediction, and target handover to ground-
    based radars and the SBIRS Low component. SBIRS High sensors will also
    gather technical intelligence and perform battlespace characterization
    and pass this information on to the warfighter in real time.
        The SBIRS Low component will acquire and track missiles during the
    midcourse of their flight. It will track small, cold bodies, such as
    reentry vehicles, against the deep space background, discriminate
    warheads from decoys, and pass this information to missile defense
    systems. The precision tracking of the threat reentry vehicles by SBIRS
    Low will significantly increase the probability of a successful
    intercept. SBIRS will complement the F-22 and ABL to enable our forces
    to dominate air and space as part of achieving full spectrum dominance.
        Space-based support is rapidly becoming a prerequisite for
    successful military operations on the land, sea, and in the air.
    Integrating space-based systems into all aspects of its operations is a
    top Air Force priority. This objective has implications for each of the
    Air Force core competencies and is the foundation for our Service's
    continued evolution as an aerospace force. But space-based capabilities
    can only be made available with reliable, cost-effective spacelift.
    Toward that end, we are developing the Evolved Expendable Launch
    Vehicle (EELV).
        The EELV will replace the current fleet of launch vehicles with a
    family of vehicles to provide assured access to space. The EELV will
    enter operational service with government flights of medium and heavy
    lift variants scheduled as early as 2002 and 2003 respectively. EELV
    will significantly improve DOD, civil, and commercial launch operations
    by reducing costs, shortening timelines, and enabling more launches per
    year. We have recently settled on a strategy to carry two contractors
    forward into the engineering and manufacturing development and
    production phases. This decision was based on a potential private
    sector market significantly larger than originally envisioned for EELV.
    The benefits from this new strategy include a more robust industrial
    base and two sources to provide continued competition into production
    and is an example of our revolution in business practices.
    Precision Engagement
        Today, and for the foreseeable future, successful military
    operations will depend on the ability to reliably achieve desired
    effects while limiting casualties and minimizing collateral damage. We
    are using the power of space-based systems to support a new generation
    of very accurate munitions that exploit the power of satellite
    navigation to find their way to within feet of any target. We are also
    investing in greater numbers of advanced precision weapons capable of
    killing multiple targets on a single pass, and improving our day,
    night, and adverse weather precision employment capabilities to enable
    pinpoint target accuracy.
        We are working hard to field advanced munitions that will further
    enhance the range of our precision engagement capabilities like the
    inexpensive Joint Direct Attack Munition (JDAM) Global Positioning
    System guidance kit that converts 1,000 and 2,000 pound general purpose
    and penetrator warheads into highly accurate, adverse weather weapons
    with in-flight retargeting capability. Initial JDAM drop test results
    were impressive, with impacts well within the 13 meter requirement.
    JDAM low rate initial production began in fiscal year 1997 and
    deliveries will start in fiscal year 1998.
        The long range, low observable, conventional, precision guided
    Joint Air-to-Surface Standoff Missile (JASSM) will enable precision
    engagement of high value, heavily defended, fixed and relocatable
    targets. This is another truly revolutionary weapon system at a very
    affordable price. The decision to proceed to engineering and
    manufacturing development is scheduled for fiscal year 1999. The low
    rate initial production decision is scheduled for fiscal year 2000.
        The Joint Standoff Weapon (JSOW) will permit highly accurate,
    adverse weather employment against land and sea targets at standoff
    ranges of 15-40 miles. We will use two variants with submunitions
    designed to neutralize both soft and heavily armored targets. We will
    begin buying JSOW soft target variants in fiscal year 1998 and hard
    target variants by fiscal year 1999.
        The Sensor Fuzed Weapon (SFW) dispenses cluster munitions which
    will provide multiple kills per aircraft pass against land combat and
    support vehicles. Full rate production of baseline SFW began in fiscal
    year 1996 and initial operational capability was declared in early
    fiscal year 1997. The Air Force initiated Pre-Planned Product
    Improvement (P\3\I) development in fiscal year 1996. SFW P\3\I expands
    the weapon's footprint by 50 percent, incorporates a dual mode Laser/
    Infrared sensor and a multi-purpose combination warhead, and increases
    kills per pass to 233 percent of the requirement for the current
    baseline SFW. Production will begin in fiscal year 1999. About 3,000 of
    the 5,000 planned weapons will include P\3\I improvements.
        The Wind Corrected Munition Dispenser (WCMD) guidance tail kit will
    provide the capability to correct for launch transients and wind
    effects and give the Air Force a first time capability to deliver area
    munitions such as Combined Effects Munitions, GATOR, and SFW accurately
    from medium to high altitude. Full rate production is planned for
    fiscal year 2000.
        To counter proliferation of chemical and biological weapons, we
    plan to enhance the counterforce capability of our Conventional Air
    Launched Cruise Missiles against fixed chemical/biological production
    and storage facilities. Funds for this effort were made available by
    OSD as a result of a joint OSD-Interservice review of current
    capabilities to attack such targets. Elsewhere, we are working on the
    Agent Defeat Weapon, a capability to neutralize (with low collateral
    damage) chemical and biological weapons before they are employed. This
    capability is currently in concept exploration and definition.
        The Joint Strike Fighter (JSF) is a precision engagement asset that
    will replace the aging fleets of Air Force F-16 and A-10 aircraft. The
    JSF will provide a less expensive multi-role partner for the F-22. The
    F-22 and JSF are intended to be complementary, not interchangeable.
    Together they represent a synergistic high-low capability mix. The F-
    22's ability to gain air dominance by penetrating and suppressing the
    most lethal ground-based and airborne systems of the next century makes
    it possible for us to design a multi-role aircraft which is less
    capable and therefore less costly. This is the same high-low mix
    principle we utilized with the F-15/F-16 partnership. Without the F-22,
    the JSF would be hard pressed to perform its mission against current
    and impending threats with the same effectiveness. The JSF's affordable
    balance of survivability, lethality, and supportability will bring
    precision engagement to the future battlespace while simultaneously
    decreasing life cycle costs.
        The JSF program is on track to supply over 2,900 next-generation
    multi-role strike fighters to the Air Force, Navy, Marines, and the
    United Kingdom Royal Navy. There are several other interested Allies
    that may expand and extend the JSF overall quantity. Delivery of the
    first operational JSF is scheduled for fiscal year 2008.
        Successful precision engagement is as dependent on timely and
    accurate information as it is on precision weaponry and capable
    delivery platforms. Rapidly getting this information to our aircrews
    for mission planning and target study is critical for mission success.
    Toward that end the Air Force is evaluating systems like the National
    Eagle system.
        Housed in a twenty-foot deployable shelter, National Eagle receives
    and processes near-real time imagery from satellites and the Predator
    UAV and fully integrates it with the Air Force Mission Support System
    and the PowerScene mission visualization system. National Eagle
    provides the route planning and ``fly-through'' mission visualization
    capability that enables our pilots to practice their missions in
    virtual reality at a computer console before strapping into their
    aircraft for an actual mission. National Eagle is a refinement of the
    technique that was effectively used in Bosnia during Operation
    Deliberate Force to increase mission success and avoid unnecessary
    collateral damage. We will continue to search for similar innovative
    initiatives to integrate air and space assets to further enhance the
    effectiveness of aerospace power.
    Global Attack
        To quickly halt enemy forces in the early phase of a conflict, the
    U.S. must maintain its unique ability to project power rapidly,
    precisely, and globally--to quickly find and attack or influence
    targets worldwide from air and space. Air Force global attack assets
    are designed to fill this need, responding anywhere in the world in a
    matter of hours.
        Global Power missions illustrate this capability and are quarterly
    requirements for each Air Combat Command bomb wing. The purpose of
    these missions is to demonstrate to any potential adversary the
    capability of U.S. aerospace forces to project power from bases in the
    continental United States to anywhere in the world within 24 hours. In
    fiscal year 1997, 32 global power missions were flown by B-1's, B-2's,
    and B-52's throughout the world. Missions with durations over 30 hours,
    taking off and landing at home station, are not uncommon. This greatly
    increases the options available to the CINC's during crises, while
    lowering aircrew TEMPO by allowing them to operate from their home
    stations.
        Bomber operations from forward locations provide commanders with
    the added mass, flexibility, and higher utilization rates critical to
    the halt phase. 1997 witnessed the first in-theater deployment of
    bombers with an Aerospace Expeditionary Force when B-1's deployed to
    Southwest Asia to support extensions to Operation Southern Watch.
        The B-1 Lancer is the Air Force's primary long range conventional
    delivery system. In October 1997, the Air Force suspended the B-1's
    active nuclear support role. It remains on schedule for conversion to a
    conventional role under the multi-phased Conventional Mission Upgrade
    Program (CMUP).
        The B-1 carries three families of cluster bomb weapons, including
    the anti-armor SFW, making it the first bomber with this critical halt
    phase capability. In April 1997, the Defensive Systems Upgrade Program,
    a component of the CMUP, entered into the engineering and manufacturing
    development acquisition phase. It includes the ALR-56M radar warning
    receiver for improved situational awareness and a fiber optic towed
    decoy for radio frequency jamming. Additionally, in July 1997, the B-1
    received approval for full rate production of the GPS and
    communications upgrade portions of the CMUP.
        By the second quarter of fiscal year 1999, we will equip eight B-
    1's with the JDAM and the interim ALE-50 Towed Decoy System for
    survivability against radar threats. By fiscal year 2002, the B-1 will
    achieve its initial operational capability with the WCMD, JSOW, JASSM,
    and the full defensive system upgrade to include the Joint Air Force-
    Navy Integrated Defensive Electronic Countermeasures System.
        The B-2 Spirit is our multi-role, heavy bomber capable of
    delivering both conventional and nuclear munitions. Achieving initial
    operational capability in April 1997, the B-2 brings massive firepower
    to bear, in a short time, anywhere on the globe. Its low-observable, or
    ``stealth,'' characteristics give it the unique ability to penetrate an
    enemy's most sophisticated defenses and threaten its most valued and
    heavily defended targets. The B-2 has the capability to deliver a wide
    variety of precision and non-precision weapons including the JDAM, GPS
    Aided Munition, SFW, Cluster Bomb Units, mines, and general purpose
    munitions ranging from 500 to 2,000 pounds.
        The GBU-37, a GPS guided, 4,700 pound, deep penetrating munition
    was added to the B-2 arsenal in late 1997. This weapon is currently the
    only all-weather, near-precision ``bunker busting'' capability
    available to warfighting CINC's. B-2 conventional weapons integration
    will continue to be enhanced with the addition of JSOW in fiscal year
    1999 and JASSM in fiscal year 2002.
        For more than 35 years, the B-52 Stratofortress has been the
    primary strategic heavy bomber force for the United States. The B-52
    has the combat proven capability of dropping or launching a significant
    array of weapons in the U.S. inventory. It is the only Air Force
    aircraft capable of delivering all of the following precision, standoff
    weapons: the AGM-129 Advanced Cruise Missile, the AGM-86B Air Launched
    Cruised Missile, the AGM-84 Harpoon anti-shipping missile, the AGM-86C
    Conventional Air Launched Cruise Missile, and the AGM-142 missile.
    Additionally, the B-52 has the capability to integrate future standoff
    and precision conventional munitions.
        Rounding out the Air Force global attack assets are the Minuteman
    and Peacekeeper ICBM fleets. Both the Minuteman and Peacekeeper systems
    provide rapid, precision strike capability. The Minuteman fleet is
    undergoing modernization programs, including propulsion and guidance
    replacements, to continue to ensure the fleet remains a reliable and
    credible deterrent to nuclear attack. The Peacekeeper fleet will
    continue to be a nuclear deterrent until deactivated under the
    provisions of START II.
    Rapid Global Mobility
        Rapid global mobility ensures our nation can rapidly respond to the
    full spectrum of contingencies--from combat operations, to humanitarian
    relief, to peacekeeping, with the right force, at the right time, and
    the right place. Air mobility missions include the airlift and/or
    airdrop of troops, passengers, supplies, and equipment to locations
    around the globe, as well as air refueling for Air Force, sister
    Service, and allied aircraft. Air mobility forces also provide
    worldwide aeromedical evacuation of patients, participate in special
    operations, and support other national security requirements. Rapid
    global mobility is the joint team's most reliable combat multiplier.
        Airlift and air refueling forces provide tremendous speed and
    flexibility in deploying, employing, and sustaining America's military
    forces. Air mobility forces operate as part of a larger joint
    warfighting team, working closely with air, land, and naval forces to
    meet operational requirements for the unified commanders.
        The C-17 is rapidly becoming the new core airlifter of the Air
    Force's mobility fleet. Its ability to carry outsize cargo into austere
    airfields is essential in deploying our forces virtually anywhere on
    the globe--a capability no other nation in the world has. This
    capability was recently showcased during CENTRAZBAT 97, a combined
    force exercise consisting of forces from the U.S., Kazakhstan,
    Uzbekistan, Kyrgyzstan, Russia, and Turkey. In this exercise eight C-
    17's flew 7,800 miles non-stop from Fort Bragg, North Carolina, to air
    drop troops and equipment in Central Asia--the longest air drop mission
    in history.
        In 1997, the C-17 supported our forces in Bosnia, Haiti, and the
    Middle East, while accomplishing numerous global movements on short-
    notice. From transporting Army rocket launchers from Oklahoma to Korea,
    to supporting the evacuation of non-combatants from Liberia, to
    humanitarian relief flights to Central Africa, the C-17 continues to
    carry the load for the joint force and will provide unparalleled reach
    well into the new millennium.
        Another important aspect of our mobility capability was
    demonstrated in 1997 by members of the 352nd Special Operations Group
    and 100th Air Refueling Wing. These forces deployed to Libreville,
    Gabon, in West Africa, as part of an enabling force to support the
    Joint Task Force Operation Guardian Retrieval. This operation was
    initiated to evacuate the estimated 550 American citizens in Zaire to
    protect them from the violence associated with the civil war there. The
    airmen joined about 400 soldiers, sailors, and Marines comprising the
    joint task force ashore in West Africa.
        The deployment came just weeks shy of the first anniversary of
    Operation Assured Response when Air Force Special Operations Forces
    (SOF) units deployed to Africa to help evacuate more than 2,400 people
    from Liberia. Our SOF forces maintain the highest tasking rate in the
    Air Force and it is critical that they are properly equipped to deal
    with the increasing number of military operations other than war. These
    operations require long range vertical lift capability presently
    supplied by MH-53J and MH-60G aircraft.
        Our plan to acquire CV-22's for our SOF forces will provide long
    range, adverse weather, clandestine penetration of medium to high
    threat environments in politically or militarily denied areas to
    execute personnel recovery operations, infiltrate, exfiltrate, and
    resupply SOF forces. The CV-22's speed, extended range, and
    survivability will significantly increase the warfighting CINC's
    ability to conduct operations in denied territory. Air Force Special
    Operations Command will receive 50 of the tilt-rotor aircraft. The CV-
    22 is expected to make its maiden flight in 2000. Hurlburt Field,
    Florida, will receive operational aircraft beginning in 2004.
        We are also modernizing our executive fleet by replacing the VC-137
    fleet at the 89th Airlift Wing at Andrews AFB, Maryland. The VC-137's
    will be replaced with four C-32A (Boeing 757) and two C-37A (Gulfstream
    V) aircraft. All aircraft will be delivered in 1998.
        Global Access, Navigation, and Safety (GANS) is an Air Force
    management initiative established to harmonize requirements and
    acquisition of several navigation and safety-related programs. The
    purpose of GANS is threefold: to organize related navigation and safety
    programs and integrate Air Force efforts through combined Air Staff and
    Major Command integrated product teams; to serve as a requirements and
    acquisition management tool; and to establish an avionics acquisition
    modernization strategy designed to minimize platform downtime and
    integration costs. The GANS process provides implementation planning
    for one of the largest of these programs, Global Air Traffic Management
    (GATM). We will sustain our rapid global mobility core competency by
    acquiring state-of-the-art GANS systems for our air mobility forces to
    preserve access to prime global airspace routes in the future.
        Additionally, latest technology, commercial ground and air traffic
    warning systems using digital terrain database displays and GPS have
    been established as standard equipment for all Air Force passenger
    capable aircraft. This equipment is to be installed as soon as
    possible, but not later than 2005, to enhance our ability to safely
    operate in higher traffic densities of the 21st century.
        Modernization of the Active and Reserve Component C-130 airlift
    fleet is on track. This program consists of modification of our
    existing C-130's and limited procurement of the C-130J. Programmed
    modifications are designed to increase reliability, maintainability,
    combat capability, and safety. Our current plan is to modernize over
    350 existing aircraft between fiscal year 2000 and fiscal year 2009.
        Our Pacer CRAG (Compass, Radar And GPS) avionics upgrade to the KC-
    135 fleet is also on track. This commercial off-the-shelf modification
    program will eliminate the need for a navigator on most missions.
    Recent additions to the Pacer CRAG program include a Traffic Alerting
    and Collision Avoidance System (TCAS), an Enhanced Ground Proximity
    Warning System (E-GPWS), a Standby Air Data Indicator, and a Reduced
    Vertical Separation Minima (RVSM) Compliant Air Data Computer. These
    systems will serve as the foundation for future GATM modifications and
    ensure our KC-135 fleet maintains the capabilities necessary to meet
    wartime requirements.
    Information Superiority
        In today's environment, information superiority is critical to the
    execution of Air Force core competencies and overall mission success.
    The essence of information superiority is the ability to collect,
    control, exploit, and defend information and information systems. These
    ``information operations'' are important to the entire range of
    military operations, from peace to all-out conflict. The Air Force
    provides information superiority to the nation by executing information
    operations in air, space, and increasingly, in cyberspace. One of the
    fundamental benefits of information superiority is effective command
    and control of our military forces.
        We are committed to integrating command and control (C\2\) into
    aerospace operations, eliminating duplication of effort, and increasing
    commonality between C\2\ systems. To implement and oversee these
    initiatives, we stood up the Air and Space Command and Control Agency
    in 1997. This agency, together with the Air Force Communications and
    Information Center (the Air Force's center of excellence for
    communications and information, also established in 1997), will be
    pivotal in expanding our nation's information edge and enhancing our
    warfighters' capabilities.
        We are aggressively pursuing innovative C\2\ capabilities to
    improve Air Force expeditionary operations. For example, in September
    1998, we will conduct Expeditionary Forces Experiment 98 (EFX 98) to
    demonstrate C\2\ capability and help focus our C\2\ operations and
    investment. EFX 98 will consist of a simulated combat scenario with
    emphasis on the rapid deployment and employment of an AEF to conduct
    offensive air operations. It will combine elements of live-fly
    exercises, modeling and simulation, and advanced technology to
    demonstrate new operational concepts such as near-real time sensor-to-
    decision maker-to-shooter capabilities, Joint Force Air Component
    Commander enroute employment planning, Distributed Air Operations
    Center concepts, and Agile Combat Support using In-Transit Visibility
    and Total Asset Visibility. EFX 98 will establish the baseline for a
    series of advanced warfighting experiments we plan to conduct annually.
        One system that is key to meeting the warfighters' command,
    control, communication, computer, and information (C\4\I) needs is the
    Global Command and Control System (GCCS). GCCS is a part of the overall
    Defense Information Infrastructure Common Operating Environment (DII
    COE) which affords all the Services interoperability and eases joint
    operations; it is a DOD integrated C\4\I system that provides a joint,
    worldwide classified network to facilitate the dissemination of
    critical information. We have fielded GCCS at all Major Commands,
    Numbered Air Forces, and most Wings. GCCS provides a full complement of
    C\2\ capabilities such as readiness assessment, crisis action and
    deliberate planning, intelligence mission support, secure
    communications, and a common operational picture. We are migrating Air
    Force C\2\ systems to this common operating environment to enhance
    interoperability.
        Effective C\2\ depends in large part on our ability to accurately
    identify all of the hostile, friendly, and neutral entities in the
    battlespace--referred to as Combat Identification (CID). Accurate CID
    hinges on our ability to effectively process data to build a three-
    dimensional picture of the battlespace. This in turn permits real-time
    application of tactical options so weapons can be employed at optimal
    ranges against the most critical enemy targets. The acquisition of CID
    systems and development of associated tactics, techniques, and
    procedures will maximize operational effectiveness, reduce casualties
    due to fratricide or enemy actions, and move us closer to the goal of
    full spectrum dominance.
        The Airborne Warning and Control System (AWACS) is the linchpin of
    airborne C\2\ systems as the airborne surveillance and battle
    management platform for the Joint Force Commander. We have
    modernization efforts underway to ensure AWACS remains an effective and
    survivable airborne C\2\ platform through 2025.
        In 1997, the AWACS Radar System Improvement Program successfully
    completed its initial operational test and evaluation. This program
    will greatly increase the detection range of low radar cross section
    targets, provide improved electronic counter-counter measures, and
    reduce radar failure time ten-fold. Additionally, the collection of
    initiatives comprising the Extend Sentry program will reduce
    maintenance downtime, reduce the number of mission aborts, and increase
    aircraft availability. The Extend Sentry program is critical to ensure
    the AWACS will remain available to meet real-world taskings.
        Timely, accurate information provides the National Command
    Authorities and our military commanders with the ability to quickly
    assess developing crises and respond appropriately. The operations of
    U-2, Predator, and the RC-135 Rivet Joint aircraft around and over
    Bosnia and Iraq graphically illustrate how the integration of air and
    space assets has improved the timeliness and accuracy of our
    information. The U-2 has the ability to deliver digital near-real time
    information to ground stations in the continental United States, which
    in turn process it and relay it by satellite to theater commanders
    around the globe.
        These ground stations, known as Contingency Airborne Reconnaissance
    System (CARS) Deployable Ground Station (DGS) 1 and 2, are located at
    Langley AFB, Virginia, and Beale AFB, California. They serve as
    collection and assessment points for the U-2's raw intelligence data.
    Each DGS consists of two squadrons, an Air Combat Command unit that
    provides imagery analysis expertise, and an Air Intelligence Agency
    unit that provides signals intelligence, logistics, and communications
    expertise. These units determine the capabilities and posture of
    potential adversaries and provide near-real time intelligence products
    to deployed forces in Bosnia and Southwest Asia using Mobile Stretch
    (MOBSTR) communications relay technology.
        Deploying a DGS into a theater of operations would require six C-5
    Galaxy transports to move approximately 200 tons of equipment and more
    than 200 people. However, with our ``reachback'' capability, we achieve
    the same effect by deploying 30 people with smaller ground stations to
    collect and relay the U-2's data from the theater of operations to the
    United States for processing and dissemination.
        The U-2's impressive capability is complemented by Unmanned Aerial
    Vehicles (UAV's). The Predator Medium Altitude Endurance (MAE) UAV has
    been deployed to Bosnia since March 1996. This versatile system
    transmits live video feeds to front line commanders via the Joint
    Broadcast System--furnishing our joint forces with unparalleled
    situational awareness.
        On 1 August 1997, the 15th Reconnaissance Squadron at Indian
    Springs Air Force Auxiliary Field, Nevada, was activated as the second
    Air Force Predator MAE UAV squadron. One week later, Predator became
    the first Advanced Concept Technology Demonstrator (ACTD) to transition
    to a formal acquisition program under DOD's ACTD initiative. We have
    overcome several challenges and learned some lessons in making Predator
    the success it is today. We are using this valuable experience as we
    work with the high altitude UAV program offices to ensure a smoother
    operational transition once these programs prove themselves.
        In the area of manned reconnaissance, Rivet Joint continues to be
    our most flexible and responsive platform. During 1997, Rivet Joint
    remained in high demand, providing accurate, timely tactical
    information to a broad range of users in Bosnia, Southwest Asia, and
    around the world. In 1997, the first three aircraft of the 14 aircraft
    Rivet Joint Fleet were modified with current technology to establish a
    new baseline configuration. Two additional Rivet Joint aircraft will be
    added to the fleet beginning in 1998, helping to alleviate this
    system's high TEMPO rate. Additionally, we plan to complete most of the
    reengining program for the RC-135 fleet by the end of the Future Years
    Defense Program.
        Our more specialized RC-135 assets, COMBAT SENT and COBRA BALL,
    provided critical technical intelligence throughout 1997 to support
    weapons development efforts, theater force protection, and weapons
    proliferation assessments.
        Surveillance is also crucial to information superiority. The Joint
    Surveillance Target Attack Radar System (Joint STARS) provides
    commanders with a set of ``eyes'' to ``see'' what the enemy is doing on
    the ground in all weather, day or night. The Joint STARS combination of
    moving-target indicators and synthetic aperture radar produces images
    that enable operators to pick out individual vehicles in a moving
    convoy. This capability played an important role in enforcing the
    Dayton Peace Accords when both of the Bosnian factions could see and
    understand that their every movement was being monitored.
        Over the course of 1997, Joint STARS participated in several
    exercises where it provided critical situational awareness to
    commanders and troops. For example, during the Hunter Warrior exercise,
    the Red Team commander expressed frustration that he was unable to move
    his forces without detection by friendly forces when Joint STARS was on
    station. Similarly, the Joint STARS received excellent reviews for its
    work in the Foal Eagle exercise conducted in the Republic of Korea--the
    largest air base defense exercise in the free world. During the Foal
    Eagle exercise, the Joint STARS significantly increased the situational
    awareness of battle commanders in South Korea by providing the real-
    time location of friendly and enemy forces.
        Joint STARS also has tremendous potential to assist with real-time
    targeting of enemy positions by attack aircraft. As an experiment, a
    Joint STARS mission was flown over Bosnia in which a Hand-held Terminal
    Unit (HTU) was used to send real-time target designation and other data
    by burst transmission to F-16 aircraft equipped with the Improved Data
    Modem. While the HTU is not currently integrated into Joint STARS, this
    experiment demonstrated the potential capability to pass real-time
    information from Joint STARS directly into the cockpits of attack
    aircraft.
        Joint STARS, which declared initial operational capability in
    December 1997, has now successfully deployed to the European, Southwest
    Asia, and Pacific theaters in four deployments. It continues to
    demonstrate its benefits as the DOD's only fielded real-time, long
    range, wide area surveillance and battle management asset. Together,
    the Joint STARS and the other Air Force information superiority assets
    provide the battlespace awareness necessary to conduct today's complex
    military operations.
        We must safeguard our information to prevent our forces from
    becoming the target of an adversary's information warfare campaign. We
    have an increasing need to defend information from its point of
    production to its point of delivery to the battlespace commanders. To
    aid in the defense of systems and the information they contain, Air
    Force investigators and counterintelligence personnel rely on the
    unique capability to detect and counter unauthorized network access
    afforded by the computer forensic laboratory. Within the laboratory, an
    impressive media analysis branch is able to dig clues from mountains of
    information stored in a variety of formats. This capability is
    complemented by a network intrusion squad capable of tracking intruders
    through the complex maze of cyberspace.
        Our Service was recently designated as executive agent for the new
    DOD Computer Forensics Laboratory. This laboratory will offer us an
    opportunity to play an important leadership role in developing
    techniques to protect key information systems across the DOD. Our other
    current information operations capabilities include the Automated
    Security Incident Measurement System, Modeling and Simulation programs,
    the Information Warfare Battlelab, and the Computer Security Assessment
    Program.
        In the area of offensive information warfare we have a variety of
    capabilities like those provided by the EC-130H, Compass Call. As DOD's
    only wide-area offensive information warfare platform, Compass Call
    provides disruptive communications jamming and other unique
    capabilities to support the Joint Force Commander across the spectrum
    of conflict.
        For localized targeting of specific avenues of communication, the
    EC-130E Commando Solo is available to commanders. This weapon system is
    the mainstay information operations aircraft for peacekeeping and
    peacemaking operations and humanitarian efforts which comprise a large
    percentage of today's military missions. With the capability to control
    the electronic spectrum of radio, television, and military
    communication bands in a focused area, the Commando Solo aircraft can
    prepare the battlefield through psychological operations and civil
    affairs broadcasts. In 1997, the Commando Solo supported the U.N.'s
    Operation Joint Guard mission by shutting down anti-SFOR propaganda
    through radio and TV broadcasts over Bosnia-Herzegovina in support of
    SFOR operations.
    Agile Combat Support
        The success of the joint force ultimately rests on our ability to
    sustain deployed forces. Agile combat support will enable our rapid,
    responsive, and flexible forces to become more expeditionary in nature
    by eliminating the need for massive deployed inventories. Improvements
    in information and logistics technologies will make this possible.
        When combatant commanders require an item, integrated information
    systems will ``reach back'' to U.S. locations and ``pull'' only the
    resources required. Streamlined depot processes will release materiel
    in a timely fashion so that time-definite transportation can complete
    the support cycle by rapidly delivering needed resources directly to
    the user in the field. Integrated information systems currently being
    tested provide total asset visibility throughout this process, tracking
    resources throughout their delivery cycle. Mobility assets equipped
    with this technology can be tracked in near-real time through the
    exchange of GPS data, two-way message text, and aircraft cargo
    information.
        We are improving interoperability and commonality of combat support
    information systems with the Global Combat Support System-Air Force
    (GCSS-AF) program. GCSS-AF is another component of the DII COE; it is a
    software modernization program to provide interoperability and sharing
    of data between base-level information systems.
        Agile combat support will allow commanders to improve the
    responsiveness, readiness, deployability, and sustainability of their
    forces. The efficiency and flexibility of agile combat support will
    enable aerospace forces to engage quickly and decisively and sustain
    operations as necessary anywhere on the globe.
    Enabling Technologies
        Our Service continues to explore and invest in promising
    technologies that enhance our core competencies and contribute to our
    vision for the future. Examples include: our development,
    demonstration, and maturation of the high-power laser technology that
    was transitioned to the Airborne Laser system; our execution of the
    Ballistic Missile Defense Organization's Space-Based Laser Research
    Demonstrator; and our cooperation with NASA to explore the potential of
    reusable launch vehicle technology for militarily unique applications.
    Additionally, we continue to investigate a range of new technologies
    from those intended to enhance the expeditionary capability of our
    aerospace forces to those designed to enable target identification from
    space. We feel it is important to explore revolutionary technologies
    like these as a hedge against the potential threats our nation may face
    in the future.
        Our defense laboratories and test centers are often the birthplace
    of key technologies. To increase the effectiveness and efficiency of
    these facilities, we streamlined the Air Force Materiel Command
    laboratory structure in April 1997 by forming a corporate Air Force
    Research Laboratory (AFRL). This new organization realigns the former
    Armstrong Laboratory at Brooks AFB, Texas; Phillips Laboratory at
    Kirtland AFB, New Mexico; Rome Laboratory at Rome, New York; Wright
    Laboratory at Wright-Patterson AFB, Ohio; and the Air Force Office of
    Scientific Research at Bolling AFB, Washington, DC, under a single AFRL
    commander headquartered at Wright-Patterson AFB. The AFRL will likely
    play a major role in harnessing emerging revolutionary technologies
    that will transform the way we employ military forces in the future.
    Revolution in Military Affairs
        A revolution in military affairs (RMA) is said to occur when the
    innovative application of new technologies, combined with dramatic
    changes in operational and organizational concepts, fundamentally
    alters the character and conduct of military operations. The Air Force
    exists today because of an earlier RMA that combined the new technology
    of manned flight with innovative operational concepts to create a
    military force with a global perspective.
        Our Service has evolved over the years by leveraging leap-ahead
    technology and developing the appropriate operational and
    organizational structures to employ that technology. We are committed
    to the research, testing, and evaluation of promising new technologies
    that may lead to the next RMA. Stealth, supercruise, the Airborne
    Laser, precision guided munitions, Joint STARS, UAV's, integrated
    information systems, and space-based assets are all examples of leading
    edge technologies that are changing the way we conduct military
    operations.
        We are exploring the implications of leap-ahead capabilities in
    such areas as information operations, space operations, and directed
    energy to ensure we are postured to exploit the next RMA to build the
    aerospace capabilities necessary to protect America's security
    interests well into the 21st century.
                              improving efficiency
        Sustaining and strengthening our core competencies will depend on
    getting the most out of limited resources. We are downsizing personnel
    and taking other actions to streamline operations and increase
    efficiency in all areas to help fund our modernization program. We are
    looking to innovation and revolutionary business practices to improve
    our operations and reduce costs.
    Innovation
        Innovation is critical to our Service's continued success. It is
    essential that we aggressively look ahead and seek new ways to employ
    aerospace power that will enable us to respond quickly to new strategic
    requirements and take advantage of new technological opportunities.
                Battlelabs
        One of the major engines for operational innovation is the Air
    Force battlelab concept. Battlelabs are small, focused, and rely on
    field ingenuity to identify creative operational and logistics concepts
    for advancing the Air Force's core competencies in joint warfare. The
    Air Force established six Battlelabs in July 1997 to identify
    innovative ideas: Aerospace Expeditionary Force, Command and Control
    Battle Management, Unmanned Air Vehicle, Space, Force Protection, and
    Information Warfare. Successfully demonstrated battlelab concepts will
    be introduced to the CINC's and their components through exercises and
    wargaming, and via the newly established Service and joint experimental
    organizations. New concepts adopted by the Air Force may prompt
    revisions to Air Force organization, doctrine, training, requirements,
    or acquisition to enhance the Air Force's ability to meet future
    challenges.
                Modeling and Simulation
        Modeling and Simulation (M&S) technologies are an array of computer
    and software tools for creating and interacting with artificial
    representations of reality. We have always used modeling and
    simulation, but advances in computer technology have enabled
    simulations that are highly detailed, increasingly realistic, and more
    affordable. Our challenge is to develop models and simulations that
    more accurately capture the contributions of aerospace power on the
    modern battlefield.
        We envision a ``joint synthetic battlespace'' that uses a mix of
    live participants, human-in-the-loop virtual simulators, and computer-
    generated constructive simulations to organize, train, and equip our
    forces. To realize this vision, we are actively supporting the
    development of joint, interoperable, and reusable models and
    simulations. Specific examples include the Joint Warfare Simulation
    (JWARS), the Joint Simulation System (JSIMS), and the Air Force-
    directed Joint Modeling and Simulation System (JMASS).
        JWARS is intended for joint campaign analysis and is being directed
    by the Deputy Secretary of Defense. JSIMS focuses on the operational
    level of war and will develop and deliver an M&S system capable of
    joint battlestaff training by 2000. JMASS provides a common environment
    focused on detailed tactical modeling for requirements development,
    acquisition, and testing. When these efforts are complete, we will be
    able to replace an aging suite of legacy models and simulations to more
    accurately simulate modern aerospace power.
                Wargaming
        Wargames are invaluable tools with which to explore innovative ways
    to employ military forces. Our Service is sponsoring a series of Global
    Engagement wargames with the support of our sister Services to better
    understand the contribution of air and space forces to the Joint Force
    Commander.
        We initiated this series in 1996 with Strategic Force 96 and
    followed it up last year with Global Engagement 97 (GE 97). GE 97 was
    enhanced by the addition of a seminar-based policy pregame where a
    select group of players, representing many principal advisors to the
    National Command Authorities, explored the implications of increased
    space and information capabilities on national policies and
    international treaties.
        Global Engagement 98 (GE 98) will also include a policy-level
    pregame to be held near Washington, DC, in June 1998. The operational
    game will be held the following November at Maxwell AFB, Alabama. GE 98
    will explore the transition of forces from a small scale contingency to
    a major theater war in the 2008-2009 timeframe. Scenarios will
    challenge current CINC's' staffs to test and evaluate emerging concepts
    of operations against viable threats and plausible enemy actions. Key
    aspects will include the employment of an AEF and the application of a
    rapid halt of advancing enemy forces to limit the conflict and avoid
    attrition warfare.
    Revolution in Business Affairs
        In addition to operational innovation, we must adopt innovative,
    modern commercial business practices to free up precious resources for
    modernization. We must remove redundancy; use competition to improve
    quality and reduce costs; and reduce support structures both to free up
    resources and to focus on core competencies.
        We are capitalizing on the revolution in business affairs by moving
    away from traditional means of doing business in acquiring and
    supporting our forces. We have instituted an aggressive series of
    reforms in this regard that extend across the range of our activities.
                Strategic Business Planning
        Sustaining the current force while simultaneously investing in the
    systems necessary for operations in the 21st century is a significant
    challenge in today's fiscally constrained environment. Our key Air
    Force leaders responsible for accomplishing and supporting acquisition
    and sustainment have joined together to embark on a shared vision and
    commitment toward a strategic business plan that moves the acquisition
    and sustainment communities toward better business practices and
    continuous process improvement. The goal is to reduce costs without
    sacrificing mission capability.
                Partnership with Industry
        In June 1997, our senior leaders in acquisition, requirements, and
    planning and programming signed a memorandum encouraging Air Force
    members to communicate more openly with industry to promote a better
    understanding of our requirements in terms of mission and affordability
    issues. The intent is to promote innovative and more affordable
    business solutions. This new partnership is already showing progress in
    the form of acquisition reform, commercial off-the-shelf acquisitions,
    lean logistics, and competition and privatization.
                Acquisition Reform
        We are changing the culture of acquisition. The emphasis is to
    acquire all products used by the Air Force ``better, cheaper, faster''
    and in a ``smoother'' more streamlined, well understood process.
    Virtually every new acquisition program is taking advantage of
    commercial practices by altering its strategy toward commercial
    specifications and standards, privatization, competition, commercial
    off-the-shelf technology, and contractor system responsibility. Through
    our Lightning Bolt initiatives in streamlining, teaming, and innovative
    acquisition strategies, we have realized $7.1 billion in savings from
    previously budgeted funds and $11.8 billion in cost avoidance. Newer
    efforts focus on continuous process improvement and establishing
    strategic steps to ensure that acquisition reform becomes the norm. To
    accomplish these objectives, we will continue to advance the
    professional development of our acquisition workforce by providing
    quality continuing education and training.
                Commercial Off-The-Shelf (COTS) Products
        Using commercial and non-developmental items is a key factor in
    achieving the needed economy of Air Force resources. Our focus is on
    increasing the use of current commercial non-developmental products,
    processes, and practices while improving the public-private sector
    business environment to enable a greater use of COTS. Some initiatives
    include: the conversion of 17 percent of our military product
    specifications to commercial item descriptions or non-government
    standards; the establishment of a market research working group to
    define commercial market research techniques that reveal the best
    commercially available items to insert into military systems; and the
    preparation of a draft COTS Handbook to aid in identifying and
    procuring commercial items.
                Lean Logistics
        Lean logistics includes a number of complementary initiatives
    designed to improve the capabilities of operational units by
    integrating and applying state-of-the-art business practices across all
    logistics functions and processes. For example, we have implemented a
    new method to compute base and depot stock levels which have reduced
    expected backorders by 17 percent, saving $70 million in depot repair
    dollars and eliminating $60 million in unfunded repair requirements. We
    have also instituted an automated method to prioritize depot repair and
    distribution actions to optimize fleet aircraft daily availability.
        The objective is to maximize operational capability by using high-
    velocity, time-definite supply and delivery processes in lieu of large
    inventories to manage mission and logistics uncertainty. This results
    in shorter cycle times, reduced inventories and costs, and a smaller
    mobility footprint, which are critical to achieve Air Force agile
    combat support objectives.
                Competition and Privatization
        We are taking a long-term approach to competition and
    privatization. This entails charting a strategic path for us--now and
    in the long run--to make the most effective use of private sector
    capabilities while maintaining or improving our readiness and quality.
    Innovative solutions, improved performance, and increased savings
    should result from the increased competition inherent in the OMB A-76
    cost comparison process and the increased role of the private sector.
    With no growth planned for total obligation authority, the savings
    accrued from competition and privatization will be key for future
    modernization. Our competition and privatization initiatives are
    designed to preserve ``tooth,'' streamline ``tail,'' and support
    modernization.
        We are pursuing dual and joint-use initiatives for workloads with
    the private sector to use more efficiently the existing industrial
    capacity at the three remaining Air Logistics Centers that remain after
    BRAC 95. For the workloads not required to support core capabilities at
    McClellan Air Logistics Center, California, and San Antonio Air
    Logistics Center, at Kelly AFB, Texas, we are continuing with public-
    private competitions. The results of the first of the public-private
    competitions, the C-5 Programmed Depot Maintenance at Kelly AFB, Texas,
    were announced in 1997. Warner Robins Air Logistics Center in Georgia
    won this competition with an expected savings of $190.2 million over
    the next seven years. Currently, two additional public-private
    competitions are planned--one for consolidated depot maintenance
    workloads at McClellan AFB, California, and the second for propulsion
    workloads at Kelly AFB, Texas. These competitions should be completed
    in 1998.
        In the area of privatization, we are pursuing initiatives in
    housing and utilities. We are using privatization to upgrade, improve,
    and replace substandard family housing and eliminate our 14,000 unit
    deficit. Of the 110,000 housing units in the Air Force-wide inventory,
    58,000 require upgrade, improvement, or replacement. Seven projects are
    currently proceeding through the privatization process with more
    anticipated.
        We are also moving forward with the privatization of base utilities
    in response to the Secretary of Defense's Defense Reform Initiative
    Decision. The first privatization project in this area will be awarded
    in July 1998 for the electrical distribution at Youngstown Air Reserve
    Base, Ohio. Under the current execution rules, we anticipate conversion
    of at least 175 water, wastewater, electrical, and natural gas systems.
                Financial Reform
        We continue our efforts to improve financial management systems and
    practices. We need better financial management in order to provide our
    commanders with high-quality financial information, eliminate financial
    irregularities that damage public confidence, and comply with the law.
        Improving financial management requires several key steps.
    Compliance with the Government Performance and Results Act (GPRA) is
    one of them. GPRA is important to financial management because it
    mandates the creation of output measures that can be used in financial
    reports and related to financial data. During the past year, we have
    supported OSD efforts to develop output measures and comply with other
    requirements of GPRA. We have also incorporated some GPRA output
    measures into our financial statements required by the Chief Financial
    Officers (CFO) Act. We are experimenting with activity-based costing,
    training our people on its use, and assisting in studies. Several of
    our commands are experimenting with new approaches to capturing the
    cost of ownership in order to identify areas to reduce operating costs
    and to help decision makers determine ways to reduce costs.
        We are also improving our CFO financial statements. These
    statements are publicly available and provide us an opportunity to
    demonstrate that we are good stewards of public funds. We have achieved
    relatively clean audit opinions on our military and civilian pay
    accounts and improved the information related to contingent
    liabilities. Now we are focused on making the statements more useful to
    commanders and seeking early implementation of some new statements
    required by the Federal Accounting Standards Advisory Board.
        Finally, we have undertaken an aggressive effort to improve our
    financial systems in order to provide better information to our
    commanders and comply with the CFO Act. In the near term, this effort
    involves modifying existing systems to provide better cost data and
    deploying already-developed systems (such as our Automated Business
    Services System) that can reduce errors in financial data. In the
    longer run, we must replace most of our existing systems. In most
    cases, we will choose the best-of-breed from among all service systems
    and modify the winner to comply with the CFO Act and provide adequate
    cost data. During the last year, we have made substantial progress on
    several systems efforts including one to replace the existing financial
    systems at Air Force depots with a modified version of a system in
    operation at Navy aircraft depots.
                Environmental Restoration and Compliance
        Environmental compliance, restoration, and conservation are
    essential to ensure the Air Force has continued access to ranges,
    airspace, and installations. Stable funding allowed the environmental
    restoration program to maintain its 1997 cleanup schedule at all
    contaminated sites. The firm commitment to know and obey environmental
    laws and regulations has resulted in a dramatic reduction in the number
    of open enforcement actions against the Air Force from 263 in 1992 to
    only 16 in 1997.
        In May 1997, the Air Force received 4 out of 14 White House Closing
    the Circle Awards which recognize people and groups for leadership in
    pollution prevention. The winners were: the Space and Missile Systems
    Center, Environmental Management Branch, Los Angeles AFB, California,
    for improved launch rocket systems; the 375th Civil Engineering
    Squadron, Scott AFB, Illinois, for its recycling program; the
    Environmental Management Directorate, Ogden Air Logistics Center, Hill
    AFB, Utah, for waste prevention; and Headquarters Air Combat Command,
    Langley AFB, Virginia, for its global environmental outreach program.
    Additionally, the Secretary of the Interior characterized Eglin AFB,
    Florida, as the best protected, best managed property that he had seen
    anywhere in the world. These examples represent our commitment to
    protect America's natural resources as we execute our missions.
        Partnerships with governmental and non-governmental organizations
    are fostering biodiversity and integrated ecosystem management at many
    installations. We are working closely with the Environmental Protection
    Agency (EPA) and state partners to seek common sense ways to achieve
    common goals. In November 1997, we signed an agreement at Vandenberg
    AFB, California, with the EPA and the Santa Barbara County Air
    Pollution Control District to reduce environmental program costs and
    apply savings directly to reducing pollution from the base. Vandenberg
    AFB was the first DOD installation to sign such an agreement with the
    EPA. We plan to direct environmental compliance funds into water
    conservation and air and water pollution projects. We will use the
    savings to purchase and operate cleaner operating boilers and equipment
    for the base's power station. The result will be less money spent on
    administration and more invested in improving air quality. The Deputy
    Undersecretary of Defense for Environmental Security cited Vandenberg
    as the model for this type of partnership. Environmental investment
    agreements are an important cooperative step toward sustaining both
    community and Air Force operations.
                Base Transfers and Realignments
        We continue to work with the communities impacted by base closure/
    realignment to put the property and facilities into economic reuse. For
    example, Pease AFB, New Hampshire, is now Pease International
    Tradeport, employing 1,219 people at a brewery, a consular center, an
    airfield, and a steel manufacturer, among others--where only 400
    civilians were employed when the base was active.
        In 1997, we completed Economic Development Conveyances (EDC's) for
    property at six closure/realignment bases. Most notably, we signed an
    EDC with the Greater Kelly Development Corporation for Kelly AFB,
    Texas, just two years after the base was announced for realignment. We
    have also reached final agreement on the terms of an EDC with the
    County of Sacramento and are working very closely to complete the
    documentation required to facilitate the transfer of McClellan AFB,
    California, from the Air Force to the County.
                Other Cost Cutting Initiatives
        Additional ongoing cost cutting initiatives implemented or
    investigated in 1997 include: (1) replacing government bills of lading
    with commercial bills of lading for air express cargo shipments; (2)
    using commercial express carriers for small arms and ammunition
    shipments; (3) increasing functionality between Air Force and
    commercial carrier transportation data and software; (4) using express
    carriers to ship classified material; (5) discontinuing volume printing
    of regulations and instructions; and (6) reengineering distribution of
    publications via electronic media such as the internet and CD-ROM.
                                   conclusion
        America is an aerospace nation and its aerospace forces are an
    essential element of our nation's military capability. They possess the
    flexibility to fight across the spectrum of conflict anywhere on the
    globe, with the speed and range necessary to halt aggression in its
    tracks.
        America's Air Force will remain a preeminent tool of U.S. military
    power with rapid global ranging forces empowered with stealth and
    precision weapons. We will continue to sponsor research and development
    to exploit the full spectrum of aerospace technology and continue to
    assist all the Services' transition to effective exploitation of our
    space assets. Finally, we will remain a key enabler of U.S. land and
    sea forces by ensuring air dominance, and through robust airlift, air
    refueling, and space support.
        The Air Force has come a long way in the past five decades and has
    an exciting journey ahead. We are laying the groundwork for that future
    today as we execute our contemporary military mission, shape our
    Service for the future, and develop the airmen that will lead us in the
    21st century. This is a journey that will take us into new, uncharted
    territory. And it is one that will benefit every member of the joint
    warfighting team.
                                     ______

                    Biographical Sketch of F. Whitten Peters
        F. Whitten Peters is undersecretary of the Air Force, Washington,
    D.C. He is responsible for all actions of the Air Force on behalf of
    the secretary of the Air Force and is acting secretary in the
    secretary's absence.
        Prior to being appointed to his current position, Mr. Peters was
    the principal deputy general counsel of the Department of Defense where
    he worked a wide range of issues, including acquisition reform,
    countering domestic terrorism, protecting the department's information
    systems and affirmative action. Before serving as a senior executive
    with the federal government, Mr. Peters was a litigation partner at the
    Washington, D.C. law firm of Williams & Connolly, where he specialized
    in complex civil and criminal litigation, including the defense of
    government contract fraud, antitrust, tax and security cases. He has
    extensive experience in representing individuals and corporations in
    compliance and ethics programs, internal investigations and suspension
    and debarment proceedings. He has written and spoken extensively on
    acquisition reform, legal ethics and criminal law issues.
        Mr. Peters and his wife, Monnie, have three daughters: Elizabeth,
    Mary and Margaret.
                                     ______

                  Biographical Sketch of Gen. Michael E. Ryan
        General Michael E. Ryan is chief of staff of the U.S. Air Force,
    Washington, D.C. As chief, he serves as the senior uniformed Air Force
    officer responsible for the organization, training and equipage of
    750,000 active duty, Guard, Reserve and civilian forces serving in the
    United States and overseas. As a member of the Joint Chiefs of Staff,
    he and the other service chiefs function as military advisers to the
    secretary of defense, National Security Council and the President.
        The general entered the Air Force after graduating from the U.S.
    Air Force Academy in 1965. He has commanded at the squadron, wing,
    numbered air force and major command levels. He flew combat in
    Southeast Asia, including 100 missions over North Vietnam. He also
    served in staff assignments at the major command level, Headquarters
    U.S. Air Force and the Joint Staff. As commander 16th Air Force and
    Allied Air Forces Southern Europe in Italy, he directed the NATO air
    combat operations in Bosnia Herzegovina which directly contributed to
    the Dayton Peace Accords. Before assuming his current position, the
    general was commander of U.S. Air Forces in Europe and commander,
    Allied Air Forces Central Europe, with headquarters at Ramstein Air
    Base, Germany.
        General Ryan and his wife, Jane, have four children: Michael, Mary
    Kathleen, Sean and Colleen.

                           Chairman's opening remarks

        Senator Stevens. Thank you very much.
        Mr. Secretary, I note your distinguished record before you
    came to Government and I think we are very fortunate to have a
    person of your background be willing to be Secretary of the Air
    Force. I hope you take no offense when I tell you that when you
    mentioned the fact that you have the power to close bases, in
    an election year, as an Acting Secretary, you send shivers
    through everyone's back. I hope you recognize the difficulty
    that we would have in getting approval of your budget should
    you carry out that threat.
        Now both you and the general have mentioned that you would
    like to close bases. I would be happy to have you give me a
    list of the bases you would like to close. The difficulty is
    that the savings we made out of the last three rounds of base
    closures were more than absorbed by expenditures that were not
    authorized by Congress in deployments to Bosnia and other
    places around the world.
        We have had to reprogram, reprogram, reprogram, and
    reprogram, and we have decided we are not going to reprogram
    anymore.
        Now the real problem with it is we spend more of our time
    and so do the members of the Air Force trying to figure out
    where to get the money that has been spent without
    authorization, how to reshuffle accounts, than we do in trying
    to figure out what to do for modernization.
        I believe we are going to have to close some bases. But
    until we see some action with regard to McClellan and Kelly,
    which were kept open during the election process by the
    President as a candidate, I don't think you are going to get
    support for the BRAC process.
        Now the idea that we should be berated about not closing
    bases at the beginning of a hearing on how can we find the
    money to continue right now with this supplemental just
    crossing my desk, the only way we are going to swallow that is
    to declare it all emergency. I really think that we are
    jeopardizing the future of our modernization program if we do
    not make savings. I don't think it is clear yet that the only
    saving we can make is through base closures.
        I come from a State that was the only State in the Union
    that was invaded in World War II, and one of the reasons it was
    was its bases were denuded in the long peacetime period before
    World War II.
        If you want to talk to me or the Senator from Hawaii about
    readiness, we would be happy to quote some history to you.
        The difficulty I have right now is I don't know where we
    are going to find the money for modernization and I agree we
    should make savings. I would urge you to start looking at some
    of the things we have been talking about up here and that
    includes consolidation of functions. Consolidation of bases
    really has not given this committee any money to shift around
    to the modernization program--none.
        We have not had $1 go from base closures into
    modernization. I would be glad to have you prove that and if
    you want to look at it, I will show you the figures. We spent
    more money, as I said, in unfunded, unauthorized operations in
    Bosnia and other activities, such as we are now spending in
    Iraq. But we are going to cover that with this emergency
    funding and I hope Congress will join in the emergency.
        But I would urge you to stop complaining about base
    closures and start telling us how to save money in other areas.
    For instance, we maintain training schools for pilots. Each one
    of the services does, and for the same aircraft. Why shouldn't
    we consolidate those functions? What have the services done
    about consolidation of functions rather than consideration of
    bases?
        I do not think consolidation of bases automatically saves
    money at all. One thing that bothers me right now is, if we
    look at what is going on right now, General--and you mentioned
    it in your statement--we now have four times greater OPTEMPO
    than in 1989, but with one-third less end-strength. We now have
    had 33 percent of the active pilots completing tours reenlist.
    I think that is the lowest since I entered the Congress.
        Under those circumstances, it seems to me that morale,
    which would be highly disturbed, Mr. Secretary, by a political
    decision to close bases, as opposed to one that was based on
    the Base Closure Commission, it seems that morale is going to
    be affected by bases being closed without the proper process
    being followed.
        So I hope we have heard the last of that, Mr. Secretary--
    again, respectfully. I do not want to be threatened again. And
    I think the committee feels threatened by that concept.
        Our budget covers specific bases. If you want to close
    some, I would urge you to tell us what you want to close. We
    will help you. If you want to close some bases, we will do it
    in the 1999 bill. But tell us where they are and why and stop
    telling us that we ought to do it without telling us where you
    want to do it.
        General, I really think the problem about pilot retention
    has a lot to do with the overall pay scale now as compared to
    private aircraft, private concerns, and the way they are hiring
    away your pilots. I would like to see you give us a suggestion.
    We had to cover this once before with the doctors in the
    military. We had to cover it before with scientists in the
    military. Why shouldn't we face the fact that if you are going
    to keep the top grade pilots, we have to pay them more?
        I would urge you to give us not just the incentive pay
    concept or the reenlistment bonus concept, but raise their pay
    across the board. I have talked to several of these young
    people. They left because they felt their families would be
    better off. They are passing their prime years flying in the
    service and they didn't feel the compensation was high enough.
    I think the Congress would be ready to adjust the pay of pilots
    to meet this problem of retention.
        Last, the one thing that really worries me right now, Mr.
    Secretary and General, is the report from Europe that at least
    two fighter squadrons were not able to maintain readiness, were
    redlined too often, and were not capable of meeting the overall
    goal of the Air Force, particularly when deployed. It is bad
    enough to have that happen here at home. But if it is true that
    there were two fighter squadrons in Europe that could not
    maintain their aircraft availability because of lack of spare
    parts, I think something has to be done about the logistical
    concept of distribution of parts and their availability. We
    would be happy to work with you on that.
        I would hope that, above all, once we deploy forces
    overseas, they are not shortchanged with regard to parts. That
    report was very disturbing to me when it first came in.
        If you have any comments about what I said, I would be glad
    to let you comment. But I have to tell you that that article
    disturbed me no end.

                            Funding request overview

        Mr. Secretary, do you have any comment?
        Mr. Peters. Senator, the point of the discussion that I had
    and also to a certain extent that General Ryan had at the Air
    Force Association [AFA] last week was clearly that BRAC is the
    right way to go if we are going to reduce infrastructure
    because it is the way that is best for the communities that
    have supported the military for so many years.
        There really are three reasons at this point why we think
    we need to be able to close bases. Money is one of them but is
    not necessarily the most important. There are two other reasons
    that are really critical.
        First, with respect to our forces, we are at a point now
    where, as General Ryan said, the forces who are left at home
    are working very long hours because the number of people left
    on the bases from which our deploying squadrons leave are not
    large enough to maintain the base during the time of
    deployments.
        We think we have the right overall force structure, but
    what we need to do is put those forces on fewer bases. Now that
    can be done, obviously, without closing bases. But it also will
    stress the bases from which we take those people and probably
    we would be better, rather than stressing a lot of bases,
    simply to close several and go on from there.
        Second, as the GAO has noted in recent studies and as we
    have looked at in our own planning process, it makes sense to
    try to consolidate our aircraft into larger units. Again, that
    requires taking units off of bases and moving them.
        In the QDR we have looked at both of those options and some
    of the QDR numbers actually depended on taking significant
    numbers of aircraft off of bases and relocating them. When we
    went down and talked to Secretary Cohen about that for this
    year, for the fiscal year 1999 program, a decision was made
    that we would not do that in favor of trying to get a BRAC
    process.
        These are really important things we are going to have to
    do. If BRAC is simply not going to happen, we have to look at
    other ways as best we can to consolidate forces and to
    consolidate aircraft.
        For example, one of the places where we had hoped to get
    modernization aircraft for the National Guard was by taking
    them out of an active duty fighter wing. We have not done that.
    We still need to look at that. The best way to do that would
    probably, again, be to actually close a base and simply take
    those aircraft and move some of them off to the Guard.
        That is where we are. On the money, we believe we have made
    about $5.6 billion off the BRAC rounds for the Air Force and
    that number goes through 2001. That is the net number. Some of
    those savings will continue to go on for many years. There is
    no question that that money has not gone all for modernization.
    But we still need to be able to get that money.

                              Environmental costs

        Senator Stevens. Hasn't any of it gone there? We spent more
    than $8 billion in Bosnia. We have had to put that up. None of
    it--I take that back--about $1 billion was requested, finally,
    last year. But at least $7 billion was spent against $5.6
    billion in savings.
        I don't see how that has gone to modernization. Until we
    find some way to assure that the money that we save is going to
    go into modernization, I think that is another problem we have
    with BRAC. I would like to put it into an account so that you
    can only use it for BRAC. We have to look at that in terms of
    amending the BRAC law.
        I hear you. Mr. Cortese reminds me that the bill is still
    not in on the environmental costs on the bases we closed. It is
    probably going to exceed the savings by the time we are
    through.
        Mr. Peters. The number I just gave you is based on our
    estimate of the environmental costs. That is the net above
    environmental costs through 2001. We think we are going to be,
    in the Air Force, net over $5 billion, including the
    environmental costs. We actually have turned to net savings at
    this point. There was an up-front cost for environmental. There
    is no question about that. There are continuing costs. But our
    estimate is that by the end of 2001, we will be net positive in
    the Air Force of about $5.6 billion.
        Senator Stevens. We hear you. I know we have to get some
    money from somewhere. I don't like this budget. This budget
    from now to the year 2003 is not going to increase despite the
    fact that we are going to start building up a surplus before--
    you know, it's not really a surplus in the overall connection
    of the national debt. But the balanced budget goal was 2002 and
    it is balanced now.
        I think part of that came from the fact that we paid
    peacekeeping costs out of defense and we don't have the money
    for modernization that we should have had.
        Now I hope also to have something to say about whether that
    happens again.
        Again, our problem is how to get the money to help you. I
    don't think you are going to get it in terms of the money we
    need for modernization, base closures, particularly with the
    forces deployed overseas the way it looks like they still are
    going to be, for an indefinite period ahead, if I understand
    what the President said. I don't know how you are going to move
    those savings into anything other than paying the costs of the
    deployments in Bosnia and Iraq.
        So this is a tough one for us.
        Senator Bond.

                                    F-15A's

        Senator Bond. Thank you very much, Mr. Chairman.
        General Ryan, I raise an issue concerning our National
    Guard general purpose squadron. I understand the procedural
    restrictions on upgrading F-15A's, but there are A's out there
    which still have a lot of life on them, and as I understand it,
    many of them with more life than some of the early model F-
    15C's.
        Now I understand that the Air Guard F-15A to F-15C
    replacement program the Air Force anticipates will be forced to
    the right, extending the sunset date of the F-15A because of
    other procurement problems. There are, as we know, Guard units
    out there right now and will be for the foreseeable future.
        Is there anything we can do to help with an F-15A system
    upgrade, such as accelerating an installation of fighter to
    fighter data link to bring them to tactical parity with the
    rest of the Air Force TACAIR inventory? 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 of the total force?
        General Ryan. Senator Bond, we continually look at the
    force structure out there in our Guard and Reserve units and
    try to make sure, as best we can, that they are compatible with
    the active force because we intermix them all the time, as you
    well know.
        We have looked at the F-15A models. Extending their life
    for a significant amount of time would cost about $11 to $15
    million apiece. We will continue to look at that as we look at
    what happens to our force structure as we move out and how our
    budgets are approved.
        But, as you know, we are committed to making sure we have
    the interoperability. In this year's budget with our Guard
    forces we increased the amount of data links that we are going
    to have on our aircraft. We eventually want to get to everyone
    being compatible with Link 16. In the meantime, we are doing
    EPLRS on our F-16's in the Guard. We are increasing their
    capability for precision guided munitions. We will go back and
    look at the A models in light of what our force structure will
    be in the future to see if there is something we need to do to
    that force if modernization pushes out to the right. If it does
    not push out to the right, then the A-B models fall into that
    timeframe where we cannot upgrade.
        But I will give you an answer for the record.
        [The information follows:]

                                    F-15A's

        The USAF is aggressively pursuing force structure
    modernization programs. As a result, we expect the conversion
    of F-15A's to F-15C's to occur on schedule. Instead of
    modifying the F-15A's, we will continue with plans to upgrade
    to F-15C's in anticipation of their introduction into the
    National Guard.

                                Pilot readiness

        Senator Bond. I appreciate that. Obviously, we want to see
    the schedules maintained. But around here, I have only been
    here for a couple of years and I have seen schedules tend to
    slip, particularly when you have as many other requirements as
    our chairman has just mentioned on it.
        I mentioned some ideas about pilot training and readiness.
    Do you have any thoughts on that?
        General Ryan. On our pilot training, as the Secretary
    mentioned--correction--as the chairman mentioned and the
    Secretary talked about, our pilot retention numbers are not
    what they ought to be. We have polled our people and asked them
    what is it that would increase your proclivity to stay with us.
        You have to remember that these men and women are the
    people who have already served 9 years in our service. Most of
    them have families. Most have been deployed to the desert
    multiple times. They are looking for stability in their lives
    as much as they are looking for anything else and that their
    families be well taken care of.
        We are working those issues as hard as we can. We have cut
    down on the deployment time that they are gone to 45 days so
    that they do not lose their skills. We have, with the
    governments in the region, Turkey and Saudi Arabia, been
    allowed to train there, not just do figure eights in the sky.
    Turkey has allowed us training days each month for our forces
    to go out and train as they need to and we have gotten similar
    capabilities in the gulf.
        That is not as much of a problem as it was before.
        We think that the bonus, that the committee was very
    instrumental in helping us get, has kind of stemmed the tide.
    What we are looking for is something to turn it back around.

                                   The Tunner

        Senator Bond. We will want to follow up on that. I have
    just one very quick, last question.
        Could you give me your views on the performance of the 60-K
    loader and your near-time procurement strategy?
        General Ryan. You know, we call it the ``Tunner,'' named
    after General Tunner, who ran the Berlin airlift and, in fact,
    flew the Hump. I was with his wife 4 or 5 days ago, a marvelous
    woman, who herself is an aviator.
        The Tunner is probably a huge step forward for us because
    of its capability to move equipment from high loads to low
    loads quickly and reliably.
        Senator Bond. Is it working well?
        General Ryan. It is working great. We have not had any
    problems with it and we are going to buy 300-plus of them and
    put them around the world to help with our mobility throughput.
        Senator Bond. I would like to help you with that.
        Thank you very much, General.
        Thank you, Mr. Chairman.
        Senator Stevens. Senator Cochran.

                                Quality of life

        Senator Cochran. Thank you, Mr. Chairman.
        General Ryan, you mentioned that the biggest problem the
    Air Force faces is retaining pilots. You pointed out the
    numbers to illustrate the problem. I wonder, given the fact
    that you said you were trying to deal with housing problems and
    other quality of life issues to try to help retain pilots, how
    does that coincide with the low amounts being requested for
    family housing, military construction, and the other things
    that you really need to do in order to improve these quality of
    life situations? I notice that the military construction
    request, for example, is down $160 million in terms of National
    Guard and Reserve military construction.
        The other part of the budget is down $332 million from the
    fiscal year 1998 budget. The family housing budget is down $100
    million from the funding level of 1998.
        Do we need to add more money for these items?
        General Ryan. As we worked our way through our budget, what
    we tried to do, was balance the modernization and the readiness
    accounts along with our people and our quality of life. Those
    were our three main pillars.
        No; it is not what we want. It is not what we think our
    folks deserve. But it was what we had to distribute in our
    budget and we tried to do it in a very balanced manner.
        We are looking at other ways to leverage that money, too,
    and that is in the private sector, particularly with family
    housing, to be able to partner with local communities and the
    capability to renovate homes, and then be able actually to do a
    rental agreement.
        We have several tests of this going on in Texas, at
    Lackland. We are doing this with a group of houses to give us
    more leverage on the money we have.
        But, to answer your direct question Senator, we would like
    to have spent more money in our quality of life side. We will
    always want to spend more money on our quality of life side to
    take care of our folks.

                                 Pilot training

        Senator Cochran. One other impact that is possible from
    this is the pressure on pilot training facilities. At Columbus
    Air Force Base in Mississippi, for example, I am told that they
    may need to increase their pilot production by over 225 percent
    to train new pilots to take up the slack from those who are
    retiring early. This is over a 3-year time period, from fiscal
    year 1996 to fiscal year 1999, a 225-percent increase.
        Are there funds in this budget request that will help deal
    with the problem at the pilot training bases?
        General Ryan. Yes; we have looked at our pilot production
    to ramp it from our low several years ago of about 500 pilots a
    year for the active duty force up to 1,100 pilots for the
    active duty force by the year 2000. That is a big increase.
        Quite frankly, we made a mistake in the Air Force in our
    drawdown when we cut our pilot training back. It was not a
    smart thing to do. Now we are suffering some from that
    decision.
        We have in the budget the capability to ramp. In the 1999
    budget, included in there is our ramp-up in pilot training. We
    are still studying how to get to the 1,100 number which
    includes expanding our pilot base to include other bases, other
    than the current pilot training bases.
        We have worked with the Navy, to answer your question, Mr.
    Chairman, in increasing our capability with them. As you know,
    we are jointly training our pilots with the Navy right now. The
    Army does all of our helicopter pilot training. So we have
    combined these functions as best we can in ramping on up. We
    are buying a common airplane, a JPATS airplane, for the Navy
    and the Air Force and we are looking for every opportunity to
    produce pilots.
        If you look at the numbers right now, if the Army, Navy,
    Air Force, and Marine Corps let every pilot go who was eligible
    to leave, that would not one-half fill up the bucket of the 13
    major airlines' needs over the next 10 years. So we are in a
    deficit war here for the service of these folks.
        The airlines are hiring mightily and they will continue to
    hire. If you look at it with the commuters, it does not even
    come close to one-quarter of the requirement. This is a
    national problem, not just an Air Force problem.

                                 Airborne laser

        Senator Cochran. Mr. Secretary, both you and General Ryan
    mentioned the fact that you had put money in this budget for
    the Airborne Laser Program. The amount is $292.2 million. Is
    the fact that the Air Force is willing to put this in their own
    budget an indication of how important this program is to the
    Air Force and the capacity to defend against missile attacks?
        Mr. Peters. Yes, it is, Senator. It is a very important
    program to us. We think it is on track. We have looked at the
    various test results we have gotten. We think we are where we
    need to be and that we, in fact, are going to be able to test
    this thing in the air in 2002, which is the goal.
        This is the only program we have at the moment in the
    theater missile area which can knock a missile down in the
    boost phase. It also has important collateral benefits in terms
    of tracking missiles as they come up. Information about
    missiles, the leakers that get through, can be given back to
    others, the theater missile defense [TMD] units, and it is a
    very, very important program for us, one that I think is
    essential both for force protection and also as an enabler for
    the other theater missile defense systems.
        Senator Cochran. Is the amount of money available to you
    related to the date of deployment of the weapons system? In
    other words, if we appropriated more money than you requested,
    would that accelerate the deployment schedule and further
    enhance the protection of our forces?
        Mr. Peters. I believe the answer at this point is no, that
    we are technology driven and research and development driven
    through 2002, which is what we need to get to. We really need
    to make sure this works correctly before we invest additional
    funds. But I think we are where we need to be through the 2002
    date.
        Senator Cochran. As I understand it, one of the attractive
    aspects of this system is that you are able to attack a missile
    in its boost phase and that this enhances the ability to
    protect against damage, destruction from hostile weapons. Is
    that one of the driving forces, one of the reasons why this is
    such an attractive option for us?
        Mr. Peters. Absolutely, Senator. This is the only boost
    phase intercept program we have ongoing at the moment. As we
    worry more about weapons of mass destruction, we certainly
    would like any weapons of mass destruction to fall back on the
    shooter rather than on our forces.
        So this is very critical to us. It looks like the only
    technology right now that can do a boost phase.
        Senator Cochran. Somebody in the Secretary of Defense's
    office has criticized this program as being susceptible to
    problems because of atmospheric turbulence. Is that a realistic
    criticism? Is that based on science or supposition?
        Mr. Peters. In this area it is based, we believe, on some
    early test results which we believe our data collection efforts
    have disproven.
        There are technologists on both sides of this argument as
    to what extent the laser beam will be defracted and made
    turbulent by the air that it has to shoot through.
        We had set some minimum parameters. We believe, based on
    data we have collected around the world, that the turbulence we
    are going to experience is within those parameters. We believe
    that the measures we have to correct for that turbulence are
    right where they need to be.
        So at this point, it is our sense that the only way you are
    going to be able to resolve this argument is by putting an
    airplane in the air, shooting the laser, and seeing what
    happens. I think we are in the area where you can argue about
    it or go try it. We are at the go try it place at this point.
        General Ryan. I would say that that argument is also
    waning. We have had multiple investigations of the phenomenon
    of refracting the beam as it goes through and most of the
    serious scientists now say yes, we've got it pretty well
    solved.
        Senator Cochran. Thank you very much, General.
        Thank you, Mr. Secretary.
        Senator Stevens. Senator Harkin.

                                Pilot retention

        Senator Harkin. Thank you very much, Mr. Chairman.
        Mr. Secretary and General Ryan, I just have two things I
    want to cover. First is on the retaining of pilots. This has
    always been a problem. It has been a problem since I was a
    pilot in the Navy. You get trained and you find out that you
    can get more money on the outside, that things are more stable
    in the civilian world. You are always going to have that
    problem in a free society and in a market economy. This is why
    I have always advocated that we pay more attention to our
    Reserve forces and our National Guards.
        I was a Navy pilot. I left the Navy. I joined the Reserves.
    I flew every weekend. I put in 4 weeks of active duty every
    year. I was better trained and qualified in the Reserves than I
    was on active duty at the cost to the taxpayers at one-third as
    much money.
        I did not have all of the collateral duties and I was not
    training to be CNO or anything else. I just wanted to fly an
    airplane. So I think we shortchange a lot of our Reserves and
    our National Guard forces.
        A lot of these pilots that are leaving the Air Force, just
    like they are leaving the Navy, want to continue to fly. They
    like to sit in that seat. They could do that in the National
    Guard and in the Reserves at probably one-half, no, one-third
    as much of what it costs us to keep them on active duty.
        We ought to be focusing on that and provide that kind of
    structure for them because they can be called up and sent into
    active duty at any minute as well qualified. General--I am sure
    you will agree with me.
        General Ryan. Yes, sir.
        We are talking from the same sheet of music. We are trying
    to hire every one of those folks who come out of active duty
    into our Guard and Reserve forces. Our Guard and Reserve force
    in the Air Force provide us with integral capabilities that we
    use all the time. In fact, we are stressing those forces fairly
    heavily right now.
        We are using our Guard and Reserve forces to the maximum
    extent that they think they can sustain right now.
        Senator Harkin. That they can sustain?
        General Ryan. That they can sustain.
        Senator Harkin. I think our job is to give them an ability
    to sustain even more. That's what I am saying. They may be at
    their limit. I am just saying that I don't think that limit is
    enough right now. That is my point. I am saying that as a
    policymaker.
        We have a lot of people out there who are qualified pilots
    who are leaving, who we could keep in the force. I know them. I
    know what they are like. I know where their heads are.
        General Ryan. Yes, sir; and we are trying to recruit every
    darn one of them to come to us into the Guard and Reserve.
        Senator Harkin. And I'll bet you that it is not too hard to
    recruit them for Reserve duty or National Guard duty, either.
        General Ryan. Yes, sir.
        Senator Harkin. Do you think it is hard?
        General Ryan. In our Guard and Reserve, we have two
    different kinds of pilots. We have pilots who are full-time
    pilots with the Reserve.
        Senator Harkin. Right.
        General Ryan. About one-third of our force, our Reserve
    forces are full time.
        Senator Harkin. I understand.
        General Ryan. The other two-thirds----
        Senator Harkin. Are the weekend warriors and stuff like
    that.
        General Ryan [continuing]. We can get the weekend warriors
    pretty well. What we are having trouble getting, and the
    Reserves and Guard are working very hard on, are those folks
    who are full time, which is a similar problem that we have.
        Senator Harkin. I understand that.
        General Ryan. They are the backbone that holds those units
    together as the part timers come in and out.
        Senator Harkin. I understand that problem. I would like to
    know what we can do to help beef that up, because those people
    tend to be more stable. They are located in a community. They
    are not moving around, they are not deployed. So what can we do
    to entice more people into that line and then help beef up the
    weekend warrior situation?
        General Ryan. One of the things that we look at very
    carefully is not so much how much the Guard and Reserve can
    help us in our two major theater war paradigm but how much the
    Guard and Reserve can help us with our OPTEMPO right now. That
    is the driver.

                                  Recruitment

        Senator Harkin. I understand.
        There is one other issue that I really wanted to cover with
    you. I am not going to get into weapon systems and all the big
    ticket items that you have.
        I was reading your posture statement and on page 17 you
    discuss recruiting quality people. You say that recruiting
    remains a challenge. U.S. commitments abroad have decreased the
    pool of interested, qualified, potential recruits. Annual youth
    attitude surveys show the interest of young men serving in the
    Air Force has dropped from 17 percent in 1989 and stabilized at
    12 percent.
        Well, General, Mr. Secretary, since World War II, we have
    had an organization in the Air Force that develops leadership,
    discipline, motivation, interest in aviation, and flying. It is
    called the Civil Air Patrol [CAP]. And yet, for the last 13
    years that I have been in the Senate, the Air Force has been
    treating it like an illegitimate child--get rid of it, ignore
    it, shunt it aside, defund it, everything else.
        Mr. Chairman, the Air Force now is supporting, as I
    understand it, establishing the Civil Air Patrol as a grantee
    organization under OMB Circular 110. That would require the
    Civil Air Patrol to apply for funds through a grant review
    process and not be a part of, or receive funds through, the DOD
    appropriations process. This would make the Civil Air Patrol a
    nongovernment organization, similar to a hospital or research
    laboratory and would move the CAP from its present position in
    the Air Force budget process.
        I just want you to know that I am absolutely, totally
    opposed to that. I look at your budget request on Civil Air
    Patrol and it goes down every year. In 1997, 1998, and 1999, it
    went from $19 million down to $13.9 million. I have to tell you
    that I think you are going in the wrong direction.
        Do you want to get young people interested?
        I had breakfast not too long ago with a man that I met
    recently, a very, very successful business man in Baltimore, an
    African-American. I was having breakfast with him and I said
    well, I have to leave now because I have a group of kids over
    on the Capitol steps who are CAP kids from Ohio. He said oh,
    the Civil Air Patrol. He said you know, I would not be where I
    am today, when I was stuck in the inner city of Baltimore, if
    it had not been for the Civil Air Patrol. He said that is what
    gave him the discipline and the motivation to succeed in life.
        So I went over to the steps of the Capitol and met these
    kids from Cleveland, OH. The more I think about it, the more I
    think we are missing a great bet here. There are kids in these
    inner cities that need this, that want it, and it is not a big
    buck item.
        If you want to increase the pool of young people that are
    motivated and that have an interest, this is where it is,
    General. This is where it is, Mr. Secretary. It is a small
    item.
        And yet I have fought for 13 years in this Senate to keep
    the Civil Air Patrol alive, to keep it in the Air Force, to
    keep it from being shunted aside, to give it new duties and
    responsibilities.
        A few years ago, we gave it the responsibility of drug
    interdiction and they have done a remarkable job. I keep
    pointing out the Civil Air Patrol can fly 1 hour of drug
    surveillance--oh, I don't know my figures right now--but it was
    at like $40 an hour, something like that.
        First of all, what you get is your pilots, General. They
    are out of the Air Force, they are flying for the airlines,
    they are in business, they are weekend warriors, and they love
    to go out and do this. They volunteer their time. They take
    their own cameras and we buy them the gas. It costs $40 an
    hour.
        For the same National Guard helicopter in Iowa to do drug
    surveillance in Iowa is like several hundred dollars an hour.
        Look at the recent A-10 crash in Colorado, for the benefit
    of you people out there. For that A-10 crash in Colorado,
    people searched high and low. The Air Force searched and
    everybody searched. Who found it--the Civil Air Patrol.
        Eighty-five to ninety percent of all of the search and
    rescue done in this country is done by the Civil Air Patrol,
    and quite successfully, too.
        So every year I give this speech. But this year I am hotter
    on it than I have ever been before because, hopefully, we have
    some new leadership down there. I hope you will take a look at
    that budget. It is just wrong when you are going from $19
    million down to $13 million.
        Here is the Air Force on rescue and recovery services at
    $46 million last year. The Civil Air Patrol was $2.1 million,
    and yet it is the Civil Air Patrol that does 85 to 90 percent
    of the search and rescue in this country. I have to ask what is
    that other $46 million going to the Air Force for?
        I just hope that we will take a new look at the Civil Air
    Patrol. I want to know what your intentions are in terms of
    shunting it off and making it a grantee organization. If that
    is where you are headed, you are going to have a battle. I may
    be alone in it, but you are going to have a battle because I am
    going to fight it.
        I think you could not say it better than in your posture
    statement. You want young people, motivated, interested in
    aviation. The Civil Air Patrol is the pool out there from which
    you can get them. I will just leave it at that.
        Mr. Chairman, we need summer camps for Civil Air Patrol. We
    need weekend activities for kids in inner cities to go out to
    our bases and be involved in Civil Air Patrol. Yet we are not
    doing any of this.
        I think it would be a great recruiting technique plus it
    will answer a lot of the problems you are going to have in the
    next 20 to 30 years for recruiting people.
        I have had my say. I would like to hear your response.
        General Ryan. First of all, sir, you are striking a chord
    with somebody who used to be a CAP cadet. I was in the Civil
    Air Patrol when I was a teenager.

                                Civil Air Patrol

        Senator Harkin. Where are you from?
        General Ryan. At the time, I was living in Nebraska, in
    Omaha.
        Senator Harkin. Interesting.
        General Ryan. I had the leadership of the CAP in and sat
    down and talked to them about where we are going with the CAP.
    I have asked the Commander of Air Education and Training
    Command to come back to me and tell me how we can revitalize
    the program. I have asked our folks in the air staff to tell me
    the ins and outs of why we are going with the circular 110
    definition of whether this is a grant or is direct funded in
    our budget kind of activity. It does not make a lot of sense to
    me that we change horses in the middle of the stream because of
    a legal interpretation. And if it is a legal interpretation, I
    would like to come back to you and see if we can get
    legislative relief so that we can directly fund the Civil Air
    Patrol.
        I would like to meet with you also and talk about our Civil
    Air Patrol and how we can revitalize it. I am committed to
    that.
        Senator Harkin. I would look forward to that. I would love
    to sit down and talk with you about it. You have been involved
    in it for a long time. I didn't know you were a cadet. That is
    interesting. That's great.
        Mr. Peters. Let me add to that, Senator. In the 95 or so
    days that I have been the Acting Secretary, I have been to CAP
    functions twice, including the Martin Luther King function here
    at Andrews, where we brought many of these inner city kids from
    the District of Columbia out to Andrews for an evening. There
    are some very, very dedicated people there.
        Senator Harkin. That's right.
        Mr. Peters. We intend to continue to fund this. I have beat
    up my general counsel, as recently as this morning, saying that
    we have to get this resolved because we need to know a
    definitive answer from OMB one way or the other, and if we need
    legislation to make this continue, we will try to get that.
        Senator Harkin. If you do need legislative relief, we ought
    to discuss that and we will come up with it. Again, I would
    like to talk to you about your projected budget on Civil Air
    Patrol and what you are looking at in the future. I don't like
    what I see in here.
        Let's see what we can do to revise that. I would like to
    meet with you about that.
        Mr. Peters. Yes, sir; we'll get together.
        Senator Harkin. Thank you very much, General, Mr.
    Secretary.
        Thank you, Mr. Chairman.
        Senator Stevens. General, I would like to be included in
    those as an ex-Civil Air Patrol legal officer, as you probably
    know, but beyond that, as a pilot, too. The Senator was
    mentioning primarily young people. The search and rescue in my
    State is done by reservists and National Guardsmen who also
    volunteer as Civil Air Patrol. There is a bifurcated function
    there that we have to preserve.
        I welcome his comments about the outreach for pilots, and I
    notice your comment about increasing pilot training. I just
    think we ought to open up the doors and train more people. We
    cannot get by with allocating the shortage among the services
    as far as I can see.
        Senator Dorgan.

                                 Airborne laser

        Senator Dorgan. Mr. Chairman, thank you very much.
        Mr. Secretary and General, welcome.
        That question was asked of you a few moments ago on the
    airborne laser. I would like to just add to the question. There
    was a GAO report, critical of the program, and the press picked
    up on it.
        Would you give me your impression of the criticism and what
    the Air Force is doing to respond to it?
        General Ryan. When I first came to this job, I tried to get
    heavily into ABL. I have had people from laboratories come and
    talk to me. I have had the testers come and talk to me. I think
    the program, the criticism of the program, was based on lack of
    facts. I think the facts are in now and you don't hear the
    criticism that you heard before.
        The facts are that the physics of the capability are there.
    We think we can do it. We have done the sampling, we have done
    the testing, we have done the warping of the mirrors, we have
    done the hard physics work to make this a viable program. What
    we are really looking forward to now is how to mechanize it so
    we can put it on the aircraft and fly the aircraft and do an
    airborne demonstration. That would happen in the year 2002.
        We are well on course to that. It is a great capability. We
    should not be stuck in the defense of our folks in rear areas,
    in theaters where ballistic missiles are a threat, to being
    only able to catch them as they come in. We need to be able to
    go out and attack them where they are on the ground and catch
    them airborne in a whole series of defensive layers.
        We think this is a vital capability and we think it is
    going to work.

                                 Tanker forces

        Senator Dorgan. The only reason I asked the question is the
    criticism that was leveled had real wings. I mean, it took off
    and was repeated and continues to be repeated.
        I would encourage you to move aggressively in response to
    it because it is an important program.
        Thank you for your response.
        General, your predecessor, General Fogleman, was very high
    on the concept of basing the Air Force's tanker aircraft at
    core tanker bases. Has that thinking changed or are you pretty
    much in line with General Fogleman's thinking on that?
        General Ryan. We have our tanker forces both stationed in
    theater and in the United States. But yes, we are trying, for
    efficiency's sake, to keep them in fairly large piles. That is
    still our motivation.
        Senator Dorgan. So the concept of the core tanker base----
        General Ryan. Is still there.
        Senator Dorgan. Let me ask a question about the Iraqi
    crisis.
        We had a lot of questions about basing options for aircraft
    with respect to any potential operations in Iraq. The question
    of where we might and might not be able to base certain
    aircraft in dealing with the Iraq crisis was something that was
    publicized widely. I would like to know if the Air Force was
    satisfied with the basing options that were available to it
    during the most recent crisis. If not, does that suggest a need
    for more long-range airpower?
        General Ryan. I was happy with the basing options that we
    were presented with. What was unclear was whether we were going
    to be able to use the bases where we had the aircraft bedded
    down to prosecute an attack. That was the real issue.
        Though there were declaratory statements made by many of
    the governments over there, we never came to a conclusive
    decision on whether those aircraft would be used or not. I was
    over in the theater not too long ago and traveled to all the
    countries where we had our Air Forces bedded down and talked to
    the leadership there. For the most part, they were very
    supportive, Kuwait particularly.
        We will always, I think, need access to bases in regions
    where we have potential conflict. If we do not have access to
    those bases or do not have allies in those areas, then our
    long-range capability will be stressed--not only our long-range
    capability in bomber capability, but our ability to extend our
    forces out using our maritime forces also.
        So there is always this balance that you will have to go
    through with that kind of activity. Each one of these has a
    different flavor.
        What we would do in Bosnia is much different than what we
    would do in Iraq, and perhaps in the Korean Peninsula, and how
    we would apply the forces. So each one is different.
        One of the problems with our long-range capability is the
    cycle times that we need, particularly with our bomber forces,
    in which I know you are very interested.
        To be able to project the power from the continental United
    States, that far, and back is something that we can do. And we
    have a very good bomber force to do it.
        But a sustained effort requires access closer. I would like
    to move the bombers in closer, quite honestly, to where we can
    get these cycle times down and use the full capability of the
    bombers.

                                 Report status

        Senator Dorgan. Well, our B-52's have moved to Diego
    Garcia, and the cycle times from that island would not be too
    high. But, I would like to submit for the record some further
    questions on the bomber force, with the chairman's permission.
        Let me ask Secretary Peters one additional question that
    relates to the question that the chairman asked on base
    closings.
        The Congress has prohibited the formation of another BRAC
    Commission until the Pentagon submits a report back to the
    Congress. I offered the amendment in the Senate, which is now
    law, that required the report.
        It is not a message to the Department of Defense or to the
    Air Force that we will not be supportive of downsizing or base
    closing in areas where we have facilities that are unneeded. We
    understand all of that. But the Congressional Budget Office has
    indicated that we do not have currently a very good method or a
    very good system of determining what the costs and the benefits
    have been of the base closures that we have already done.
        We have ordered the closing of about 100 bases. Well over
    one-half have now been fully closed. The Congressional Budget
    Office says we would be very unwise to proceed until we
    understand what it is we have done and what the consequences
    are of what we have done.
        On that basis, we decided, despite a call for more base
    closing rounds, to stop and ask for a complete report and an
    evaluation of what have we done, what has been done, what have
    been the costs and benefits.
        Can you respond to that and tell us where you are in the
    process of trying to gather together these facts and the
    information for Congress?
        Mr. Peters. Yes, sir.
        Secretary Cohen intends to try to submit that report, I
    think, in the April timeframe. We have also had the DOD
    inspector general and in the Air Force our own audit agency
    going out to look at these costs.
        The DOD inspector general has been working this and, in at
    least one of the years--I don't know which one--has found that
    our costs were actually less than estimated and our benefits
    were actually greater than estimated. But that data collection
    effort is going on right now.
        I know that because the Air Force is a couple of weeks
    overdue in providing the data, which I am reminded of almost
    daily. I believe that report will be coming in the April
    timeframe.
        Senator Dorgan. What kind of overcapacity do you think
    exists, Mr. Secretary?
        Mr. Peters. At this point, we have not actually figured out
    exact numbers. But it is clear to us--and we have asked our
    planners to go back and look at this--that, as we become more
    of an expeditionary Air Force, we need to have larger bases.
        In the POM cycle we currently are in, we have tasked our
    planners to look at consolidating and reorganizing various
    forces, including, for example, where training occurs and who
    does it: Active, Reserve, or National Guard. We have also asked
    them to come back to the Chief and me with a plan for how we
    would plus up these highly stressed forces, such as security
    forces and mechanics.
        We will have that in the POM 2000 cycle. We are going to
    try to resolve a lot of those issues. That is where we are.
        We know, though, from the QDR experience that we needed to
    take out one more active fighter wing in order to get aircraft
    for the National Guard. We did not do that because the
    Secretary felt that it was more important to try to go for a
    BRAC round. What we had planned to do was to pull substantial
    assets off of several bases. But doing that without BRAC is not
    the first choice.
        So we know that, even to reach our QDR targets, we have to
    take a substantial number of aircraft off of existing bases.

                                 BRAC planning

        Senator Dorgan. General Fogleman was remarkably candid last
    year when I asked him about this issue. He said well, I won't
    be here when the next round occurs. But he said if I were doing
    it, I would probably call for only one additional round. That
    was at odds with what had been discussed publicly.
        Have you any comments on that?
        Mr. Peters. We are looking at our planning process right
    now. Our sense is that it will take two. But we are looking
    right now at trying to come up with an overall concept for what
    people have nicknamed superbases, that is, a base from which we
    could have substantial assets deployed without ruining the
    quality of life for people still left on the base.
        In other words, we would like to avoid having our security
    forces who are left at home go to 12 hour shifts when we deploy
    with security forces overseas. So we are looking at that right
    now to try to come up with a better sense of exactly what
    skills those are, how many we need, and what their best
    locations would be.
        General Ryan. One of our problems in our previous drawdown
    was, conceptually, what kind of Air Force were we going to be,
    going into the future. It has evolved that we are very much an
    expeditionary Air Force. We are going to be called to go
    overseas, provide our own force protection, provide our own
    living conditions, not live on the economy because of the
    seriousness of the threats that are out there from terrorists
    and others.
        Given that paradigm, we are not structured for that kind of
    activity. We are spread very thinly around a lot of bases. We
    need to bulk up so that not only the forces but the
    infrastructure for the base is of sufficient size to keep it
    busy at home and efficient at home but also effective overseas.
    So what is happening to us right now, particularly in our
    security police forces, for instance, is we take them from many
    different bases and spread the load. So most of the bases out
    there are on 12 hour shifts for our security forces.
        Our forces in the gulf, in Turkey and other places, are on
    12 hour shifts. Then we switch them. So we are running 12 hour
    shifts on our folks both at home and overseas. We just have to
    stop that.
        What we save in a BRAC is interesting from my perspective,
    but what we gain is our capability to do this mission that we
    have been at for the last 8 years and asking our folks to suck
    it up at home. We are, in fact, abusing them in some ways.
        Senator Dorgan. Thank you very much.
        Thank you, Mr. Chairman.
        Senator Stevens. Thank you, Senator Dorgan.
        Senator Domenici.

                            Contracting out savings

        Senator Domenici. Thank you very much, Mr. Chairman.
        Mr. Chairman, I was not here for your entire opening
    remarks and your questions, but I want to join in the portion
    for which I was here. I want to join you in your comments with
    reference to how much we have taken out of the regular budget
    of the Defense Department for these unforeseen contingencies
    and events that were not planned for, led by Bosnia.
        Frankly, I don't believe that we can have the United States
    military be bound by a multiyear, firm, in-place budget, the
    only part of our National Government so bound, and then insert
    and inject upon them the mandate that they pay for
    interventions like Bosnia, out of their regular budget. That is
    why we are here, with all these strains in terms of how are
    they going to live within their numbers.
        You take $5 to $7 billion and it will fix a lot of the
    problems we are talking about. Maybe it is $8 billion. But
    whatever it is, that is a big strain.
        I want to raise one point that I have learned about from
    General Ryan and others in the Air Force that I do not have an
    answer to. But I want to suggest that there is a great, big
    problem waiting out there if the U.S. Air Force is expected to
    meet its budget targets in some of the ways suggested.
        One is to contract out various activities in the Air Force.
    Unless I am mistaken, that means that through contracting out,
    the Air Force intends to have 29,000 fewer jobs in the civilian
    part of the Air Force under this budget and 23,000 jobs will be
    military positions. If you add those up, that is a 52,000 job
    reduction expected in ultimate force structure, and they are to
    be paid for by $5 billion that are to be saved from a formula
    approach to contracting out.
        The formula says that when we do these contracting outs,
    here they all are, we will save 25 percent on average on every
    one; that is, over what it would cost doing it the normal way.
        First, I want to be the first one on record to say I do not
    believe you can get this job done. I don't believe you can
    contract out and privatize that much to achieve that kind of
    saving.
        I base this on anecdotal information, but I have been
    around when there were just a few jobs being canceled because
    of contracting out and privatization. By the time you are
    finished with it working its way through the Congress and
    through the disputes between the unions that currently have
    membership that are being reduced, it takes a lot longer than
    planned and, frequently, we never get it done even though it is
    supposed to get done.
        So I guess I add another problem that you have, Mr.
    Chairman, in trying to get this defense budget put together.
    But I think that is a very, very serious one and it will cost
    much more than planned. And the Air Force will not be able to
    reduce the manpower as recommended.
        I would be glad if either or both of you wants to comment.
    I have only given you my version, and if I have misstated
    anything, then, clearly, I would like for you to correct any
    misstatements.
        Mr. Peters. Senator, I think the numbers are generally in
    the right order except that the savings we are looking to for
    this is only about out $1 billion. We have booked $1.1 billion
    through the FYDP at this point. There may be more there. Of the
    savings we have booked, actually some of the other savings that
    may be in that number you are talking about are the savings
    from working the depot issues in public/private competitions,
    where we have had a 29-percent cost saving on the only one that
    actually has been awarded yet.
        For the other two, the RFP's I hope are coming out in the
    next 30 days, with an effort to try to award them toward the
    end of this fiscal year.
        Senator Domenici. Mr. Secretary, let me say that my number
    is entitled to a clarification. My $4.8 billion is for 5 years,
    or about $1 billion a year.
        Mr. Peters. It is $1.8 billion total over the FYDP which is
    the number we have been working with, of which $700 million is
    depots.
        Senator Domenici. We will confirm the number. In any event,
    it is a rather large number. The $4.8 billion is from your own
    budget briefing.
        Could I just talk about some parochial issues with you very
    quickly, General and Mr. Secretary?
        Senator Stevens. If you would wait for just one second, I
    have to step out for just a few minutes.
        When you have finished, the next person is Senator Shelby.
    But I will be back.

                           Air Force space laboratory

        Senator Domenici [presiding]. Thank you, Mr. Chairman. I
    will be finished very shortly.
        When the airborne laser was being discussed by two
    different Senators, I did not chime in. I know quite a bit
    about it. It was invented and dreamed up in Albuquerque, NM, at
    Kirtland Air Force Base and the military space lab there. It
    was researched there, it was built there, and it was tested
    there. I have been there and talked to everybody there.
    Frankly, the GAO frequently makes mistakes and I believe they
    have just made a mistake in their report. They did not fully
    listen to both sides of the debate.
        They took one little piece of history and documented it for
    the public as if this program was destined not to work
    scientifically and physically. That is not the case. In fact,
    it is now touted by the military as the only significant laser
    that may be in our arsenal in the not too distant future with
    reference to space.
        If I have misstated anything, I would ask you to correct
    that.
        General Ryan. No, sir; I don't think that is parochial,
    either. I think you are dead-on and those are facts.
        Senator Domenici. With reference to the laboratory, the Air
    Force laboratory, the space laboratory that used to be called
    Phillips, in Albuquerque, am I correct that, even though you
    have restructured the way you were going to manage this, that
    which will be done, that is, the mission of the former Phillips
    Laboratory, will remain the same, that it will be the major
    space research laboratory for the U.S. Air Force?
        General Ryan. Yes, sir.
        Mr. Peters. Yes, sir.
        Senator Domenici. We have been told that and I assume that
    is still the case.
        Mr. Peters. Yes, sir.
        General Ryan. Yes, sir; I know of no plans to change that.

                                     F-117

        Senator Domenici. The F-117 is at Holloman Air Force Base.
    I am concerned that there will remain enough capability to
    adequately service and maintain the F-117. With the reduction
    in military personnel, is that in any way going to affect the
    operation and maintenance of the F-117?
        General Ryan. I don't think so, sir. We have protected as
    best we can in our budgets, even with the outsourcing and
    privatizing that we talked about, the core capability to be
    able to generate our forces and execute them. So I do not
    anticipate a problem with the F-117.

                      Environmental impact statement [EIS]

        Senator Domenici. Holloman Air Force Base is fortunate to
    be the recipient of some German training missions. I understand
    that an EIS, an environmental impact statement, is being
    completed with reference to an additional group of German
    training missions.
        Do you foresee any problems with this EIS and the
    implementation of that plan?
        Mr. Peters. Senator, I do not. That is a high priority for
    us at this point and I am not aware of any problems that exist
    there. It is also a very high priority for the German
    Government, to get that to happen because they are losing some
    of their training space in Europe and we need to get them on to
    Holloman to get them the training that they need. So that is a
    very high priority for us and we are working that as fast as we
    can.
        Senator Domenici. Do I gather that, Mr. Secretary, in
    general you continue to be committed to working with the local
    community with reference to the various concerns that are had
    about where you will fly these planes and where their missions
    will be?
        Mr. Peters. Yes, sir. Absolutely.

                                   Partnering

        Senator Domenici. Last year, we had a shared facility that
    was directed to be built in the city of Alamagordo as an
    experiment. They are planning a brand new hospital. The Air
    Force was thinking of adding to theirs. They have put together
    a plan wherein both would save and both would have what they
    need.
        We are supposed to get a final from the Air Force on their
    evaluation before they move forward. When might we expect that?
        General Ryan. I would like to answer that one for the
    record to give you the exact date. But I can tell you that we
    are very, very positive about that partnering with Alamagordo
    and Holloman Air Force Base. We think that is a wonderful idea.
    We think it is good for the city, we think it is good for our
    folks. I will give you the exact date of when we will have that
    report back to you, sir, in an answer for the record.
        [The information follows:]

                                Shared Facility

        The Air Force will submit a report to Congress, through the
    Office of the Assistant Secretary of Defense (Health Affairs),
    containing its analysis and recommendations regarding this
    sharing proposal no later than May 31, 1998.

        Senator Domenici. The other air base, Cannon Air Force
    Base, has had some reductions because of the acceleration of
    phasing out some of the F-16's--no----
        General Ryan. The F-111's, sir.
        Senator Domenici [continuing]. The EF-111's. We were going
    to have some and they are going to be leaving earlier.
        Some of that vacuum is supposed to be filled by some
    training missions from the Republic of Singapore. Might I ask,
    when might that agreement be finalized? Or would you like to
    state that for the record?
        General Ryan. I will give you the exact date in an answer
    for the record, sir. But right now, we foresee no problem with
    that agreement with the Republic of Singapore. We think that is
    a go, subject to an environmental assessment that we think will
    show much less of a problem using F-16's rather than F-111's at
    the numbers we are talking about.
        Senator Domenici. It is not a very large number and it is a
    different airplane
        General Ryan. A different airplane.
        [The information follows:]

                             Cannon Air Force Base

        Pending the outcome of the environmental assessment, we
    anticipate a finalized agreement with Singapore by April 1999.
    Singapore plans to begin moving some of its aircraft and
    personnel into Cannon AFB between October and December of 1998
    with the full training complement beginning in December 1999.

                          Bomber training initiatives

        Senator Domenici. You are going through a realistic bomber
    training initiative, where you are looking for some places to
    fly bombers at low levels. You know that New Mexico is not
    averse to having many of these kinds of air space utilizations
    by the Air Force taking place in our State. But we are
    concerned that way up in northern New Mexico, in the
    communities of Taos and Santa Fe, that they are concerned about
    whether this will work up there.
        I am not convinced that it is an appropriate location, but
    I leave that up to the evaluations and studies.
        Will you continue your commitment to hold additional
    meetings to provide interested residents with information and
    answers in that regard?
        Mr. Peters. Yes, Senator, we will. Senator Bingaman and I
    met about this several weeks ago and at that point he asked
    that we extend some deadlines. That has been done. We will
    continue to try to work with you and the communities in New
    Mexico to make sure they feel they have a full opportunity to
    comment.
        Senator Domenici. I have the cumulative competitive
    resource savings that we discussed earlier. I will hand it to
    you. It's your own briefing. It says for 6 years it is $4.8
    billion. Maybe you can tell us if this is wrong now, and you
    have reduced your savings projections.
        Mr. Peters. If I may, I would give you that for the record.
    We will do that.
        Senator Domenici. Please.
        Mr. Peters. I think those are not the numbers we have been
    working with.
        Senator Domenici. Something may be added to it.
        [The information follows:]

                                  O&P Savings

        In our fiscal year 1999 PB, the Air Force is projecting
    $1.8 billion cumulative savings from fiscal year 1998 through
    fiscal year 2003 from competitions and reengineering efforts.
    The cumulative savings by year are:

    Fiscal year:
        1998................................................     $79,500,000
        1999................................................     258,800,000
        2000................................................     494,800,000
        2001................................................     854,700,000
        2002................................................   1,300,000,000
        2003................................................   1,800,000,000

                   Information technology software capability

        Senator Domenici. I think Senator Shelby is next.
        Senator Shelby. Thank you. I will try to be brief, General.
        Information technology, you are familiar with the standard
    systems group and other organizations that comprise the
    Electronics Systems Center [ESC]. We are concerned about the
    software capability and what is in-house and where is it going
    and everything. Do you believe it is necessary, General, for
    the Air Force to retain an in-house software capability to
    develop and to support software for military essential
    activities like standard systems?
        General Ryan. I wish I could give you a ``yes'' or a ``no''
    to that, Senator.
        I have asked our Director of Communications and
    Information, our chief communicator, to go back and tell me
    whether in this day and age, the assumption that we can get it
    cheaper on the outside than building it on the inside still
    pertains. If you look at what is going on in the business world
    today, you see a lack of capability out there. One in every 20
    jobs, that require computer skills, is going vacant. There are
    20,000 jobs in the Washington, DC, area that are unfilled by
    competent computer-literate folks.
        I have a son who is a captain in the Air Force who is a
    computer officer. I get first-hand knowledge of those kinds of
    capabilities and the Air Force's thrust in that area.
        Our real issue is can we build those kind of people in the
    Air Force and retain them vice----
        Senator Shelby. Absolutely, and cost has to be a factor,
    too.
        General Ryan. Cost has to be a factor, vice contracting out
    that capability. Clearly, we can contract out that capability.
        Senator Shelby. But at what cost?
        General Ryan. But is it cheaper to do it? That is what I
    have asked them to tell us.
        Senator Shelby. We have some information, and I don't know
    if you have it, that it would cost more to contract out. I
    don't know if that is right.
        General Ryan. I don't know, either, sir, and that is what
    we are trying to pursue. Before we make any decisions about
    this business, we must go through that analysis.
        Senator Shelby. Absolutely.

                   restructuring of Electronic Systems Center

        I am also aware, General, that General Kadish has proposed
    to reorganize the Electronic Systems Center in the decision to
    restructure the program management authority from a standard
    systems group to ESC.
        What consideration was given to the contractor support
    relationship there? If it was assumed that the reorganization
    would not impact contractors, can you assure us that the
    program execution will not be hampered by the proposed
    restructuring?
        I know why you restructure or try to. But is this a good
    thing?
        General Ryan. I would like to request to take that one for
    the record and get back to you, sir.
        Senator Shelby. All right.
        [The information follows:]

                          In-House Software Capability

        In response to your questions concerning the development of
    software, the Air Force views software development and
    maintenance as a commercial-like activity that is neither
    inherently governmental nor military essential. Today we have
    several software activities, including the Standard Systems
    Group (SSG) at Maxwell Air Force Base, Alabama, and the
    Materiel Systems Group (MSG) at Wright-Patterson Air Force
    Base, Ohio, that provide software support for our standard base
    and depot systems. They use a mix of active duty, government
    civilians and contractors to accomplish their mission.
        Just as we do with other commercial-like activities, we are
    reviewing the SSG and MSG to ensure these activities are
    providing the best value to the taxpayer. The decision process
    used to increase effectiveness and gain efficiencies in
    software development and maintenance will consider a full range
    of options, to include outsourcing, privatization and
    reengineering.
        Labor is clearly the single biggest cost driver for
    software whether it's done in-house or by contractor. When
    comparing in-house and commercial software programmer labor
    costs, we must go beyond a simple comparison of fully-burdened
    labor rates and weigh other factors, such as training,
    retention, and productivity. We are looking very carefully at
    the whole picture to include the training and experience
    required to produce reliable, efficient, effective software.
    For example, if a first-term programmer decides not to
    reenlist, a substantial training investment has been made with
    marginal near-term and no far-term return. If a second-term
    airman does not reenlist, we have made an even greater
    investment with, again, only a marginal return. We are
    concerned that despite offering selective reenlistment bonuses,
    the reenlistment rate for first-term airman programmers
    continues to decline. So far this year, it stands at 32 percent
    and for the second year in a row it is below our goal of 55
    percent. Reenlistment is even bleaker for second-term airman
    programmers--a 28 percent reenlistment rate so far this year,
    and for the fifth consecutive year we are below our goal of 75
    percent.
        Another factor in the economic equation is the expected
    software life cycle. Outsourcing software maintenance for
    systems we will deactivate in the near future may not be cost
    effective due to contractor ``spin-up'' costs associated with
    gaining adequate experience levels. In cases where we are
    replacing a system, it may make more sense to continue in-house
    software maintenance for the legacy system and procure software
    development and maintenance for new systems.
        In summary, we will look at all the cost components of our
    organic software capability, to include personnel,
    infrastructure, equipment and supplies. While we are building
    the cost models to help us in the decision process, we have
    made no decisions regarding the future of our software
    activities.
        In response to your questions concerning the restructure of
    the Electronic System Center (ESC), the Standard Systems Group
    (SSG) is a subordinate group under the ESC organization.
    Program management authority has always been the responsibility
    of the ESC Commander. The restructure at ESC was a prudent
    action to take in response to the revolutionary changes in the
    information technology environment. With regard to the
    expressed concern about program execution, you have my
    assurance that one of the restructure's key objectives is to
    strengthen the emphasis on program execution. The restructure
    carefully considered the relationships among the military
    users, government acquisition offices, and the contractors. The
    government and contractor support staffs were pooled under the
    SSG Executive Director to better balance workload assignments
    and standardize processes throughout SSG. Program execution has
    been enhanced as a result of the restructure.

                 Joint air-to-surface standoff missile [JASSM]

        Senator Shelby. The joint air-to-surface standoff missile,
    or JASSM, you are very familiar with. What is the status of the
    program with respect to analysis of alternatives?
        General Ryan. The analysis of alternatives is currently
    being briefed up through the OSD and service chain. It is a
    process that I think we will be through by the end of this
    month.
        In any case, we are looking toward a decision on the JASSM
    capability. As you know, the alternatives were the SLAMMER and
    the JASSM variation.
        We should know the answer to that here this month.
        Senator Shelby. Do you have any idea if the Navy will stay
    with the program?
        General Ryan. I won't answer for the Navy, but I can tell
    you from what I know of the analysis that, clearly, I think
    JASSM is a very, very good system and it shows lots of
    potential for the future. But I cannot speak for the Navy in
    that, sir.
        Senator Shelby. Mr. Secretary.
        Mr. Peters. I am sorry, but I can't, either, on that. I
    know that our competition we think is going to be very good. We
    are getting very good prices. But we will have to wait and see
    how the analysis of alternatives comes out.
        Senator Shelby. It has been a good weapon, hasn't it?
        General Ryan. Yes, sir.
        Mr. Peters. Yes.
        Senator Shelby. I just want briefly to hit on national
    missile defense, if I could.
        The Air Force officials, I understand, General, have
    repeatedly argued that the Minuteman option complies with the
    ABM Treaty. But they have never stated how it would be made
    treaty compliant.
        Can you tell us how this can be done? If you don't want to
    address that now, you can get it back to me.
        General Ryan. As you know, Senator--and I will clarify it
    for the record--we have offered a Minuteman solution to a small
    raid capability that appeared to us to be treaty compliant. I
    know that the study is ongoing right now on what other
    alternatives there are out there to meet that kind of raid
    capability and whether Minuteman is the right missile to be
    used in that case. That should come to fruition here in the
    next several months.
        [The information follows:]
                            National Missile Defense
        The Air Force has suggested the use of modified Minuteman missiles
    to perform the role of ground-based interceptor (GBI) in an NMD system.
    Before any selection of any NMD GBI, however, the USD(A&T), supported
    by DOD's Compliance Review Group (CRG) must determine whether a
    particular design is consistent with U.S. treaty obligations. Unless,
    and until, the USD(A&T) rules, no definitive answer can be given as to
    whether Minuteman-based GBI is treaty compliant.
        Nevertheless, there are reasonable arguments that we could proceed
    with Minuteman-based interceptors and maintain good-faith compliance
    with both the ABM Treaty and START:
      --Under the ABM Treaty, Minuteman-based interceptors could have such
            changes that they could be considered legal ABM components and
            not illegally upgraded versions of previously existing
            missiles.
      --Under START, the Minuteman-based interceptor could be considered an
            ICBM used for delivering objects into the upper atmosphere or
            space, in the same manner as a space-launch vehicle or booster
            for communications payloads. Each Minuteman-based interceptor
            would count towards START central warhead limits, and be
            subject to the applicable START provisions.
      --Although Minuteman-based interceptors would be subject to both the
            ABM Treaty and START simultaneously, the two treaties are
            separate legal entities. Compliance with each must be assessed
            in light of the specific applicable treaty language.

        Senator Shelby. Should you not get a determination from the
    compliance review group before you move way down the road on
    this? Mr. Secretary, do you want to address that?
        Mr. Peters. Senator, if I may answer that, in my last life
    as the Deputy General Counsel of DOD, we were looking at this.
    The compliance review group is working on this. But they needed
    to have a relatively clear architecture before they started to
    work because it is a very highly fact-intensive work. But that
    is ongoing.
        I am not sure what the date for completion is. It is a
    complicated issue.
        Senator Shelby. Yes, very complicated.
        Do you want to get back to me on it and explain what you
    plan to do, if you plan to do anything, and how?
        Mr. Peters. Yes, sir.
        [The information follows:]

                               Treaty Compliance

        The Air Force strongly supports the National Missile
    Defense (NMD) Joint Program Office process identifying the best
    system from among various options--including the Minuteman NMD
    option. As part of this process, the government will select the
    booster within 90 days after contract award. The LSI contract
    was awarded on April 30, 1998. On or about July 30, 1998, the
    booster part of the NMD architecture will become known. It is
    only after this point that the Compliance Review Group would
    definitively rule on treaty compliance of the booster selected,
    whether Minuteman or an alternative design.

                    Evolved expendable launch vehicle [EELV]

        Senator Shelby. What about the evolved expendable launch
    vehicle? General, are you familiar with that?
        General Ryan. Yes, sir.
        Senator Shelby. I understand the Air Force has announced a
    new acquisition strategy for this program that appears to
    leverage the commercial market for space launch and will meet
    the cost-saving requirements and national security objectives.
        Explain your new strategy and how it benefits the military,
    industry, and, of course, the taxpayers, which is very
    important.
        General Ryan. Sir, space is the new frontier. We have seen
    on the commercial side today an increase in the use of space to
    the point where the military, even the Government, will be the
    minority member out there as we move into this next century.
    The amount of money that is going to be spent on space support
    and orbital capability is kind of mind boggling.
        As we went into the strategy for EELV, we were thinking
    about down-selecting to one or the other. It appears that in
    the commercial market out there, they will be planning for
    both.
        Senator Shelby. Good opportunities, yes?
        General Ryan. Good opportunities, and this is a partnering
    between industry and the Air Force that will benefit both.
        We think that the EELV will get the cost per pound launch
    to orbit significantly down. If we are going to become an
    aerospace Air Force, if we are going to become an aerospace
    Nation, we have to get the cost per pound to orbit down
    significantly, and this is a really good step on the way to
    that.
        Senator Shelby. It is a good opportunity and you can,
    hopefully, do it.
        General Ryan. Yes, sir.
        Senator Shelby. Are you familiar with what Boeing has done
    in my home State?
        General Ryan. Yes, sir.
        Senator Shelby. Mr. Secretary, do you have a comment?
        Mr. Peters. No; I think this is really the way we ought to
    be going.
        We are looking, in the Air Force, at trying to leverage our
    dollars both for acquisition and for science and technology
    research with industry and with other Government agencies. I
    think it is clear to us that we need to partner with the
    commercial world in many ways that we are not doing now because
    there will be a huge demand in that area. We still provide a
    lot of the lift services and launch services and we need to
    look at how we are doing that.
        Just earlier this month we signed a deal with the National
    Reconnaissance Office [NRO] and with the Defense Advanced
    Research Project Agency [DARPA] to do a mobile tracking
    satellite system in space. Each one of us is picking up about
    one-third of the cost of that. We also are contributing an EELV
    to get it up in space.
        We have asked our Scientific Advisory Board [SAB], our
    science advisors, to give us a plan that we call doable space.
    This is to look at what industry and Government need to do to
    define critical technologies and to give us some ideas about
    how we could partner with industry to achieve those
    technologies by using joint funds. I think that is clearly the
    way we are going to go and I think EELV is a good example of
    the many benefits that can be obtained by getting private
    industry to participate at the same time that we are
    participating in the programs.
        Senator Shelby. Basically you are looking to the market for
    some help?
        Mr. Peters. Yes, absolutely.
        General Ryan. Yes, sir.
        Senator Shelby. Thank you.
        Thank you, Mr. Chairman.
        Senator Stevens [presiding]. Yes, sir.
        Senator Bumpers.

                            modernization of C-130's

        Senator Bumpers. Thank you, Mr. Chairman.
        Mr. Secretary and General Ryan, let me ask you both this
    question.
        In your posture statement, on page 35 you state that your
    current plan is to modernize more than 350 existing C-130's.
    Let me just say at the outset that I strongly agree with that.
    I notice that you are only asking for one C-130J. I don't want
    to get into the C-130J fight. I am sure it is a fine airplane,
    but it costs $64 million.
        My guess is--and I am not privy to what precisely it would
    cost to do the modernization of these C-130's--my guess is that
    you could probably modernize about eight C-130's for what it
    would cost to buy one new C-130J.
        The modernization plan could take those planes' usefulness
    up to the year 2030 or so. That seems to me like one of the
    best ways in the tight budgetary constraints of DOD and the Air
    Force, and particularly this morning, to do this. It seems like
    an immensely wise thing to do.
        Incidentally, I assume that that is the plan now, since it
    is in the posture statement.
        Mr. Peters. Senator, let me address that, if I may.
        We have asked our air mobility commanders to give us a
    better idea of how to structure this program. As you know, we
    have had C-130 modernization money in the budget for some time.
    General Kross has given us the preliminary view that we would
    probably do better by spending that money in a different way to
    create something he has called the C-130X, which is a glass
    cockpit, modernized C-130, rather than doing it in drabs as
    these things go through program maintenance.
        He is coming in his year 2000 program objective memorandum
    [POM] with a program that will do that, to let us look at that.
        Senator Bumpers. That is fine, too, Mr. Secretary. I am for
    that, too.
        Mr. Peters. I think we are definitely going in that
    direction.
        With respect to the J's, we have done two things in the
    1999 budget. We have added one to round out the number that we
    have been given. Second, we have added all the spare parts and
    support equipment that are necessary to run all of the other
    ones that have been added by Congress. So our hope is that, at
    the end of 1999, we would have a useful fleet of J's in the
    budget and that we would also have a roadmap for what to do
    with our older C-130's, some of which will obviously be retired
    because it will not be economical to upgrade them. But many of
    them should be upgraded to a common cockpit.
        Senator Bumpers. General Ryan, would you like to add
    anything to that?
        General Ryan. No; it will be a balance between J's and what
    we call X, bringing the old ones, eight different models that
    we have, up to a common configuration.

                         Air Mobility Command upgrades

        Senator Bumpers. We are talking about getting the biggest
    bang for our buck. That is the reason I raised the question. I
    don't want to get into the fight if you have the money and you
    can see fit to do that. But I think it would be foolish to
    limit ourselves to a $64 million plane when you can get the
    same capability, essentially, for probably around $8 million
    with the existing planes we have. It would be foolish not to do
    that.
        Incidentally, I think Air Mobility Command now wants to buy
    more C-17's, isn't that correct?
        General Ryan. The Commander of Transportation Command has
    said that he needs another 15 to fill out the special
    operations capability that he is on tap for.
        Senator Bumpers. Well, I would not fight about that. It is
    a good airplane. I always thought it was too expensive and I
    would have done something different. But now that we have it
    and we are building it, why I don't object to that.
        On a parochial issue, regarding the National Guard's 188th
    Fighter Wing, in Fort Smith, AR. Since 1994, I have been trying
    to get those F-16's updated or replaced. We know that we are
    not buying any more, even though Lockheed wants to sell us some
    more.
        I think those aircraft should undergo what Lockheed calls a
    midlife update program.
        Incidentally, I would like to get in on that myself, a
    midlife update. [Laughter]

                           Guard and Reserve upgrades

        Tom Harkin, to whom I would defer on this because of his
    own expertise, being a fighter pilot and so on--the other day
    we were told that only 29 percent of our pilots were reupping.
        General Ryan, we talked this morning about the major effort
    you make to get those people in the Reserves who do not reup.
    The point I want to make is this.
        If you have an F-16 pilot who is not reupping and you say
    to him why don't you join the 188th Fighter Wing here in Fort
    Smith, and he is looking at a plane that is really outdated
    compared to the one he has been flying--well, I won't say it is
    outdated, but it sure has less capability than the one he has
    been flying--would you not consider that a deterrent to him on
    whether or not to enlist in the Guard?
        General Ryan. I believe that we have done a very, very good
    job in providing the Guard with modern capability. Our A models
    that are still in the Guard are well maintained and are very,
    very good. They lack some of the state-of-the-art things that
    we have in some of our other aircraft, like precision
    munitions, et cetera.
        So yes, we were looking at how to upgrade and divest
    ourselves of all of our F-16A and B models in this last budget
    that we went through. We will continue to try to upgrade those
    kinds of capabilities.
        One of the problems we ran into was this idea that we could
    not shift a wing out of the active component into the Guard and
    get the tumble-down effect of the better capability because it
    would download bases. So we kind of got trapped a little bit in
    not being able to get those forces, particularly the ones that
    you are talking about, out of the inventory.
        We will continue to look at it, sir, and in our next budget
    we will address the modernization of those less capable
    aircraft, for instance, the F-15A and the F-16A models.
        Senator Bumpers. I hope you will, General. This is my last
    year. This will be the fourth year, at least, that I have
    worked on trying to get a modernization program for new planes
    in that fighter wing in Fort Smith. It is a fine organization.
        The Europeans are doing this, are they not? Are they not
    doing the midlife update on their F-16's?
        General Ryan. They are doing the midlife upgrade. Yes, sir.
        Senator Bumpers. There is one other point on that. I asked
    General Hawley about this and he wrote me back a strange letter
    that I do not understand. Perhaps you can explain it to me.
        He says that plans to update the 188th have been scrapped
    because of discussions between the administration and the
    Congress on BRAC legislation. I didn't understand that. What is
    the relevance of the BRAC legislation on upgrading the F-16's?
        General Ryan. When we had built our budget for this year,
    the 1999 budget, part of the QDR, the ``Quadrennial Defense
    Review,'' said to move a wing from the active component into
    the Guard and that would allow us to modernize some of these
    aircraft. We were unable to do that because of the resistance
    that the administration felt would be there in downloading
    bases without a BRAC legislation. I think that is where he is
    coming from.

                                     F-22's

        Senator Bumpers. We are now talking about buying 339 F-
    22's, is that correct?
        General Ryan. That's correct, sir.
        Senator Bumpers. We are looking now at a 5-month delay in
    testing and delivery of the first five F-22's because,
    apparently, of this new high tech casting of titanium parts, as
    opposed to aluminum.
        You know, and I make no bones about it, that I have been an
    ardent, adamant, long-time opponent of the F-22. I am about
    ready to concede that I have lost that. So I got a spending cap
    put on last year's authorization bill. That was the Armed
    Services Committee and Senator Levin and Senator Warner agreed
    to it.
        What is this 5-month delay going to do to the spending cap?
        General Ryan. We see no impact on the spending cap. The
    delay is 5 months.
        Senator Bumpers. You think it will still come in under the
    cap that we had in the bill last year?
        General Ryan. Yes, sir; we have the agreement of all of the
    manufacturers to be able to do that.
        The 5-month delay has to do with the third aircraft that is
    going to come off the line. Remembering that we are in the EMD
    phase, engineering and manufacturing, this was one of the
    things that we have an EMD phase for, to determine the
    viability of the manufacturing techniques. We have gone back
    and redone the technique of not only how to do the weld but to
    inspect the welds to make sure they are secure.
        That has put us behind, on that aircraft, 5 months. We have
    a catchup plan that, by the time we get to the seventh
    airplane, we will be caught up.
        Senator Bumpers. And when is that?
        General Ryan. I can give you a date on that, sir. I will
    give it to you for the record.
        [The information follows:]

                                      F-22

        The F-22 Initial Operational Test and Evaluation (IOT&E)
    start (August 2002) and Milestone III (July 2003) have not
    changed due to the recent manufacturing delays. The Air Force
    has replanned the F-22 flight test work to accommodate a 2 week
    to 5 month delay to deliver aircraft from manufacturing to
    flight test. These delays affect test aircraft 4003 (5.3
    months) through aircraft 4006 (2 weeks). The schedule for
    aircraft 4007 is not affected by the manufacturing issues, and
    it will meet the original planned first flight date in
    September 2000.

        General Ryan. But our ninth--we have nine airplanes in that
    EMD phase. Then we start into the production airplanes, the
    production decision being made this year for the first two.
        Senator Bumpers. What is the initial phase--five for the
    first year of production, five F-22's? Is that in 1999?
        General Ryan. There are two in the first lot for this year.
        Senator Bumpers. That is for 1998?
        General Ryan. That's for 1999.
        Senator Bumpers. For 1999? You have two in the budget for
    next year?
        General Ryan. Yes, sir.
        Senator Bumpers. For year 2000, you have five?
        General Ryan. There are six, and then I will give you the
    ramp.
        Senator Bumpers. You can supply that for the record, if you
    will.
        General Ryan. Yes, sir.
        [The information follows:]

    F-22 Production Quantities

                                                                    Quantity

    Fiscal year:
        1999..........................................................     2
        2000..........................................................     6
        2001..........................................................    10
        2002..........................................................    16
        2003..........................................................    24
        2004-11......................................................\1\ 281
                            -----------------------------------------------------------------
                            ________________________________________________
          Total.......................................................   339

    \1\ Maximum production rate is 36 aircraft per year.
    ---------------------------------------------------------------------------

                                 Bomber status

        Senator Bumpers. On bombers, let me ask you this.
        How many B-1's do we have left? We lost another one the
    other day.
        General Ryan. Right. We are at 92, I think, total in the
    active inventory.
        Senator Bumpers. Is the B-1 now purely for conventional
    use?
        General Ryan. Yes, sir; it has been deemed that under START
    II negotiations, that it would be so equipped and that it would
    not be equipped to deliver nuclear weapons.
        Senator Bumpers. How many B-52's do we have in the Middle
    East right now?
        General Ryan. We have, on the ramp at Diego Garcia, 14.
        Senator Bumpers. Fourteen?
        General Ryan. And we have three B-1's.
        Senator Bumpers. Three B-1's?
        General Ryan. Yes, sir.
        Senator Bumpers. I take it they are not there just for
    show. We would use those in the event of an attack against
    Iraq?
        General Ryan. Absolutely.
        Senator Bumpers. How many B-52's do we have left?
        General Ryan. B-52's?
        Senator Bumpers. Yes--in the Air Force. Is it 150?
        General Ryan. Right now, we have 94.
        Senator Bumpers. One hundred seventy-four?
        General Ryan. Ninety-four total B-52's.
        Senator Bumpers. What is the longest life expectancy of
    those planes?
        General Ryan. They go out to 2030.
        Senator Bumpers. OK. Back to C-130's: I want to be sure
    that the record is clear on this.
        If we go through this modernization of 350 C-130's, which,
    according to your posture statement is your present plan, most
    of those planes would be viable until the year 2030-40, is that
    correct?
        Mr. Peters. That is an approximate number, yes.
        Senator Bumpers. I want to close my questioning, Mr.
    Chairman, by again reiterating my strong support for that idea.
    As I say, I am not trying to stop the production of the C-
    130J's. But I think the C-130X makes a lot more sense. I think
    the modernization of that fleet makes a lot more sense.
        You know what your budget constraints are. In my opinion,
    you are just getting a lot more there.
        Now I have a parochial interest. I have Little Rock Air
    Force Base which is the major C-130 training base in the United
    States. I want it to stay that way, of course.
        Incidentally, you just put a new engine facility down there
    the other day, and I thank you for that. But I like to think
    that I am looking at this above and beyond my parochial
    interests. I would think that you would have that same interest
    given the budget constraints in which you are operating.
        Thank you, Mr. Chairman.

                           Collision avoidance system

        Senator Stevens. Thank you, gentlemen.
        I do have just two short questions. I am sure you are aware
    of the CBS ``60 Minutes'' show that highlighted the C-141
    midair collision with the German aircraft off Africa. Two years
    ago, after the crash of Secretary Brown's plane, we put money
    into the bill, $32.5 million, for aviation and safety
    equipment, which included the enhanced ground proximity warning
    system with the digital terrain data base to address controlled
    flight into terrain [CFIT] and the traffic alert and collision
    avoidance system [TCAS]. We have also had predictive windshear,
    radar, and cockpit voice recorders and flight data recorders.
        I want to ask about TCAS. I was surprised to find that TCAS
    is not on the C-17?
        Mr. Peters. It is not currently on the C-17, Senator, but
    there are plans to reengineer it onto the C-17.
        Senator Stevens. I thought we put up enough money and we
    got the plan to satisfy all the requirements for DOD passenger
    carrying aircraft?
        Mr. Peters. The C-17 can carry passengers. But the emphasis
    is in putting it on our fleet that only carries passengers
    first, such as the C-20's and the aircraft the 89th Wing flies
    and others. Those are at the head of the line, followed by the
    aircraft that carry cargo and passengers.
        Senator Stevens. I am told that the private commercial
    airline industry has voluntarily equipped its entire fleet with
    the enhanced ground proximity warning system and that we are
    lagging behind that. I think, particularly on the planes that
    are going to be used for the deployment of our forces, the C-17
    is, basically, for deployment of our forces abroad, as I
    understand it, beyond being a cargo plane.
        I want to ask you one more question. Why is there not a
    plan--I thought we funded a plan to assure that all passenger
    aircraft of the Air Force, particularly the large troop carrier
    aircraft, would have the latest safety equipment. Now if you
    need money, I would like to know that for the record.
        What would it cost to assure that is the case? I cannot
    believe we should not have that equipment on the C-17.
        Mr. Peters. Senator, right now, at the current schedule I
    believe our passenger carrying aircraft will all have TCAS and
    these other safety enhancements by around the year 2000, and
    the TCAS will be going on all of our aircraft by 2005.
        Senator Stevens. What about the C-17's? You can get more
    people on C-17's than any other airplane when we carry them and
    when our troops are going to be deployed overseas. They are the
    ones, I would think, that would need that basic system.
        Mr. Peters. Let us get back to you for the record with the
    exact date that it is going on the assembly line. It is in
    development and there is a date on which it gets put on the
    assembly line. Then it gets retrofitted back onto the C-17's. I
    don't have that date with me today. But let us get back to you
    for the record on that.
        [The information follows:]

                              Safety Enhancements

        The Air Force will have the Traffic Alert and Collision
    Avoidance System (TCAS) installed on C-17 production aircraft
    (P-71) beginning in fiscal year 2001; retrofits for the first
    70 aircraft will be complete by fiscal year 2002. Therefore,
    all C-17's that the Air Force possesses as of fiscal year 2002,
    will be equipped with TCAS; new C-17's received after that time
    will be delivered with TCAS already installed.

        Senator Stevens. My mind slips back to the rescue mission
    to take people out of Iran. Had there been a TCAS on that
    plane, we would not have had to abort that mission.
        The real problem about that is, if we deploy to Iraq or
    anywhere out there, we must be using C-17's almost daily in
    this deployment. Aren't we?
        General Ryan. Oh, yes, sir.
        Mr. Peters. Yes, sir.
        Senator Stevens. Isn't that a passenger aircraft, then,
    General?
        General Ryan. It is both a passenger and air cargo. Yes,
    sir. But our primary passenger aircraft are first in our
    prioritization scheme.

                                  C-17 support

        Senator Stevens. I would hope that the ones that are
    carrying the largest number of troops would be moved up in that
    schedule if it is at all possible.
        Again, if you need money, we ought to be able to find money
    for that.
        Last, on the C-17, let me leave you with this comment and
    you can make some comments for the record if you like.
        As I understand it, the C-17's are going to be at McCord,
    they are going to be at Altus, in Omaha, and in Charleston.
    That is where they will be based.
        If they are the primary deployment mechanism of our combat
    forces, that means that Fort Lewis and Fort Bragg, in
    particular, will be the enhanced area for troops to be deployed
    with the C-17.
        If you also then have megalopolis sort of bases now for the
    fighter aircraft, it looks like we are heading toward a
    situation where we will have very, very few bases for the Air
    Force. Is that really the plan?
        I should think we learned a lesson from Pearl Harbor about
    putting all of our assets in one place. If we are going to have
    the Army in Fort Lewis and McCord built up, if we are going to
    have Charleston built up for C-17's and Fort Bragg, we,
    obviously, are going to lose a lot of, really, the safety in
    deployments at several other locations in the country.
        I am hearing you this morning saying you would rather have
    enormous bases now for the fighter aircraft and for the other
    aircraft, just as we are going to have for the C-17's.
        That plan is not really reflected in this posture
    statement.
        Mr. Peters. No; at this point, Senator, it is not. This is
    in the works. We are trying to work this out.
        I think enormous is a stretch because there are other
    considerations such as proximity to air space and, as you
    suggest, distributing troops in multiple bases.
        But what we need to do is--we need to make sure that we
    have enough people on our primary bases from which we deploy so
    that when people are deployed, the people who are left at home
    do not have to work 12 hour shifts and do not have many of the
    same problems they have when they deploy.
        What we need to do to lift our retention, we think, is to
    try to make sure that, when people are at home base, that they
    have more of a regular workweek, a 40-hour workweek, a time to
    be with their families, and a time to decompress from the
    stresses of deployment.
        So what we are looking at is a basing scheme that will
    facilitate that.
        Our sense is it means that we will have a number of larger
    bases. But there are other alternatives, such as we have done
    with the security forces, where we have a core security forces
    group and people fall in with them.
        So we are doing a planning effort on that this year, to try
    to figure out exactly what the implications of that are.
        We don't have an answer to that yet. This is really a
    response to the fact that we see that money alone is not the
    answer for retaining our key people. We need to provide them
    with quality of life when they are at home training that is
    more normal and allows them to do the things which all of us
    want to do during the workweeks when we are at home.
        That is what we are trying to look at, trying to figure out
    how to balance our forces to get there.
        Senator Stevens. We would be interested in that.
        I see for the three locations for the C-17--I don't know
    what the plan is to deploy forces from California, Arizona, or
    Texas. Are you going to fly the C-17's south to go back north
    again? Similarly, if you look at the forces deployed in New
    England, the C-17's are down in Charleston. I am seeing the
    Army start to consolidate its deployment around the bases where
    they know the C-17's will be. That is what I am saying. I am
    not sure that has been thought through yet.
        I would like to have your comments later on that.
        [The information follows:]

                                   Superbases

        Consolidation of similar forces and complementary missions
    at the same base enables the Air Force to realize
    efficiencies--both operational and financial--as we execute our
    global responsibilities.
        We believe that by consolidating our forces on fewer bases,
    we can meet the challenges of today's expeditionary Air Force
    in two important respects. First, this consolidation enhances
    our versatility to operate during deployments. Second, it
    enables us to ``manage'' the workload levied on those personnel
    not deployed--relieving them of ``routine'' 12-hour workdays.
        Finally, force consolidations enable us to reduce our
    infrastructure saving valuable resources--as we match our
    basing structure with our post Cold War reduced force
    structure.
        With respect to C-17 basing, proper force consolidation is
    a complex issue, one that requires extremely careful analysis.
    As our basing plans mature, we will consult with the Congress
    at the appropriate time.

                         Additional committee questions

        Senator Stevens. We will be submitting additional questions
    from various Senators to the Department for your response in
    the record.
        [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 F. Whitten Peters
                   Questions Submitted by Senator Ted Stevens
                                      f-22
        Question. Last year the Air Force insisted that it could deliver
    438 F-22's for $48 billion. Can you explain why 339 F-22's will now
    cost $43.4 billion?
        Answer. The Quadrennial Defense Review (QDR) in May 1997 reduced
    the production quantity from 438 to 339, reduced the Low Rate Initial
    Production quantity from 70 to 58, and reduced the maximum production
    rate from 48 per year to 36 per year. This reduction in aircraft
    quantity and efficient production rates causes the F-22 unit costs to
    increase. The decrease in efficient production results in an increase
    to contractor overhead, an increase in the cost of materials due to
    smaller quantity buys, and an increase in subcontractor risk and cost.
    The combined effects of the QDR changes reduced the production cost
    from $48 billion to $43.4 billion.
        Question. As the F-22 begins flight testing and avionics
    integration, what risk areas are being carefully monitored by the Air
    Force?
        Answer. During flight test the Air Force will monitor mechanical
    performance (such as landing gear and braking capabilities), structural
    loads, the flying qualities of the aircraft, and engine capabilities.
    During avionics integration the Air Force will particularly monitor the
    radar performance in the flying test bed, the delivery of
    Communications/Navigation/Identification (CNI) hardware and software,
    and Mission Software integration. The Mission Software coordinates the
    sensors, processors, controls, and displays in the aircraft.
        In addition to monitoring all technical performance items in flight
    test and avionics integration, the Air Force is closely monitoring the
    cost and schedule status of all critical systems and subsystems.
                                     ______

                Questions Submitted by Senator Pete V. Domenici
                                 privatization
        Question. How did the Air Force arrive at the number of civilian
    and military jobs to be eliminated and/or contracted out?
        Answer. Through an Air Force initiative called Jump Start, the Air
    Force reviewed our total work force to determine the positions that
    could be competed with the private sector. We then removed from
    consideration any position, civilian or military, that was considered
    wartime deployable, forward based, military essential or inherently
    governmental. The remaining positions fell into the Office of
    Management and Budget category of commercial activity, which is the
    category of positions the Air Force considers for competition. In
    addition, we decreased this category of positions for competition
    consideration to account for rotation base to support overseas and
    career field sustainment.
        Question. Were specific, individual studies performed to analyze
    the savings and appropriateness of activities to compete? Or, was a
    goal imposed ``from the top?''
        Answer. A goal was not imposed ``from the top'' regarding
    activities to consider for competition. Through an Air Force initiative
    called Jump Start, the Air Force, in coordination with the major
    commands, reviewed the total work force to determine if a function was
    a commercial activity that could be competed with the private sector.
    We then removed from consideration any position, civilian or military,
    that was considered wartime deployable, forward based, military
    essential or inherently governmental. The remaining positions fell into
    the Office of Management and Budget category of commercial activity
    which is the category of positions the Air Force considers for
    competition. In addition, we decreased this category of positions for
    competition consideration to account for rotation base to support
    overseas and career field sustainment.
        Question. How did the Air Force determine that contracting out
    saves 25 percent? Why do the Army and Navy assume different savings?
    Please provide copies of the analysis you performed to come to the
    conclusion that 25 percent was the right number.
        Answer. The Air Force does not presume that our A-76 cost
    comparisons will result in a contracting decision since historical data
    indicate 40 percent of the cost comparisons are retained in-house. The
    25 percent savings is calculated based on our historical cost
    comparison data that are maintained in a data base called the
    Commercial Activities Management Information System (CAMIS). CAMIS is a
    DOD required data base that has been in-place since 1979. Air Force
    data indicate that since 1979 the average savings the Air Force has
    achieved in conducting cost comparisons is 24 percent regardless of
    whether we contract the function or retain it in-house under a most
    efficient organization (MEO). However, savings for cost comparisons
    over the last 10 years have been 34 percent. Therefore, in projecting
    our cost comparison savings for the fiscal year 1999 President's
    Budget, the Air Force used a conservative percentage of 25 percent to
    ensure we could achieve our savings goal. The Air Force cannot address
    the Army and Navy's savings. The analysis is a running average and is
    the actual result of studies extracted from the CAMIS data base which
    contains over 1,200 A-76 initiatives conducted since 1979.
        Question. With fewer military personnel and DOD civilians after all
    this contracting out, what will be the impact on overseas rotations and
    ``perstempo'' problems?
        Answer. The Air Force continually analyzes the effects of
    competition and privatization efforts on both enlisted and officer
    career fields to identify early on any impact on overseas rotations and
    perstempo. When analysis reveals a potential impact on overseas
    rotations or perstempo, that particular skill will be removed from
    consideration for competition. The Air Force has a formal process to
    identify its minimum military essential requirements with a key element
    of this minimum military essential requirement being overseas rotation.
    This process is ongoing and will continue to be used in the future to
    ensure mission readiness. The Air Force is committed to competition and
    privatization, but not at the expense of mission readiness or
    unacceptable impacts on our people.
        Question. How will the Air Force monitor and document the progress
    in achieving your outsourcing programs and achieving the planned
    savings? How will these data be confirmed by an outside party?
        Answer. The Air Force will monitor and document the progress and
    savings of cost comparisons and direct conversions through the
    Commercial Activities Management Information System (CAMIS). CAMIS is a
    DOD required data base and CAMIS data is available to any interested
    party at any time.
        Question. What actions do you plan if the savings do not
    materialize as planned? More outsourcing? Cuts in procurement? Force
    structure? Readiness?
        Answer. Air Force has stated that our competition program is
    aggressive and has risks, (e.g., supplier availability, level of
    savings). If the Air Force is able to execute our planned competition
    candidates, we should be able to meet our projected savings. If we find
    that we cannot achieve the projected savings, we will need to rebalance
    our modernization and readiness accounts to reflect the reduced
    savings.
        Question. Please list the specific positions, functions, and
    locations to be competed or outsourced for the state of New Mexico.
    When will this data be available, if you do not have it now?
        Answer. The data is shown below:

    ----------------------------------------------------------------------------------------------------------------
                                               Announced
                 Base/function              authorizations         Announced date                Decision date
    ----------------------------------------------------------------------------------------------------------------
    Cannon AFB: Military Family Housing               21    April 1996..................  February 1998.
     Maintenance.
    Holloman AFB: Military Family Housing             66    May 1997....................  November 1998.
     Maintenance.
    Kirtland AFB:
        PMEL \1\..........................            51    May 1996....................  August 1997.
        Base Supply \2\...................           170    May 1996....................  November 1997.
        Communication Functions...........            54    April 1997..................  May 1998.
        Base Communications...............           228    November 1997...............  October 1998.
        Dormitory Management \3\..........             6    February 1997...............  May 1998.
    ----------------------------------------------------------------------------------------------------------------
    \1\ Tentative Decision for PMEL was In-House; pending completion of the administrative appeal process.
    \2\ Tentative decision for Base Supply was Contract; pending completion of the administrative appeal process.
    \3\ Direct conversion to contract.

                                     ______

                   Questions Submitted by Senator Judd Gregg
                             partnership for peace
        Question. In the past, the Administration has indicated that the
    Partnership for Peace program will help decrease international military
    tensions. It further stated intentions to enhance and strengthen the
    program and to ensure that Russia is included, not excluded. Your
    statement indicates that ``recently, the focus of our cooperative
    engagement and stability enhancement efforts have been in our
    Partnership for Peace participation.'' Has Russia been included in any
    Air Force Partnership for Peace efforts in the last several years? If
    so, what is the Russian reaction to the Partnership for Peace program?
        Answer. The most recent effort was last fall when Russia
    participated in CENTRAZBAT 97, an ``in the spirit of Partnership for
    Peace'' exercise in Central Asia which focused on peacekeeping. At the
    operational level, Russian reactions are positive. Challenges remain in
    the political sense in so far as many Russians link Partnership for
    Peace to NATO expansion. Compounding the problem is a lack of Russia's
    financial resources. We are encouraged by the signing of the Founding
    Act last May. More dialogue has since taken place and the GOR signed an
    Individual Partnership Program in January of this year, a very positive
    indicator for future activities.
        Question. Do you think the program decreases possible Russian
    concerns about NATO expansion? Some specific examples please?
        Answer. The results at the operational level are positive where the
    Russians can see the benefits of cooperation, such as last fall at
    CENTRAZBAT 97. We expect this benefit to expand as the Russians observe
    less and participate more with the signing of the Individual
    Partnership Program in January. Many in Russia see a direct link
    between Partnership for Peace and NATO expansion. The USG will continue
    to have a major political challenge convincing Russia that NATO
    expansion is not a threat. Programs such as Partnership for Peace
    engage the GOR and help alleviate Russian fears.
                        science and technology programs
        Question. In September and October 1997 there were news reports of
    a possible U.S. Air Force decision to terminate all atmospheric
    sciences, electro-optic sensor, and photonics Science and Technology
    base research starting in October 1988. It was reported that the
    proposal would possibly force the closure of the Atmospheric Sciences
    Division and the Electromagnetics and Reliability Directorate at
    Hanscom AFB, Massachusetts, and result in the elimination of several
    hundred jobs. Please provide information on the Air Force's near and
    long term projections for those Science and Technology programs,
    including specifically any work programmed for Hanscom AFB,
    Massachusetts?
        Answer. The Air Force Research Laboratory (AFRL) has no plans to
    terminate all atmospheric sciences, electro-optic sensor, and photonics
    research beginning in October 1998. Air Force Science and Technology
    (S&T) funding for Hanscom Air Force Base (AFB) activities has been
    reduced approximately 16 percent in fiscal year 1999 from the fiscal
    year 1998 President's Budget (equates to an 8 percent reduction from
    the fiscal year 1998 appropriated level); however, there will be no
    involuntary reductions in fiscal year 1998 and there are no planned
    involuntary reductions in fiscal year 1999 for S&T personnel at Hanscom
    AFB. In addition to any future potential personnel cuts triggered by
    fiscal year 1999 budget reductions, a reduction of nine military
    positions has been planned as part of a previously mandated workforce
    drawdown.
        As the Air Force becomes more dependent on space assets, space-
    related requirements will demand more S&T activities. Some of this
    work, including the study of space environments and solar effects, will
    continue to be conducted at Hanscom AFB. We value the contributions of
    Hanscom AFB over many years and look forward to significant work from
    Hanscom in the future.
                                     ______

                Questions Submitted by Senator Daniel K. Inouye
                           funding for contingencies
        Question. When must the Air Force receive reasonable assurance that
    supplemental funding for contingencies will be made available?
        Answer. The Air Force must receive reasonable assurance by the end
    of April/early May that supplemental funding will be received by July
    1998. If funding is not received by then, we will be forced to curtail
    or defer operations, maintenance, training, and sustainment activities
    in the fourth quarter in order to support the significant cost of
    responding to the crisis in Southwest Asia, resulting in severe
    readiness impacts and mission degradation.
        Question. When must the Air Force receive the funding in order to
    preclude adversely affecting readiness?
        Answer. The significant costs of continuing our presence in Bosnia
    and responding to the crisis in Southwest Asia cannot be managed beyond
    July without an intolerable impact on readiness.
        Question. What actions will the Air Force likely be forced to take
    if the assurance and the funds are not made available?
        Answer. Peacetime flight training will be severely curtailed in
    early fiscal year 1998/4 in order to continue Operations Southern and
    Northern Watch, Bosnia and Counterdrug operations. As a result, for
    those units not directly supporting these contingencies, we anticipate
    crew readiness will decline, aircraft mission capable rates will
    continue to erode, and spare parts and inventories will further be
    depleted. Pilot training will be curtailed, further aggravating the
    pilot shortage. Bottom line--the current decline in retention and
    readiness will accelerate, requiring two to three years and an increase
    in funding to recover.
                                      f-22
        Question. GAO recommended Congress defer $595 million from fiscal
    year 1999 for the first two F-22 production aircraft due to program
    delays. What is the Air Force's position on this?
        Answer. The Air Force does not support the GAO recommendation
    because it would seriously impact the program. A one year slip to the
    program would break the EMD and production cost caps, cause a $2.75
    billion total funding impact, and force an IOC slip of 12 months.
        The GAO's recommendation is based on three concerns: (1) delays in
    the flight test program; (2) a perception that the F-22 program has
    fewer stable manufacturing processes compared to other civilian and
    military programs; and (3) delays in avionics software development and
    testing.
        The Air Force disagrees with these concerns. The F-22 is ready for
    production based on 43,889 hours of wind tunnel testing, 6,200 hours of
    engine testing, 2,100 CPU hours modeling and simulation, and 180 flight
    test hours that will occur this year.
        By December 1998, 75 percent of avionics hardware will be delivered
    using production rather than developmental processes. Also, it is
    invalid to compare the F-22's manufacturing processes to other programs
    because of differences in technologies, manufacturing processes,
    tolerances, degrees of maturity, level of commercial components in the
    design, etc.
        Avionics software risks are well defined. The current schedule has
    5 months of margin in the development of software Blocks 1 through 3.1.
        Question. With the reduced F-22 buy of 339 aircraft, what
    assurances can you give that the aircraft can be produced without cost
    growth normally experienced when a program is reduced and stretched?
        Answer. The Air Force and Contractor team are committed to live
    within the Congressionally mandated cost caps and are realizing
    significant potential production cost reductions. The F-22 contractors
    are progressing toward validating cost reduction initiatives valued at
    $15.2 billion. Our post-QDR goal was $12.7 billion while our current
    estimate is $15.2 billion. The government-contractor team signed a
    Memorandum of Understanding on January 14, 1998 committing to deliver
    339 aircraft under the Congressionally mandated cost cap. The cost cap
    represents the cost of delivering a 339 aircraft program as determined
    by a joint government-contractor team.
                                     ______

                  Questions Submitted to Gen. Michael E. Ryan
                   Questions Submitted by Senator Ted Stevens
               continuation pay and aviation career incentive pay
        Question. What percentage of pilots receiving Aviation Continuation
    Pay and Aviation Career Incentive Pay are in non-flying billets at this
    time?
        Answer. Twenty-eight percent of the pilots currently receiving
    Aviation Continuation Pay (ACP) and 23 percent of the pilots receiving
    Aviation Career Incentive Pay (ACIP) are in non-flying billets. These
    pilots are either attending Professional Military Education, filling
    leadership positions, or providing operational expertise to Air Force
    and joint staffs.
                                   pay equity
        Question. Is there equity in pushing to increase pay for pilots
    again in fiscal year 1999, without addressing the needs of aircraft
    maintenance professionals and other specialties vital to the mission?
        Answer. The Air Force is not requesting a pay increase specifically
    for pilots in fiscal year 1999. The Air Force's retention gameplan is
    designed to reduce tempo, improve quality of life, enhance
    compensation, and improve personnel policies. These initiatives address
    the concerns of all Air Force members.
        Many of the following compensation enhancements we requested and
    received in the 1998 National Defense Authorization Act (NDAA) were
    designed to improve the quality of life for all of our members. The
    NDAA:
      --Increased Family Separation Allowance from $75 to $100 per month
            for those members separated from their families for more than
            30 days;
      --Included provision to protect an individual's total pay from
            decreases related to their assignment to field conditions at
            home station or deployed; and
      --Provided new authority to pay up to $300 per month to those
            assigned to locations considered less desirable or safe which
            present ``quality of life hardships''.
        The Air Force will continue to use a variety of tools, to include
    selective reenlistment bonuses, to ensure retention of critical
    enlisted specialties within the Air Force. The Department of Defense is
    also evaluating whether increased pays, including new authorities, are
    necessary to improve the retention of selected career enlisted
    specialties.
                                   perstempo
        Question. Given the PERSTEMPO turmoil associated with peacekeeping
    missions, why has the Air Force limited deployments to 45 days, when
    increased lengths would provide stability to rear area units?
        Answer. Shorter duration deployments for some Air Force aviation
    units ensure the highly technical skills developed in our airmen do not
    atrophy because of limited training opportunities while deployed.
        Shorter deployments also favorably address several key quality of
    life concerns identified by our people. Given sufficient notice prior
    to deployment, disruption is minimized and the benefits include:
    Improved management of pre- and post-deployment training requirements;
    overall unit readiness is better sustained over the course of a 45-day
    rotation; and reduced length of family separation.
                              flying hour program
        Question. I understand that the Air Force is continuing to
    experience shortfalls in the flying hour program, particularly in spare
    parts. What is the current shortfall and how are you resolving it? Do
    you project a problem in fiscal year 1999?
        Answer. High OPTEMPO and aging aircraft continue to increase the
    cost of our flying hour program. The flying hour program is predicated
    on historical cost data that reflects program costs from the two
    previous years. The current shortfall for fiscal year 1998 of $209
    million will be reflected in our Omnibus reprogramming submission at
    the end of April. Recently our fiscal year 1999 Unfunded Priority List
    identified a shortfall of $219 million in reparable spares funding.
    This shortfall will continue to be refined as consumption factors are
    updated. We will again assess the fiscal year 1999 shortfall during the
    execution year.
                                     jassm
        Question. How will the Air Force employ the Joint Air to Surface
    Standoff Munition (JASSM)?
        Answer. JASSM provides the warfighter a unique, adverse weather,
    ``launch-and-leave,'' PGM-quality weapon with a long-range standoff
    capability. The weapon's precise attack capabilities enable JASSM to
    place high value, fixed or relocatable point targets at risk while
    minimizing aircrew and launch platform exposure to enemy air defense
    systems. Potential JASSM targets range from non-hardened above ground
    to hardened, shallow buried targets. JASSM is designed to be compatible
    with both fighters and bombers.
        This missile will contribute significantly to the Secretary of
    Defense's guidance to rapidly defeat the enemy's initial attack in the
    earliest phase of a conflict. In the subsequent stages of conflict, the
    missile would be employed against selected high value, heavily defended
    targets. Additionally, JASSM employment could be tasked as part of a
    crisis action response directed by National Command Authorities
    (NCA's).
        Aircraft delivery methods can be accomplished from low-to-high
    altitudes and are scenario-dependent based on enemy defenses, range-to-
    target, weather, and launch aircraft capabilities. Via the target of
    opportunity mode, the aircrew, prior to missile release, can retarget
    relocatable high value targets by updating GPS geo-referenced target
    location data. JASSM terminal guidance for targets of opportunity is
    provided by GPS/INS only.
                             manned reconnaissance
        Question. It is my understanding that the Air Force is in the
    process of reviewing options for a new generation manned reconnaissance
    plane. This contradicts the Department's previously stated objective to
    replace manned reconnaissance with UAV's. Has the Department changed
    its strategy with regard to airborne reconnaissance?
        Answer. The Air Force has not changed its position with respect to
    the airborne reconnaissance mission. We are committed to maintaining
    the existing manned and unmanned reconnaissance assets, while
    developing additional vehicles to augment and potentially replace
    current platforms. The existing high-altitude manned reconnaissance
    aircraft, the U-2, will be viable for the foreseeable future.
        The Global Hawk is one of two complementary air vehicles being
    developed, along with a Common Ground Segment, in the High Altitude
    Endurance (HAE) Unmanned Aerial Vehicle (UAV) Advanced Concept
    Technology Demonstration (ACTD). The Global Hawk is envisioned to be a
    long-dwell, stand-off collection platform, similar to the U-2.
        If the HAE UAV ACTD is successful and a decision is made to acquire
    and operate the Global Hawk, it will initially augment the U-2.
                    basing of unmanned reconnaissance system
        Question. Have you developed plans for the basing of new unmanned
    reconnaissance systems, such as Global Hawk or the Tier III Minus
    Darkstar? How will you take into account operational training and
    global deployment factors in making these basing decisions?
        Answer. The Air Force has established a High Altitude Endurance
    (HAE) Unmanned Aerial Vehicle (UAV) Integrated Process Team (IPT) that
    has been meeting since November 1996. While preparing for potential
    introduction of the HAE UAV's into the Air Force inventory, this team
    has dealt with a great many questions pertaining to fielding,
    operations, employment, training, basing, and manning. Air Combat
    Command conducted preliminary site surveys for potential HAE UAV bed
    down locations, however, no decisions or recommendation have been made
    at this time. Since Global Hawk and DarkStar are still Advanced Concept
    Technology Demonstrations (ACTD), they are not Air Force assets and
    still must prove military utility and be deemed affordable.
                                     ______

                Questions Submitted by Senator Pete V. Domenici
                                   readiness
        Question. What do your latest, 1998, data show about pilot
    retention? Is it getting better or worse? Is it better or worse for
    married pilots? With families?
        Answer. Our latest retention data confirms we are in a challenging
    pilot retention environment. The Air Force's leading pilot retention
    indicator, the Aviator Continuation Pay (ACP) take-rate has declined
    slightly from fiscal year 1997 levels. We closed out fiscal year 1997
    with a 34 percent long-term ACP take-rate, to include 38 pilots who
    originally declined the bonus in fiscal year 1997, but accepted the
    higher rates in fiscal year 1998. Our current fiscal year 1998 long-
    term ACP take-rate is 28 percent; however, we feel it is still too
    early to draw any conclusions from this data. To date, only 31 percent
    of the fiscal year 1998 eligible pilots have made their ACP decision.
    We are cautiously optimistic that the increased ACP coupled with Air
    Force efforts to reduce TEMPO and improve quality of life will increase
    pilot retention. As for pilots with families, the long-term ACP take-
    rate has always exceeded the rate for our single pilots. The following
    spreadsheet highlights this fact:

                                 ACP TAKE RATES
                                  [In percent]
    ------------------------------------------------------------------------
                                                               Status
                         Fiscal year                   ---------------------
                                                          Family     Single
    ------------------------------------------------------------------------
    1989..............................................         72         53
    1990..............................................         44         27
    1991..............................................         47         30
    1992..............................................         73         65
    1993..............................................         80         76
    1994..............................................         80         76
    1995..............................................         81         54
    1996..............................................         75         49
    1997..............................................         36         19
    ------------------------------------------------------------------------

        Question. What are the socio-economic profiles of the pilots
    leaving? Staying?
        Answer. The Air Force does not track the socio-economic profile of
    pilots beyond marital status and number of dependents; economic status
    is limited to knowledge of the individual's pay and bonuses. The Air
    Force does conduct pilot bonus non-taker surveys to identify reasons
    why pilots are leaving the Air Force. Our survey results highlight
    TEMPO (19 percent), quality of life concerns (14 percent), and airline
    hiring (11 percent) as the top three reasons why pilots are separating
    from the Air Force. The survey results show the close relationship
    between increased tempo and quality of life concerns.
        Air Force personnel are being deployed at four times the rate they
    were during the Cold War. Frequent deployments have social impacts
    particularly with family members--increased periods of separation,
    longer work hours at home station, and a general lack of planning
    stability. Eighty-three percent of our pilots are married. Although we
    don't track the employment status of our pilot's spouses, a growing
    trend throughout society is the working spouse. Military service
    inherently requires frequent relocations and the increased absence of
    the military member due to deployments complicates any spouse's career
    plans.
        Airline hiring is another significant factor affecting pilot
    retention. Our analysis reveals that economically, a pilot will have
    greater life stream earnings if they separate from the military and
    obtain a job with a major airline at the earliest opportunity. If
    pilots are strictly motivated by money, they will separate from the Air
    Force and fly for the commercial airlines at the earliest opportunity.
    While we suspect our young pilots may be making economic decisions, we
    feel the majority of our pilots join and continue to serve in the
    military for other reasons, to include camaraderie, benefits package,
    flying opportunity, and the opportunity to serve the nation.
        Question. Are you aware of surveys of pilots showing that a major
    complaint is lack of respect for Air Force leadership? What are the
    specific complaints about?
        Answer. In fiscal year 1997, the Air Force surveyed all pilots who
    declined the pilot bonus and the number one reason flyers gave for
    getting out was tempo (19 percent). The second most cited reason was
    Quality of Life concerns (14 percent) and when we peeled that issue
    back one layer, the reason was too much time away from home. In other
    words, tempo was driving 33 percent of our pilots to turn down the
    bonus and get out.
        Concern with leadership actually ranked 9th on the list of
    concerns--only mentioned by 4 percent of those exiting. The main
    concern seemed to be at the squadron and group command level and we are
    addressing these concerns.
        Each MAJCOM holds squadron commander selection boards to pick only
    the best leaders possible. Once selected they must attend Pre-command
    Squadron Commander Training. Similarly, all colonels compete on the new
    Command Selection Board for Group command positions. This stringent
    screening process, coupled with an intense 2-3 week preparation course,
    is another positive step to ensure only the best are selected for
    command.
        In addition, the CSAF has implemented a Notice to Airman (NOTAM)
    program to articulate the Air Force's senior leadership's efforts
    regarding a variety of issues. This program provides commanders at all
    levels first-hand information on issues of importance allowing them to
    get the ``real story'' out to their troops.
                            quality of life programs
        Question. Which of your ``quality of life'' programs are working?
    Which are not? Which generate the best pay-off in terms of retention?
    Please provide the data and analysis to substantiate your answer, or
    are you using judgement or anecdotal evidence to assess the degrees of
    success or failure?
        Answer. In a quality of life survey conducted across the Air Force
    last fall, two-thirds of our enlisted and three-quarters of our officer
    members indicated satisfaction with their quality of life and over 70
    percent indicated their families remain supportive of career service.
        While we strive to quantify the retention value of quality of life
    programs we do not have quantifiable data at this time. We maintain
    that the success of some of these programs is best seen in how they
    contribute to keeping airmen focused on the mission rather than
    worrying about their basic needs. The Air Force emphasizes quality of
    life initiatives and objectives across seven priority areas which
    address a wide-range of needs for our members. Our 1998 Quality of Life
    Focus paper outlines the initiatives associated with each of the
    following priority areas: (1) pursue fair and competitive compensation
    and benefits; (2) balance the impact of high tempo levels; (3) provide
    access to quality health care; (4) provide access to safe, affordable,
    and adequate housing; (5) preserve retirement systems and benefits; (6)
    increase and enhance support to community programs; and (7) expand
    educational opportunities and access.
        Question. Does the Air Force have any studies on these issues? By
    independent organizations?
        Answer. The Air Force used the 1997 Quality of Life (QoL) Survey to
    gather data on the effectiveness of our people programs. Recent QoL
    survey results cited health care, educational opportunities,
    commissaries and exchanges, fitness centers, and housing as the most
    important QoL efforts influencing retention.
        The OSD Quality of Life Office recently contracted an independent
    study to explore service returns on quality of life investments in
    terms of retention. This study will investigate specific quality of
    life programs, their influence on retention, and compare the investment
    costs of these programs to attrition costs.
        Question. What changes have been occurring in spouse, child, and
    substance abuse for the past two years? Please differentiate between
    officers and enlisted, length of service, and among major military
    specialties and PERSTEMPO rates.
        Answer. The Air Force's data on spouse, child, and substance abuse
    is not detailed enough to differentiate between officers and enlisted,
    length of service, major military specialties, and PERSTEMPO rates. The
    data we do have shows a decrease over the past two years in the number
    of spouses and children treated for abuse in Air Force treatment
    facilities. The data also shows a decrease in severity of abuse
    treatment. Air Force drug testing results over the past two years show
    no change in the rate of positive findings, even with the CY 1997
    increase in the drug testing rate from 50 to 75 percent of our end
    strength.
        Question. What is the role of the current high PERSTEMPO in any
    changes in family or substance abuse? Please provide copies of any
    analysis you have of the relationship.
        Answer. We do not have any scientifically based data reflecting the
    relationship between PERSTEMPO and family or substance abuse.
        Spouse abuse rates remained steady from 1993-1995, then declined in
    1996 and 1997; severity of cases also decreased over this time period.
    Child abuse rates show a slightly decreasing trend over the same period
    and also a decrease in severity.
        According to the latest report of the DOD Worldwide Survey of
    Health Related Behaviors, between 1992 and 1995 alcohol use, illicit
    drugs use, and tobacco use all decreased. These data are supported by
    Air Force drug testing results over the past two years showing no
    change in the rate of positive findings on urinalysis, even with an
    increase in the CY 1997 drug testing rate from 50 percent to 75 percent
    of end strength.
        The next worldwide report will be available in late 1998. The 1998
    survey will include PERSTEMPO deployment data, which should prove
    beneficial statistically.
                                     ______

              Questions Submitted by Senator Kay Bailey Hutchison
                  deployment of united states troops in bosnia
        Question. What impact does the open-ended deployment of U.S. troops
    in Bosnia have on the Air Force's ability to contribute to the defense
    of vital interests elsewhere?
        Answer. Present Air Force contributions to the Bosnia peace process
    will not inhibit our ability to support the National Military Strategy
    of the United States. Should operational taskings escalate in response
    to a particular crisis, the National Command Authority will prioritize
    taskings and allocate available resources to meet those requirements.
        Question. Could you characterize for me the impact the mission in
    Bosnia is having on Air Force readiness across the board?
        Answer. The Bosnia operation, by itself, has had no major impact on
    overall Air Force readiness. Bosnia does add stress on our individual
    high demand-low density systems such as U-2, Predator, and Rivet Joint.
        Question. What is your estimate of the future Air Force costs of
    the Bosnia mission, and how do you propose to prioritize those costs
    against competing demands on limited resources? Specifically, what
    programs would drop below the funding line if we continue, ``for an
    undefined period of time,'' the Bosnia mission?
        Answer. The projected Air Force cost to support the Bosnia mission
    is $250.7 million for fiscal year 1999. To pay for continuing
    operations without approval of the budget amendment would require the
    Air Force to decrement other programs within the already constrained
    fiscal year 1999 budget. At this point, we have not identified specific
    programs that would fall below the line if the Bosnia mission is
    indefinitely extended. However, the most likely candidates are in our
    carefully balanced, time-phased force modernization program.
                                nato enlargement
        Question. We have heard widely varying estimates of the cost of
    NATO enlargement. If, as we have heard, the DOD budget, and the Air
    Force budget as well, is a zero-sum game, then which programs
    specifically will be sacrificed to allow NATO enlargement? What is the
    Air Force plan to accommodate NATO enlargement?
        Answer. The Army is the DOD executive agent for NATO enlargement.
    The Air Force does not expect to pay and it has no plans to pay for any
    NATO enlargement requirements from the Air Force budget.
                              information security
        Question. In light of recent reports of attempts to hack into Air
    Force computer networks, what legislation can we or must we amend,
    alter, or enact, to help make your ability to conduct information
    operations easier and more secure?
        Answer. In the wake of recent intrusions into DOD computer
    networks, the Deputy Secretary of Defense has directed a department-
    wide review of policies and practices that affect information
    operations. This review is being conducted on several fronts, including
    an examination of whether or not there are legal constraints that
    hamper our efforts to conduct effective information operations. Thus,
    it is premature for us to advocate specific legislative changes in this
    area.
        It is our hope that the OSD-led effort, in which we are actively
    participating, will result in a clear articulation of the legal issues
    surrounding information operations as well as proposals for any
    legislative changes that may be deemed necessary to ensure our ability
    to identify and respond to on-line attacks.
                                   readiness
        Question. To paraphrase your own statement concerning readiness,
    readiness is a function of personnel, equipment, training, logistics,
    and financial resources. If we look at each of these areas individually
    we see an air force comprised of 40 percent fewer personnel responding
    to over four times as many deployable commitments. And I'm concerned
    the details behind the headlines would provide even more cause for
    alarm--I think it all points to a readiness level that is either at a
    degraded level now or will be significantly degraded in the future.
    What are your specific plans to deal with these readiness challenges?
        Answer. The Air Force has already done much to address the
    challenges to our readiness in the face of increasing demands for our
    forces:
    TEMPO Initiatives
        Global Sourcing--adjudicates CINC's requirements across the Combat
    Air Forces Global Military Force Policy--establishes limits on tasking
    of selected high demand/low density assets for contingency operations
        Reduced Joint/Air Force Exercises
        Post deployment stand downs--1 day ``down'' for each 7 days
    deployed; up to 14 down days maximum
        Eliminated Quality Air Force Assessments
        Reduced Operational Readiness Inspections (10 percent in fiscal
    year 1998; 30 percent in fiscal year 1999)
        Implemented temporary duty/deployment tracker
        Shortened the duration for aviation unit deployments from 90 to 45
    days
        Funded 2 Additional RC-135's
        Stood Up a Reserve Associate AWACS Squadron
        45-Day Rotations to SWA
    Aircraft Spare Parts Funding
        95 percent in fiscal year 1998; 95 percent in fiscal year 1999
    Compensation Initiatives
        Pay Raise (2.8 percent fiscal year 1998; 3.1 percent fiscal year
    1999)
        Increased number of AFSC's qualifying for Reenlistment Bonuses
    (from 20 to 88)
        Increase Hazardous Duty Incentive Pay
        Increase Family Separation Allowance
        Subsistence Allowance for Dorm Residents
    Rated Management Initiatives
        Reduce Rated ALO's by 47 Positions
        Convert 20 percent Rated Staff Positions to Ops Staff Officer
        Increased Pilot Bonus and Pilot Production
    Quality of Life Initiatives
        E-mail access to deployed airmen
        Outreach Program--Squadron-level volunteers available to assist
    with family issues while member is deployed
        $296 million for Family Housing in fiscal year 1998.
        We believe the demand for aerospace power will continue well into
    the future, and we recognize the need to restructure ourselves to
    better support this demand. In particular, we are looking for ways to
    increase the depth of our support structure by consolidating state-side
    bases. This will allow us to support forward deployments and home
    station demands more effectively and efficiently.
        Question. Can you continue to expend large portions of your TOA on
    operations like Bosnia and Southwest Asia, while maintaining discipline
    to your plans for modernization? If so, How?
        Answer. Without a supplemental appropriation, we cannot continue to
    expend the level of funding required to support ongoing operations in
    Bosnia and Southwest Asia. Initially, from within our Operations and
    Maintenance accounts, we will among other actions begin civilian
    furlough actions, defer aircraft and aircraft engine maintenance,
    cancel operational training exercises, terminate real property
    maintenance contracts, and postpone the opening of 4 child development
    centers. To avoid unacceptable reductions in equipment and training
    readiness, we plan to rely heavily on furloughing civilians. However,
    further actions would be needed to include requesting a formal
    reprogramming action. This would place our carefully balanced, time-
    phased modernization program at risk. Funding and execution of certain
    near-term (C-17), near-mid-term (bomber upgrades and precision-guided
    munitions), later-mid-term (F-22, Evolved Expendable Launch Vehicle,
    and Space-Based InfraRed System) and far-term (Airborne Laser and Joint
    Strike Fighter) requirements would have to be restructured and slipped,
    potentially degrading tomorrow's readiness and our ability to meet our
    future global engagement commitments.
                         fighter aircraft requirements
        Question. Can you give us your perspective on what we need both the
    F-22 and the JSF in the current timeframes being pursued?
        Answer. A mix of F-22's and Joint Strike Fighters (JSF's) is the
    most effective solution to the Air Force fighter modernization
    challenge. When the F-22 reaches Initial Operational Capability (IOC)
    in fiscal year 2006, the average age of the F-15 fleet will be 26 years
    when the JSF achieves IOC in fiscal year 2010, the average F-16 will be
    24 years old. Neither of these airframes would be able to fly much
    longer unless an expensive service life extension program was
    undertaken. These extension programs would provide only a marginal
    improvement to their current capability but at a significant cost.
    Additionally, the advancement and proliferation of air-to-air and
    ground-to-air threats could put both F-15 and F-16 fighters in a
    position of inferiority and threaten our ability to achieve air
    superiority in a major theater war.
        The F-22 is the ``force enabler.'' Its emphasis is on dominant air
    superiority capability while retaining a significant air-to-ground
    capability. It will allow a theater commander to rapidly achieve air
    superiority and enable all other Joint missions to take place
    unhampered by enemy airpower.
        The JSF will provide the ``bulk'' of the Joint Commander's
    offensive airpower. Its affordable cost will allow us to procure it in
    enough numbers to sustain a high operations tempo. However, the JSF's
    affordability depends on the technologies leveraged from the F-22.
    Together the F-22 and JSF provide the optimum ``high/low'' mix of
    dominant capability and high operations tempo that allows the Air Force
    to support the Joint Vision 2010 goal of full spectrum dominance.
                                      f-22
        Question. Are you concerned that anything short of full funding
    will impact the ability to stay on course with the F-22 within
    Congressionally mandated caps?
        Answer. Yes, we believe that anything short of full funding up to
    the Congressionally mandated cost caps will impact the F-22 program's
    ability to complete Engineering and Manufacturing Development (EMD) and
    the production program within the caps. A deferral of funds will
    require an extension of EMD, which in turn will exacerbate problems
    with diminishing manufacturing sources. For the production program,
    there are inflation impacts, industrial base slowdown and restart risks
    associated with the qualification of new vendors and subcontractors.
    Additionally, altering the production program will void previous
    commitments made with the F-22 contractor team which enabled it to
    minimize subcontractor risk and cost increases.
        Question. Are you experiencing any challenges during EMD that you
    would characterize as abnormal for a program at this stage in
    development?
        Answer. No. The F-22 has experienced two manufacturing challenges
    and a problem with debonding of the stabilator. All have been resolved.
    These issues are typical of the challenges encountered during
    Engineering and Manufacturing Development. Provided funding and
    quantity stability, we expect to overcome future challenges that may
    occur during Engineering and Manufacturing Development.
                                      t-6a
        Question. I see you plan to replace the T-37 with the T-6A (the new
    JPATS-Texan); obviously this would have an impact on the current pilot
    situation. Can you outline for me your distribution plan for the T-6A
    Texan II at pilot training bases and identify how this might impact the
    rate at which you produce new pilots?
        Answer. The Air Force currently plans to beddown the T-6A
    sequentially at Randolph AFB, TX, Laughlin AFB, TX, Vance AFB, OK,
    Columbus AFB, MS, and Sheppard AFB, TX. The timing of the transition
    from T-37 to T-6 at each base has been optimized to minimize the impact
    on pilot production rates--no impacts are expected under the current
    bed-down plan.
                                     ______

                Questions Submitted by Senator Daniel K. Inouye
                                readiness impact
        Question. What is the readiness impact of maintaining a surge force
    in the Gulf over a long period of time?
        Answer. The principal readiness impacts of maintaining the surge
    force are increased workload and increased deployment time. These, in
    turn, adversely impact retention of our experienced people. By June 1,
    1998, nearly 50 percent of the aviation units presently deployed to the
    Gulf will exceed our maximum desired temporary duty rate of 120 days
    away from home station in a 12 month period.
                                 airborne laser
        Question. How does the Airborne Laser fit into the Tactical missile
    defense architecture?
        Answer. The Theater Missile Defense (TMD) architecture has four
    layers or tiers: attack operations, boost phase intercept, midcourse,
    and terminal phase. ABL is the only boost phase system. Destroying
    enemy missiles in the boost phase is extremely important for several
    reasons: (1) presents an enemy with the possibility that missile
    debris, including the warhead, may fall back on their territory--in
    this way, ABL serves as a viable deterrent to the use of weapons of
    mass destruction; (2) reduces the number of missiles that the midcourse
    and terminal defense systems must engage, enhancing their
    effectiveness; and (3) kills missiles before any early release of
    submunitions (ERS), as ERS is a very significant challenge for hit-to-
    kill defense systems.
        In addition to its role as a boost-phase ``shooter'', ABL will also
    possess significant sensing capability that will improve performance of
    other TMD layers by: providing quick and accurate missile launch point
    estimates which cue attack operations assets; passing trajectory data
    and impact point predictions on missile warheads to midcourse and
    terminal systems to narrow their sensor search patterns and extend
    their range; and predicting accurate and timely impact points to
    enhance passive defenses in the target areas.
                           joint strike fighter [jsf]
        Question. What is your position on the need for a Joint Strike
    Fighter alternative engine program?
        Answer. The Air Force supports the JSF Alternate Engine (AE)
    program. There is no operational requirement for an AE in the JSF.
    However, an AE program may offer some potential benefits such as:
    improved operational readiness since a single engine problem would not
    ground the entire JSF fleet; improved contractor responsiveness due to
    competition; and maintenance of the U.S. fighter engine industrial
    base.
        Question. How much will it cost?
        Answer. The total Joint Strike Fighter (JSF) Alternate Engine (AE)
    program cost is estimated at $1.8 billion. Currently, the Services have
    fully funded the AE program through its Concept Demonstration Phase
    (fiscal year 2003). Funding for the AE Engineering and Manufacturing
    Development Phase, scheduled to begin in fiscal year 2004, will be
    addressed by the Navy and Air Force in their respective fiscal year
    2000 POM's.
                                     ______

                  Questions Submitted by Senator Byron Dorgan
                           long-range air power panel
        Question. Given the dynamics of the creation of the Long-Range Air
    Power Panel, most people think of it as studying the question of
    whether or not the Air Force should buy more B-2 bombers. The Panel is
    dealing with the same problem that we in Congress have had to address:
    the B-2 has some amazing capabilities, but further procurement would
    put the defense budget under enormous pressure. It is possible that the
    Panel will weigh the cost of buying another B-2 bomber against other,
    more cost-effective ways to keep our bomber force robust. Would you
    view it as appropriate for the Panel to come back with recommendations
    that affect the entire bomber fleet?
        Answer. The Panel's Report was released subsequent to the March 4
    hearing. The Long-Range Air Power Panel was established to evaluate the
    adequacy of current planning for United States long-range air power and
    the requirement for continued low-rate production of B-2 stealth
    bombers. The panel, as part of its evaluation and review, could
    consider: Trade-offs between additional B-2 bombers and other
    programmed DOD assets in meeting various scenarios; desirability of an
    increased rate of purchase of precision-guided munitions for aircraft
    in the existing B-2 fleet; the desirability of improving the low
    observable characteristics of the existing B-2 fleet; and affordability
    of additional B-2 bombers in the context of projected levels of future
    defense funding.
        The Long-Range Air Power Panel provide several far-reaching
    recommendations for fully exploiting the current B-1, B-2, and B-52
    bomber force, and for upgrading and sustaining the bomber force for
    longer term. These recommendations warrant careful review as the Air
    Force prepares its Program Objective Memorandum for the Department of
    Defense's fiscal year 2000-06 Future Years Defense Program.
                      start iii and bomber force structure
        Question. Although the START III process is stalled at the moment,
    given the fact that the Russian Duma has not yet ratified START II,
    these strategic arms reduction treaties affect the number of bombers
    deployed in a strategic role. Is the Air Force at all concerned about
    the impact of START III on the strategic or conventional bomber force?
    What effect could the treaty have on bomber force structure generally?
    Are we taking precautions so as not to jeopardize our conventional
    bomber capability?
        Answer. With decreasing forward-basing options and overflight
    concerns, sustaining our long-range bomber capability is a top priority
    to the Air Force. Without a clear START III framework, it is premature
    to discuss the effects this treaty would have on our bomber force
    structure. START III negotiations have not yet begun. Once we have
    clear START III guidelines, we will work closely with OSD and JCS to
    ensure our conventional and strategic force structure continues to meet
    our national security objectives.
                         deep attack weapons mix study
        Question. Am I right in understanding that the Deep Attack Weapons
    Mix Study came to its conclusions about bomber force structure needs
    based on certain assumptions in its models about what force structure
    was available for a deep strike? What assumptions did the DAWMS models
    make about the number of B-52's in the force structure? Did the DAWMS
    study ever include in its models' assumptions a force structure of 94
    B-52's? If not, what deep strike capabilities would additional B-52's
    bring into play?
        Answer. Part II of the Deep Attack Weapons Mix Study (DAWMS) was
    tasked to examine tradeoffs between long range bombers, land and sea
    based tactical aircraft and missiles used to strike the enemy's rear
    area. It was subsequently expanded to examine tradeoffs, including
    options that would involve more than 20 B-2's as matched against
    carrier assets and missile assets. The Quadrennial Defense Review (QDR)
    subsumed the assessment of force structure sufficiency while Part II of
    DAWMS was scaled back to only examine tradeoffs for more than 20 B-2's.
    Throughout all of these analyses (DAWMS as well as QDR), the Department
    of Defense used current, funded, ``combat coded'' aircraft. Although
    the size of the entire B-52H fleet is currently 94 aircraft, force
    structure analysis and deliberate war planning use only combat-coded
    aircraft. The number of combat-coded aircraft determines the number of
    aircrews available and level of war reserve spare parts. Of the 94 B-
    52H aircraft in the inventory, 44 are combat-coded, 31 are attrition
    reserve, 12 are training aircraft, 6 are backup available aircraft, and
    1 is a test aircraft. Attrition reserve aircraft are only funded for
    recurring maintenance and aircraft upgrades, not operations and
    training. Thus, there are only enough aircrews, maintenance personnel
    and spare parts to support the 44 funded combat-coded aircraft used in
    QDR and DAWMS scenarios.
        It is difficult to assess the impact of additional B-52's without
    modeling and analyzing the interrelationships of joint force operations
    in a dynamic campaign environment. The addition of any type of deep-
    strike capable asset would probably increase U.S. capabilities,
    however, the total number of assets deployed to a theater are sequenced
    and measured according to lift requirements and capabilities, and
    beddown limitations. As the addition of any asset would likely result
    in the removal/delay of others, the impact of adding B-52's can't be
    assessed independent of a thorough campaign analysis.
                                 airborne laser
        Question. Looking ahead, what might be the major criteria the Air
    Force will use when it decides where to base the ABL?
        Answer. The ABL basing site survey is scheduled to begin in fiscal
    year 2000 with a decision in fiscal year 2001. Right now, the important
    criteria the Air Force will use to decide ABL basing include, but are
    not limited to:
      --Is there an established existing Base Infrastructure? (Use of
            existing facilities helps minimize military construction
            requirements.)
      --Can the airfield support a 747-400 aircraft (e.g., no modifications
            to runway, approaches lights, taxiways, navigation aids, basic
            POL (petroleum, oil and lubricants) storage, or tower
            required)?
      --Does the base have sufficient ramp space (parking apron), alert
            facilities and laser fuel servicing for seven aircraft?
                                pilot retention
        Question. If Congress wanted to address the problem of pilot
    retention more aggressively than the Administration is proposing to do,
    how might we best do that?
        Answer. The Air Force is optimistic the current pilot retention
    gameplan designed to reduce TEMPO, improve quality of life, restore
    compensation to original levels, increase pilot production, reduce
    pilot requirements, and improve personnel programs will help Air Force
    pilot retention. We feel that more time is needed to accurately
    evaluate the effects of our initiatives. Continued Congressional
    support for TEMPO reductions, quality of life improvements, aviator
    compensation initiatives and pilot production alternatives is key to
    ensuring the success of our efforts.
                               navigator training
        Question. My understanding is that the Air Force has had problems
    lately not only with the retention of navigators, but also with their
    training. Could you please comment on the new joint navigator training
    program? Is the Air Force satisfied that this joint training system is
    meeting the Air Force's needs?
        Answer. Joint training initiatives began in response to the April
    15, 1993 Secretary of Defense Memo on the ``Roles, Missions, and
    Functions of the Armed Forces of the United States.'' This memo
    identified three distinct areas for joint training: fixed-wing primary,
    advanced airlift/tanker/maritime patrol training, and Naval Flight
    Officer/Weapons Systems Officer (WSO)/Electronic Warfare Officer
    Training (EWO). Joint Undergraduate Navigator Training began in October
    1994 on a limited scale with all active duty WSO's receiving their
    training at NAS Pensacola, FL. Since October 1995, all Air Force
    Navigators, WSO's and EWO's have started their training at Pensacola.
    With the exception of heavy aircraft navigators (tankers, airlift,
    reconnaissance) who finish their advanced training at Randolph AFB TX,
    all others complete their training at NAS Pensacola or Corry Station
    FL. Current annual navigator production is set at 300 active duty
    students per year.
        The Air Force is satisfied with the quality of the graduates from
    the Navy program.
                                contracting out
        Question. In March of 1995, the services' personnel directors told
    the Armed Services Personnel Subcommittee that civilian personnel
    ceilings, not workload, cost or readiness concerns, are forcing them to
    send work to contractors that could have been performed more cheaply
    in-house. Also in that month, GAO reported that ``the personnel
    ceilings set by OMB frequently have the effect of encouraging agencies
    to contract out regardless of the results of cost, policy, or high-risk
    studies.'' Contracting out because of personnel ceilings raises some
    concerns. There is no public-private competition, because there simply
    aren't enough federal employees to do the work. We all know that the
    Air Force's civilian workforce will get smaller, and that there will be
    more contracting out. But if the Air Force has the money to do work
    that needs to be done, the Air Force should be able to use federal
    workers if in-house performance benefits the warfighter and the
    taxpayers. Is the Air Force adhering closely to the authorization and
    appropriations provisions that prohibit management by personnel
    ceilings? How can we make this prohibition stronger and ensure greater
    compliance with the will of the Congress? Isn't it true that using
    personnel ceilings is a relatively recent practice?
        Answer. The Air Force is complying with the intent of Congress and
    is adhering to the authorization and appropriations provisions that
    prohibit management by personnel ceilings. The Air Force has certified
    to Congress that, unless Congressionally directed, the Air Force does
    not use any constraints or limitations in terms of man years, end
    strength, full-time equivalent positions, or maximum number of
    employees in managing the civilian workforce. Consistent with
    Congressional, OMB, and Department of Defense guidance, the Air Force
    manages the civilian workforce based on workload requirements and
    budget. Congressional guidance such as the Fiscal Year 1998 National
    Defense Authorization Act contains language that prescribes limitations
    on the size of management headquarters and management support
    activities, requires reductions in the Defense Acquisition Workforce,
    limits the number of civilian employees of a military department who
    are non-dual status military technicians, and prescribes level of
    depot-level maintenance and repair that may be contracted for
    performance by non-governmental personnel. In addition, previous
    Congressional guidance, such as the National Performance Review Report
    and the Federal Workforce Restructure Act of 1994, has placed
    constraints and limitations on civilian workforce management. The Air
    Force does not use personnel ceilings as a management practice.
                                   superbases
        Question. One of the themes of your testimony is that the Air Force
    is considering moving towards a new concept of basing--which you called
    ``superbases.'' Would any Air Force bases currently fit into the
    superbase category?
        Answer. The Air Force is still in the early stages of developing
    this basing concept; thus, it is premature to say if any base currently
    fits into this category.
        Question. In your analysis of this concept, have you projected the
    military construction investments that would be required in order to
    create superbases? Would you agree that the more drastic the change to
    superbases, the more new construction would be required?
        Answer. Analysis has not started on the Milcon investments required
    to create this basing concept. The Air Force is in the early stages of
    developing a strategic basing concept which will focus on operational
    considerations and ensuring deployments are equitable and predictable
    to Air Force people. Consolidation of missions and bases could drive
    new construction requirements.
        Question. Do you have a notional estimate of how much military
    construction funding would be required to make such a shift in basing
    philosophy possible? How would this compare to the amount of money
    saved at bases to be closed?
        Answer. We do not have notional estimates on construction costs.

                              subcommittee recess

        Senator Stevens. Gentlemen, thank you very much. I am sorry
    to have kept you for so long.
        Again, I mean no offense about your statement, Mr.
    Secretary. I understand you must be frustrated. But God, I hope
    you don't do that. If you want to do it, give it to us and we
    will do it for you--if you really want to do it. But don't make
    a political decision. I think that would be very bad right now.
        Thank you very much.
        [Whereupon, at 12:46 p.m., Wednesday, March 4, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 1999

                                  ----------

                           WEDNESDAY, MARCH 11, 1998

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:25 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Ted Stevens (chairman) presiding.
        Present: Senators Stevens, Cochran, Domenici, Bond, Inouye,
    Bumpers, and Dorgan.

                             DEPARTMENT OF DEFENSE

                             Department of the Navy

                             Secretary of the Navy

    STATEMENTS OF:
            HON. JOHN H. DALTON, SECRETARY OF THE NAVY
            ADM. JAY L. JOHNSON, CHIEF OF NAVAL OPERATIONS, U.S. NAVY
            GEN. CHARLES C. KRULAK, COMMANDANT, U.S. MARINE CORPS

                     OPENING STATEMENT OF HON. TED STEVENS

        Senator Stevens. My apologies to you, Secretary Dalton,
    Admiral Johnson, and General Krulak, I just made an opening
    statement to the group that's honoring 30 years of the Sea
    Grant Program, and like all events, it took longer than I
    anticipated.
        We are pleased to have you this morning to testify on the
    Navy and Marine Corps 1999 budget. The committee's initial look
    at the Navy and Marine Corps' budget suggests you have built a
    solid budget which lives within the funds available; however,
    there will be, I am sure, some challenges to the allocations
    you have recommended.
        We all recognize that people are the heart of our armed
    forces. The Navy has seen negative trends in pilot retention as
    well as a disturbing trend in recruitment, in general. The
    ``Operations and maintenance'' account is basically flat
    compared to the fiscal year 1998, while there is no question
    that operational tempos have increased.
        It is our goal to try to make certain that the Navy and
    Marine Corps can maintain readiness within this budget request.
    Both the Navy and Marine Corps also face a number of near- and
    far-term acquisition challenges, the Navy must try to maintain
    a fleet of 300 ships, which requires the construction of 10
    ships, but the 1999 budget will support only 7 ships, and the
    commandant has consistently told us he needs $1.2 billion
    annually for modernization, and the 1999 procurement budget for
    the Marine Corps is $745 million.
        The Navy is beginning to develop the future aircraft
    carrier as well as the future surface combatant vessel, the DD-
    21. In a budget that's likely to be flat to the year 2003,
    these competing demands will present the Navy, Marine Corps
    team, and the Congress with very difficult decisions on
    allocating the limited dollars that we have available for this
    modernization.
        We look forward to working with you on the fiscal year 1999
    budget, as well as planning for the future, and we're going to
    make your full statement a part of the committee's record.
        Before you proceed let me call on my colleague from Hawaii,
    the distinguished former chairman of this subcommittee.

                       STATEMENT OF HON. DANIEL K. INOUYE

        Senator Inouye. Thank you very much, Mr. Chairman. I wish
    to join you in welcoming Secretary Dalton, Admiral Johnson, and
    General Krulak. I believe our Nation is most fortunate to have
    this fine team to represent our Naval and Marine forces.
        I have been especially impressed to see how well they all
    work together to advance the goals of our sea surfaces. As many
    of us know, this has not always been the case, but in recent
    years it has been clear that the Navy and Marines have come
    together under the leadership of these gentleman to speak with
    one voice on the collective priorities.
        These are challenging times for the Navy and Marines. The
    Navy has been reduced from a planned force of 600 ships to one
    today not much above 300. Our Marine Corps has been able to
    hold on to much of its force structure, but are seeing manpower
    cut by 14 percent.
        The request before the subcommittee is $79.2 billion for
    Navy and Marine programs. This amount is approximately $1
    billion more than funded for the current fiscal year, but it is
    not all good news.
        Our counterpart Military Construction Subcommittee will see
    a cut of over $670 million for Navy and Marine programs, and so
    when you adjust for inflation the total Navy Department's
    budget has a real cut of 1\1/2\ percent.
        With that knowledge, I must say I'm concerned how the Navy
    and Marines will continue to maintain the quality and ready
    forces that they have today. I think we have seen some cracks
    already.
        In recent years we have had flying hours and spare part
    shortfalls. Today, the Navy is having a difficult time meeting
    its recruiting goals, and retention has been a constant
    struggle.
        At the same time I understand that we are asking more from
    our forces. Our marines are being tasked to respond to crises
    at record levels, and our carrier battle groups are being asked
    to re-deploy with less training time.
        Mr. Chairman, I join you in commending our witnesses for
    doing their best to respond to these challenges, but I'm
    concerned that we might be asking too much of them.
        In a balanced budget environment we cannot expect to
    provide more resources to address these problems, instead we
    must all work together to ensure that the resources we have
    spent are most effective in an efficient manner.
        There will be no margin for error, no room for that, no
    room to waste resources on duplication, and this fact must be
    realized and endorsed by the administration, by the Department,
    and by the Congress. It's not going to be an easy chore, but I
    do hope that when the dust settles we will continue to have a
    Navy and Marine Corps that will be able to carry on our
    Nation's work in the manner that we have been privileged to
    receive from them.
        I thank you very much.
        Senator Stevens. Does anyone have an opening statement that
    they wish to make?

                   prepared statement of Senator Thad Cochran

        Senator Cochran. Mr. Chairman, I'd like to have the
    opportunity to put a statement in the record, I don't want to
    delay the hearing. We are happy to have the witnesses here, and
    we are kind of anxious to hear their testimony.
        [The statement follows:]
                   Prepared Statement of Senator Thad Cochran
        Mr. Chairman, I'm pleased to join you in welcoming this
    distinguished panel of witnesses to review the budget request for the
    U.S. Navy and Marine Corps for fiscal year 1999.
        One of my concerns about the fiscal year 1999 request is the Navy's
    shipbuilding program, which I think falls far short of meeting the
    Navy's requirements for 300 ships. With the average life span of a ship
    being approximately 35 years, the Navy needs to procure approximately
    10 ships a year to maintain a 300 ship goal.
        Mr. Chairman, the Navy's procurement rate for new surface combatant
    ships will not meet their stated goal of 300 ships. The current Future
    Years Defense Plan calls for only 5 ships in fiscal year 2000, and only
    7 ships per year through fiscal year 2003.
        At this rate, we will procure an average of only 6.4 surface
    combatant ships per year from fiscal year 1999-2003. I also understand
    the Navy's projected ship procurement rate for fiscal year 2004-2015
    will also fall below the 10 ships per year required to meet the stated
    goal of a 300 ship Navy.
        I know there are some new ``smart'' technologies that can help
    reduce manning and other costs of operating and maintaining our fleet.
    There are also some initiatives such as the program to convert older
    CG-47 cruisers to Theater Ballistic Missile Defense capability and
    include Smart Ship control systems which can extend service life of
    these ship. I support these efforts.
        I am also pleased that the Navy has included full funding for the
    TAGS-65 Oceanographic Ship, the last ship in its class, which will
    provide much needed research and other support for the Navy's missions
    around the globe.
        While I support these new initiatives and programs, as well as the
    Navy's recently announced multi-year procurement of DDG-51 Destroyers,
    we must not lose sight of the ever-widening gap that is developing
    between our 300 ship goal and the Navy's actual and projected ship
    procurement rates.
        Other issues that I hope our witness will address today include
    OPTEMPO and the Readiness of our sailors. According to the Navy's
    Posture Statement, readiness of deployed units remain high, but
    constrained resources and the pace of operations are affecting the
    readiness of non-deployed forces. Several recent articles have
    highlighted these concerns.
      --January 15, 1998 Norfolk Virginian-Pilot article quoted a senior
            Norfolk officer as saying ``Keeping two carriers in the gulf is
            causing us some real headaches.'' ``Hopefully the next deployer
            (Stennis) will go out on time, but, after that, all bets are
            off.''
      --March 5, 1998 Washington Times reported that in testimony to
            Congress, VADM Dan Oliver, the Navy's senior personnel expert,
            indicated it is ``very difficult'' to keep pilots, submariners
            and others. He cited the hectic pace of Navy life and the loss
            of a chance to command a ship, due to the decommissioning of
            many ships, among the reasons for retention problems.
      --March 7, 1998 San Diego Union Tribune reported that during a March
            6, 1998 hearing of the Readiness Subcommittee of the House
            National Security Committee a ``Marine sergeant told
            congressman that some units have .50-caliber machine guns
            manufactured during the 1940's and it can take up to 18 months
            to get the heavy weapons repaired or replaced.''
        Mr. Chairman, I know the Secretary, the CNO and the Commandant are
    well aware of these problems and I look forward to hearing from them
    today.

                     STATEMENT OF HON. CHRISTOPHER S. BOND

        Senator Stevens. Thank you. Senator Bond.
        Senator Bond. Thank you, Mr. Chairman. I will be brief. I
    join you in welcoming the Secretary, the Admiral, and General
    Krulak, and I share the view of our distinguished ranking
    member that your team is being asked to carry a major portion
    of the burden, while not being adequately resourced.
        We hear news, the Pentagon is having difficulty trying to
    realign its forces to cover both the Arabian Gulf presence and
    the re-emerging threats to peace and security in the Balkan
    regions, and these are not close to being the two major
    regional contingencies [MRC's] we thought we'd be ready to
    face.
        I know that many of my colleagues would join in expressing
    concern over the services' ability effectively to meet their
    mission requirements making deep and risky cuts in critical
    supply, stocks, accelerating appreciation, not to mention the
    additional strain put on personnel, and we are all concerned
    about the abysmal retention rates of pilots in the services,
    and I submit that simply throwing money at the problem is not
    the answer. I gather the considerable bonus package only
    engendered about a 3- to 4-percent increase in the retention
    rate.
        I understand that many of the people who joined the service
    did so for very noble reasons, and the financial considerations
    are not the entire problem, and the exodus of individuals now
    spans the rank structure, and I think that we are seeing some
    problems with incentives for command being hamstrung when
    junior officers are paid more than their seniors.
        I hear from people in the service that over the years,
    recent years, the individual tactical flight time has been
    dramatically curtailed. I am sure that way back, Admiral, your
    logbook had only a few blank lines in the monthly accounting of
    your flights, and I venture to say that a lieutenant today has
    a lot more blank space in the logbook, and much of the time
    dedicated to other than war contingencies is not really
    increasing their warfighting skills.
        I think it is also important that we reflect on the
    intangibles, which made you, Admiral, and you, General, when
    you were butter bars, look up to the unit commanders, which
    when you became commanders gave you authority and
    accountability to stand up and lead.
        We have warned in this committee over the years that the
    Department of Defense's policy of low-balling funding
    requirements would exacerbate the fiscal problems facing all of
    the services' abilities to conduct the operations required.
        As I understand from Dr. Hamre's comments last week, you
    are already expending funds from the fourth quarter of the
    fiscal year 1998 budget for missions being conducted today, and
    we are only in March.
        The emergency supplementals this year are going to be very
    important, but some of these operations have extended way
    beyond any contingency, and we need to get some straight
    answers and some straight priorities from the Department of
    Defense.
        On another very important note, Mr. Secretary, we are
    looking forward to the commissioning of the U.S.S. Harry S.
    Truman, we have made a commitment to another carrier, and I am
    also concerned that we accelerate the evaluations of the F/A-
    18E/F not to skip any testing, but to work as hard as we can to
    cure any anomalies, then we can begin a robust and, we believe,
    necessary multiyear procurement.
        We want to do everything. I am personally committed to
    providing the men and women who fly from the carriers the
    finest and most advanced aircraft, to give them the edge so
    critical to today's high-tech, high-speed, highly dangerous air
    combat arena, and I will have more to talk about in that in the
    Q&A period.
        Thank you, Mr. Chairman.
        Senator Stevens. Senator Dorgan, do you have an opening
    statement?

                        STATEMENT FROM HON. BYRON DORGAN

        Senator Dorgan. Mr. Chairman, let me just put a statement
    in the record, I am anxious to hear the witnesses instead.
        [The statement follows:]

                   Prepared Statement of Senator Byron Dorgan

        I would first like to thank these capable witnesses for
    their appearance before this committee. I recognize, as the
    other Committee Members do, that their job is not an easy one,
    given the current state of world affairs and the increased
    demands being placed on our men and women in uniform. I am
    particularly impressed by the retention rates of the Navy and
    Marine Corps. The statistics in this area say much about the
    efforts and the abilities of the Secretary, the Chief of Naval
    Operations and the Commandant of the Marine Corps, as well as
    those who work for them. Although we know more must be done in
    this area, the Navy and Marine Corps are to be commended.
        The burden for managers in the military is a familiar one
    in government today: doing more with the limited funds
    available. I would hope that the questions I pose would be
    taken in that light. As other members of this committee, I am
    committed to doing the most I can for our military personnel
    with the funds we have available. Most of all, I want to ensure
    that the problems that are causing the exodus of some of our
    most qualified people from the military are solved.

        Senator Stevens. Thank you. Mr. Secretary, we are pleased
    to have your statement. All of your statements will be in the
    record.

                      opening remarks of Secretary Dalton

        Secretary Dalton. Well, thank you very much, Mr. Chairman,
    Senator Inouye, distinguished members of this committee.
        This is my fifth time to appear before this committee, and
    let me say what a privilege and honor it is to be here to
    represent the Department of the Navy.
        I am also very proud to be here with these two outstanding
    officers who lead our Navy and Marine Corps. They do an
    outstanding job, and as you say, Senator Inouye, we really do
    work together as a team. The Navy and Marine Corps team is,
    indeed, working very well together.
        I would like to take a few minutes to reflect on where the
    Navy Department has been in the last few years, where we are
    today, and where we are headed. I would like to break that
    down, if I could, in talking operationally, programmatically,
    and in personnel.

                                 Operationally

        First of all, operationally. We are our Nation's 911 force.
    When there is a problem, it is the Navy-Marine Corps team that
    gets the call. That is very evident today in the Arabian Gulf.
        Today, we have two carrier battle groups, and one
    amphibious ready group there, and I am very proud of the men
    and women who are there doing such an outstanding job.
        While there is debate today about the recent agreement that
    was made between the Secretary General of the United Nations
    and Saddam Hussein, we simply would not have that agreement to
    debate had it not been for the presence of the Navy-Marine
    Corps team in the gulf. Winston Churchill had it right when he
    said, ``The best Ambassador is a warship,'' and those warships
    that were there showed the resolve of this Nation, and, indeed,
    provided an opportunity for that agreement to be signed.
        Similarly, things have happened like that around the world
    in the last few years: restoring democracy to Haiti; bringing
    the parties to the peace table to make the Dayton accords
    possible; bringing stability in the Taiwan Straits a couple of
    years ago, when that troublesome problem arose; the rescue of
    Capt. Scott O'Grady; and the noncombatant evacuation operations
    in Albania, and the former Zaire. From A to Z, the Navy-Marine
    Corps team has been there, has responded, has responded
    professionally, has answered all bells, and I am very proud of
    the job the Navy Department has done.
        Operationally, this committee has been extremely supportive
    of the Navy Department.
        I am grateful to you, and we have come to you to ask for
    support for carriers, submarines, ships, airplanes, big-deck
    amphibious ships, and quality of life improvements for our
    people. This committee has not only responded and supported our
    request, but in the past has, indeed, enhanced our requests,
    and we are grateful to you.
        I pledge to you that we will continue to pursue initiatives
    like acquisition reform, so that we can provide the highest
    quality of naval service possible for each tax dollar that we
    have as a resource.

                                   Personnel

        In the area of personnel, I am so proud of the outstanding
    men and women of the Navy Department. We simply have the finest
    men and women serving in the Navy Department today that we have
    ever had. It is no secret that in the last few years we have
    had some difficult problems and challenges in that regard. We
    all know that there was major adverse publicity a few years ago
    with respect to very poor behavior on the part of some of our
    people. We all know about a major cheating scandal we had at
    the Naval Academy just a few years ago. However, we have
    addressed those issues and attacked them.
        A recent report from an outside group, led by Adm.
    Stansfield Turner and the president of Goucher College, showed
    that the Naval Academy is, indeed, fulfilling its mission
    today. We have attacked the problem with respect to the
    behavior of our people, with training required by every one of
    our people, education, to emphasize our core values of honor,
    courage, and commitment to ensure that our sailors and marines
    treat their shipmates with dignity and respect. I am very proud
    of the progress that we have made in that regard. It is
    something we need to continue to work on, and, indeed, we are.
        We have been very innovative with things like the battle
    stations for our recruits at Great Lakes, and the crucible that
    the Marine Corps is using at Parris Island and San Diego, to
    enhance the training for our people. We made significant
    progress with diversity in our officer ranks, and I am proud of
    that.
        Our vision for the future is one that is bright. We are
    focused on our ``Forward from the Sea'' vision. This is
    something that we produced several years ago, in 1994, but it
    is the right vision. We haven't tried to reinvent ourselves and
    change that every 2 years. It is the right vision, and we are
    moving forward, moving forward with it.
        We are committed to things like the revolution in military
    affairs and the revolution in business affairs, to bring things
    on like information technology for the 21st century, network
    centric warfare, and cooperative engagement capability.
        We are thinking outside the box, utilizing things like the
    Navy's fleet battle experiment, and the Marine Corps
    warfighting lab, things like the Hunter Warrior, Urban Warrior.
    We are moving forward and preparing this 911 force of the Navy
    Department for the 21st century.

                                Programmatically

        Mr. Chairman, I am proud of the budget that we have
    presented to this committee. It's a solid plan, and I seek your
    support for it. I would like to emphasize our priorities. F/A-
    18E/F Super Hornet was our top priority last year, it is again
    this year. We are asking for funding of advanced procurement
    for CVN-77. It is very important that we move forward with
    that, and DD-21, a land attack surface ship for the 21st
    century, of revolutionary importance. The intercontinental
    missile defense, the V-22, the AAAV, these are all programs for
    which we ask your support.
        We face challenges in readiness, retention, and recruiting.
    These are indeed challenges we are addressing, and we will,
    indeed, address them for the future. There is no question that
    the economy has been strong, and has complicated issues with
    respect to retention and recruiting.
        Mr. Chairman, I ask for your very strong support and the
    support of this committee for the emergency supplemental that
    is before this body. We simply cannot deal with any offsets
    with respect to that. We sincerely request your support for the
    emergency supplemental.
        Similarly, we have a reprogramming request before this
    committee of $220 million for personnel issues, and we would
    ask for your support for that.
        We simply have too much infrastructure, and I would
    encourage this body to support an additional round of base
    realignment and closure. If we are spending money on things
    that we do not need, like too much infrastructure, then we do
    not have adequate resources to deal with some of the issues
    that you raise with respect to recapitalization and personnel.
        Finally, Mr. Chairman, one additional area that I would
    like to ask for the support of this body is the Law of the Sea
    Treaty. I am concerned that the United States is not a party to
    the treaty. This absence is incompatible with our Department's
    active engagement and leadership in maritime affairs, and has
    potentially negative effects for the credibility of our overall
    national maritime policy. The treaty, in its improved current
    form, is a winning proposition for the United States, and I ask
    each of you to support its ratification at the earliest
    opportunity.

                               prepared statement

        In closing, Mr. Chairman, I would just like to thank you
    again and thank this committee for the support you have
    provided the Department of the Navy. On behalf of the sailors,
    marines, and civilians of the Department of the Navy it is my
    great honor to represent, I thank you very much for your
    support, and ask for your continued support. We look forward to
    working with you, and I look forward to responding to your
    questions. Thank you.
        Senator Stevens. Thank you, Mr. Secretary. We should be
    finished with the reprogramming on the personnel items this
    week.
        [The statement follows:]
                      Prepared Statement of John H. Dalton
        Mr. Chairman, Senator Inouye, Distinguished members of the
    Committee. It is a pleasure for me to address you for the fifth year on
    the state of the United States Navy and Marine Corps.
        America's forward-deployed naval forces are engaged around the
    world on a daily basis to carry out the National Military Strategy. Our
    forces are shaping the international environment, responding to the
    full spectrum of crises, and preparing now for an uncertain future.
    There is an enduring need for the forward presence of our Navy-Marine
    Corps Team. That need was validated by Secretary Cohen in his
    Quadrennial Defense Review, the report of the National Defense Panel
    and the reality of day-to-day global involvement of our Sailors and
    Marines.
        Our Navy and Marine Corps in the Arabian Gulf are demonstrating
    today the relevance of forward-deployed naval forces. In a region where
    land basing options are limited, our two carrier battle groups and one
    amphibious ready group on station there are a powerful symbol of
    American resolve. I believe that resolve, backed up by the awesome
    strike potential of our ships and aircraft, played a major role in the
    latest agreement between Iraq and the United Nations. As Winston
    Churchill once said, ``A warship is (indeed) the best ambassador.''
        The staying power of our forward-deployed expeditionary forces will
    also be crucial as we maintain our current force level in the Arabian
    Gulf for the foreseeable future. America's resolve to do the right
    thing does not have an expiration date, and the Navy-Marine Corps Team
    remains up to the task. We will remain ready to respond, anytime--
    anywhere.
        I want to refer back, briefly, to 1992. Where we have been as a
    Department since that time illustrates how we are postured now, and for
    the future. We began, in 1992, a continuous process of transformation
    with publication of ``. . . From the Sea'', which reflected the
    dramatic change in the international security environment.
        Our transformation process continues today, exploiting technologies
    from the Revolutions in Military and Business Affairs to give our
    forces the power and efficiency to dominate the battlefields of
    tomorrow. It is a process of innovation and growth which leverages the
    unmatched power, timeliness and operational independence of aircraft
    carrier battle groups and amphibious ready groups.
        Not only am I immensely proud of where we stand today, but I
    believe we have a clear, forward-looking vision in place that will
    guarantee the right naval forces for the future.
        Certainly, the future holds great challenges for the Navy and
    Marine Corps. The unrelenting operational demands on our forces and our
    people are threatening to diminish our readiness. While we have not
    seen declines in readiness in our deployed forces, the overall tempo of
    operations is beginning to weaken our ability to train the forces which
    will follow them on station. We must ensure adequate resources,
    training and quality of life initiatives to maintain the readiness of
    our Sailors, Marines and civilians.
        We will need strong, positive leadership and teamwork now, by this
    Department and by the Congress, to ensure our naval forces will
    continue to be just as ready in 2010 and 2020. I want to discuss some
    of the budget and program issues that are important to the future of
    the Navy and Marine Corps.
        First, the budget. We have made a concerted effort over the past
    year to improve what is already an active, engaged process for the
    budget, both within the Department of the Navy, and with Congress. I
    believe, as a result, we have a positive relationship which makes our
    tough choices more clear, and I thank each of you for making that
    relationship a healthy reality.
        With regard to modernization efforts, our programs will continue to
    harness the potential of the Revolution in Military Affairs (RMA). The
    Department of the Navy is at the leading edge of this effort, actively
    embracing strategic concepts such as information warfare, cooperative
    engagement capability, urban warfare, and network-centric warfare.
        We are encouraging the creation of innovative concepts, through the
    Navy's Fleet Battle Experiments, the Marines' Warfighting Laboratory,
    the upcoming Navy Warfare Development Command at Newport, as well as
    through active leadership to stimulate ideas from within the force.
        The revolution in military affairs is being aggressively coupled
    with the Revolution in Business Affairs (RBA) by the Department of the
    Navy. We are doing so by streamlining processes in procurement and
    acquisition, support services and logistics, through the use of
    commercial off-the-shelf technology, and by plans to reorganize and
    reduce our infrastructure. These programs will guarantee future
    savings, but they require dedicated funds to allow us to capitalize on
    these revolutions.
        Our major modernization programs are on track, and I thank you for
    this committee's active support. We have forwarded a plan for
    accelerated procurement of CVN 77, which will be the first new carrier
    of the 21st century, a dramatically advanced platform, and will provide
    the vital bridge to our next generation carrier, CVX.
        The F/A-18 E/F Super Hornet promises a great future for carrier-
    based aviation. The over-publicized wing drop problem has been managed
    well and we are now in the process of selecting the best fix among
    several workable options to fully correct it. Our test plan is on track
    to finalize our solution next month. This will allow us to incorporate
    our fix into all production aircraft. Super Hornet represents what we
    demand for our carriers--the best strike asset we can afford.
        The Joint Strike Fighter (JSF) is an integral part of our forward-
    looking plan for naval aviation. I have made visits to both design
    teams, and I am confident a healthy competition is in place that will
    guarantee the Navy and Marine Corps the right aircraft for our next
    generation strike aircraft needs. Our goal is to get the most modern
    aircraft to the fleet as quickly and affordably as possible. Super
    Hornet and JSF do exactly that.
        The Surface Combatant 21 family, led by its first member, the
    multipurpose DD 21, with its focus on land attack, will help
    revolutionize the Navy's shipbuilding and warfighting strategy. This
    modern surface combatant represents an exciting mainstay for our battle
    groups of tomorrow, because of the tremendous leap in effectiveness it
    will bring, at significant manpower and cost savings.
        Another exciting program that we continue to develop is the Theater
    Ballistic Missile Defense (TBMD) capability that is embedded in our
    Aegis cruisers and destroyers. These powerful ships are a promising
    first-line of defense for our forward-deployed joint forces.
        Our shipbuilding plan, overall, produces technologically superior
    ships such as DDG 51, LPD 17 and the New Attack Submarine. The average
    rate of production in the future years defense plan (FYDP) is adequate
    in the near term to support the projected fiscal year 2003 force of
    about 300 ships. However, beyond the FYDP, this rate of production will
    not permit us to maintain the required ship and aircraft inventory.
        The operational commitments undertaken by the Navy and Marine Corps
    today require a certain force level to satisfy both personnel optempo
    concerns and world-wide presence missions. Our rate of new ship and
    aircraft construction must recapitalize the force in the long term to
    maintain this balance. We need to ensure that, in the future, adequate
    modernization funding is provided in order to fulfill tomorrow's
    tasking.
        The Navy and Marine Corps' worldwide commitments today include the
    extended operations in Bosnia. In order to continue our forward-
    presence in this critical theater, we will need your support for a
    supplemental budget request to meet additional costs for the Bosnia
    operation in 1998.
        Let me turn now to what is my favorite topic: the Sailors, Marines
    and civilian employees of the Department of the Navy. They are the most
    proud, professional, diverse and intelligent this Nation has ever
    known. They are the primary reason we remain the world's greatest Navy
    and Marine Corps.
        We ask a great deal of our people, and we continue to ask more. Our
    forces today must be ready for a vast array of mission tasking, across
    the full spectrum of combat and non-traditional uses of military force.
    As a result, our people are warriors in the classic sense, and
    compassionate and discriminate in the human sense. This requires time,
    training and a truly multi-faceted and motivated Sailor or Marine.
        We are proud of the tailored programs we have developed to
    transform the best of our society into Sailors or Marines. New
    leadership development programs at boot camp--``Battle Stations'' for
    the Navy, and the ``Crucible'' for the Marine Corps--are already
    forging smarter Sailors and Marines, and giving them the skills and the
    mindset to capitalize on the Revolution in Military Affairs of which
    they will be a vital part.
        On the recruiting front, we continue in our efforts to attract
    highly qualified and culturally diverse officer and enlisted
    candidates. This is a challenging time: for the first two months of
    fiscal year 1998, Navy recruiting accessed only 91 percent of goal. If
    that trend continues through fiscal year 1998, it may lead to an annual
    accession goal shortfall of 4,000 personnel. On the Marine Corps side,
    we are on track with our accession goals.
        We are addressing the challenge for Navy recruiting head-on with a
    number of new initiatives, including direct involvement by our top
    leadership. I have personally prepared a letter to go to over 20,000
    high school principals around the country to solicit their support for
    quality recruits. I would ask that wherever possible, each of you use
    your leadership position on this committee to encourage your peers when
    you are home, to mention the opportunities available in the Navy and
    Marine Corps.
        Retention, also, is a critical area of focus for us. Our people are
    our greatest resource, and indeed, my highest priority. We will
    continue to listen carefully to the concerns of our Sailors, Marines
    and civilians, and we will continue to search for innovative ways to
    improve health care, retirement, deployment schedules, housing and
    other areas. We must work together in continuing to attract and retain
    the highest quality people for our Navy-Marine Corps Team.
        Success in the two critical areas on which I have focused--
    modernization of the force, and taking care of our people--requires
    significant investment, now. Much of that investment is in place with
    our aggressive initiatives to improve efficiency in everything we do.
    But much more will have to come from a reduction in our infrastructure.
    We simply have too much infrastructure for the size of the force we
    envision in the next few years. To continue to operate this way is not
    good business.
        The Department of the Navy will continue to make the tough choices
    that it must in the budget process. I ask each of you to help us do the
    same, to reduce our overhead, anywhere that we can, primarily through
    additional base closures in the years ahead.
        One additional area I must mention is the Law of the Sea Treaty. I
    am concerned that the United States is not a party to the Treaty. This
    absence is incompatible with our Department's active engagement and
    leadership in maritime affairs and has potentially negative effects for
    the credibility of our overall national maritime policy. The Treaty, in
    its improved, current form, is a winning proposition for the U.S., and
    I ask each of you to consider its ratification at the earliest
    opportunity.
        In closing, let me say that I am tremendously proud to serve as
    Secretary of our Nation's Navy-Marine Corps Team. We are a forward-
    thinking, forward-looking organization: we are both America's premier
    fighting force, and a positive influence for sustaining peace on the
    world stage.
        We currently have a near-continuous presence in four major regions:
    the Mediterranean Sea, the Arabian Gulf/Indian Ocean, the Western
    Pacific and the Caribbean. On any given day of the year, day-in and
    day-out, over half of our Navy-Marine Corps Team is underway, at sea. A
    major challenge we face for future operations is ensuring that we can
    continue to meet this operational tempo required of our forces--both in
    terms of people and equipment.
        Let me repeat that our vision of the way ahead is sound, and is in
    line with the Nation's fundamental interests. But the means to get
    there are becoming less and less clear. I believe, as I know you do,
    that we have the appropriate vision, and it is worth fighting for. I
    will say as I did earlier, we must ensure adequate resources, training
    and quality of life initiatives to ensure our Sailors and Marines
    remain forward-deployed and ready, anytime anywhere.
        Thank you for your leadership, enthusiasm and support for our
    Sailors, Marines and civilians who stand the watch. I appreciate the
    opportunity to appear before you today. I look forward to responding to
    your questions.
                                     ______

                 Department of the Navy 1998 Posture Statement
        This posture statement reflects the continuing process of
    transformation initiated by the Department of the Navy in 1992 with
    publication of ``. . . From the Sea''--a bold step taken to ensure the
    Navy-Marine Corps Team remained at the forefront of America's defenses
    in a rapidly changing world. Since then, ``. . . From the Sea'' has
    been refined and expanded upon with publication of ``Forward . . . From
    the Sea'' (1994), ``Operational Maneuver . . . From the Sea'' (1996),
    and ``The Navy Operational Concept'' (1997).
        Our transformation process continues today, exploiting technologies
    from the Revolutions in Military and Business Affairs to give our
    forces the power and efficiency to dominate the battlefields of
    tomorrow. By doing so, we are well on the way to achieving our vision
    of highly effective, forward-deployed naval forces capable of shaping
    the peace, responding to the full spectrum of crises, and preparing for
    future threats. It is a process of innovation and growth which
    leverages the unmatched power, timeliness, and operational independence
    of aircraft carrier battle groups and amphibious ready groups which
    serve as the foundation of our Nation's forward defense.
        The future holds great challenges for the Navy and Marine Corps,
    both operationally and organizationally, as we strive to protect our
    Nation's strategic investment in the world's finest naval force. We
    must ensure adequate resources, training, and quality of life
    initiatives maintain the readiness of our Sailors, Marines and
    civilians, and allow them to continue their heritage of Honor, Courage
    and Commitment.
        This posture statement illustrates the framework adopted by the
    Department of the Navy to achieve our vision of 21st century
    excellence, strengthening the unrivaled Navy-Marine Corps Team so vital
    to America's present--and future--security.

                                       John H. Dalton,
                                                 Secretary of the Navy.
                                       Admiral J.L. Johnson, USN,
                                             Chief of Naval Operations.
                                       General C. C. Krulak, USMC,
                                        Commandant of the Marine Corps.
                           the navy-marine corps team
    Answering the Nation's Call: Anytime, Anywhere
        Forward-deployed and combat ready, naval forces embody the
    President's National Security Strategy for a New Century. Our nation
    recognizes the vital role of military engagement in supporting U.S.
    national interests and objectives. Because they are forward deployed
    every day, naval forces are a critical component of our nation's global
    engagement strategy. As delineated in the National Military Strategy,
    they provide the essential tools to shape the international
    environment, to respond to the full range of crises, and to prepare for
    an uncertain future.
        We live in a complex and ever-changing world. The growth during
    this decade of democracies and free market economies is most
    encouraging. Yet nationalism, economic inequities, and ethnic tensions
    remain a fact of life and challenge us with disorder--and sometimes
    chaos. As both positive and negative changes take shape, the United
    States has become what some call the ``indispensable nation''--the only
    nation with the technological capability and acknowledged benevolent
    objectives to ensure regional stability.
        The National Defense Panel recently pointed to the rapidly changing
    international environment and underlined the requirement for a
    ``transformation strategy,'' a coherent plan for creating the forces
    the United States will need to deal with the challenges ahead. The
    Navy-Marine Corps team recognized the need for such a strategy more
    than five years ago, and began to transform itself with the seminal
    white paper ``. . . From the Sea.'' That white paper, its companion
    ``Forward . . . From the Sea,'' and the concepts outlined in
    ``Operational Maneuver . . . From the Sea'' and ``Forward . . . From
    the Sea: The Navy Operational Concept'' changed the direction of the
    Department of the Navy dramatically and began just such a
    transformation strategy.
        The focus of this strategic concept is to influence events ashore
    directly and decisively from the sea--anytime, anywhere. The strategic
    concepts embedded in ``. . . From the Sea'' and ``Forward . . . From
    the Sea'' easily adapted to the Quadrennial Defense Review tenets of
    shaping the international environment, responding to the full spectrum
    of crises, and preparing now for an uncertain future. Shaping and
    responding require presence--maintaining forward-deployed combat-ready
    naval forces. Being ``on scene'' matters! It is and will remain a
    distinctly naval contribution to peacetime engagement. As sovereign
    extensions of our nation, naval forces can move freely across the
    international seas and be brought to bear quickly when needed. The
    transformation that the Navy-Marine Corps team has begun seeks to build
    on these enduring attributes of naval power and ensure that they remain
    our strengths in the next century.
        The balanced, concentrated striking power of aircraft carrier
    battlegroups and amphibious ready groups lies at the heart of our
    nation's ability to execute its strategy of peacetime engagement. Their
    power reassures allies and deters would-be aggressors, even as it
    demonstrates a unique ability to respond to a full range of crises.
    From their forward-deployed locations in the Mediterranean, the Arabian
    Gulf, the Western Pacific and the Caribbean, naval forces offer the
    National Command Authorities (NCA) a wide range of options--in effect a
    ``rheostat'' that can be dialed up or down to put the appropriate
    forces on scene when needed whatever the evolving crisis.
        Operating in international waters and unfettered by constraints of
    sovereignty, naval forces are typically on scene or the first to arrive
    in response to a crisis. The inherent flexibility of naval forces
    allows a minor crisis or conflict to be resolved quickly by on-scene
    forces. During more complex scenarios, naval forces provide the joint
    force commander with a full range of options tailored for the specific
    situation. From these strategic locations, naval forces shape the
    battlespace for further operations.
    Tradition and Teamwork: Hallmarks of Success
        Tradition is embedded in the Navy-Marine Corps team. As we look
    toward the new millennium, we emphasize our traditional core values of
    honor, courage, and commitment. These timeless ideals remain at the
    center of everything we do.
        Teamwork is another Navy-Marine Corps trait. It ranges from
    teamwork within individual units, to cooperative efforts among units,
    to coordination throughout the Department of the Navy. The Navy and
    Marine Corps also can integrate forces into any joint task force or
    allied coalition quickly.
    Charting a Course for Future Success
        The Department of the Navy is no stranger to innovation or to
    ``Revolutions in Military Affairs.'' It has undertaken three such
    revolutions in the past one hundred years: the first occurred in the
    1890's; another with carriers and amphibious warfare in the 1920's and
    1930's; and the third with the ballistic missile submarine force in the
    1960's.
        In ``. . . From the Sea'' and ``Forward . . . From the Sea,'' we
    have sown the seeds of yet another revolutionary change in naval power,
    one that will ensure our continued contribution to our national
    security in a changing world. It revolves about an easily understood
    axiom: the purpose of naval forces is to influence events ashore
    directly and decisively from the sea--anytime, anywhere.
              naval expeditionary forces: full spectrum capability
        The President's National Security Strategy for a New Century
    identifies engagement as a critical ingredient in maintaining peace and
    stability around the world. Our National Military Strategy specifies
    three tasks: shape the international environment, respond to the full
    spectrum of crises, and prepare now for an uncertain future.
    Shaping the International Environment
        Naval forces project U.S. influence and power abroad in ways that
    promote regional economic and political stability, which in turn serves
    as a foundation for prosperity. Naval forces remain continually engaged
    around the world as a visible tool of U.S. foreign policy. The power-
    projection capabilities of our aircraft carrier battle groups and
    amphibious ready groups provide a potent response to aggression. Our
    forces shape the local security calculus by being there--a visible,
    powerful presence with a full range of options. These same forces
    reassure allies of our commitment to regional peace and stability.
    Routine exercises with allied forces enhance coalition interoperability
    and add to our collective ability to respond to attack. Sailors and
    Marines do this every day of the year. Nearly one-third of Navy and
    Marine Corps operational forces--more than 60,000 men and women and 100
    ships--are deployed around the world. Carrier battle groups and
    amphibious ready groups provide near-continuous presence in four major
    deployment areas: the Mediterranean Sea, the Arabian Gulf/Indian Ocean,
    the Western Pacific, and the Caribbean. In Japan, we anchor regional
    stability with the forward-stationed Independence (CV 62) Battle Group
    and the Belleau Wood (LHA 3) Amphibious Ready Group. Closer to home,
    the Navy's Western Hemisphere Group is shaping the environment by
    strengthening the bonds to South and Latin American allies. Each of
    these strategic locations provides a launching point for quick reaction
    by naval forces to crises virtually anywhere.
        Peacetime engagement is our primary means of shaping the
    international environment; it is a traditional role for the Navy and
    Marine Corps. Our forces participate in an array of engagement
    activities, becoming forces to be reckoned with in the regional
    security environment. They participate in a complete range of shaping
    activities--from deterrence to coalition building--establishing new
    friendships and strengthening existing ones during port visits around
    the world. These visits promote stability, build confidence, and
    establish important military-to-military relationships. In addition,
    port visits provide an opportunity to demonstrate good will toward
    local communities, further promoting democratic ideals.
        Deterrence is another shaping factor. Because foreign nuclear
    weapons remain a threat, we continue our vigilant efforts to discourage
    their proliferation and use, along with other weapons of mass
    destruction. This nation must maintain a credible nuclear-deterrent
    capability. Our ballistic missile submarine (SSBN) fleet is a key
    component of peacetime deterrence. The reliability and security of
    their command-and-control systems, and the superb accuracy and inherent
    flexibility of their weapons combine to convince any adversary that
    seeking a nuclear advantage--or even nuclear parity--would be futile.
    Stealth and mobility make this force the most survivable element of our
    strategic nuclear triad.
        However, we seek to deter more than simply the use of weapons of
    mass destruction. We also seek to prevent aggression with conventional
    forces. While the total capability of our armed forces is a factor in
    such conventional deterrence, it is the visible, forward-deployed naval
    expeditionary forces that have perhaps the most critical role. Naval
    forces act as local extensions of our sovereign national territory,
    able to maneuver in international waters unencumbered by the political
    constraints that may limit other forms of military power. Routine naval
    deployments signal both friend and foe of our commitment to peace and
    stability in the region. This demonstrated ability to respond rapidly
    to crises--and to fight and win should deterrence fail--offers a clear
    warning that aggression cannot succeed. Moreover, the ability of the
    forward-deployed forces to protect local allies and secure access
    ashore provide a guarantee that the full might of our joint forces can
    be brought to bear. Taken together these visible U.S. capabilities
    foreclose opportunities for aggression and help shape a stable local
    peace.
        One key element of this conventional deterrence is helping allies
    to help themselves. The Navy and Marine Corps execute a full exercise
    schedule with nations throughout the world. The expeditionary nature of
    our forces promotes interaction with the sea, land, and air forces of
    numerous allies. Each exercise, large or small, directly contributes to
    successful coalition building. Credible coalitions play a key role in
    deterring aggression and controlling crises. Our routine interactions
    promote trust and confidence, and encourage measures that increase both
    our security and that of our allies.
        The Navy and Marine Corps role in both conventional and strategic
    deterrence, including laying the foundations for future coalitions, is
    a critical ingredient in our national strategy of peacetime engagement.
    Forward naval forces truly shape our international environment every
    day in tension spots around our uncertain world.
    Providing Options for an NCA ``Rheostat''
        One enduring strength of naval forces is their balance. The
    combined capabilities of a carrier battle group and an amphibious ready
    group offer air, sea, and land power that can be applied across the
    full spectrum of combat. They are positioned forward, able to provide
    an immediate, highly visible crisis-response capability, but they can
    also be unobtrusive by operating beyond the horizon or from an
    undetected submerged position. This balance and flexibility provides
    the National Command Authorities (NCA) a range of military options that
    is truly unique.
        Forward presence provides an immediate response capability that
    prevents an aggressor from achieving a fait accompli. On-scene naval
    forces not only shape the battlespace--they demonstrate our capability
    to halt aggression long before adversaries can achieve their
    objectives. While enhancing deterrence, naval forces simultaneously
    shift the military balance in our favor by offering numerous options in
    response to aggression. We force adversaries to consider multiple
    responses by injecting uncertainty into their planning, disrupting
    their ability to execute a coherent campaign, and eroding their
    confidence in the likelihood of success. Naval forces can provide
    security and employ unique operational and logistic capabilities,
    allowing civil initiatives to work. Options may range from establishing
    a no-fly zone to ensuring delivery of humanitarian supplies.
        The flexible, rapid movement of naval forces at the onset of any
    crisis is an ideal way to signal our nation's commitment. Our quick-
    reaction capability, combined with self-sustaining logistics, enables
    the Navy-Marine Corps team to be on scene at the outset and to remain
    as long as necessary to stabilize the situation. The advantage of our
    expeditionary nature is amplified when allied nations are reluctant or
    unable to support crisis-response efforts. Naval forces provide
    numerous options to the National Command Authorities, including: sea
    and area control; naval gunfire for fire support; interdiction and deep
    strike missions; amphibious operations; special warfare operations; and
    Marine air-ground task force operations ashore. The mobility and
    agility of naval units make them the force of choice in a wide variety
    of situations. The presence of naval forces in the early stages of a
    crisis reminds a would-be aggressor of the overwhelming power that can
    be projected from the continental United States.
        There are numerous examples of the Navy-Marine Corps team providing
    instantaneous real-world support of the National Command Authorities.
    In mid-1997, the Nassau (LHA 4) Amphibious Ready Group (ARG), with the
    26th Marine Expeditionary Unit (Special Operations Capable) (MEU(SOC))
    embarked, and the Kearsarge (LHD 3) ARG, with 22d MEU(SOC) embarked,
    planned sequential noncombatant evacuation operations in the former
    Zaire, Sierra Leone, and Albania. The geographic separation and unique
    requirements of each event clearly demonstrated the flexibility of
    naval forces. Later in 1997, when Iraqi intransigence resurfaced, the
    Nimitz (CVN 68) Carrier Battle Group (CVBG) rapidly repositioned from
    the Pacific to the Arabian Gulf. Soon afterward, the George Washington
    (CVN 73) CVBG relocated from the Mediterranean Sea to the Arabian Gulf,
    to emphasize U.S. resolve. Partially in response to these movements,
    and in concert with vigorous diplomatic efforts, the Iraqi government
    agreed to terms that allowed U.N. inspectors, including Americans, to
    return to work.
        In the early stages of a crisis, our combat capabilities can defend
    allies and their critical ports and airfields, needed for the arrival
    of follow-on forces from the continental United States. In the future,
    our emerging theater air-and-missile-defense capabilities will enhance
    this protective shield for joint forces and allies--unobtrusively, from
    the sea. The mobility of these systems, currently being developed
    around the existing Aegis surface combatant fleet, will be a critical
    force multiplier. Our dynamic pursuit of area and theater-missile
    defense continues.
        The ability to fight and win against any adversary is vital to the
    National Security Strategy. Throughout the joint campaign, naval forces
    will capitalize on our command-and-control system to concentrate combat
    power from dispersed, networked forces and project power far inland.
    Initial operations by swiftly responding naval forces often can halt
    aggression early in the conflict. In those cases where aggression is
    not contained immediately, our initial operations will be critical in
    enabling a joint campaign to begin. The Navy's ability to dominate the
    littorals ensures sea and area control, while defeating enemy area-
    denial threats. Naval forces also can assert maritime superiority and
    provide strategic sealift to transport joint and allied forces into
    theater. Our ability to counter enemy area-denial threats effectively--
    with potent information warfare, power projection, and force-protection
    capabilities--increases our decisive impact early in a joint campaign.
        Naval operations are critical elements of the joint campaign. We
    deliver precision naval fire support--strike, force interdiction, close
    air support, and shore bombardment. We seize the advantage of being
    able to operate on and from the sea. Using high-tech information-
    processing equipment, we achieve superior speed of command by rapidly
    collecting information, assessing the situation, developing a course of
    action, and executing the most advantageous option to overwhelm an
    adversary. Throughout the joint campaign we keep the vital seaborne
    logistics pipeline flowing. And, when the joint campaign is over, naval
    forces can remain on scene for long periods to enforce sanctions and
    guarantee the continuation of regional stability.
    Preparing for an Uncertain Future
        Today, the Navy and Marine Corps enjoy maritime superiority around
    the world. We find ourselves at a strategic inflection point, during
    which we can think in different ways about warfighting in the future.
    We have an opportunity to be innovative and create new capabilities to
    overcome the threats that lie ahead. We must embrace change and make it
    our ally. The Department of the Navy is committed to exploiting
    emerging technologies, concepts, and doctrine to guarantee the military
    superiority vital to our nation's global leadership. In addition, we
    are examining concepts that will capitalize on our national
    capabilities, going beyond jointness and the interagency network. These
    concepts envision bringing together all elements of national power
    including academia, laboratories, financial institutions, industry,
    communications, humanitarian organizations--to meet the challenges of
    the 21st century.
        Similarly, we must acknowledge today's realities. Although Navy and
    Marine Corps deployed unit readiness remains high, a combination of
    constrained resources and the pace of operations required to execute
    NCA tasking and fulfill the requirements of the Unified Commands are
    affecting the readiness of our non-deployed forces. In concert with
    Congress, we must find ways to address this situation. We must and will
    take advantage of the ongoing revolutions in military affairs and
    business affairs to achieve our goals.
    Revolution in Military Affairs
        A revolution in military affairs (RMA) occurs when new concepts of
    warfare combine with new technologies to achieve a quantum leap in
    military capabilities. Carrier aviation, amphibious warfare, and
    ballistic missile submarines are vivid examples of such previous
    successes. We embarked on a similar innovative path with the 1992
    publication of ``. . . From the Sea'', and further refined our
    strategic vision with ``Forward . . . From the Sea'' in 1994. The
    revolution has continued in the past two years with publication of the
    Navy's ``Operating Forward . . . From the Sea'', and the Marine Corps'
    ``Operational Maneuver From the Sea'' (OMFTS). These operational
    concepts show how the naval service will execute its strategic concept
    and maintain its operational primacy into the 21st century.
        The Navy and Marine Corps are involved actively in developing
    concepts that will combine in the future to attain revolutionary
    capabilities. These efforts include information warfare, precision
    strikes from the sea, Cooperative Engagement Capability (CEC), Network-
    Centric Warfare, theater ballistic missile defense, and Ship-to-
    Objective Maneuver (STOM). These concepts enhance our broad mission
    areas of sea and area control, power projection, presence, and
    deterrence. Our revolution is appropriate for the times.
    Revolution in Business Affairs
        An RMA must combine new concepts, technologies, organizational
    structures, doctrine, and programs. Modernization and recapitalization,
    using dedicated funds, are necessary to exploit fully the RMA. We seek
    to find some of these funds by instituting a revolution in business
    affairs. Modernizing our force structure to better reflect tomorrow's
    challenges and streamlining our support services to make them more
    efficient are two methods we are using to realize additional fiscal
    savings for reallocation to support more robust modernization efforts.
        The importance of achieving these savings cannot be overemphasized.
    Our shipbuilding plan produces technologically superior ships, such as
    Arleigh Burke (DDG 51), San Antonio (LPD 17), the New Attack Submarine
    (NSSN), and CVN-77, and the average rate of production in the future
    years defense plan (FYDP) is adequate in the near term to support the
    projected fiscal year 2003 force of about 300 ships. However, beyond
    the FYDP, this rate of production will not permit us to maintain the
    required ship and aircraft inventory. The operational commitments
    undertaken by the Navy and Marine Corps today require a certain force
    level, to satisfy both personnel tempo concerns and worldwide presence
    missions. Our rate of new-ship and aircraft construction must
    recapitalize the force in the long term to maintain this balance. We
    need to ensure that, in the future, adequate modernization funding is
    provided in order to fulfill tomorrow's tasking.
        The Navy-Marine Corps team is the finest maritime force in the
    world today. To maintain our preeminence, we must continue our
    investment in technological advances. Indeed, the rapid pace at which
    technology proliferates around the world presents us with new
    challenges. In the information age, potential adversaries will acquire
    knowledge of our systems and capabilities much faster than ever before.
    In order to remain on the leading edge of technological innovation, we
    must undertake a revolution in the way we procure systems and place
    them in the fleet--a revolution in business affairs. Further, we must
    learn from the successes of others, and prepare to manage acquisition
    in a way that makes the most of every dollar spent. The transformation
    of our forces must integrate the strengths of our people with emerging
    technologies.
    Institutionalizing Innovation
        Both the Navy and the Marine Corps are moving swiftly to
    institutionalize the generation of innovative concepts and ideas. The
    CNO's Strategic Studies Group (SSG) is dedicated to developing
    revolutionary naval warfare concepts 15 to 20 years from today. The SSG
    fellows combine analysis of naval campaigns and scientific methodology,
    to identify future warfighting concepts that offer an order-of-
    magnitude improvement over current capabilities. This continuing effort
    complements Fleet Battle Experiments, which examine future concepts and
    doctrine 5 to 10 years from now. The Marine Corps' Warfighting
    Laboratory (MCWL) and the Sea Dragon series of experiments also are
    creating the necessary focus on new concepts and doctrine.
        In 1997, the MCWL conducted the first in a series of Advanced
    Warfighting Experiments (AWE's), Hunter Warrior, and is currently
    preparing for the second AWE, Urban Warrior. The Marine Corps
    capitalized on the innovative momentum generated through the MCWL by
    creating the Office of Science and Innovation (OSI) on August 15, 1997.
    The mission of the OSI is to develop visions focused on the development
    of policies and strategies associated with the exploitation of
    scientific innovation, modeling, simulation, and technology, in order
    to enhance Marine warfighting capabilities. The OSI has taken the lead
    in incorporating the successes of the MCWL into the Marine Corps Combat
    Development System.
        In 1998, the Navy will establish the Navy Warfare Development
    Command in Newport. This new command will combine the expertise of the
    Naval War College, Navy Doctrine Command, and the CNO Strategic Studies
    Group into an organization capable of integrating concept development,
    experimentation, and doctrine within the framework of the Navy
    strategic vision. This organization will formalize a process for rapid
    generation and experimentation of innovative concepts. It also will
    maximize the unique abilities at the Naval War College and empower the
    doctrine development process.
        Our Navy and Marine Corps are focused on the future, building upon
    the firm foundation of ``. . . From the Sea'' and ``Forward . . . From
    the Sea''. We will maintain carrier battle groups and amphibious ready
    groups forward, shaping the international environment and creating
    conditions favorable to U.S. interests and global security. From their
    forward locations, our forces are positioned to respond to a full range
    of crises and contingencies, and protect our national interests. Our
    continued emphasis on innovative thinking is preparing us well for an
    uncertain future.
                      operational primacy: 1997 in review
        Throughout 1997, the Navy and Marine Corps maintained an average of
    119 ships, 62,300 Sailors, and 23,300 Marines deployed overseas in
    support of forward presence missions, training exercises, and
    operations in more than 100 countries. Sea-based and self-sustained,
    naval forces take advantage of bilateral training opportunities in
    countries with limited infrastructure or ability to support large scale
    military deployments. These training exercises offer emerging
    democracies a unique opportunity to train with U.S. forces. Forward-
    deployed expeditionary forces also give theater commanders a flexible,
    responsive force that can be positioned in key trouble spots for
    extended periods, as a visible example of U.S. resolve and commitment.
    During 1997, the Navy-Marine Corps team proved time and again that sea-
    based forces are the premier forward presence asset.
    Operations
                Arabian Gulf/Red Sea
        Iraq.--Operation Southern Watch (August 1992-present). Navy,
    Marine, and Air Force units continue to enforce the ``no-fly'' zone
    over Iraq. Naval operations in 1997 included extensive Navy and Marine
    aircraft sorties from the aircraft carriers Kitty Hawk (CV 63),
    Theodore Roosevelt (CVN 71), Constellation (CV 64), John F. Kennedy (CV
    67), Nimitz (CVN 68), and George Washington (CVN 73).
        Operation Northern Watch (May 1997-present). Navy and Marine EA-6B
    squadrons are operating to enforce the no-fly zone over northern Iraq.
        CVN Thrust (October 1997-present). In response to Iraq's expulsion
    of U.N. weapons inspectors, Nimitz (CVN 68) accelerated its transit to
    the Arabian Gulf, while George Washington (CVN 73) swung to the Gulf
    from deployment in the Mediterranean to provide a formidable force with
    massive strike capability.
        Saudi Arabia.--Operation Desert Focus (July 1996-present). In the
    aftermath of the Khobar bombings, the First Marine Expeditionary Force
    (I MEF) provided counterintelligence team support for force protection
    to Joint Task Force-Southwest Asia (JTF-SWA). The deployment was
    extended into fiscal year 1997 because of the continued terrorist
    threat.
        Bahrain.--Reinforcement of Naval Security in Bahrain (April-June
    1997). A reinforced platoon of the Fleet Antiterrorism Security Team
    (FAST) Company deployed in response to a Navy Central Command (NavCent)
    request immediately following indications and warnings of terrorist
    threats. Naval Reserve Mobile Inshore Undersea Warfare Units deployed
    to Manama, Bahrain, to augment port surveillance and security.
        Maritime Interception Operations.--(August 1990-present). Surface
    combatants, amphibious ships, and maritime patrol aircraft continue the
    maritime intercept operations in the Arabian Gulf in support of U.N.
    sanctions against Iraq. Almost 25,000 queries, 11,000 boardings, and
    over 600 diverts of shipping have occurred since the operation began.
    U.S. Navy ships are the principle tool for enforcing the U.N. mandated
    sanctions against Iraq.
                Africa
        Democratic Peoples Republic Of The Congo (Formerly Zaire).--
    Operation Guardian Retrieval (March-June 1997). As conditions in
    Kinshasa deteriorated, Nassau (LHA 4), with elements of the 26th Marine
    Expeditionary Unit (Special Operations Capable) (MEU(SOC)) on board,
    was dispatched off the coast of Zaire. The remainder of the 26th
    MEU(SOC) Forward on board Nashville (LPD 13) and Pensacola (LSD 38)
    remained in the Mediterranean Sea to provide strategic reserve for the
    NATO Stabilization Force (SFOR) in Bosnia. The 26th MEU(SOC) assumed
    the main effort of a planned noncombatant evacuation operation named
    Joint Task Force Guardian Retrieval. Kearsarge (LHD 3) and the 22d
    MEU(SOC) deployed two weeks early to relieve Nassau and the 26th
    MEU(SOC); the former assumed responsibility for the Joint Task Force
    (JTF) mission on May 2, 1997.
        Sierra Leone.--Operation Noble Obelisk (May-June 1997). As
    Operation Guardian Retrieval finished, the deteriorating security
    situation in Freetown, Sierra Leone, required Kearsarge (LHD3) and the
    22d MEU(SOC) to relocate quickly to another crisis operating area. As
    commander for JTF Noble Obelisk, the 22d MEU(SOC) evacuated 451
    American citizens and 2,059 third-country nationals in four days to
    Kearsarge. All evacuees were later transferred to Conakry, Guinea, for
    processing.
                Europe
        Bosnia.--Operation Deliberate Guard (December 1996-present).
    Earlier Bosnian-related operations (Operations Deny Flight and Decisive
    Edge) transitioned to Operation Deliberate Guard in support of the
    Stabilization Force (SFOR). Carrier and shore-based aviation squadrons
    continue joint and combined flight operations to enforce the ``no-fly''
    zone over the Republic of Bosnia-Herzegovina. Additional Navy and
    Marine F/A-18 and EA-6B aircraft, forward-deployed to Aviano, Italy,
    provide suppression of enemy air defense, close air support, and
    electronic warfare capabilities to the SFOR. Naval Mobile Construction
    Battalion Seabees and Marines augment Army civil affairs brigades to
    support specific peacekeeping operations. Nearly 500 Naval Reserve
    personnel were recalled to support Bosnian operations.
        Adriatic Sea.--Operation Joint Guard (December 1996-present).
    During four of five operational phases, SFOR designated deployed
    MEU(SOC)'s as the reserve in support of the NATO-led implementation of
    the Dayton Peace Accords. In March 1997, Nassau and the 26th MEU(SOC)
    returned to the Adriatic Sea as a supporting force after responding to
    the crises in the former Zaire and Sierra Leone. Nassau was later
    relieved by Kearsarge and the 22d MEU(SOC). During 1997, Navy maritime
    patrol aircraft supplied reconnaissance support to area commanders.
    VMU-2, a Marine Corps unmanned aerial vehicle (UAV) squadron equipped
    with the Pioneer UAV, transmitted a video data link to Navy P-3
    aircraft for further relay to the three multinational divisions. VMU-1
    deployed in September 1997 to provide a video link to officials during
    the Bosnian municipal elections. Marine active and reserve personnel
    augment USCINCEUR's effort in Bosnia.
        Albania.--Operation Silver Wake (March-July 1997). U.S.S. Nassau
    (LHA 4) Amphibious Ready Group (ARG), with the 26th MEU(SOC) embarked,
    conducted a noncombatant evacuation operation (NEO) in Tirana, Albania.
    Spreading anarchy in Albania compelled the evacuation of 877 Americans
    and third-country nationals. Following the evacuation, Marines provided
    security for personnel remaining in the embassy and housing compounds.
    These elements were later relieved by Marine Corps Security Forces from
    Naples, Italy, and Souda Bay, Crete.
                Caribbean and South America
        Counterdrug Operations.--Active and reserve Navy ships, submarines,
    and aircraft continue detection and monitoring missions in the
    Caribbean Sea and the Atlantic and Pacific Oceans. Navy and Marine
    Corps personnel serve as tactical planners, analysts, and mobile
    training teams in drug-source countries to enhance host-nation law
    enforcement. Marine Corps units have also conducted 55 missions along
    the Southwest border, in support of domestic law enforcement agencies.
    Navy personnel operate and maintain re-locatable over-the-horizon radar
    (ROTHR) sites in Virginia and Texas, providing wide area surveillance
    of the transit zone. Efforts are underway to construct a ROTHR site in
    Puerto Rico, which will extend surveillance capabilities to the source
    countries. Additional surveillance is provided by a Naval Reserve E-2
    radar early warning aircraft squadron established in support of
    counterdrug operations. The Director of Naval Intelligence maintains
    dedicated, maritime-focused counterdrug intelligence support and
    interagency coordination via multisource fusion analysis of commercial
    shipping and noncommercial vessels. These intelligence sources provided
    information to law enforcement and Department of Defense personnel.
        Haiti.--New Horizons Haiti (formerly exercise Fairwinds) (April
    1996-December 1997). Navy Seabees, Marine engineers, and Navy medical
    units supported the nation building efforts of ``U.S. Support Group
    Haiti.'' These units provided important humanitarian assistance to the
    Government of Haiti through the completion of engineering projects and
    medical support.
        Cuba.--Cuban Migrant Support (August 1994-present). Marines from
    the Second Marine Expeditionary Force (II MEF) continue the Cuban and
    Haitian migrant handling, processing, and security missions in
    Guantanamo Bay, Cuba. Navy personnel provide medical and logistic
    support to the migrants. Since September 1994, as many as 40,000
    migrants housed at the Guantanamo Bay Naval Facility have been
    repatriated.
        Peru.--Operation Laser Strike (September 1996-June 1997). Marines
    supported the counter-drug operations of U.S. Southern Command
    (CINCSOUTH) with a ground mobile radar and communications team.
                Asia
        Korea.--Naval sea and air power forward-based in Yokosuka, Sasebo,
    and Atsugi, along with Marine expeditionary forces from Okinawa,
    continue to provide a visible and unambiguous presence around the
    Korean peninsula. Four at-sea training exercises were conducted with
    South Korean forces: Sharem 120 featured Thach (FFG 43), Hewitt (DD
    966), and Topeka (SSN 754) in an antisubmarine exercise; MCMEX tested
    anti-mine warfare expertise with Guardian (MCM 5) and Patriot (MCM 7);
    Foal Eagle 1997 was a large-scale carrier battle group exercise
    centered on the Independence (CV 62) battle group, combatants from 3rd
    Fleet, and numerous support ships; Ulchii Focus Lens 1997 is a major
    joint and combined command and control exercise for the Blue Ridge (LCC
    19), 7th Fleet's command ship forward deployed in Japan. These highly
    beneficial exercises are integral to our ability to operate in a nearly
    seamless fashion with South Korean forces.
        Guam.--Operation Pacific Haven (September 1996-March 1997). Navy
    personnel from Helicopter Combat Support Squadron Five, Naval Mobile
    Construction Battalion Seabees based in Guam, Marine translators, and a
    reinforced Marine rifle company from Okinawa supported the USCINCPAC
    effort of screening and processing Kurdish refugees from northern Iraq.
        Korean Airlines Flight 801.--Crash Recovery Operations (August
    1997). Navy helicopter units provided medical evacuation assistance to
    survivors to the U.S. Naval Hospital in Guam. The Navy's medical and
    dental personnel were instrumental in the recovery and identification
    of victims. In addition, a seven-member special psychiatric rapid
    intervention team (SPRINT) was dispatched from the Naval Medical
    Center, San Diego, two days after the crash to provide counseling and
    emotional support for rescue workers. Seabees provided further rescue
    and salvage support to the National Transportation Safety Board.
        Cambodia.--Operation Bevel Edge (July 1997). Marines from the Third
    Marine Expeditionary Force (III MEF) deployed to Utapao, Thailand, to
    support a USCINCPAC JTF mission. The 31st MEU(SOC) was placed on alert
    for a possible NEO from Cambodia.
    Exercises
        West African Training Cruise (WATC).--This annual deployment
    provides interaction between U.S. Naval forces and their host-nation
    counterparts for military training, expanded military-to-military
    relations, and to maintain familiarity with the West African littoral
    environment. The Navy and Marine forces in the Whidbey Island (LSD 41)
    during WATC 97 also participated in UNITAS 97.
        UNITAS 97.--The annual UNITAS deployment is a primary means of
    supporting regional stability in the Western Hemisphere. Active and
    reserve surface combatants and P-3C aircraft, Marine forces from II
    MEF, a submarine, reserve medium lift transport aircraft, and a U.S.
    Coast Guard cutter join to conduct multinational exercises with
    Venezuela, Colombia, Ecuador, Peru, Chile, Argentina, Uruguay, and
    Brazil, while circumnavigating the continent during a five-month
    period. This year, France, The Netherlands, Canada, UK, Germany, and
    Portugal also participated during phases of the nine-nation, 29-city
    deployment. These exercises often provide the only opportunity for
    Latin American forces to train with U.S. and other allied forces.
        Partnership for Peace.--The Partnership for Peace (PfP) program
    continues to be the centerpiece of NATO's strategic relationship with
    Central and Eastern European nations. These operations, part of our
    bilateral military-to-military contacts program, included basic
    seamanship exercises and familiarization visits with the regional
    forces. Surface ships, aircraft, and submarines participated in many
    exercises in 1997 including: BALTOPS 1997, Ioklos, Briz, Posidon, and 5
    other bilateral cooperative exercises which took place in the
    Mediterranean, Baltic, and Black Seas. These exercises are central to
    Sixth Fleet's participation in PfP endeavors.
        Black Sea Operations.--Navy and Marine Corps units have conducted
    training operations with forces from Romania, Ukraine, and Bulgaria.
    Sailors and Marines make a major contribution to national efforts aimed
    at building Black Sea alliances and furthering relationships via
    Partnership for Peace. Through exercises such as Rescue Eagle and Sea
    Breeze, forward-deployed, self-sustained naval forces provide excellent
    opportunities for initial bilateral training with the armed forces of
    emerging democracies.
        Baltic Challenge 97.--The second Baltic Challenge exercise involved
    2,800 personnel from nine nations: Estonia, Latvia, Lithuania, Norway,
    Sweden, Finland, Denmark, Ukraine and the United States. Focused
    primarily on peacekeeping and humanitarian assistance, naval active and
    reserve forces demonstrated a range of capabilities that support
    operational objectives in Europe, including the stationing of a
    Maritime Prepositioning Force in the Baltic Sea. Additionally,
    reservists made up nearly 25 percent of the Marine Forces deploying to
    Estonia, showcasing the readiness and skill inherent in the ``total
    force.''
        Blue Harrier 97.--This biennial, multinational mine-warfare
    exercise highlighted the newly converted mine countermeasures (MCM)
    command-and-control ship Inchon (MCS 12). This exercise provided NATO
    mine warfare units the opportunity to interact in tactics and
    procedures, which promoted cooperation and mutual understanding amongst
    its participants.
        Tandem Thrust 97.--Tandem Thrust 97 was conducted in the Shoal
    Water Bay Training Area, Australia. As part of a Combined Task Force
    (CTF) headed by Commander Seventh Fleet, forces from Independence (CV
    62) Carrier Battle Group, an Amphibious Ready Group built around the
    New Orleans (LPH 11), III MEF, and the 11th MEU(SOC) worked with other
    U.S. and Australian forces on a short-warning crisis-action scenario.
    The exercise implemented USCINCPAC's cooperative engagement strategy
    and demonstrated U.S.-Australian cooperation.
        Carat 97.--Regional stability in Southeast Asia is supported by the
    Pacific Fleet's cooperation afloat readiness and training (CARAT)
    program, patterned after UNITAS. Active and reserve surface combatants,
    maritime patrol aircraft, a special purpose Marine air-ground task
    force, medical detachments, and a U.S. Coast Guard cutter conduct
    exercise with six countries in the South China Sea region for two
    months each year. In 1997, Brunei, Indonesia, Malaysia, Singapore, and
    Thailand participated. Our naval forces exercised with the host
    nation's air, sea, and land forces to promote regional maritime
    interoperability, increase readiness, enhance military-to-military
    relations, and ensure stability of Southeast Asian sea lanes of
    communication.
        Kernel Blitz 97.--This large scale amphibious exercise was
    conducted at Camp Pendleton, California in June 1997. As a maritime
    contingency response to a freedom-of-navigation challenge, Kernel Blitz
    97 demonstrated the inherent flexibility of the Navy-Marine Corps team
    with at sea, amphibious, and subsequent operations ashore. The use of
    emerging technology was a key underlying concept to Kernel Blitz 97.
    Using the Global Command and Control System (GCCS), all participating
    units received a common tactical and imagery picture from multiple
    sources.
        Arctic Care 97.--Navy and Marine reservists of the 4th Force
    Service Support Group participated in a joint civic action exercise in
    isolated villages in the Yukon-Kuskokwim Delta in Alaska. This exercise
    provided valuable training for 150 Marines and Sailors as they
    augmented the understaffed rural health care system. Humanitarian
    medical, dental, veterinary, and light engineering support were
    afforded to the indigenous Yupik Eskimo population.
    Military Support To Civil Authorities
        Chemical-Biological Incident Response Force.--In response to the
    threat of weapons of mass destruction against American interests, the
    Marine Corps Chemical-Biological Incident Response Force (CBIRF)
    provided support for national events during 1997--beginning with a
    deployment to Washington, D.C., for the second inauguration of
    President Clinton. The CBIRF, consisting of both Marine and Navy
    personnel, was positioned to quickly respond to a terrorist chemical or
    biological attack. Functioning within the Federal Response Plan and
    working with the First Army's Response Task Force, the CBIRF developed
    a helpful relationship with other first responders. In addition, the
    CBIRF supported the Summit of Eight in Denver, Colorado during the
    summer of 1997.
        Western U.S. Floods.--(Winter/Spring 1997). Nevada and California
    experienced record rainfalls and rapid winter snow melts in 1997.
    Widespread flooding forced the evacuation of thousands of residents and
    caused extensive damage. Naval Reserve emergency preparedness liaison
    officers (EPLO's) were assigned to the Federal Emergency Management
    Agency (FEMA) and National Guard emergency operations centers to
    coordinate Federal, Department of Defense, and state assets. Navy
    EPLO's coordinated Naval Construction Battalion efforts to repair
    weakened dams and bridges, and coordinated logistical support
    requirements, including shipment of more than one million sandbags.
        Great Plains Blizzard and Flood.--(Winter/Spring 1997). North and
    South Dakota's record-setting snowfall and subsequent snow melt
    produced extensive flooding. During these events, Navy EPLO's were
    responsible for coordinating support equipment from nearby bases. Navy
    EPLO's established themselves on site and became the official
    Department of Defense representatives for coordinating DOD support with
    the 5th Continental Army.
        When later Spring floods again affected South Dakota and Minnesota,
    Navy EPLO's were on scene. Marine Corps and Coast Guard personnel
    entered the fray, and Navy EPLO's were requested to once again help
    coordinate support efforts. Navy EPLO's worked with the Department of
    Defense Disaster Coordination Office, the other armed services, and
    many local agencies.
    Freedom Of Navigation
        The ability to move U.S. forces when and where they are needed
    depends upon unfettered access to the world's oceans and international
    airspace. To ensure access as a matter of legal right, U.S. naval
    forces in 1997 conducted more than 20 operations to protest excessive
    maritime claims, in support of the President's Freedom of Navigation
    Program. These assertions supported the U.S. foreign policy objective
    of adherence by all nations to the International Law of the Sea.
        Similarly, the Department of the Navy strongly supports U.S.
    accession to the Law of the Sea Convention as amended in 1994. A
    majority of the world's nations now are signatories to the Convention,
    including all major maritime powers except the United States. Worldwide
    acceptance of the Law of the Sea Convention remains the best guarantee
    of a stable ocean's regime that recognizes navigational and overflight
    freedom crucial to naval operations. Accession by the United States
    also provides less of an incentive for states to make and enforce
    excessive claims. That should, in the long term, result in a decline in
    the number of excessive maritime claims which restrict our rights of
    mobility and access.
        The Department of the Navy is operating today to provide for
    America's interests. The forward-deployed strategy is cost-effective
    for the nation while simultaneously providing a ready, responsive force
    capable of meeting the challenges of today's chaotic world. Conducting
    daily operations and exercises with allies reinforces our commitments
    to friends and potential adversaries alike.
           sailors, marines and civilians: our most valuable resource
        People are the heart and soul of the Navy-Marine Corps team. With a
    fiscal year 1997 end strength of 395,000 active duty and 95,898 Reserve
    Sailors, 174,000 active duty and 42,000 Reserve Marines, supported by
    220,000 federal civilian employees, the Department's personnel form a
    flexible, well-trained and responsive team.
        A key element in recruiting and retaining a high quality all-
    volunteer force must be a military compensation package that allows the
    Department of the Navy to keep faith with our people and is reasonably
    competitive in the civilian labor market. A solid and sensible
    compensation plan remains essential to maintaining operational
    readiness. Compensation competitiveness is determined by the real-
    dollar value of basic pay, food and housing allowances, special and
    incentive pays or bonuses, and such benefits as commissary and exchange
    privileges, medical and dental care, retirement, and paid leave. Given
    the extraordinary demands placed upon Sailors, Marines, and their
    families, it is imperative that we ensure all factors of compensation,
    from basic pay and dependents' medical care to retirement benefits, are
    adequately addressed. This is even more vital given the vast array of
    private sector opportunities which continue to attract our most
    talented, highly trained, and experienced Sailors and Marines.
        Together, the Navy-Marine Corps team has served as the shield of
    the republic since the earliest days of our nation. Navy and Marine
    Corps personnel have performed together magnificently as a result of
    our ability to recruit, train, and retain the highest quality
    personnel. For over two centuries, Navy and the Marine Corps personnel
    have exemplified our shared core values of honor, courage, and
    commitment. At the leading edge of the new century, the significance of
    our forward-deployed Navy-Marine Corps team has never been greater. The
    unique culture and traditions that have brought success in the past
    need to be sustained and nurtured in the future.
    Shaping the Total Force
        Navy-Marine Corps end strength is approaching steady-state, but
    will require further modest reductions to implement the recommendations
    of the Quadrennial Defense Review (QDR). Consequently, the operational
    readiness of the Navy and Marine Corps depends, now more than ever,
    upon our ability to recruit and retain the very best men and women with
    the right mix of skills and experience. Ensuring the quality of life
    and professional development of our Sailors and Marines is of primary
    importance. We must provide rewarding career opportunities, a quality
    standard of living, and fair and adequate compensation.
    Recruiting Tomorrow's Leaders
        Attracting the high-caliber youth needed to maintain our future
    force is the recruiting focus of the Department of the Navy. Although
    low national unemployment and an increase in college enrollment created
    a challenging recruiting environment, 1997 proved to be a successful
    year for Navy and Marine Corps recruiting. Recruiting strategy focused
    on attracting highly qualified individuals for particular skills in the
    Fleet and Fleet Marine Forces. Navy recruiters achieved 100 percent of
    their overall recruiting goals, employing targeted marketing to achieve
    100 percent of nuclear field and critical-ratings goals. In addition,
    the academic quality of Navy enlisted recruits remains high: more than
    95 percent earned high school diplomas, and 66 percent scored in the
    upper half of the Armed Forces Qualification Test. The Marine Corps
    attained more than 100 percent of enlisted recruiting goals and
    exceeded Department of Defense goals in all tier and aptitude
    categories for the previous 30 consecutive months. This singular
    accomplishment is directly attributed to the dedicated efforts of our
    Marine Recruiters.
        Traditional commercial advertisements, emphasizing our core values
    of honor, courage, and commitment continue as the mainstays of our
    recruiting effort. The Marine Corps also has developed a series of
    advertising campaigns designed to attract more women and minorities
    into officer and enlisted programs. They are increasing the use of
    radio, print, and direct-mail advertising specifically tailored for
    women, as well as such high-profile marketing opportunities as
    sponsorship of the Extreme Games and Hoop-It-Up.
        Partly responsible for this success is the boost special duty
    assignment pay (SDAP) has given to maintain a quality recruiting force.
    The Navy and Marine Corps recruiting commands continue to assign the
    highest-caliber commanders and most stringently screened Sailors and
    Marines to recruiting duty. A number of initiatives are in place to
    improve the quality of life for recruiters and their families assigned
    away from major bases or stations.
        As we continue in our efforts to attract highly qualified and
    culturally diverse officer and enlisted candidates, we are ever-mindful
    of the formidable challenges the future presents. Historically low
    unemployment, record high college enrollment, and a declining veteran
    population which reduces exposure to the military as a career option,
    contribute to a potentially lower propensity to enter the military
    services. For the first two months of fiscal year 1998, Navy recruiting
    accessed only 91 percent of goal. If that trend continues through
    fiscal year 1998, it may lead to an annual accession goal shortfall of
    4,000 personnel.
        Realizing that recruiting top quality people is one of the most
    significant challenges facing the Department, we have developed a
    recruiting campaign involving the entire chain of command. As an
    example, the Secretary of the Navy has sent letters to high school
    principals throughout the Nation, urging them to actively discuss the
    potential of a Navy or Marine Corps career with their students. We also
    are attempting to address the challenge head-on with a number of new
    initiatives, including accessing more females, recruiting more general
    detail (GENDETS) personnel, and increasing opportunities for Navy
    veterans to return to active duty. Extensive use of Internet homepages
    to advertise highly technical careers in the Department also has proven
    to be a superb recruiting tool. Additionally, funding has been
    increased for traditional advertising, enlisted bonuses, and the Navy
    College Fund (NCF) program to help in all aspects of retention and
    recruiting.
        We made improvements in increasing minority accessions in both
    officer and enlisted ranks through the enhanced opportunities for
    minorities initiatives (EOMI) program. While solid progress was made
    for enlisted accessions, more work is needed in the area of officer
    accessions. Additionally, we are exploring better ways in which to
    achieve a better distribution of minorities across technical and
    nontechnical ratings. Our efforts are not focused on achieving quotas,
    but rather continuing to accept and promote only the best qualified and
    highly motivated personnel to serve in the Department of the Navy.
        The Department's ability to recruit an exceptionally well-qualified
    and diverse civilian workforce has been enhanced through a series of
    coordinated recruitment programs, which have brought Navy and Marine
    Corps activities together with college and university students. To
    invest in future civilian recruitment, special residential and
    scholarship programs were established to acquaint outstanding high
    school and college students with the Department's technical missions.
    Retaining the Best and the Brightest
        Maintaining a skilled, motivated and ready force is the foundation
    for the future of the Navy-Marine Corps team. By fiscal year 2000,
    after several years of downsizing, we will be at a point where every
    loss to the Navy must be offset by a recruit in order to maintain
    stable end strength. This will be challenging. The United States has a
    strong economy with plentiful employment options. Moreover, fewer young
    people today express interest in joining a military service. Although
    faced with further reductions associated with the Quadrennial Defense
    Review, it is prudent that we start retooling our retention program
    now. For example, we continue to offer a selected reenlistment bonus to
    keep critical billets filled. The percentage of Sailors offered this
    program was greatly reduced during peak downsizing years, but current
    personnel levels demand an increase in those eligible for this bonus.
    Other career stabilizing initiatives include affording Marine Corps
    first-term reenlistees the option of choosing one of three duty
    stations for their second term. Similarly, Navy homebasing initiatives
    give families more stability by serving in a single fleet concentration
    area.
        Educational opportunity remains a cornerstone of Department of the
    Navy career-incentive programs. New Navy recruits report that the
    Montgomery G.I. Bill was the number one reason for enlisting, and the
    Navy College Fund (NCF) continues as a primary incentive program for
    specialized-skill areas. This past year, Navy increased the NCF to
    provide a total of $40,000 in benefits for nuclear program enlistees.
    In addition, tuition assistance is available for self-motivated Sailors
    and Marines. At sea, or when deployed to remote locations, the Program
    for Afloat College Education (PACE) and the Marine Corps Satellite
    Education Network (MCSEN) continue to accelerate the use of distance
    learning for further education.
        A stable and competitive officer corps is essential to lead the
    Navy and Marine Corps. Nuclear officer incentive pay, medical officer
    incentive special pay and Aviation Continuation Pay (ACP) are some of
    the tools enabling the naval services to retain capable, talented and
    technically oriented leaders in the face of ever-increasing private
    sector competition. Using the higher authority approved in the 1998
    National Defense Authorization Act, the Navy and Marine Corps are
    addressing pilot retention issues within selected warfare communities.
        Adequate compensation fosters improved retention in mission
    critical skills, increases morale, and maintains high readiness. The
    basic allowance for housing (BAH) system, authorized by Congress in the
    Fiscal Year 1998 Defense Authorization Act, will be phased in over a
    six-year transition period. The BAH is expected to provide an immense
    benefit for Sailors and Marines stationed in high-cost, metropolitan
    coastal areas, and improve the lives of our junior enlisted personnel.
        Passage of the Military Retirement Reform Act of 1986 (Redux) has
    decreased considerably the benefits of making military service a
    career. Studies have shown that a typical enlisted member with 20 years
    of service will receive 25 percent less retirement compensation than
    before Redux. This erosion of benefits translates into a growing
    perception that a military career is less advantageous than civilian
    employment. This, in turn, affects force retention and stability in our
    mid-grade officer and enlisted personnel. The Department supports the
    exploration of alternative retirement savings programs.
    Navy and Marine Corps Reserve Contribution
        The Naval and Marine Corps Reserve provided an unprecedented level
    of support during the past year. Increasingly used as a force
    multiplier to accomplish everyday missions, the Naval and Marine Corps
    Reserve is no longer just a force-in-waiting--to be called upon in the
    event of global war. To this end, Reserve contributory support to the
    active Fleet has more than doubled since 1991, to more than two million
    man-days of direct mission support in 1997.
        The Naval Reserve plays a significant role in virtually all major
    operations and exercises. Reserve ships and aircraft are increasingly
    used for counter-drug and other fleet operations, such as a
    Mediterranean deployment for the operational reserve carrier John F.
    Kennedy (CV 67) and a deployment to Europe for a multinational mine
    countermeasures (MCM) exercise for the reserve MCM command ship Inchon
    (MCS 12). A driving force in this increased deployment of reserve force
    ships and aircraft has been to lessen active duty personnel operational
    tempo. This increased role is highlighted by the fact that five of the
    ten reserve frigates were deployed for periods of four to six months in
    1997. These deployments included CARAT, BALTOPS and counter-drug
    operations, which were missions previously assigned to active units.
    Naval reserve force ships have expanded their role in these deployments
    by rotating selected Reservists that make up one-fourth the crew.
        The reserve expanded their support of the fleet in other ways as
    well. Reservists filled critical positions in fleet hospitals, naval
    hospitals and with the Marine Corps, and participated in virtually all
    naval medical exercises. Even critical leadership positions have become
    an area for Reserve personnel to assist the fleet.
        In addition to the traditional mobilization posture, the Naval
    Reserve has expanded its utility to the active component, as a
    contingency response team and a vital pool of manpower and equipment.
    Structured to support the fleet on a daily basis, the Naval Reserve
    provides 100 percent of the Navy's forces in such mission areas as:
    adversary aviation squadrons, fleet aviation logistics support, mobile
    inshore undersea warfare, and naval control of shipping.
        The Marine Reserve component is a critical element of the Total
    Force. The active component, as the nation's most ready force, has
    primary responsibility for forward presence, operations other than war,
    and crisis response. The Marine Corps Reserve supports these missions
    with individuals and units as required. During fiscal year 1997, Marine
    Reservists worked and trained alongside their active counterparts in
    numerous operations and exercises. More importantly, the Marine Reserve
    augments and reinforces the active component, creating a Total Force
    capable of sustained combat in the event of a major theater war.
        Today, more than 95 percent of the units of Marine Forces Reserve
    are assigned to active component forces in support of the Marine
    commitment to joint operations plans. Reserve participation is
    essential with today's smaller active-duty force. Success throughout
    the full range of possible missions, from military operations other
    than war (MOOTW) to augmenting and reinforcing the active component in
    periods of crisis, demands the seamless integration of both forces.
        The Marine Corps Reserve exists to enhance the operational
    capabilities of the active component. The Marine Corps Reserve
    currently contributes 26 percent of the force structure and 37 percent
    of the trained manpower to the Total Force Marine Corps. One hundred
    percent of the adversary squadrons, civil affairs groups, and
    battalion-sized reconnaissance units; 50 percent of the tank battalions
    and theater missile defense detachments; and 33 percent of the
    artillery battalions are provided by the Marine Corps Reserve. The full
    integration of active and reserve personnel into combined-arms air-
    ground teams are the nation's force-in-readiness--the highly capable
    Marine Corps.
    Naval Training: Today's Investment, Tomorrow's Capability
                The Navy Training Continuum
        The Naval Training Center in Great Lakes, Illinois, has initiated
    an innovative boot camp final exam named ``Battle Stations.'' This was
    done to ensure that Sailors were ready to join the Fleet. New Sailors
    use teamwork, basic seamanship and nautical knowledge gained during the
    boot camp curriculum to master seven training stations during a pre-
    graduation battle problem. ``Battle Stations'' uses fleet experiences
    to create a more challenging and relevant training regimen for the
    Navy's newest Sailors.
        To continue preparing junior Sailors for career success after basic
    recruit training, the Navy uses basic and advanced-skills schools in
    areas such as engineering and weapon systems. Employing electronic
    manuals, remote video classroom techniques, and on-board systems, the
    Navy is training more Sailors with greater productivity. Afloat
    training groups at fleet concentration areas are used to tailor
    training to meet the needs of individual commands. Tailored training
    eliminates duplication, saves time and concentrates on correcting
    individual and unit weaknesses. In addition, through careful planning,
    operational exercises provide windows of opportunity for follow-on at-
    sea training.
        The Navy's leadership continuum puts career-spanning rigor into
    leadership training, for both active and reserve personnel. The
    leadership continuum is the Navy's vehicle for imparting leadership
    qualities into a program of recurring training from recruitment to
    retirement. The purpose of the training is to produce warriors whose
    individual skills and values enable them to bond together as a cohesive
    combat-ready team.
        Leadership training commences at accession training and is
    reinforced through eight courses for officer and enlisted personnel,
    which form the basis of the continuum. Enlisted personnel attend the
    leadership training after selection to E-5, E-6, E-7, and Command
    Master Chief or Chief of the Boat. Officers attend the leadership
    training en route to specific leadership assignments. These progressive
    and sequential courses are all two weeks in length with the exception
    of the nine week Senior Enlisted Academy.
        Four major themes are the foundation of all the courses: values;
    responsibilities, authority, and accountability of leadership; unity of
    command, Navy and services; and continuous improvement. The training is
    a deliberate process to transform behavior and attitudes, rather than
    just ensuring compliance with regulations, by providing a common
    perspective on the real importance of the Navy's core values of honor,
    courage, and commitment. As each Sailor progresses through the
    leadership training courses, they acquire the knowledge, skills, and
    experience to form the basis of leadership techniques. The formal
    leadership training is periodically reinforced in warfare and specialty
    pipeline training, at annual All-Hands training, and during
    development/professional assignments. Current education and training
    programs, which include leadership modules, are being aligned with the
    continuum themes to ensure consistency, and to eliminate redundancies
    and conflicts.
                Marine Corps Transformation Process
        Transformation is an ongoing and dynamic process of making Marines,
    and consists of four phases: recruiting, recruit training, cohesion,
    and sustainment.
        Recruiting.--The transformation process begins with the first
    contact with a Marine recruiter. A demanding and extremely selective
    screening process follows: Those who qualify enter an improved delayed-
    entry pool to prepare for recruit training; enhanced physical
    conditioning, study guides, and instruction on Marine Corps history and
    traditions become integral parts of that preparation; and potential
    recruits also receive their introduction to Marine Corps core values.
    In addition, the recruiter introduces them to the concept of total
    fitness--body, mind, and spirit. From the outset, it is made clear to
    recruits that they will be expected to undergo a transformation to
    become a valued part of an elite organization.
        Recruit Training.--On October 1, 1997 recruit depots implemented
    significant changes to the focus and content of recruit training.
    Recruit training was lengthened from 11 to 12 weeks for both males and
    females. This provides additional time for drill instructors to teach,
    mold, and mentor their recruits. Supporting this change is a
    significant increase in core values training, totaling more than 50
    hours of instruction, discussion, and training reinforcement critiques.
    The most notable enhancement to recruit training is the addition of the
    ``Crucible'' event, intended to test the mettle of every recruit at the
    culmination of recruit training. As the true rite of passage from
    recruit to Marine, the Crucible is a 54-hour field training evolution,
    emphasizing the importance of teamwork in overcoming adversity. The
    regimen includes food and sleep deprivation and an operational tempo
    that poses continuous physical and mental challenges.
        Cohesion.--Unit cohesion is defined as the intense bonding of
    Marines, strengthened over time, resulting in absolute trust,
    subordination of self, and an intuitive devotion to the collective
    actions of the unit. To achieve this, the Marine Corps is forming teams
    of Marines immediately after recruit training and assigning those teams
    to follow-on skill producing schools. Subsequently, they are assigned
    to operational units in the Fleet Marine Force. Changing from
    individual assignment to unit assignment is a major modification of
    personnel policies--but one that will improve combat efficiency.
        Sustainment.--The sustainment of the transformation process is
    continuous, and spans all that Marines do throughout their service.
    Professional military education schools educate Marine leaders--
    officers, staff noncommissioned officers, and noncommissioned
    officers--in ``whole Marine'' character development. Leaders in both
    the operating and in support forces conduct business and accomplish
    their missions in ways that support and reinforce both core values and
    team building. Leaders are also expected to manifest core values and
    mentor their subordinates. Living the Marine Corps ethos is a shared
    responsibility for all Marines and continues until the day a Marine
    hangs up the uniform for the last time--and beyond.
                Voluntary, Professional, and Graduate Education
        Voluntary education programs have made a significant contribution
    to recruiting, retention, and readiness. The latest recruiting survey
    indicates that over 25 percent of Navy's enlistees cited ``money for
    college'' as the primary reason they joined the Navy. Our enlisted
    force has shown that pursuing follow on education remains a high
    priority. For the past several years, a majority of our E-4 to E-6
    potential career force retention candidates have used tuition
    assistance (TA). The interest in advanced education prompted the
    Department to consolidate the Navy and the Marine Corps tuition
    assistance programs in 1995. This ``centralized'' TA system saved $1
    million in its first year of operation. These and future savings will
    translate in more courses for our personnel.
        The Department of the Navy is committed to making it just as easy
    for personnel at sea to have access to educational opportunities as
    those ashore. In fiscal year 1997, the Navy's Program for Afloat
    College Education (PACE) became available in every one of the 346 ships
    in the Navy, and over 20,000 Sailors participated in the program. Using
    tools such as PACE and the Marine Corps Satellite Education Network
    (MCSEN), most Sailors and Marines are able to pursue an education
    during off-duty time, regardless of duty assignment or location.
        To increase access to education, the Navy is moving to establish
    academic skills learning centers worldwide. By fiscal year 1999, 21
    centers will be activated, with a total of 52 centers planned by fiscal
    year 2001. These centers provide Sailors with the opportunity to
    improve basic academic skills, assist them in retaking the Armed
    Services Vocational Aptitude Battery (ASVAB) tests, help prepare them
    for college work, and achieve their educational potential. The MCSEN
    also provides the technology to deliver a standardized military
    academic skills program to all major Marine Corps installations, which
    guarantees accessibility to basic skills improvement courses in
    reading, writing, communications, and mathematics.
        As the largest single source of Navy and Marine Corps officers, the
    Naval Reserve Officer Training Command (NROTC) prepares men and women
    at civilian universities to assume junior officer positions in today's
    technical Navy and Marine Corps. NROTC scholarships at our nation's
    finest universities gives the Department added visibility to recruit
    tomorrow's leaders.
        The Department of the Navy is evaluating our graduate education
    programs to ensure that its leaders are prepared for the challenges of
    warfare and national security in the next century. Naval flagship
    education institutions, which include the Naval Postgraduate School,
    Naval War College, Marine Corps University, and the United States Naval
    Academy, provide multiple opportunities for officers to attain graduate
    education in a military setting. Opportunities for naval personnel to
    obtain postgraduate education at civilian universities also exist in
    several disciplines under the graduate education at civilian
    institutions program. Joint postgraduate education enables naval
    officers to function within the joint environment and master the
    intricacies of joint warfare planning and operations. The Naval Academy
    now offers a graduate program in leadership, culminating with a
    Master's degree for junior officers. Navy graduate medical education
    programs prepare medical officers for the challenge of operational and
    peacetime roles. In addition, the Navy and the Marine Corps have
    ensured that tuition assistance remains a continuing option to complete
    graduate education for enlisted and officer service members.
        The Department of the Navy civilian leadership development program
    identifies certain leadership competencies that commands and activities
    use to establish formal leadership programs. The program provides all
    employees with opportunities to acquire knowledge and skills that
    enhance their competitiveness for higher level positions. Civilian
    leadership development also supports the Defense leadership and
    management program, which offers advanced leadership and executive-
    level skills and professional military education to GS-14 through
    Senior Executive Service (SES) employees. These programs support
    Department of the Navy initiatives to bring civilians into high-demand
    technical career paths. These programs start at the entry level and can
    help highly motivated and successful employees move to senior
    management and executive levels.
    Fostering Excellence
                Core Values: Principles By Which We Live
        The Navy and Marine Corps are committed to sustaining our tradition
    of building strong character and ethical behavior. Character, ethics,
    and core values underscore morale and personnel readiness to improve
    mission performance. People who are trained and led by role models of
    high character are inspired to attain equally high levels of integrity
    and commitment.
        The emphasis placed upon our core values of honor, courage, and
    commitment is the foundation of Navy and Marine Corps efforts to combat
    such unacceptable behavior as sexual harassment, alcohol and drug
    abuse, hazing, and fraternization. Ethical awareness and adherence to
    core values is at the forefront of Department policy, planning, and
    action. In 1996, we promulgated our core values charter, which
    highlights the bedrock principles of the Navy-Marine Corps team.
    Character, ethics, and core values are emphasized throughout the career
    of each Sailor, Marine and civilian. This approach ensures that
    character, ethics, and core values are visible continuously at all
    levels, and reemphasized as each individual grows in tenure,
    responsibility and authority.
                Equal Opportunity
        The Department of the Navy offers every Sailor, Marine, and
    civilian employee equal opportunity to succeed and achieve his or her
    fullest potential, regardless of ethnicity, gender, national origin,
    race, or religion. With strong emphasis on core values, the Department
    ensures that each individual is treated with dignity and respect. A
    recent amendment to Department of the Navy regulations prohibits
    participation in any supremacist organization espousing discrimination
    based upon race, creed, color, sex or national origin. In addition, the
    Department of the Navy continues to emphasize the critical role of
    women in the fleet.
        Since 1994, women have been eligible for assignment on board combat
    ships and aircraft. With the exception of submarine duty and special
    operations, women train and serve in every Navy community and career
    field. Moreover, the women at sea program continues to expand career
    opportunities for women on combatants and in aviation. In fiscal year
    1998, more ships and another carrier air wing will become gender
    integrated, bringing the gender-integrated ship total to 133 and the
    air wing total to five.
        The Department of the Navy's focused efforts to eliminate sexual
    harassment were reflected in the 1995 Department of Defense Sexual
    Harassment Study, which reported that the Navy and Marine Corps showed
    the greatest declines in reported sexual harassment incidents among all
    the Services. We continue to reemphasize our commitment to eradicating
    sexual harassment, unprofessional relationships, and unacceptable
    conduct. Active efforts concentrate on oversight, leadership, policies,
    and training, while providing assistance and formal assessments of our
    programs. In a recent survey, Navy and Marine Corps focus groups
    reported we are successfully communicating to the field our core values
    and policies on sexual harassment and unprofessional relationships.
    When policy infractions occur, our toll-free advice lines, victim/
    witness assistance programs, counseling, advocacy, and other community
    support services are working effectively with our commanders to take
    action to eliminate the problem and prevent recurrence.
                Quality of Life: Taking Care of Self and Family
        The Department of the Navy recognizes quality of life as a vital
    component in recruiting and retaining the quality men and women needed
    for the force of the 21st century. The Departmental focus is to provide
    an acceptable level of quality housing, health care, and community
    support services to Sailors, Marines, and their families, regardless of
    duty station. Key elements of the quality-of-life program include an
    adequate compensation and benefits package, as well as a positive
    environment that provides our personnel the requisite tools to reach
    their full potential. To this end, the Department of the Navy has
    established minimum quality-of-life guidelines, and is working toward
    consistent and professional delivery of all quality-of-life components.
        Alcohol and drug abuse can seriously impact the quality of life of
    Navy and Marine Corps members and their families. Alcohol abuse
    accounts for almost half the accidental deaths each year in the Navy
    and Marine Corps. It is also associated with many safety, health,
    discipline, and family problems. We are actively and aggressively
    addressing these issues and promoting an environment and culture which
    will not accept alcohol abuse. We have established a standing committee
    on alcohol use ``deglamorization'' that monitors the Navy's ``Right
    Spirit'' campaign and the Marine Corps ``Semper Fit'' program. These
    initiatives have contributed to the declining trends in alcohol abuse.
        Additionally, our ``Zero Tolerance'' policy has significantly
    reduced drug abuse. Positive drug-test results have declined from 14
    percent in 1981 to less than 1 percent today. More recently, both Navy
    and Marine Corps have initiated pre-employment drug testing at Military
    Entrance Processing Stations (MEPS) which should further reduce drug
    abuse within our active duty forces.
                Housing the Force
        Properly housing our personnel and their families remains a core
    quality-of-life issue. New initiatives underway in family housing,
    bachelor quarters, and housing allowances underpin our commitment. The
    military housing privatization authorities are rapidly becoming the
    sharpest tools in our kit. Erasing maintenance and repair backlogs and
    suitable-housing deficits hinges on the careful use of these
    authorities, in concert with the traditional application of
    appropriated dollars. Changes to the housing compensation system now
    provide allowances that more closely match actual housing costs.
        The availability of family housing program dollars continues to
    challenge the Department in its desire to eliminate maintenance and
    repair backlogs. With more than 45,000 homes in need of major repair or
    replacement, the Department is developing projects to be funded through
    a combination of family housing funds and an aggressive public-private
    venture (P/PV) program. By calling upon the strengths and capabilities
    of private-sector housing providers and experts, the P/PV authorities
    will allow the Department to accelerate revitalization goals and
    stimulate the development of quality housing units.
        The Navy is reexamining the requirements necessary to achieve the
    barracks standard of ``1+1'' (e.g., two single-occupant rooms that
    share restroom and bathing facilities) for permanent-party personnel in
    grades E-1 through E-4 and have committed to the development of
    installation-level implementation plans. The Navy plan will be
    completed by April 1998. Construction funds have been programmed
    through the current Future Years Defense Plan (FYDP) to help the Navy
    attain the ``1+1'' goal. The Marine Corps plan began in fiscal year
    1996 by identifying priorities at each installation, based upon
    projected manning requirements, the current inventory of adequate
    spaces, and proposed new construction. As an interim step in executing
    its plan, the Marine Corps has programmed more than triple the historic
    funding level to replace approximately 10,000 inadequate barracks
    spaces and meet a ``2+0'' standard by 2005 (e.g., double-occupant room
    with a private restroom and bathing facility).
                Child Care
        Affordable, high-quality child care also is a critical quality-of-
    life requirement. Initiatives to expand availability 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 regional contracts with local providers.
                Community and Family Support
        Rounding out quality-of-life services for Marines, Sailors and
    families are community support programs, entailing individual and
    family support services. A full range of family support services,
    emphasizing basic skills for living, are available. The Marine Corps'
    formal Key Volunteer Network Program and the Navy's Ombudsman Program
    work at the grass roots level to assist spouses and families while the
    service member is deployed. In addition, the Marine Corps is
    implementing LINKS (lifestyle, insights, networking, knowledge, and
    skills) to assist new families adapt to life in the Marine Corps. These
    outreach efforts are an integral part of readiness and retention.
        Single Sailors and Marines represent the largest category of
    personnel in our Armed Forces. Typically, they live in modest
    accommodations, and need programs which enhance their physical and
    mental readiness, provide recreational opportunities, and offer
    meaningful and beneficial activities during off-duty hours. The single
    Sailor and Marine programs address these specific needs. Initiatives
    include safe and secure storage for personal belongings and vehicles
    during deployment, pier-side laundry facilities for those who live on
    board ship or are deployed overseas, and quality fitness equipment. The
    Great Lakes Training Center even has a recreational facility, providing
    activities for recruits during the recruit training curriculum.
                Meeting Spiritual Needs
        Quality of life for Sailors and Marines also means ministry at sea,
    in battalions, on flight lines, and in housing areas. More than 900
    chaplains in the Navy, including 350 serving with Marine Corps units,
    mold values by facilitating the free exercise of religious faith,
    providing around-the-clock pastoral care and counsel, and encouraging
    spiritual growth. As key players during crises, chaplains provide
    intervention skills and spiritual, emotional, and practical support
    during times of personal loss, bereavement, and transition. Chaplains
    interact with Family Service Centers, the Navy and Marine Corps Relief
    Society, American Red Cross, and other agencies to ensure that military
    personnel always receive superb support.
                Drug Demand Reduction Task Force
        The Secretary of the Navy's Drug Demand Reduction Task Force
    (DDRTF) continues its contribution to the war on drugs and is committed
    to increasing Navy and Marine Corps readiness. The cornerstone program,
    drug education for youth (DEFY), provides constant positive influence
    for 9- to 12-year-old children of Sailors and Marines. In 1998, the
    DDRTF is producing television public service announcements,
    spotlighting the ``It's a Life or Drugs Situation'' campaign.
                Serving our Retired Shipmates
        We are committed to fulfilling our promises to the more than
    460,000 Naval Service Retirees. The Navy and Marine Corps have
    established Retired Activities Offices worldwide, manned by volunteers
    who provide counseling and assistance to retirees and family members.
                Health and Fitness
        The goal of the health promotions program is to develop physical
    health and readiness of all Department of the Navy military personnel.
    Progress in achieving and maintaining a healthy lifestyle is evaluated
    through semiannual physical fitness and body-composition testing
    programs. Today's Sailors and Marines are more fit and healthier than
    at any other time in our nation's history.
        Morale, welfare, and recreation (MWR) programs support the mental
    and physical readiness of our Sailors. Our fitness and sports
    activities are the cornerstones of our approach to ensure all Sailors
    meet mandatory fitness standards. Our main focus is to engage naval
    personnel in a comprehensive fitness program for the benefit of the
    individual, the unit in which they serve, and the Department as a
    whole.
        To better prepare Marines for the rigors of combat, the Marine
    Corps is developing training and education programs that will provide
    access to basic sports-medicine information. These courses will be
    offered on the Internet and in CD-ROM format. Sports medicine and
    rehabilitation therapy (SMART) clinics at both San Diego and Parris
    Island Marine Corps Recruit Depots were established to assist recruits
    who receive sports-related injuries during their initial training. In
    addition, Marine Corps Base, Quantico, has established the Wellness
    Center in Larson Gym, to provide preventive medical care.
                Medical
        Quality health care is the hallmark of Navy medicine. In recent
    years, average accreditation scores for Navy hospitals have been in the
    90th percentile, exceeding average civilian hospital scores.
        Navy medicine will continue to find innovative ways to provide
    medical and dental care as close to the worksite as possible. Pierside
    clinics, deployment of health-care specialists with the operating
    forces, and new programs at recruit training activities that save
    valuable training time by delivering health care to trainees on-site
    are just the first steps.
        New technology enables the Navy to provide specialty consultation
    in remote areas and achieve cost and time savings by reducing the need
    to transport patients. It also greatly enhances the ability to provide
    quality health care for forward-deployed operating forces and at remote
    medical treatment facilities. The successful telemedicine technology
    developed in our operational testbed, George Washington (CVN 73), is
    now being applied to support operational medical services in other
    locations.
        Navy medicine is committed to providing an atmosphere of health
    care excellence. Guiding Navy medicine are three basic themes: taking
    health care to the deckplates; moving information not people; and
    making TRICARE work. TRICARE's triple option health plan offers
    opportunities to reduce family member out-of-pocket expenses and
    improves health care access. While the HMO option of TRICARE (Prime) is
    most likely the best choice for most family members and retirees, the
    program offers traditional fee-for-service options for those who prefer
    more freedom of choice in selecting a health care provider.
        We are working to improve the ways we assist people who have
    experienced problems with the health care system. We demonstrated a
    TRICARE Advocacy Plan at several facilities recently which has shown
    very promising results. The Department plans to expand this program to
    more Navy and Marine Corps bases.
        In conjunction with the Department of Defense and other Services,
    the Navy is working to ensure TRICARE's success. As TRICARE approaches
    full implementation in 1998, delivery of patient-focused, consistent
    health care to all beneficiaries, regardless of geographical location,
    remains our goal.
        Beneficiary education and customer-focused marketing are some of
    our important priorities. The Navy and Marine Corps leadership is
    promoting improvement of services and our response to the needs of
    Sailors, Marines, retirees, and family members. Encouraging current
    legislative authority allows the Department of Defense to proceed with
    the Medicare subvention demonstration project. Although the subvention
    test sites have yet to be approved, Navy is preparing to participate in
    this important demonstration. Working with DOD and the other services,
    we look forward to demonstrating our ability to offer TRICARE Prime to
    our valued retirees age 65 and older. We also are continuing to assess
    options to improve access to medical care for our Medicare-eligible
    beneficiaries. Indeed, we estimate that only half of our medicare-
    eligible population lives near a military treatment facility and would
    therefore not be eligible to join TRICARE even if it were authorized
    across the country. Navy supports all initiatives to assess alternative
    health care options for our retirees. We are acutely aware of the
    ``broken promise'' of lifetime care expressed by many retirees,
    especially those over 65 years old and not eligible for TRICARE. Recent
    efforts by DOD to review options to the present programs are fully
    supported by the Department. Our study of this issue will hopefully
    help us develop an equitable and consistent health plan for all
    retirees.
                                   readiness
    Today's Readiness: Mission Capable
        The Department's forward-deployed naval forces remain the most
    viable means for the nation to respond rapidly to contingencies around
    the world. On any given day, one-third of our ships, submarines,
    squadrons, and Marine units are deployed overseas. Multiple demands
    placed on non-deployed forces--units that recently returned from a
    deployment or are preparing for an upcoming commitment--require nearly
    one-half of these assets to be at sea or away from home port during
    that same day. Never has the Department asked more of its people and
    equipment during peacetime than today. Yet, the Navy and Marine Corps
    team remains ready, in all respects, to execute fully its many mission
    areas.
        Continuous naval presence in critical regions worldwide provides
    the National Command Authorities (NCA) a wide range of military
    capabilities. A visible, credible force possessing deep strike,
    amphibious, command and control, peacekeeping, and even environmental
    compliance enforcement capabilities is core to this nation's standing
    as the preeminent superpower. Presence is the key--and naval forces
    provide it every day in every corner of the world.
        Through their continued forward presence, naval forces help
    maintain global stability. Even though the fleet and the number of
    Sailors and Marines in uniform have been reduced, we remain ready to
    protect America's interest both at home and abroad. However, with a
    smaller force available to maintain the same level of commitment, it
    becomes increasingly important that non-deployed forces complete
    required repairs and training as scheduled. This is necessary in order
    to have units fully ready to meet follow-on forward-deployed
    operational commitments and overseas presence missions. Although the
    incremental costs for contingency operations are relatively small due
    to our forward presence, we must still divert programmed operations,
    maintenance, and training funds away from non-deployed forces to
    support such requirements. In the past, these actions were nearly
    transparent due to the size of the fleet. But with today's smaller
    force, absent supplemental appropriations, such actions have a more
    noticeable effect on readiness.
    Tomorrow's Readiness Challenge
        Readiness remains a top priority and the fundamental gauge by which
    the Navy-Marine Corps team measures its ability to respond to current
    and future national tasking. Accordingly, we constantly monitor and
    assess our readiness to determine the right fiscal balance among
    operations, modernization, and recapitalization accounts. The
    Department's readiness monitoring system has proved reliable in
    identifying deficiencies quickly so that appropriate action can be
    taken.
        Naval forces are operating at a satisfactory, but lower, level of
    readiness. Today, deployed and non-deployed readiness continues to
    remain sufficient to meet all National Military Strategy commitments.
    We continue to assess the balance between operational and procurement
    accounts to ensure that we do not jeopardize our ability to transition
    instantly from peace to crisis to conflict.
        Readiness is not only limited to our ability to meet today's
    commitment; our readiness must be able to answer both near-term and
    long-term requirements as well. Providing the necessary tools our
    people need to operate both today and into the future is essential to
    maintaining operational primacy. Our current equipment readiness
    remains satisfactory. In some major warfighting systems where it is
    cost-effective, equipment is being remanufactured or given a service-
    life extension (SLEP) to keep it operational. Two aircraft types, the
    electronic warfare EA-6B Prowler and the maritime patrol P-3C Orion,
    are perfect examples of systems that are upgraded to keep their
    warfighting edge. Other major weapon systems are substantially upgraded
    to provide a bridge to future systems. The F/A-18E/F Super Hornet and
    the remanufactured AV-8B Harrier will ensure Naval air superiority and
    potent strike options are maintained until the Joint Strike Fighter
    joins the fleet. Likewise, the retrofit of the AAV-P7 amphibious
    assault vehicle will keep it capable of conducting its mission until
    the advanced amphibious assault vehicle (AAAV) becomes operational.
        The Department is also formulating innovative systems for the
    future that will improve long-term readiness. Even as the most modern
    ships in the world leave the shipyards, active research and development
    efforts and budget conscious procurement plans for their replacement
    are underway. For example, 13 more Arleigh Burke (DDG 51)-class
    destroyers will join the fleet in the next four years under a cost-
    effective multilayer procurement plan, yet we are developing an
    innovative DD-21 design for next century. The Navy's budget request
    includes funding for CVN-77. Its design will make it an affordable
    transition carrier for a new concept ship, the CVX. The New Attack
    Submarine and the San Antonio (LPD 17)-class amphibious ship are
    innovative replacements for their aging predecessors and are necessary
    to maintain long-term readiness. The vast amount of work in research,
    development, and fielding of Navy theater missile defense systems is
    yet another example of long-term investments that are paying off today.
    In short, aggressive long-range planning ensures Marines and Sailors
    will continue to have the tools that they require, at an affordable
    price.
        We also are examining innovative ideas to substantially reduce
    overhead costs. Smart Ship and Smart Base are initiatives to find ways
    to reduce personnel requirements on board our ships and bases.
    Similarly, we are investigating innovative technologies to improve
    efficiency and reduce crew size in new ship designs such as CVX and DD-
    21. Regardless of whether we are giving new life to existing systems or
    taking a technological leap into systems of the next century, proper
    funding of modernization accounts is critical to our continued
    operational primacy and future readiness. Striking the correct balance
    between current and future readiness is vital.
    Safety: Reducing the Risks
        Effective operational safety and occupational health programs are
    fundamental to preserving our resources and protecting our Sailors,
    Marines, and civilian employees from the daily hazards they face around
    the world. The Department's commitment to saving lives, and ensuring a
    high level of personnel and equipment readiness, have led to its
    unparalleled emphasis on safety programs.
        In response to congressional concerns, the Office of the Secretary
    of Defense chartered a Defense Science Board Task Force on Aviation
    Safety. The Department of the Navy supports the key task force
    recommendations including efforts to achieve a goal of zero mishaps, to
    institutionalize operational risk management (ORM) and to increase
    implementation of key commercial off-the-shelf (COTS) aviation-safety
    technologies.
        The Commandant of the Marine Corps and Chief of Naval Operations
    have signed new instructions that implement ORM. Training courses are
    under way to incorporate ORM into our daily operational routines. The
    Naval Safety Center provided an ORM ``Train the Trainer'' course, in
    order to jump-start implementation of operational risk management. The
    Marine Corps Combat Development Command and the Naval Doctrine Command
    are incorporating and embedding ORM in doctrinal publications. The
    Chief of Naval Education and Training and Marine Corps University will
    begin formal instruction of ORM during fiscal year 1998. Additionally,
    the Naval aviation Human Factors Quality Management Board (HF/QMB),
    started in 1996, has made huge strides in addressing human factors
    causes in mishaps, while serving as a platform to review technologies,
    policies, standardization, information dissemination, and cultural
    issues.
        The Navy and Marine Corps Class A operational mishap rate in fiscal
    year 1997 was second lowest ever. Navy aviation set a new record for
    safety in fiscal year 1997, including going 118 days without a Class A
    mishap. Leadership involvement and focus on operational safety,
    accountability, and implementation of ORM were instrumental in
    achieving this significant milestone. Current naval safety-of-flight
    programs include cockpit voice and flight data recorders, global
    positioning systems (GPS), ground proximity warning systems (GPWS), and
    helicopter health usage monitoring systems (HUMS) providing
    enhancements that will ensure long-term operational success and loss
    reduction.
        Aviation commands are developing and employing flight risk
    assessment and aircraft risk assessment matrices. A computer-based
    squadron assistance/risk assessment (SARA) program, developed by Boeing
    Military Aircraft Company (formerly McDonnell Douglas Aerospace) in
    cooperation with Marine Aircraft Group-13, will be incorporated into
    all Marine Corps squadrons in fiscal year 1998. Navy aviation units are
    preparing to adopt SARA. Additionally, the 3d Marines, an infantry
    regiment, significantly reduced mishaps by incorporating ORM into all
    training and exercises.
        These operational safety and survivability initiatives, implemented
    in conjunction with the Naval Safety Center, the Naval Postgraduate
    School, and Fleet and Fleet Marine Force (FMF) units, are reducing
    characteristic losses of the past. In units that activated the HF/QMB
    to address human factors in aviation, there was a 45 percent reduction
    in mishaps and have operated for more than 580 days without an
    operational flight fatality. The previous fatality-free record was 170
    days. New windows of human performance information and opportunity are
    being explored. The recent surge exercise by U.S.S. Nimitz (CVN 68)
    proved to be an excellent opportunity to measure the effect of fatigue.
    Through such efforts, we are moving swiftly toward the goal of reducing
    losses due to human factors by 90 percent in five years.
        The Department of the Navy remains committed to maintaining the
    balance between current readiness and aggressive modernization, which
    is critical to future readiness. Judiciously applying fiscal resources,
    improving safety records, and maintaining equipment contributes to
    today's readiness. Carefully planning for tomorrow through sound
    modernization practices will help create the most cost-effective force.
                    technology: innovation and modernization
        The last decade showcases the diverse types of missions the Navy
    and Marine Corps undertake. From combat operations to disaster relief,
    from humanitarian assistance to civilian evacuations, our forces will
    need to adapt even more to the challenging operations of the future.
        The explosion of new technologies has transformed the way
    militaries conduct warfare. Capabilities available today were not
    considered possible a mere decade ago. It is evident that the growth
    rate of these technologies will continue to accelerate. This phenomenon
    of rapid expansion in technology requires that the Navy and Marine
    Corps become experts in the innovative application of emerging
    technology to new and existing weapon systems. Innovation is critical
    in order to transform the aggregate impact of leading-edge technology
    into battlespace dominance. Together, the Marine Corps Warfighting
    Laboratory and the Navy At-Sea Battle Labs provide a venue to
    institutionalize innovation within the Department of the Navy.
        Marine Corps Warfighting Lab.--The Marine Corps Warfighting
    Laboratory (MCWL) is the test bed for warfighting innovations within
    the Marine Corps. The MCWL investigates concepts and technologies and
    coordinates results with other Marine Corps organizations, defense
    industry, scientific research labs, academia, and the other military
    services. The MCWL developed the five year experimentation plan (FYEP),
    which consists of three phases, and is the cornerstone document for
    concept-based experimentation and the introduction of science and
    technology into the operating forces. Each phase is composed of
    limited-objective experiments (LOE) and culminates in an advanced
    warfighting experiment (AWE). The first phase, called Hunter Warrior,
    was completed in March 1997 and examined the contribution that a Marine
    air-ground task force (MAGTF) could make if provided with selected
    conceptual and technological improvements. Through the use of: enhanced
    targeting; precision fires; command, control, communications, computer
    and intelligence (C\4\I); and a limited deep operational maneuver
    capability--a force resembling a notional Marine expeditionary unit
    demonstrated a capability to shape the battlefield beyond current
    force-employment options. The next phase, Urban Warrior, will examine
    MAGTF operations in the urban littoral environment. This will be an
    advanced warfighting experiment (AWE) conducted on the east and west
    coasts of the United States in densely populated urban centers.
    Following Urban Warrior, the first Five-Year Experimentation Plan will
    culminate in Capable Warrior. This last AWE will experiment with naval
    expeditionary forces in an urban littoral environment.
        Navy At-Sea Battle Labs.--Reflecting the inherent mobility of naval
    forces, the Navy's battle labs are not single physical entities, but
    rather the fleet itself. To bring technology and operational concepts
    together with real world conditions, the Navy employs fleet units as
    at-sea battle labs. Creating a virtual laboratory, the Navy initiated a
    series of fleet battle experiments (FBE) that use operational forces
    engaged in training exercises. The FBE's take forward-looking programs
    and integrate them with innovative operational concepts. These
    experiments focus on future programs that align the Navy with Joint
    Vision 2010 and other emerging operational concepts. In September 1997,
    the Third Fleet sponsored a sensor-to-shooter demonstration as part of
    Fleet Battle Experiment Bravo. A SEAL team on the ground in China Lake,
    California, transmitted an image of a target, via satellite, to San
    Diego. The image was transferred to a classified web page and
    downloaded to Coronado (AGF 11), the Third Fleet flagship. The final
    destination for the target image was the cockpit of an F/A-18, enabling
    the pilot to see the target, fly to it, and conduct a successful air
    strike. After the strike, the target image was retransmitted to the
    same locations to aid battle-damage assessment.
        Network Centric Warfare.--In April 1997, the Chief of Naval
    Operations declared that the Navy was shifting from platform-centric to
    network-centric warfare. This is warfare which derives its power from
    the networking of a well-informed but geographically-dispersed force.
    The enabling elements are a highly-webbed information service, access
    to all appropriate information sources, weapons reach with precision
    and speed of response, value-adding command-and-control processes--to
    include high-speed, automated assignment of resources to need--and
    integrated sensors hosted on the information network and closely
    coupled in time to the shooters and command-and-control processes.
    Network-centric warfare is applicable to all levels of warfare and
    contributes to the coalescence of strategy, operations, and tactics. It
    is transparent to mission, force size, and composition, and geography.
        Information Technology 21.--Joint Vision 2010 highlighted the
    critical role information plays in the success of military operations.
    Increased processing power, networking capabilities, and software
    enhancements will have a dramatic and decisive impact on future
    warfighting. Under the Information Technology-21 (IT-21) concept, the
    Navy is building a communications-and-networking backbone that will
    support the rapid exchange of information between naval and joint
    platforms. New doctrine and organizations also are being developed to
    allow the Navy to take full advantage of these changes.
        Trader's War Game Series (1995-1997).--In 1995, the Marine Corps
    initiated an effort to address a key reality of the future battlefield:
    widely dispersed units relying on longer range engagement through
    indirect fires, with the concomitant problem of engagement
    coordination, stressing information management and rapid, intuitive
    decision-making and pattern analysis. The initial phase of this program
    was conducted at the New York Mercantile Exchange (NYMEX) to extract
    relevant lessons from the daily ``information war'' occurring on the
    trading floor. This program is now poised to consider other nonmilitary
    organizations that confront the rapid decision-making dilemma,
    including large city police and fire departments, search and rescue
    organizations, the Federal Aviation Administration's air traffic
    control process, and medical trauma units.
        Wall Street Game.--The Naval War College brought an eclectic group
    of professionals together to conduct a war game at the World Trade
    Center. Wall Street leaders, government experts on trade and finance,
    bankers, foreign policy specialists, and military officers from all the
    services examined the impact of a major regional conflict in the Middle
    East on trade and international financial markets. The war game also
    examined the market effects of systematic information warfare on power
    grids, telecommunication systems, and banking data bases. Its lessons
    learned will enrich our understanding of the symbiotic relationship
    between international events, communication systems, energy
    infrastructures, and military affairs.
    Exploiting Technology in Major Programs
        After technology and innovative concepts are identified, tested,
    and validated, the Department of the Navy's acquisition process ensures
    technology insertion into important programs. Some examples include:
        F/A-18 E/F.--Throughout the development of the F/A-18E/F, the
    insertion of key technological capabilities and sensible systems
    engineering trade-offs were made resulting in an affordable aircraft
    that is second to none. Its use of current and cutting-edge
    technologies make it a cost effective aircraft with sufficient growth
    potential to meet long term threats and evolving requirements. For
    example, the extensive use of composite materials in an enlarged
    airframe, combined with a new engine, extended the range of the Super
    Hornet by 40-50 percent, greatly improved its ability to stay ``on
    station'' in support of ground forces, and increased its weapons
    payload over that of the F/A-18C/D. The combination of radar cross-
    section reduction, defensive electronic countermeasures, better
    endurance, and integration of standoff weapons improved survivability
    in a balanced, affordable way. It has vastly superior offensive
    capabilities due to the integration of joint standoff guided munitions,
    combined with sufficient growth margins to accept next generation
    electronics and weaponry.
        CVX.--This next generation nuclear-powered aircraft carrier is
    scheduled to begin construction in 2006 to replace Enterprise (CVN 65).
    To accomplish the dramatic technological changes which are envisioned,
    CVX will begin a formal 5-6 year design process in 2000. This process
    will include a comprehensive research and development effort to
    determine the best CVX big-deck carrier design. The result of this
    study will be a carrier that has substantially lower life cycle costs,
    improved capabilities, and more flexibility. The new carrier fleet must
    accommodate a dynamic range of missions in an increasingly uncertain
    world. CVX, with a projected 50 year life, will be the centerpiece of a
    carrier fleet that will lead naval aviation well into the next century.
        New Attack Submarine (NSSN).--NSSN will be the most technologically
    advanced submarine the Navy has developed, with built-in flexibility to
    ensure easy insertion of new technologies. Additionally, it is being
    designed and built with a host of advanced technology systems that can
    be broadly grouped into four categories:
      --Operational-Requirements: new technologies, such as the lightweight
            wide-aperture array, and a more advanced electromagnetic
            silencing system that support warfighting improvements.
      --Affordability: technologies that reduce overall cost, such as
            modular isolated deck structures, an open-system architecture
            command and control system for easy technology upgrades, and a
            ``life of the ship'' reactor core.
      --Re-engineering: use of existing submarine technology that can be
            scaled to the NSSN, such as the ultraquiet, high-power-density
            main propulsion unit, and weapons launch and handling system
            components, which will be smaller, fewer, and less expensive
            than those on Seawolf (SSN 21).
      --Environmental Requirements: technologies to set the standard in
            environmental compliance, such as non-ozone depleting air-
            conditioning plants and less hazardous hull coatings.
        DD-21.--DD-21, the designation given to the first ship in the SC-21
    class Land Attack Destroyer, will represent a dramatic advance in
    precision strike and naval surface fire support for forces ashore. By
    including industry early in the design process, many of the ship
    characteristics and systems designs will exploit leading-edge
    commercial technologies and commercial supportability. The ship will
    possess a single, fiber-optic based, real-time distributed computing
    environment, using commercial off-the-shelf (COTS) processors and user-
    friendly common displays. This system alone will significantly reduce
    the number of Sailors required to operate, maintain and support the
    ship. The integration of Joint C\4\ISR systems will permit the creation
    of a real-time tactical picture needed to respond to calls for fire
    from troops ashore in a timely and accurate manner. An advanced
    multifunction radar, fully integrated shallow-water-capable sonar
    system, cooperative engagement capability, and extended-range guided
    munitions will ensure that DD-21 plays a significant role in supporting
    three-dimensional battlespace dominance, at sea and ashore. In order to
    operate extensively in the littoral, DD-21 will possess full-spectrum
    signature reduction, active and passive self-defense systems, and will
    incorporate cutting-edge survivability features. A highly efficient
    hull form, along with fuel efficient propulsion, will support
    significant reductions in operating costs.
        MV-22 Osprey.--The MV-22 Osprey is a revolutionary, advanced
    technology, vertical and short takeoff and landing (V/STOL),
    multipurpose aircraft that provides the performance of a turboprop
    transport with the hovering capability of a helicopter. With more than
    78 percent of the MV-22's load-bearing structural weight fabricated
    from composites, the aircraft is more than 700 pounds below the
    specification weight. Increased reliability and maintainability have
    been part of the MV-22 design process from the start. Maintenance, as
    all other aspects of MV-22, has been tested for human factors such as
    adequate access, reduction of MV-22 unique tools, and use of on board
    monitoring systems that determine when components need replacement by
    providing extensive fault-detection capabilities. The MV-22
    construction also incorporates many features that enhance its combat
    survivability, including: composite structural components that provide
    increased ballistic tolerance; triple-redundant, digital fly-by-wire
    flight controls; and a cabin overpressurization system that provides
    chemical and biological protection.
        Advanced Amphibious Assault Vehicle (AAAV).--The AAAV uses the most
    power-dense diesel engine in the world. The AAAV also is the first U.S.
    combat vehicle to use fully retractable hydro-pneumatic suspension
    units, providing land mobility equivalent to or better than the M-1A1
    main battle tank. For high-water speed propulsion, the AAAV uses two
    newly developed internal 23-inch waterjets. Speeds in excess of 20
    knots are achieved by retracting its suspension and deploying
    appendages to create a large planing surface. The AAAV is incorporating
    recent advances in embedded training and electronic technical-manual
    technologies, as well as state-of-the-art diagnostics capabilities. The
    vehicle incorporates the newest nuclear, biological and chemical
    protection system, and it has a fully stabilized turret capable of
    mounting a variety of weapons that are more accurate and lethal than
    currently fielded weapons. Finally, the AAAV armor is composed of
    state-of-the-art ceramic tile on advanced composites, providing
    ballistic protection while reducing the vehicle's weight.
        Joint Strike Fighter (JSF).--JSF represents a Department of Defense
    initiative to produce an advanced aircraft with extensive capabilities
    at a minimum cost. Advances in technology promise to create an aircraft
    with substantial combat mission radius, high survivability against air
    defenses, and a potent payload. Advances in electronics, composite
    materials, flight control design, aircraft propulsion, and
    manufacturing processes are at the core of these capabilities.
    Technological innovations will allow JSF to be a multi-role aircraft
    capable of maritime operations as well as short-take-off and vertical-
    landing flight operations.
        Non-Lethal Weapons Development.--The four services and the U.S.
    Special Operations Command have joined together in an effort to field
    quickly a low-cost alternative to lethal weapons.
        The Commandant of the Marine Corps, as the Department of Defense's
    executive agent, has taken several aggressive steps to organize and
    coordinate the efforts in this critical area. The Joint Non-Lethal
    Weapons Directorate serves as the focal point for all DOD nonlethal
    weapons activity, as well as a clearinghouse for exchange of
    unclassified information on nonlethal technologies with other U.S
    agencies and foreign governments. Efforts to date have provided
    operational forces with nonlethal weapons, to include: 40 mm sponge,
    sting-ball, and foam baton rounds; tactical water cannons; and hand
    grenade dye markers.
    Research and Development Opportunities
        History has demonstrated that superior technology can provide a
    decisive edge in warfighting. The Department's fiscal year 1997 science
    and technology program developed new technology options to meet the
    worldwide spread of warfare capabilities. Basic research programs
    expanded our fundamental knowledge of maritime sciences and
    engineering, materials, and information sciences; our applied research
    exploited and evaluated technology options for specific naval problems;
    advanced technology development programs demonstrated the operational
    capability of new technologies--as stand-alone systems and as
    enhancements to existing systems; and our manufacturing technology
    programs worked to ensure novel technologies can be affordably
    manufactured.
        Because technology opportunities always are richer than the
    available resources, funds were leveraged through partnerships with the
    other services, government agencies, academia, and industry for many
    programs. For example, successful fiscal year 1997 program partnerships
    included the joint countermine advanced concept technology
    demonstration; SandyDuck 97, a comprehensive field study of coastal
    dynamics, an area vitally important for nearshore naval operations; the
    thermal spray nanoscale coatings initiative, which developed a new
    coating for ships, aircraft, and land vehicles to prevent wear and
    erosion; and the power electronic building blocks program, which
    promises to revolutionize naval and commercial power systems.
        During fiscal year 1997, basic naval research investments had
    global implications, including the discovery of the atom laser,
    successful testing of a combination of anti-rejection drugs for
    transplant recipients, and a Nobel Prize winner in chemistry. Navy
    medical researchers continue to work on several initiatives to reduce
    the number of battlefield deaths from loss of blood. These efforts will
    not only improve delivery of lifesaving blood products to casualties in
    a combat environment, but also would relieve the logistical demands of
    storing and regularly replenishing different blood types.
        While our future adversaries may not be known, it is very clear
    that emerging technologies have forever altered our concept of future
    conflicts. The role of technology and our ability to exploit its
    advances demands that the Navy and Marine Corps maintain a robust
    science and technology program to research, develop, apply, and perfect
    revolutionary technologies. It is imperative that the Department of the
    Navy support a solid basic and applied research effort so that
    tomorrow's conflicts are fought with the most technologically advanced
    systems available.
    Exploiting Technology to Improve Training
        Increased use of distributive training and distance learning and
    technology have the potential to change dramatically the way we train
    and educate Sailors and Marines. Just as modern weaponry has influenced
    warfighting, investments in education technology will shape the way in
    which we teach and train our force. Sailors and Marines from around the
    globe, ashore and at sea, will have continual access to instructors and
    educators previously available only to resident students. The
    Department's training and education plans emphasize that an investment
    in modernization and recapitalization in educational technology will
    improve training effectiveness for better performance and operational
    readiness of our fighting force.
        The Department is exploring a variety of advanced technologies for
    developing and delivering instructional products where they are most
    needed. In the near future, Sailors and Marines can expect to use the
    internet and intranets, learning resource centers (LRC's), interactive
    multimedia instruction (IMI), video tele-training (VTT), and embedded
    training (ET) to learn new skills.
        The Navy modeling and simulation (M&S) roadmap focuses on utilizing
    M&S tools to enhance operational training, in port and under way.
    Current Navy M&S initiatives include: research, evaluation, and system
    analysis (RESA) maritime simulation, which is used to replicate naval
    systems and movements in wargaming; and the enhanced naval wargaming
    system (ENWGS). ENWGS is a computer-based simulation system which
    provides realistic wargaming in all aspects of naval warfare, from the
    tactical to strategic level of play, and provides pertinent decision-
    making training for battle group staffs. The next-generation M&S
    training tool is the joint simulation system (JSIMS). JSIMS-Maritime
    will be the primary M&S tool to support operational training,
    education, mission rehearsal, and doctrine development. The Marine
    Corps received an addendum to the Joint ORD to include Marine Corps
    specific requirements. It also will complete the JSIMS-Maritime concept
    of operations and initiate its conceptual modeling effort. Finally,
    interactive multi-sensor analysis training (IMAT) is revolutionizing
    undersea warfare training. IMAT uses advanced computer visualizations
    of threat platforms, environmental effects, and sensor/processor
    systems, to build conceptual training for complex sensor operation and
    tactical planning tasks. IMAT has been adopted by aviation warfare and
    by ship sonar technician apprentice schools, and is being used in 13
    advanced courses.
        The Marine Corps modeling and simulation master plan (MCMSMP)
    articulates M&S vision, objectives, and management framework for Marine
    Corps. The Marine Corps M&S investment strategy (MCMSIS) delineates the
    Marine Corps plan to achieve the desired M&S end state. These documents
    provide a common structure for coordinating M&S within the Total force,
    and will be combined into a single comprehensive plan in early 1998.
    Examples of progress under the MCMSMP and MCMSIS include the
    construction of a Range Instrumentation Systems Concept Exploration
    Experiment at the Marine Corps Air-Ground Combat Center in Twentynine
    Palms, California. This experiment led successfully to the production
    of the Operational Requirement Document for Range Instrumentation
    Systems. Additionally, Marine Corps is fully vested in high level
    architecture compliance mandated by the Department of Defense, in close
    coordination with the Navy.
           efficiency: exploiting the revolution in business affairs
    Acquisition Reform
        The Department of the Navy's research, development and acquisition
    team continues to be the engine for developing, procuring and
    supporting technologically superior and affordable systems for the Navy
    and the Marine Corps, as well as joint and allied forces. These
    critical goals are being attained through strategic acquisition
    reforms, the application of a range of tools, and the implementation of
    the Federal Acquisition Streamlining Act and the Clinger-Cohen Act.
        The Department of the Navy is confronting key management issues and
    developing tools such as ``cost as an independent variable'' (CAIV) to
    reduce total ownership costs. Acquisition specialists are inserting
    commercial dual-use technologies into fielded weapon systems, to make
    operations and support costs more affordable. The Department is
    accelerating the move from military specifications and standards to
    performance-based specifications through Navy-developed software tools
    such as TURBO STREAMLINER, SPECRIGHT!, and the Single Plant Process
    initiative.
        Acquisition Center of Excellence.--The Department of the Navy is
    committed to developing the infrastructure that enables large
    distributed work teams to produce higher quality systems at reduced
    cost over a shorter period of time. The embodiment of this commitment
    is the Acquisition Center of Excellence (ACE), an institution that will
    serve as a test bed and development site for the Navy's simulation-
    based acquisition (SBA) effort. The SBA initiative is expected to
    revolutionize the design and procurement of major systems, thus
    reducing total life-cycle cost and acquisition time.
        Acquisition Work Force.--Today's acquisition workforce is
    approximately half the size it was in 1989, numbering 95,895 as defined
    in the Fiscal Year 1998 DOD Authorization Act at the end of fiscal year
    1997. Reducing the work force has been steady and controlled,
    accomplished largely through retirement incentives, base realignment
    and closure actions, and organizational restructuring. At the same
    time, procurement has become more technologically complex and the
    expectations of the fleet even greater. As we further reduce manpower
    levels to 86,868 by the end of fiscal year 2003, it is imperative that
    the acquisition force structure be composed of the right people, with a
    balanced education, training, and skill mixture.
        The Department has had difficulty over the past several years
    bringing young people into the acquisition field. To meet this
    challenge, the Department implemented a plan during the past year that
    triples the acquisition intern program. This initiative should help to
    ensure the availability of highly qualified people to fill senior
    acquisition positions.
        Acquisition Reform Success Stories.--The Department's bold approach
    is reflected in many successes. Some examples include:
      --F-14 Precision Strike Fighter Team.--This program has demonstrated
            what teamwork and innovative thinking can accomplish.
            Partnering with Lockheed Martin, the team used the LANTIRN
            targeting system to give the F-14 a night and precision-guided
            munitions delivery capability. The first fully operational
            system was deployed 223 days after contract award, two years
            ahead of schedule. By using commercial off-the-shelf
            technology, the team realized significant savings estimated as
            more than $173 million.
      --Chemical Biological Incident Response Force.--The Marine Corps
            Systems Command rapidly procured and fielded a suite of
            equipment to support Marine Corps Chemical Biological Incident
            Response Force (CBIRF) requirements. Using an abbreviated
            acquisition program (AAP) strategy, commercial-off-the-shelf
            (COTS) and non-developmental items (NDI) were examined.
            Equipment for the CBIRF was acquired to fulfill mission-
            critical and mission-essential requirements. Procurement and
            delivery of equipment to CBIRF was accomplished in less than
            nine months time.
        Joint Maritime Communications Strategy (JMCOMS).--JMCOMS will
    provide an extensive communications infrastructure to meet tactical and
    support communications requirements. Capabilities range from real-time
    transmission of intelligence and weapons targeting data to the ability
    of our men and women at sea to communicate directly with loved ones at
    home. The Navy has reduced system acquisition time from 4-7 years to
    less than 2 years. Using innovative architecture, one key subsystem--
    the UHF miniaturized digital assigned multiple access (mini-DAMA)
    terminal--achieved savings estimated at 50 percent of acquisition costs
    and 30 percent of total life cycle costs, compared to previous
    terminals.
        Multifunctional Information Distribution System (MIDS).--This
    multinational cooperative development program is aggressively using
    open systems architecture, commercial products, innovative acquisition
    streamlining techniques, and cost as an independent variable. The
    terminal architecture implements nonproprietary open commercial
    standards that will facilitate technology insertion throughout the life
    cycle of the program. The average recurring unit cost of MIDS has been
    reduced from an early estimate of $428,000 to well below $250,000. The
    technical and costs management success of the program has attracted the
    attention of numerous European nations.
        Tactical Air Moving Map Capability (TAMMAC).--The TAMMAC team
    developed an integrated acquisition and logistics concept that
    emphasized current technology, standardized unit configuration for all
    aircraft, minimized use of military specifications and maximized use of
    commercial-off-the-shelf hardware and organization-to-commercial depot
    maintenance. Traditional internal configuration control responsibility
    for system components was transferred to the original equipment
    manufacturers, improving the visibility of manufacturing resource and
    industrial base issues. The TAMMAC cost savings estimates are more than
    $360 million over the life of the system, with an 83 percent reduction
    of required spares.
    Infrastructure Reform
        Infrastructure reductions have not kept pace with force-structure
    reductions. Previous reductions in infrastructure as a result of the
    Base Realignment and Closure (BRAC) process have proved helpful in
    bringing fleet and force support costs down. Additional reductions
    under a similar program are needed to bring our infrastructure in line
    with our smaller force. To this end, the Department is conducting an
    ongoing review of our organizations and our policies for operations,
    maintenance, personnel, and training. We must run our ``businesses''
    much as the private sector does--with a minimum of duplication and red
    tape, and a maximum of service and responsiveness. Any efficiencies
    gained through a leaner infrastructure can be invested in force
    modernization and readiness.
        Two issues are critical to our efforts to increase efficiency: our
    regional maintenance strategy and the application of state-of-the-
    market business practices to reduce infrastructure costs.
        Regional Maintenance Strategy.--The regional maintenance strategy
    implements a fundamental restructuring and consolidation of our shore
    maintenance capabilities. During the past 3 years, the Navy has
    established 7 regional maintenance centers. These new maintenance
    organizations have contributed significantly to maintaining high
    deployed fleet readiness despite a challenging operational tempo, base
    realignments and closures, repair ship decommissionings, and decreased
    resources.
        By aggressively executing the Navy's regional maintenance strategy,
    our industrial resources are more fully utilized, particularly in the
    repair and maintenance depots. Regional repair centers are moving into
    depots and are jointly manned by civilian and military technicians.
    Consequently, regional facility footprints and associated expenses are
    being reduced. Job planning, coordination, material support, and
    information distribution improvements and integrations are well under
    way. For example, the most recent pilot initiative at Pearl Harbor,
    Hawaii, provides a methodical, phased approach to integrate completely
    the resources of the Naval Intermediate Maintenance Facility and Pearl
    Harbor Naval Shipyard into a new maintenance organization. The
    resulting consolidated workforce forms a common manpower resource pool
    that can be efficiently and effectively assigned as required. A project
    management strategy will be used that is both responsive and cost
    efficient for all types of repair and maintenance work.
        State-of-the-Market Business Practices.--The first step to
    implement new business practices is to create an organizational
    structure that accelerates positive process changes. Second, we need to
    improve installation management by focusing on business perspectives of
    efficiency, price competition, and customer satisfaction. Some examples
    include:
      --Marine Corps Continuous Process Improvement Program.--The Marine
            Corps Continuous Process Improvement Program (MCCPIP) is the
            agent for reengineering key business processes of the combat
            development system (CDS). The CDS translates concepts and
            requirements into integrated capabilities, which in turn
            constitute the building block elements of Marine air-ground
            task forces.
      --Cruise Missile Command and Control Program Office.--This program
            office teamed the Department of the Navy with the Defense
            Logistics Agency and Federal Express to build a logistics
            support system that increased material readiness while reducing
            logistics costs. The initiative has been a success: the average
            transit time for material being requested by ship has been
            reduced from 32 to 6.5 days, and overall cost avoidance to date
            is nearly $13 million.
        Other examples of initiatives which are expected to improve
    operational or administrative efficiencies and reduce costs include:
        Outsourcing.--In 1996, the National Performance Review (NPR), the
    Commission on Roles and Mission (CORM), the Defense Science Board
    (DSB), the CNO's Executive Panel and the Center for Naval Analysis
    (CNA) recommended outsourcing non-core functions as a means of reducing
    overall costs of operations, improving business processes across the
    Department of Defense infrastructure, and recapitalizing those savings
    for modernization. The Department of the Navy has incorporated a
    comprehensive plan to reduce infrastructure costs through competition,
    privatization, and outsourcing. An estimated 80,500 full-time
    equivalents (FTE's) from the Navy and 5,000 FTE's from the Marine Corps
    have been programmed for study over the future years defense plan. The
    Navy initiated studies in fiscal year 1997 on over 10,500 FTE's and
    plans to study more than 15,000 FTE's in fiscal year 1998, with more in
    successive years.
        Activity Based Costing (ABC).--ABC properly allocates all direct
    and indirect costs for identified services and enabling management. ABC
    also identifies and improves processes for reducing costs, raises cost
    consciousness, justifies budgets, satisfies informational requests from
    higher headquarters, and facilitates outsourcing cost comparisons. The
    Marine Corps has implemented ABC throughout the facilities maintenance
    organizations at continental U.S. (CONUS) installations and will expand
    this capability to logistics and supply organizations over the next 2
    years.
        Marine Corps Force Structure Review Groups.--For years, the Fleet
    Marine Forces have been operating below targeted manpower levels as we
    struggled to balance structure requirements against available Marines.
    Using the Quadrennial Defense Review as an opportunity for a self
    examination of roles, missions, and capabilities, the Marine Corps
    focused on how best to organize for the challenges of the 21st century.
    The major objective of the active duty and reserve force structure
    review groups was to identify and make recommendations to remove force
    structure which no longer contributed significantly to the Marine
    Corps' warfighting capability. The successful attainment of the
    objective led to reductions in supporting establishment billets and an
    increase to a 90 percent manning level in the Fleet Marine Forces.
        In addition to the review groups, the Total Force Structure (TFS)
    Division was formed at Marine Corps Combat Development Command in June
    1997. This organization is continuing the evaluation of Marine Corps
    organizational posture as it relates to available billet structure and
    equipment. The review process involves a close examination of the
    mission of each combat or supporting establishment element, its
    organization, equipment, and the manpower required to accomplish that
    mission.
        Regionalization.--The Navy has embarked on an aggressive effort to
    reinvent the operation and management of our shore establishments to
    free resources for readiness and modernization. The Chief of Naval
    Operations, fleet commanders, major claimants, and naval base
    commanders are conducting detailed analyses in Navy concentration areas
    to consolidate installation management functions. The goal of
    regionalization is to reduce base operating support costs through the
    elimination of unnecessary management layers, duplicative overhead, and
    redundant functions. Regionalization also facilitates better work force
    utilization, opportunities to outsource across an entire region,
    standardization of processes, and regional planning and prioritization.
        In another effort, Department of Defense components were directed
    to regionalize base-level civilian personnel functions and reduce
    manpower to a 1:100 ratio between personnel specialists and the
    serviced population. Attainment of this servicing ratio requires
    reducing (by approximately 45 percent) the number of employees
    providing base-level civilian personnel services by the year 2001.
    Regionalization provides a return on investment by standardizing human
    resource services and eliminating duplication.
    Challenge of International Programs
        Through international programs, the Department of the Navy provides
    assistance to America's allies and partners. Such diverse programs as
    Foreign Military Sales (FMS), leases, and grants of defense articles
    and services; cooperative programs, which promote bilateral interaction
    on a broader scale; protection of key technologies while facilitating
    release authority for transferable technologies; and training and
    education, produce mutually favorable relationships. Examples of the
    benefits produced by participation in international programs include:
      --Cooperative research and development (R&D) projects reduced Navy
            R&D costs by more than $1.6 billion since 1987;
      --FMS reduces unit costs: Foreign sales of F/A-18 reduced the per
            unit cost by $2.1 million, saving $2.3 billion since 1979;
      --Foreign comparative testing leverages foreign non-developmental
            items: Existing systems and platforms like the F-14 Tomcat are
            modernized with digital flight control systems;
      --Security assistance helps sustain industrial base: Numerous
            production lines are sustained by foreign sales.
        Supporting U.S. industry and obtaining maximum results from
    increasingly constrained national resources are key challenges. The
    Department must join more efficiently and flexibly with allied nations
    to accomplish critical technology advances. The core element necessary
    to meet this challenge is early engagement of allies, during the
    missions needs analysis stage, to identify common mission problems and
    acceptable performance requirements.
        Recognizing the benefits as well as challenges, the United States
    and its allies are increasing efforts to achieve desired efficiencies
    and improved warfighting effectiveness through international programs.
    Environmental Issues
        Effective environmental planning to meet the requirements of
    environmental statutes, executive orders, and regulations is essential
    for facilities management, acquisition programs, and military
    operations. Department strategies for establishing partnerships with
    regulators, stabilizing funding, and reducing the cost of cleanup at
    active and closing bases are paying dividends. The cleanup program
    cost-to-complete estimate continues to show reductions.
        In the area of environmental protection, the Department has made
    substantial progress with respect to shipboard pollution control. A
    solid-waste plan was developed for surface ships in order to comply
    with the Act to Prevent Pollution from Ships. A submarine addendum to
    this plan is in development. Meanwhile, the Department is coordinating
    with the Environmental Protection Agency (EPA) and coastal states to
    create uniform national discharge standards for military vessels. At
    shore installations, the Department continues to serve as the
    Department of Defense executive agent for Clean Air Act and Clean Water
    Act implementation. The Department works closely with EPA and states to
    ensure both compliance and protection of the military mission. The
    Department is achieving its natural resources conservation goals by
    emphasizing stewardship of natural resources, preserving biological
    diversity, and developing partnerships for conservation.
                                    programs
        The following paragraphs describe the key programs involved in
    building the naval forces that support and defend U.S. interests. These
    programs represent an integrated--although unprioritized--snapshot of
    the diverse capabilities necessary for the Navy-Marine Corps team to
    conduct a wide range of missions.
    Shipbuilding and Naval Weapons Programs
        Aircraft Carriers.--Twelve aircraft carriers form the centerpiece
    of naval global forward presence and striking power. Harry S Truman
    (CVN 75) currently under construction at Newport News Shipbuilding, is
    expected to be commissioned in fiscal year 1998. At that time, the
    Navy's oldest active commissioned carrier, Independence (CV 62), will
    transition to the inactive fleet. The keel for Ronald Reagan (CVN 76)
    has been laid for a fiscal year 2002 delivery, and CVN 77 will enter
    the fleet in fiscal year 2008, as the two remaining Kitty Hawk-class
    carriers are retired. CVN 77 is being designed to serve as a
    ``transition carrier'' to the CVX, incorporating new technologies and
    process design changes that will move naval aviation to a future
    carrier design. The CVX will be commissioned in 2013, in time to
    replace Enterprise (CVN 65), which will reach the end of its service
    life at 52 years. CVX will be the most technologically advanced
    nuclear-powered carrier the Navy has ever developed. It will employ
    technologies that reduce operating costs yet improve its warfighting
    capabilities. Better survivability, more flexibility through an open
    architecture command and control system, an advanced aircraft launch
    and recovery system, a state-of-the-art propulsion system, and reduced
    manning will be incorporated in the new design. It will facilitate
    joint and combined operations and will give the nation a more flexible
    and less costly big-deck aircraft carrier for the next century.
        Amphibious Lift.--The current amphibious lift modernization plan is
    formed around the 12 amphibious ready groups (ARG's) needed to meet the
    nation's forward-presence and contingency requirements. The plan
    includes the fiscal year 1998 delivery of Bon Homme Richard (LHD 6) and
    Pearl Harbor (LSD 52)--the final Harpers Ferry (LSD49)-class ship--and
    the fiscal year 2001 delivery of Iwo Jima (LHD 7). The San Antonio (LPD
    17) class of ships, another critical piece of our future amphibious
    force, will begin delivery in fiscal year 2002. The LPD 17 class
    incorporates major improvements in command-and-control and ship self-
    defense systems, which will increase its ability to operate
    independently of the ARG when required. This class is the critical link
    in achieving the goal of a modern 12-ARG force. LPD 17 is the
    functional replacement for aged amphibious platforms including: LPD 4,
    LKA, LST, and LSD 36 classes of ships. This acquisition plan is key to
    maintaining the 2.5 Marine expeditionary brigade equivalents of lift,
    currently met by using marginal Naval Reserve Force and inactive ship
    maintenance facility assets. Construction of LPD 18, the second ship of
    the class, is scheduled to begin in fiscal year 1999 with procurement
    of two additional ships planned for fiscal year 2000.
        New Attack Submarine (NSSN).--NSSN plays a pivotal role in the
    Navy's recapitalization plan. In fiscal year 1998, the Navy begins NSSN
    construction at a low but efficient rate in order to build adequate
    numbers of our next generation of quiet submarines. The NSSN counters
    the proliferation of advanced-capability submarines and establishes the
    foundation for better technology insertion into the submarine force.
    New modular-construction techniques and a contract-teaming plan combine
    with an innovative design process to fundamentally enhance the
    production quality and the affordability of this ship. Features
    include:
      --Open Systems Architecture.--Using widely available public-domain
            standards, the combat, communication, and information systems
            will have industry-standard interfaces that offer portability
            and software reuse to simplify cost-effective 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.
        Seawolf (SSN-21)-Class Submarine.--Seawolf performed superbly
    during initial sea trials in July 1996, demonstrating the fastest,
    stealthiest characteristics of any submarine at sea. Seawolf will
    enhance significantly U.S. undersea superiority even against our most
    capable adversaries.
        SSN 688 Class Submarine Modernization.--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 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
    commercial technology.
        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 commenced 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 installs improved processing and
    control and display workstations. The current installation plan
    completes all SSN's through Phase III by fiscal year 2003.
        Maritime Prepositioning Force (MPF).--Procurement of three
    additional MPF ships, known as MPF enhancement (MPF(E)), will provide
    Marine air-ground task forces (MAGTF's) enhanced capability in naval
    construction, medical support, and expeditionary-airfield construction.
    The first two MPF Enhancement ships, USNS 1st Lt Harry L. Martin and
    USNS LCpl Roy M. Wheat, are expected to be delivered in fiscal year
    1999. A contract award for the third ship is expected in fiscal year
    1998.
        Arleigh Burke (DDG-51)-Class Destroyer.--The DDG 51 class, along
    with its companion class of CG 47 Aegis cruisers, provide sea control
    and 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, but expeditious process. Twenty-one
    destroyers already are in commission. We expect to build a total of 57
    Arleigh Burke-class destroyers. The Aegis destroyers requested under
    the multiyear procurement plan will 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 presently
    under construction. Future ships will include other essential
    improvements such 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.
        Aegis Cruiser Modernization and Conversion.--Capitalizing on the
    substantial investment made in our battle-proven Aegis cruisers, the
    Navy will modernize these highly capable ships through a series of mid-
    life conversions to install area theater ballistic missile defense, two
    5 inch/62 Mk 45 Mod 4 guns, area air defense commander (AADC)
    capability, and smart ship control systems.
        Naval Fires.--Fire-support requirements for the future are being
    addressed by gun technologies and wedded global positioning systems
    (GPS) that will enable surface ships to engage targets ashore at ranges
    of more than 60 miles. The cornerstone of our near-term effort is the
    extended-range guided munitions (ERGM) and the 5 inch/62 Mk 45 Mod 4
    gun mount program. The ERGM is a five-inch projectile that incorporates
    a rocket motor and internal GPS coupled with an inertial navigation
    system (INS). The 5 inch/62 Mk 45 Mod 4 gun mount is a modified five-
    inch gun mount designed to handle, load, and fire the ERGM. Initial
    testing of the ERGM and 5 inch/62 gun components proved successful in
    fiscal year 1997.
        Other promising gun technologies for the longer term include the
    microminiaturization of guidance components and composite material
    technology. Combined, these technologies both will reduce the cost of
    precision-guided gun munitions and extend their range to targets up to
    100 nautical miles away. Research-and-development funding has been
    allocated to develop these capabilities for future application to both
    the ERGM program and a 155 mm advanced naval gun planned for
    installation on the next-generation surface combatant (DD-21).
        The Navy is considering a variety of missiles to meet the ground
    forces requirements for responsive, longer-range naval surface fire
    support (NSFS). Two potential solutions--the Navy tactical missile
    systems (NTACMS), a naval variant of the Army tactical missile system
    (ATACMS), and the land attack standard missile (LASM), a surface-to-
    ground variant of the Navy's family of STANDARD Missiles--are being
    evaluated as options to fill the land attack missile role.
        Land Attack Destroyer (DD-21) (First of the 21st Century (SC-21)
    Surface Combatants).--The SC-21 analysis of alternatives (AoA)
    completed examination of future surface combatant mission requirements
    and alternatives for providing those requirements. The AoA found that a
    class of multi-mission ships focused on supporting land attack, and
    possessing hull and mechanical/electrical systems in common with the
    follow on to retiring Aegis cruisers, provided the required
    capabilities at the lowest life-cycle cost.
        Key performance features identified in the AoA and reflected in the
    DD-21 operational requirements document (ORD) include: more vertical
    launch cells dedicated to long-range precision-strike and shorter range
    fast-interdiction missiles; guns capable of firing extended range
    guided munitions; improved survivability against antiship cruise
    missiles, torpedoes, and mines; full-spectrum signature reduction; a
    single, survivable, fiber-optic-based, real-time distributed computing
    environment, using commercial off-the-shelf (COTS) processors and user-
    friendly common displays; a fully joint interoperable C\4\ISR system; a
    fuel-efficient propulsion system; and significantly reduced ship
    manning, which lowers operating and support costs. Current acquisition
    plans call for DD-21 to be designed using an integrated industry/Navy
    team. Key production features likely will include: a more affordable
    hull design; COTS-based systems; design features to facilitate rapid
    and cost-effective system upgrades; condition-based maintenance
    monitoring; commercial supportability; and embedded training programs.
        Surge Sealift.--Surge shipping is the immediate transportation of
    heavy military equipment that ground forces need to meet warfighting
    requirements. A total of 19 prepositioning or surge large medium-speed
    (LMSR) roll-on/roll-off (RORO) ships will be required. Fourteen LMSR's
    will be acquired through new construction. Five more have been
    converted from existing container ships. The LMSR's will provide afloat
    prepositioning of an Army heavy brigade's equipment and a corps' combat
    support, as well as surge capability for lift of a heavy division's
    equipment from the United States. The LMSR's can load/offload in 96
    hours, with a total lift capacity of five million square feet--three
    million square feet of surge sealift and two million square feet of
    prepositioning sealift--a significant part of DOD's overall sealift
    capability. Each ship can carry 300,000-400,000 square feet of unit
    equipment at 24 knots over a 12,000 nautical-mile range. The lead ship
    in the class of new construction RORO's, USNS Bob Hope (T-AKR 300), is
    scheduled for delivery in 1998. Delivery is scheduled for all remaining
    ships by the end of fiscal year 2001.
        Mine Warfare.--Mine Warfare is an essential 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 to enhance the capabilities of dedicated forces
    and vigorously pursue the transition to an organic MCM capability. The
    Navy's dedicated MCM forces, composed of active and reserve surface MCM
    ships, MHC ships, MCM helicopters, and explosive-ordnance-disposal
    divers are among the best in the world. With the addition of the MCM
    command-and-support ship Inchon (MCS12), the Navy possesses a true
    expeditionary mine countermeasures capability.
        Aggressive development of organic MCM systems for forward-deployed
    carrier battle groups and amphibious ready groups is under way. Focused
    science, technology, and developmental efforts are producing solutions
    to difficult mine-warfare problems. For very shallow water, the
    shallow-water assault breaching system (SABRE) system and the
    Distributed Explosive Technology net system are in development for
    delivery in fiscal year 2001. These complementary systems are designed
    to defeat mines and obstacles in the difficult surf-zone region.
        Contributions from organizations outside the traditional mine-
    warfare community are augmenting dedicated and organic MCM
    capabilities. For example, the Oceanographer of the Navy collects and
    disseminates environmental data essential to 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 assess, avoid,
    or neutralize the sea-mine threat.
        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 on board sensors, it
    is clearly preferable to have off board sensors to image tethered,
    volume, and bottom mines accurately. Complete knowledge of the mine
    threat, without unduly exposing reconnaissance platforms, is vital to
    exploiting the tactical benefits of maneuver warfare.
        The Near-Term Mine Reconnaissance System (NMRS) is a mine-hunting
    UUV launched and recovered from a SSN 688-class submarine's torpedo
    tube, and provides a first-time capability. 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
    and will incorporate enhanced endurance, range, search rate, and total
    search-area coverage.
        Tomahawk.--The Tomahawk cruise missile enables surface combatants
    and submarines to launch attacks against land targets from long ranges
    in all types of weather. The fiscal year 1999 budget includes funds to
    procure 114 remanufactured Tomahawk missiles--15 in the Block III
    configuration, which includes the Global Positioning System, and 99 in
    the Block IV (Phase I) Tomahawk Baseline Improvement Program
    configuration, providing improved terminal guidance and precision
    strike capabilities. Last year, the Department proposed initiating a
    major revision to the Tomahawk program, called the Tactical Tomahawk
    Initiative (TTI). Through design and construction techniques, the TTI
    would provide new-production missiles with enhanced capabilities at a
    lower unit cost than would be possible with remanufactured missiles.
    Although the TTI program has not been incorporated in the fiscal year
    1999 budget, it remains under active consideration and may be initiated
    later this year or as part of the DOD fiscal year 2000 budget.
        Theater Ballistic Missile Defense (TBMD).--Sea-based Navy area and
    theater-wide TBMD systems will provide the United States, allied
    forces, and areas of vital national interest, defense against theater
    ballistic missiles (TBM's). There is a straightforward and compelling
    need to rapidly deploy defenses against TBM's on board naval ships at
    sea. First, the threat from theater-range ballistic missiles is real
    and growing. Second, ships take advantage of the inherent flexibility
    and mobility of being at sea. Ships do not require host nation
    permission or support which is critical to safe entry of our forces
    into overseas ports and airfields. This is increasingly important as
    more of our armed forces are becoming CONUS-based. Third, and equally
    important, the United States has the opportunity to capitalize on its
    significant investment in a fleet of highly capable Aegis cruisers and
    destroyers which deploy routinely to hot spots around the world.
        Navy TBMD programs are founded on an evolutionary development
    strategy which leverages previous investments in the Aegis combat
    system, the standard missile, vertical launching systems (VLS), and
    existing communication systems to counter TBM threats. This builds on
    the solid foundation of Aegis ships, trained crews, and existing
    industrial and logistic infrastructure. A comprehensive review of Navy
    TBMD programs was recently completed, with the aim of developing a plan
    to accelerate the fielding of a credible, forward deployed, sea-based
    TBMD capability. Key interrelated programs that form the pillars of our
    acceleration strategy include: (1) increased procurements to accelerate
    TBMD forward fit and backfit of Aegis DDG's and CG's; (2) phased COTS-
    based improvements to the Aegis Combat System leading to a fully
    distributed architecture needed for Navy Theater Wide TBMD; and (3)
    upgrades to battle management and C\4\I necessary to execute TBMD in a
    joint force network centric environment.
        The Navy area TBMD system, which will field a user operational
    evaluation system (UOES) called ``Linebacker,'' on two Aegis cruisers
    in fiscal year 1999, will provide for engagement of TBM's in the
    terminal phase of flight. Aegis ships with the tactical area TBMD
    capability begin delivery in fiscal year 2001. The Navy theater-wide
    TBMD system will build on area system capabilities, adding an ascent
    and mid-course intercept capability that can provide defense for an
    entire theater of operations. Other advantages of ship-based TBMD
    include high survivability, rapid relocation, and self-sustainability.
    Both TBMD programs, as currently designed, are antiballistic missile
    treaty compliant.
        Force Protection Systems.--Confining geography and the
    proliferation of antiship cruise missiles combine to make littoral
    operations particularly challenging. Force protection 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 is a Navy
            plan that integrates and automates the detect-control-engage
            sequence, and provides layered force protection with electronic
            warfare and hard-kill weapons for ships. More than 20
            acquisition programs combine to provide a quick-reaction combat
            capability (QRCC) and integrated command-and-control system.
            The QRCC system architecture integrates several existing stand-
            alone systems. The ship self-defense system provides
            multisensor processing, target identification, and an automated
            detect-control-engage capability. Shipboard sensors are linked
            to establish accurate, correlated, firm-track criteria as early
            in the detection phase as possible. Embedded electronic warfare
            doctrine automates soft-kill and hard-kill weapons for a rapid,
            layered defensive reaction to any detected threat.
      --The Rapid Antiship Missile Integrated Defense System (RAIDS)
            complements the antiship-missile defense capabilities of
            Spruance (DD 963) and Oliver Hazard Perry (FFG 7)-class
            combatants. RAIDS is in production and has been installed in
            Spruance (DD 963). Installation in Oliver Hazard Perry-class
            ships commenced in fiscal year 1997.
      --The Rolling Airframe Missile (RAM) complements existing force
            protection 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 force protection firepower.
            RAM, a NATO-cooperative program with Germany, is in production
            and has been installed in the LHA amphibious assault ships.
            Installations are ongoing in LHD, LSD 41, and DD 963 class
            ships, and are planned in CG 47 through CG 73, CV/CVN, DDG 51
            through DDG 78, and LPD 17 classes.
      --Phalanx Close-In Weapon System (CIWS) provides a fast-reacting
            final force-protection capability for surface ships against
            low-flying and steep-diving, high-speed antiship missiles. A
            high order language computer upgrade increases computer
            capacity and provides 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 1998.
      --The Advanced Integrated Electronic Warfare System (AIEWS) (AN/SLY-
            2) program was accelerated by the CNO on May 14, 1996. AIEWS
            Increment 1 (advanced electronic support) is scheduled for
            fleet introduction in fiscal year 2002, and Increment 2
            (advanced electronic attack) starts subsequent to the Increment
            1 effort. AIEWS, as the replacement system for the AN/SLQ-32
            shipboard electronic warfare system, will use open
            architecture, lowering investment costs and improving system
            effectiveness. Increment 1 provides improved human-computer
            interface, increased emitter processing capability, and
            precision ESM and specific emitter ID (SEI) in 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 nations to improve the ability of the Sea Sparrow
            missile to counter low-altitude, highly maneuverable antiship
            cruise missiles. The program takes the existing RIM-7P Sea
            Sparrow missile and adds a new rocket motor and warhead. The
            ESSM may be installed on LHD, CVN, and DDG 51 Flight IIA-class
            ships.
        Common Missile Development/Standard Missile.--The Navy continues to
    build on the proven Standard missile family by adding capabilities to
    counter existing and emerging threats. Two new upgrades are in
    production:
      --The SM-2 Block IIIB, approved for full-rate production in fiscal
            year 1996, incorporates a dual-mode seeker to provide an
            improved capability against missile countermeasures. It will be
            deployed on Aegis vertical launching system (VLS) cruisers and
            destroyers.
      --The SM-2 Block IV complements earlier SM-2 medium-range variants
            for Aegis VLS cruisers and destroyers. The newest variant, SM-2
            Block IVA, builds on the Block IV missile to provide improved
            defense against cruise missiles and theater ballistic missiles.
        Trident D-5 Missile.--To meet the requirement of the Nuclear
    Posture Review, four Ohio-class submarines currently equipped with the
    Trident I C-4 missile will be upgraded to carry the more capable
    Trident II D-5 missile. In addition, under the conditions of the START
    II treaty, the Navy's Ohio-class submarines will assume a role of
    growing importance within the strategic triad by carrying approximately
    one-half of the allowable strategic nuclear 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
    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 re-
    termination, remoting, or closure was completed in 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 with outstanding results in a variety of
    locations around the world. SURTASS 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) is operational and has
    demonstrated successfully the ability to detect, classify, and track
    quiet submarines. These results validate that acoustic ASW remains
    feasible against advanced-capability nuclear and diesel-electric
    submarines. New fiber-optic technologies, algorithms, and enhanced
    signal processing enable exploitation of weak signals in high
    background noise environments 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 to test and
    validate LFA technologies. Compact acoustic source technologies are
    also under development and 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 (ADS) is a theater-deliverable
    acoustic-surveillance system that provides continuous acoustic coverage
    over vast ocean areas for extended periods. This system can detect
    quiet nuclear submarines, diesel-electric submarines operating on
    battery, ships exiting or entering port, or minelaying operations. The
    importance of portability will intensify as our surveillance
    requirements increase because of a greater focus on the littorals and
    the growing popularity of diesel submarines, and the downsizing of our
    own force.
    Ground Weapons Programs
        Advanced Amphibious Assault Vehicle (AAAV).--The AAAV gives the
    Marine Corps a weapon system fully capable of implementing ship-to-
    objective maneuver (STOM). Currently in the demonstration and
    validation phase, the AAAV will allow rapid, high-speed transportation
    of Marine combat units as they emerge from amphibious assault ships
    located well beyond the visual horizon. It is designed for greater crew
    survivability and maneuverability than the current AAV-7A1, and will
    incorporate a nuclear-biological-chemical protective system. The AAAV
    is targeted for fielding during fiscal year 2006.
        Assault Amphibious Vehicle (AAV) RAM/RS.--A portion [64 percent] of
    the AAV fleet will undergo a reliability, availability, and
    maintainability (RAM) upgrade, and a rebuild to standard (RS) retrofit,
    to ensure Marine AAV's remain maintainable until the arrival of the
    AAAV. The RAM/RS program will incorporate a Bradley suspension and
    engine, and a new transmission. The projected savings of RAM/RS
    compared to the current inspect and repair only as necessary [IROAN]
    program--is $400 to $500 million.
        Lightweight 155 mm Towed Howitzer (LW155).--The LW155 155 mm towed
    howitzer will be a rugged, efficient weapon system. It will replace the
    aging M198 155 mm towed howitzer as the only artillery system in the
    Marine Corps inventory. The LW155 is designed for expeditionary
    operations requiring light, highly mobile artillery, and for transport
    by the MV-22 Osprey aircraft. The howitzer's lighter weight (9,000
    pounds versus 16,000 pounds for the current towed howitzer, the M198)
    and automated breech, rammer, and digital fire control computer will
    provide the MAGTF commander greater operational flexibility, while
    increasing the responsiveness and efficiency of artillery units. The
    program is in the engineering and manufacturing development (EMD) phase
    of the DOD systems-acquisition process. Initial operational capability
    is planned for fiscal year 2002.
        Medium Tactical Vehicle Replacement (MTVR).--The Marine Corps MTVR
    will provide the backbone of future Marine Corps wheeled combat support
    and combat service support. The MTVR will be a quantum improvement over
    existing trucks, incorporating an electronically controlled engine and
    transmission, central tire-inflation system, antilock brakes, and a 22-
    year corrosion control package. Payload capacity will increase from 5
    tons to 7 tons off-road and to 15 tons on-road. The MTVR program is in
    the engineering and manufacturing development phase of the DOD systems-
    acquisition process. Initial operational capability is expected in
    fiscal year 2000.
        Third Echelon Test Set (TETS) AN/USM-657.--The Marine Corps faces
    unprecedented challenges in maintaining the current inventory of aging
    electronic ground weapon systems while simultaneously fielding new
    sophisticated systems. The Marine Corps has adopted the TETS to satisfy
    this requirement. TETS is a diagnostic-testing and fault-isolation
    system for communication-electronic and ground-weapon systems. This
    portable test set can be mounted on the tailgate of a high-mobility,
    multipurpose wheeled vehicle (HMMWV) or housed within maintenance
    shelters. Contract for the TETS was awarded in fiscal year 1997 and
    fielding will begin in fiscal year 1999.
        Javelin.--Javelin, a joint Marine Corps and Army program, is a
    soft-launch, medium-range, fire-and-forget anti-armor weapon system.
    Capable of being fired from enclosed structures, the Javelin offers
    greater protection for the gunner and greater lethality against armor
    targets at medium ranges than previous anti-armor weapons. The Javelin
    consists of a reusable command launcher unit, which can be employed as
    a stand-alone thermal sight, and a missile. Initial fielding is planned
    for fiscal year 1999.
        Predator.--Predator, a short-range assault weapon (SRAW), is a
    Marine Corps anti-armor program with fielding scheduled to begin in
    fiscal year 2001. It will fulfill the Marine Corps' requirement for a
    lightweight, man-portable, disposable, short-range weapon. The missile
    has a soft-launch rocket motor for firing from enclosed spaces, and the
    flyover, shoot-down profile facilitates warhead penetration into the
    vulnerable 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. The newest and most capable naval
    aircraft, the F/A-18E/F Super Hornet, combines the outstanding
    characteristics of earlier F/A-18 models with cutting edge technology
    resulting in an affordable aircraft with significantly improved
    performance and endurance. F/A-18E/F is designed to execute the
    missions and meet the threats through 2015, with greater range and
    payload flexibility, an ability to return to the carrier with more
    unexpended ordnance capability, room for avionics growth, and enhanced
    survivability features. It will increase the capability for naval
    aviation to conduct night strike warfare, close air support of ground
    forces, fighter escort, air interdiction, and fleet air defense. The
    Super Hornet is in the flight test phase of engineering and
    manufacturing development, and has amassed over 2,100 flight hours.
    Initial sea trials were completed in January 1997. Approval for the
    low-rate initial-production (LRIP) of 62 aircraft was received last
    year. Procurement of LRIP aircraft will begin the orderly transition
    from the Navy's F/A-18C and F-14A aircraft to this improved strike-
    fighter. The Super Hornet will comprise most of the carrier-based
    strike-fighter assets by 2008.
        MV-22 Osprey.--The MV-22 Osprey is a tilt-rotor, vertical-take-off-
    and-landing aircraft designed to replace the Marine Corps' CH-46E and
    CH-53D helicopters. The Osprey has accrued more than 1,000 flight
    hours, and has entered the developmental and operational test phase.
    Its performance has been impressive, and its test envelope continues to
    expand. Increased reliability and maintainability were part of the MV-
    22 initial design process. All aspects of the MV-22 have been tested
    for human factors such as adequate access, reduction of MV-22 unique
    tools, and use of on board monitoring systems that determine when
    components need replacement. Its construction incorporates many
    features that enhance its combat survivability, including composite
    structural components that provide increased ballistic tolerance,
    triple redundant digital fly-by-wire flight controls, and a cabin
    overpressurization system that provides chemical and biological
    protection for crew and embarked troops. Aircraft deliveries are
    scheduled to begin in fiscal year 1999.
        AV-8B Remanufacture.--The AV-8B remanufacturing program continues
    on track. Refurbished aircraft with better engines, COTS technology,
    and improved avionics have been joining the fleet since 1996. These
    aircraft will effectively conduct the close air support mission until
    the arrival of the Joint Strike Fighter. The Marine Corps now has three
    variants of the AV-8B Harrier in service: the day attack, night attack,
    and radar/night attack aircraft. The night attack Harrier improves on
    the original AV-8B design by incorporating an improved navigation
    system with a forward-looking infrared sensor, a moving map display,
    and night-vision-goggle compatibility. The radar/night attack Harrier
    (Harrier II+) incorporates these improvements and the AN/APG-65
    multimedia radar. The fusion of night and radar capabilities makes the
    Harrier responsive to the Marine air-ground task force requirements for
    expeditionary, night-and-adverse-weather, offensive air support.
        F-14 Update.--The F-14 Tomcat is now being configured as a potent
    precision-strike fighter. Incorporation of the low altitude navigation
    and targeting infrared for night (LANTIRN) system gives the Tomcat an
    accurate autonomous designation and targeting capability for delivery
    of laser-guided bombs. Beginning in 1997, all forward-deployed carrier
    air wings had LANTIRN capability. In addition to LANTIRN, two major
    flight-safety improvements for the Tomcat also are under way. The
    digital flight control system (DFCS) has demonstrated significant
    improvements in departure resistance/spin recovery and improved flying
    qualities during shipboard recovery. Installation of the DFCS will
    begin in June 1998. The TF30 engine breather-pressure modification
    consists of an engine sensor that detects an abnormal condition to
    allow the pilot time to take action to prevent engine failure. With
    these warfighting and safety improvements, the F-14 Tomcat will give
    battle group commanders a proven warfighting aircraft with added
    flexibility for attack missions until the F/A-18E/F enters the fleet.
        EA-6B Prowler Block 89A Upgrade.--The EA-6B Prowler is the sole
    provider of airborne electronic warfare jamming support to the
    Department of the Navy, and recently was designated a national asset.
    The Block 89A upgrade program addresses structural and supportability
    problems associated with the aging aircraft fleet. Numerous avionics
    improvements for safety of flight and joint operability--including the
    ICAP-III program update--are included.
        Navy Helicopter Master Plan.--The Navy's Helicopter Master Plan
    reduces the Navy's types of helicopters from eight to two, reducing
    manpower and logistics-support costs. The Navy is procuring a U.S. Army
    UH-60L Blackhawk derivative, the CH-60, to replace current logistics
    and combat helicopters. The Navy's current inventory of SH-60B/SH-60F/
    HH-60H helicopters will be remanufactured into a single multimission
    helicopter, the SH-60R.
        AH-1W Super Cobra/UH-1N Huey.--A commonality upgrade titled the H-1
    Upgrades Program (4BN/4BW) replaces the current two-bladed rotor system
    on the AH-1W and UH-1N aircraft with a four-bladed, all-composite rotor
    system, and also adds a performance-matched transmission, drive system,
    and upgraded landing gear. The 4BW also will incorporate a new, fully
    integrated cockpit and six weapons stations. The 4BN maximizes
    commonality and supportability with the 4BW and returns the required
    aircraft power margin, while providing adequate mission-payload and
    warfighting-capability growth potential. The upgrade program will
    reduce life-cycle costs, significantly improve operational
    capabilities, resolve existing safety deficiencies, and extend the
    service life of both aircraft.
        CH-53D/E Sea Stallion.--The CH-53D Sea Stallion is used to
    transport personnel, equipment, and supplies during expeditionary
    operations ashore. Operational safety improvement programs, including
    the global positioning system, improved radios, and night-vision goggle
    heads-up display, will ensure that the aircraft remains capable until
    retirement. In addition to the funded operational-safety-improvement
    programs of the CH-53D, the CH-53E Super Stallion will be provided a
    service-life extension program that extends the Super Stallion's
    service life past 2025 and will include a forward-looking infrared
    system.
        Joint Strike Fighter (JSF).--The joint strike fighter 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 degree of commonality, while still satisfying
    unique service needs. For the Navy, the JSF will provide a multirole
    stealthy strike fighter, to complement the F/A-18E/F. For the Marine
    Corps, the JSF will replace both the AV-8B and the F/A-18A/C/D,
    completing the Marine Corps' neck-down strategy of an all short-take-
    off- and vertical-landing fixed-wing force. Using cost as an
    independent variable, a primary objective of the JSF program is the
    reduction of costs associated with development, production, and
    ownership.
        In November 1996, designs from two contractors were selected to
    compete in the JSF concept demonstration phase. This phase features
    flying concept demonstrators (X-32 and X-35), concept-unique ground and
    flight demonstrations, and continued refinement of the contractor's
    preferred weapon systems concepts. Transition to engineering and
    manufacturing development begins in 2001. Significant savings are
    anticipated from the joint approach to development. The United
    Kingdom's participation as a collaborative partner in the concept
    demonstration phase provides additional savings. Denmark, Norway and
    the Netherlands are associate partners in the program. Participation by
    other allied countries is anticipated.
        Air-to-Ground Weapon Programs.--The most significant joint air-to-
    ground weapon development programs 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 effective against many
    targets during day, night, and adverse weather conditions. It will
    replace a variety of weapons in the current inventory. JDAM is an Air
    Force-led program to develop an all-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+ will add autonomous capability and automatic target
    acquisition (ATA) to the SLAM-ER. The Navy also is planning to increase
    the inventory of laser-guided bombs through the Skipper conversion
    program.
        Area Air Defense Commander Capability (AADC).--The area air defense
    commander requires an advanced planning and execution capability that
    integrates force planning and tactical operations functions. The Navy
    envisions the AADC embarked in an Aegis cruiser supported by a joint
    staff of 40 personnel or less. AADC systems are planned for
    installation on 12 Aegis cruisers, with 2 additional systems designated
    for training. A prototype system will be installed on an Aegis cruiser
    in fiscal year 1999 in conjunction with Navy area theater missile
    defense development. The cruiser conversion plan calls for an initial
    operational capability in fiscal year 2003, with full operational
    capability for 12 cruisers in fiscal year 2006.
        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-weapon 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 Navy, Marine Corps, and Air Force
    aircraft well into the future.
        Unmanned Aerial Vehicles (UAV's).--Naval forces are employing the
    Pioneer UAV system in support of a broad array of expeditionary
    operations, such as reconnaissance and intelligence support in Bosnia.
    Outrider is Pioneer's potential replacement as the naval tactical UAV.
    Outrider is in the advanced concept technical demonstration phase of
    development. A 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).--ATARS is
    the only manned tactical-reconnaissance system for naval combat
    aircraft presently under development, and will greatly increase the
    timely dissemination of imagery-intelligence information to theater,
    operational, and tactical commanders. The system's digital data-link
    capability will allow all levels of command to receive time-sensitive
    imagery simultaneously, enabling accurate intelligence preparation of
    the battlefield and pre-strike planning and post-strike 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 in
    fiscal year 1999, ATARS will be joint-data-link capable and will
    provide support to all services. It will provide high-resolution, 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 (JSIPS) and tactical exploitation groups.
    Information-Superiority Programs
        Navy-Marine Corps C\4\ISR.--The Joint Vision C\4\I For The Warrior
    (C\4\IFTW) challenged the services to develop ``a global C\4\I system
    that satisfies the total information requirements of warriors when they
    fight as a team with a common mission.'' For the Navy and Marine Corps,
    the challenge of C\4\IFTW became a key element in the development of
    our Naval vision for the future, known as COPERNICUS. This common
    vision enables the Navy and Marine Corps to adapt, evolve, and fully
    integrate their command and control, communications, computers,
    intelligence, surveillance and reconnaissance (C\4\ISR) capabilities to
    conduct joint naval expeditionary force operations in the 21st century.
        COPERNICUS is the unifying vision to ensure C\4\ISR systems respond
    to the warfighter, are fielded quickly, capitalize on technological
    advances, and support warfighting concepts. COPERNICUS enables Navy
    C\4\ISR development and implementation, such as the Global Command and
    Control System (GCCS), Global Command Support System, Defense
    Information Systems Network, and the Marine Air-Ground Task Force C\4\I
    (MAGTF C\4\I).
        The joint maritime communications system (JMCOMS) and Information
    Technology 21 (IT-21) are two implementation strategies which will
    leverage commercial technologies to achieve the COPERNICUS vision.
    JMCOMS will improve communication bandwidth utilization whereas IT-21
    will install an integrated communications suite at shore sites and on
    ships at sea.
        The following are programs being implemented under the JMCOMS and/
    or IT-21 strategy;
      --Automated Data Network System (ADNS) is a secure, interoperable,
            multimedia intelligent network management system for data
            transfer. The development of ADNS is based on commercial and
            government off-the-shelf hardware and software. ADNS is
            currently fielded on 25 surface ships and submarines and will
            be installed on all ships and submarines by the end of fiscal
            year 2003.
      --Global Broadcast Service (GBS) is a revolutionary advancement in
            joint communications, providing high-speed one-way broadcast
            video and data service. GBS becomes operational in February
            1998, with the launch of the UFO-8 satellite.
      --Challenge Athena is a program to lease commercial communications
            satellites and facilities to provide wideband connectivity,
            including intelligence imagery, to ships at sea.
      --Joint Maritime Command Information System (JMCIS) is the Navy's
            designated command-and-control (C\2\) system for the future
            global command-and-control system (GCCS). JMCIS follows an
            evolutionary acquisition process to meet emerging fleet
            requirements. This system supports C\2\ and tactical
            intelligence warfighting requirements for afloat, ashore, and
            tactical/mobile units. JMCIS provides timely, accurate, and
            complete all-source C\4\ISR information management and develops
            a common operational picture for warfare mission assessment,
            planning, and execution. JMCIS incorporates the Marine air-
            ground task force (MAGTF) command, control, communication,
            computer, and intelligence (C\4\I) software. The next version
            of the system software will be defense information
            infrastructure common-operating-environment (DII COE) compliant
            and will finalize naval implementation of GCCS, known as GCCS-
            Maritime (GCCS-M). GCCS-M will avoid the year 2000 problem,
            greatly improve network centric warfare, and be integral to
            information technology for the 21st century.
      --Navy Tactical Command Support System (NTCSS) is the afloat system
            that brings existing logistical support systems into a single
            communications database. This effort mirrors the strategy
            utilized by afloat tactical systems. NTCSS provides the afloat
            commander key maintenance, supply, medical, and administrative
            information through the shipboard non-tactical automated
            program (SNAP), the naval aviation logistics command management
            system (NALCOMIS), and the maintenance resource management
            system (MRMS). This NTCSS information will be used to complete
            the tactical picture for the commander. NTCSS systems are
            currently interoperable with worldwide logistics systems
            inventory control and stock points. Standard data elements
            exist through the use of standard military requisition format,
            national stock numbers, and other common Department of Defense
            data elements. The NTCSS initiative is vital to the rapid
            improvement of afloat logistics systems. By the end of 1997, 65
            percent of the NTCSS shipboard installations will be complete,
            providing the fleet with a wide-area networked-based logistics
            system.
        COPERNICUS.--As stated earlier, COPERNICUS is the vision of
    complete integration of C\4\ISR systems in support of the warfighter.
    It provides the technical infrastructure that enables the sensor-to-
    shooter process. This system links targeting information provided by
    the sensor directly to the shooter. Some programs key to supporting the
    COPERNICUS vision for seamless connectivity of an operational picture
    are provided below:
      --Global Command-And-Control System (GCCS) is the over-arching
            command-and-control system for the armed services. It is the
            single most important initiative in the joint C\2\ arena today,
            forming the backbone of the C\4\I for the warrior concept.
            Since achieving initial operating capability, GCCS has expanded
            beyond its initial force deployment, planning, and execution
            capability with applications across all functional areas of
            command-and-control. In fiscal year 1998, existing GCCS
            functions will become defense information infrastructure (DII)
            common operating environment (COE) compliant. Future upgrades
            will include intelligence, meteorological and imagery
            information on a common operational picture (COP), as well as
            better crisis action tools.
      --Mobile Satellite Services (MSS) are leased commercial systems that
            allow mobile users access to specifically tailored and wider-
            band, low-earth-orbit satellite services.
      --AN/PSC-5 Enhanced Manpack UHF Terminal (EMUT) is a lightweight,
            demand-assigned multiple access (DAMA), portable, line-of-sight
            and tactical-satellite-communications terminal that will serve
            as a primary command-and-control single-channel radio for
            MAGTF's. Employed at battalion level and higher, this radio
            provides increased range and reliability. EMUT will be used to
            transmit intelligence traffic, to interface with SINCGARS
            waveforms, and to transmit/receive command-and-control traffic.
            Initial operational capability will be in early fiscal year
            1998.
      --Enhanced Position Location Report System (EPLRS) provides MAGTF
            C\4\I users a dedicated data communications network and also
            serves as the primary source for automated friendly position-
            location information (PLI) and navigation information. EPLRS is
            a computer-based, time-ordered, spread-spectrum radio system,
            operating in the Ultra-High Frequency (UHF) band. Integral
            error detection and correction, cryptographic security, and
            frequency hopping features provide resistance to electronic
            countermeasures (ECM). EPLRS data communications capability
            will be used by the tactical data network (TDN), tactical
            combat operations (TCO) system, advanced field artillery
            tactical data system (AFATDS), and the digital automated
            communications terminal (DACT) to improve data distribution
            below the regimental level. In addition to position location/
            reporting features, EPLRS provides the capability to transmit/
            receive data. EPLRS will be used for data transmission at the
            regimental level and below.
        Cooperative Engagement Capability (CEC).--The increasingly complex
    threats in the air-defense arena make it necessary to link
    geographically dispersed sensors, of differing capabilities, with all
    potential firing platforms. CEC uses sensor netting to make this
    possible. With CEC, it appears to each shooter's combat system as if
    every asset in the data link is that unit's own sensor. Engagements
    using remotely provided track data are 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, including identification information. With the addition of the
    airborne element of CEC in the E-2C Hawkeye, the reach of CEC will be
    dramatically increased. It will greatly enhance our ability to conduct
    overland engagement of cruise missiles, as well. In August 1997, CEC
    successfully passed initial operational test and evaluation. During the
    all-service combat identification evaluation team (ASCIET) 97 exercise,
    CEC's contribution to the establishment of a single integrated air
    picture was showcased in the successful integration of Cape St. George
    (CG 71) and a shore-based Marine Corps TPS-59(V)3 radar. Further CEC
    demonstrations included a Marine Corps HMMWV-launched missile that
    received its initial target data from the cruiser's radar. Currently,
    Army and Air Force are each continuing studies aimed at determining
    potential application of CEC to their service-unique systems.
        To take advantage of the benefits of CEC, the Marine Corps has
    developed a prototype CEC lab to evaluate the integration potential of
    CEC. The focus of the lab is to fuse real-time attributes of CEC with
    the battle management information afforded by such non-real-time
    systems as Link-11 or Link-16. The CEC lab takes advantage of
    commercial-off-the-shelf (COTS) equipment, Internet protocol, and
    capitalizes on commercial technology to distribute the air picture to
    the operator. Future demonstrations of the Marine Corps land-based CEC
    lab and node include the Atlantic Command's theater missile defense
    initiative (TMDI) exercise in the spring of 1998. The Marine Corps also
    will continue support for the Navy's operational evaluation of CEC.
        Marine Corps Aviation C\4\I Improvements.--Quantum improvements
    continue in systems that support the aviation combat element of the
    MAGTF. Phase one's initial operational capability 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 supervise,
    coordinate, and direct the execution and planning of all MAGTF tactical
    operations. Also operational this year is the improved direct air
    support central (IDASC) product improvement program (PIP) and the
    tactical air operations center (TAOC). The ATACC provides great
    enhancements to interoperability with the Navy's joint maritime command
    information system and the Air Force's contingency theater automated
    planning system.
        Marine Corps Fire Support C\4\ Improvements.--The fire support
    command-and-control system (FSC\2\S) is an interim system for providing
    semi-automated tactical fire support and technical artillery fire-
    control for MAGTF operations. The follow-on advanced field artillery
    tactical data system (AFATDS), which will automate fire-support
    command-and-control, will commence fielding of 51 systems in fiscal
    year 1999. The approved acquisition objective (AAO) is 677 units
    through fiscal year 2002.
      --The target location, designation, and hand-off system (TLDHS) 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 that will maximize the effectiveness of supporting
            fires, accommodating laser-seeking precision-guided munitions.
            The TLDH will provide the interface with the AFATDS and with
            digital delivery systems on board aircraft, and will use
            existing and planned communications assets for message
            transmission and receipt. The TLDS is scheduled for initial
            fielding in late fiscal year 2000.
    Information Warfare (IW)
        The gathering and dissemination of information has emerged as
    perhaps the most rapidly evolving, technology-based area of all the
    Warfare disciplines. Its effective implementation will be critical to
    securing the battle space that allows the other warfare commanders to
    perform their missions. In both platform-centric and network-centric
    warfare, IW remains a critical warfare element by itself, and a central
    supporting element to the other warfare commanders. The availability of
    advanced communication technologies in world markets increases the
    likelihood that they will be employed by potential adversaries in
    advanced automated command-and-control systems and as components of
    advanced weapons systems. The adversarial use of these technologies and
    capabilities provides a clear challenge that must be countered.
        COPERNICUS enhances the ability of Naval personnel to successfully
    conduct information operations (IO) and employ information warfare
    (IW). In an age of dynamically evolving command-and-control technology,
    the Navy has found that fleet needs cannot always follow the extended,
    formal requirements and procurement process. In response, the Navy has
    leveraged the dynamic operational interface of the fleet information
    warfare center (FIWC) with the technical expertise provided by the
    Naval information warfare activity (NIWA) to develop advanced
    technology systems to meet rapidly emerging needs. FIWC and NIWA form a
    team uniquely able to recognize, define, build, and deploy equipment to
    meet rapidly evolving IW needs.
        FIWC and NIWA also have been instrumental in expanding
    communications electronic attack capabilities within the Navy. Two
    initiatives include the advanced support pod (an airborne
    communications jamming pod) and the surface communications jamming
    capability (SCJC).
      --FIWC's Naval Computer Incidence Response Team (NAVCIRT) serves as
            the Navy's single point of contact for reporting, identifying,
            assessing, and recovering from computer attacks and viruses. A
            dramatic increase in the number of computer intrusions, probes,
            viruses, and denial of service complaints were reported in
            1997. To combat these attacks, the number of operational
            intrusion detection sensors under FIWC's analytical control
            were doubled. Similarly, FIWC conducted nearly 100 computer
            network vulnerability assessments, more than doubling the
            fiscal year 1996 total. A recent at-sea exercise included FIWC
            as an opposing force intent on disrupting information networks.
        The Surface Cryptologic Systems program is modernizing shipboard
    information warfare to operate in the modern threat environment. Ships
    with Outboard, combat direction finding (Combat DF), and ship's signals
    exploitation equipment (SSEE) will provide that capability in the near
    term, and future ships will incorporate highly automated, open
    architecture, modular IW systems to maintain this dominance.
        Information Warfare (IW) Education and Training.--Education and
    training are critical to IW awareness and the Navy is the lead service
    for formalizing IW training. IW education and training is conducted at
    the Naval Telecommunications Training Center, at the Fleet IW Center,
    and at the Naval Postgraduate School.
    Navy/Marine Corps Intelligence Systems
        Joint Deployable Intelligence Support System (JDISS).--JDISS
    provides common intelligence, communications, and office automation
    applications for U.S., NATO, and coalition operations. JDISS provides a
    responsive, secure information network between intelligence centers and
    operational commanders, including access to national databases.
        Battle Group Passive Horizon Extension System (BGPHES) is a ship-
    based system for the remote operation of airborne signals intelligence
    collection systems and control of local receivers on board the host
    ship. It extends the signal collection range up to 700 miles depending
    upon the altitude of the aircraft. BGPHES completed its first
    operational deployment aboard John F. Kennedy in 1997, operating with
    Navy ES-3A aircraft and Air Force U-2's.
        Common High Bandwidth Data Link (CHBDL).--A wideband data-link for
    the transfer of signal and imagery intelligence data from
    reconnaissance aircraft to shipboard processing systems is a reality.
    CHBDL is the Navy's implementation of DOD's joint common data link
    (CDL) standard. It will initially be used with the battle group passive
    horizon extension system (BGPHES) for tactical SIGINT and the joint
    service imagery processing system-navy (JSIP-N) for tactical imagery.
    This point-to-point duplex link gives real-time control of airborne
    sensors with direct downlink of collected data to afloat commanders.
        CHBDL completed a successful first deployment with the John F.
    Kennedy (CV 67) battle group in 1997. CHBDL is programmed for
    installation on board all aircraft carriers, large-deck amphibious
    ships, and fleet flagships.
        Marine Corps Intelligence Programs.--The Marine Corps' research,
    development, and acquisition of tactical intelligence systems continue
    to improve intelligence support to MAGTF commanders. Upgrades to
    tactical intelligence capabilities are being addressed through programs
    within the joint military intelligence program (JMIP) and tactical
    intelligence and related activities (TIARA).
        Improvements to imagery intelligence capabilities are being
    accomplished through the joint services imagery processing system
    (JSIPS) national-input segment, which provides deployed Marine forces
    with national imagery support. Beginning in fiscal year 1998, each
    Marine expeditionary force will receive a tactical exploitation group
    to receive, process, and disseminate imagery from F/A-18D ATARS-
    equipped aircraft, and other theater and national collectors. Marine
    Corps signals intelligence (SIGINT) improvements include the radio
    reconnaissance equipment program SIGINT suite-1, the technical control
    and analysis center (TCAC), the team portable communication
    intelligence system (TPCS), and the testing of improvements to the
    mobile electronic warfare support system (MEWSS). Additionally, the
    Marine Corps participates in the ongoing, congressionally-mandated
    tactical exploitation of national capabilities (TENCAP) program,
    designed to exploit national overhead reconnaissance systems and
    explore emerging technologies. Other program initiatives to enhance
    Marine Corps intelligence capabilities include:
      --Intelligence Analysis System (IAS) provides the backbone for
            tactical intelligence fusion in support of the Marine
            expeditionary force (MEF) command element down to the squadron.
            The MEF IAS configuration is a mobile system with multiple
            analyst workstations in a client-server LAN. Lower echelon
            configurations can range from individual to multiple
            workstations. IAS is capable of communication with other
            intelligence systems at the national, theater, and tactical
            levels.
      --Manpack Secondary Imagery Dissemination System (SIDS) enables the
            MAGTF commander to collect, store, display, manipulate, and
            transmit digital reconnaissance imagery in near-real-time. SIDS
            consists of digital cameras and palmtop processors, which allow
            reconnaissance units to take pictures and immediately transmit
            them back to a base station for exploitation and dissemination.
            SIDS is programmed to be fully operational by fiscal year 1998.
      --Counterintelligence and Human Intelligence Equipment Program
            (CIHEP) provides equipment to conduct controlled,
            surreptitious, and tactical intelligence gathering operations
            that directly support antiterrorism and force protection. CIHEP
            integrates audio, video, photo, communications, and automated
            data processing to report and disseminate counterintelligence
            information.
    Non-Lethal Weapons
        The DOD-wide nonlethal weapons (NLW) program, directed by the
    Commandant of the Marine Corps as executive agent, encompasses a broad
    range of nonlethal technologies. These systems, which include 14
    multiservice projects currently receiving joint research-and-
    development funds, provide the field commander more options for
    response to contingencies, especially those dealing with military
    operations other than war. Although Marine expeditionary units
    currently have NLW-capability sets and deployed U.S. Army units have
    been trained in some basic (40 mm and 12 gauge) NLW munitions, these
    items provide only a modest nonlethal capability. They do, however,
    provide the ground commander an ability to disperse or discourage
    crowds and seize or temporarily incapacitate individuals. Ongoing NLW
    projects range from stingball munitions to acoustics and other
    directed-energy systems. The fielding of these systems is planned over
    the next 7-10 years, with the more basic munitions expected to be in
    the inventory by the year 2000.
                conclusion: charting a course for future success
        In the ``. . . From the Sea'' revolution, the Department of the
    Navy has begun to lay out its transformation strategy and to chart a
    course into the 21st century. Our challenge is clear: to be the best
    Navy-Marine Corps team in the world today, tomorrow, and in the decades
    to come. We are moving aggressively to meet that challenge on all
    fronts.
        We recognize that forward, balanced, flexible naval forces will be
    a key part of implementing our national security strategy of
    engagement, and that they will play a unique role in shaping a stable
    and prosperous future. Accordingly, we must sustain our current
    operational primacy in a rapidly evolving strategic landscape. We have
    already laid the foundation for our future primacy, but know that we
    must go much further. We must explore still more ways of serving our
    nation's changing needs and we must expand the revolution in naval
    affairs that has already begun.
        We recognize, too, that new concepts, in themselves, are not
    enough. We will transform our forces with the technologies of a new
    age, and make rapid technological change our ally. That will mean
    streamlining--revolutionizing--the way we do business. We will balance
    carefully our investments in people, readiness, technology, force
    structure, and modernization, to ensure that our people have the tools
    they need, when they need them.
        Finally, we recognize that our success ultimately depends on
    dedicated, innovative personnel. Our naval forces are blessed with the
    world's finest Sailors and Marines. They are our ``secret weapon.'' We
    will nurture that core intellectual capital of our revolution and
    encourage the new thinking that will keep our Navy and Marine Corps
    team great.
        The future of our Naval Service is bright. We will meet the
    challenges of a new world, and we will thrive on them. We will ensure
    that this nation has a decisive impact from the sea, today and
    tomorrow--anytime and anywhere.

                       opening remarks of admiral johnson

        Senator Stevens. Admiral Johnson.
        Admiral Johnson. Thank you, Mr. Chairman, good morning,
    Senator Inouye and members of the committee. I will be very
    brief.
        I would start just by saying that I share the Secretary's
    enthusiasm for the Navy and Marine Corps team, I am intensely
    proud of our great Navy. I think we have had a very good year,
    we intend to have another one. The trend is in the right
    direction.
        We are on station, where we belong, ready to execute the
    full spectrum of tasking that may be laid upon us. I would
    characterize it as an even strain out forward, and I talk to
    them almost daily, and they are very much ready in every
    respect.
        As to the budget, I would characterize it as a good
    balanced budget. It does reflect the work we did in the
    ``Quadrennial Defense Review,'' it does reshape the Navy to
    what I would call a leaner but more capable force, which allows
    us to then reinvest and focus our investments, if you will, on
    operation and maintenance, manpower, and procurement accounts,
    so that we will not have to, hopefully, come back next year for
    the kind of reprogramming we are just discussing now.
        I believe it to be a very good budget, and like the
    Secretary and the Commandant, I am very, very grateful
    personally and professionally for the support that we get from
    this body, and I am ready for your questions, sir.
        Senator Stevens. General Krulak.

                       opening remarks of general krulak

        General Krulak. Yes, sir; you have my testimony, so I will
    be very brief.
        First, like Admiral Johnson and the Secretary, I want to
    thank you very much for what this committee has done for my
    individual marines. There are a lot of big-ticket items that
    are important to me, but nothing is more important than that
    individual marine, and a lot of what you have done has made his
    life a lot better.
        There are 24,497 of those marines forward deployed right
    now, as we speak, as we sit here, almost 24,500, away from
    their families for 6 months to 1 year, and I just wanted you to
    know that they are doing a hell of a job.
        Third, sir, I hope that you are wearing that nice dark
    green uniform for me--as a marine. Just kidding, sir.
    [Laughter.]
        I thought that you were wearing that for me, sir. I am
    ready for your questions.
        [The statement follows:]

                  Prepared Statement of Gen. Charles C. Krulak

        There is a direct and undeniable link between our strong
    and virile economy and the stability of the world in which we
    trade. The Quadrennial Defense Review, mandated by Congress,
    validated the unique effectiveness of naval forces in
    contributing to crisis prevention and crisis resolution--to
    promoting that stable world. The National Defense Panel
    provided an independent assessment. Once again naval forces,
    with our ability to stand off a potential hotspot for
    indefinite periods of time--with no issues of sovereignty, no
    issues of basing rights and with no host nation support
    agreements required of any kind--was validated as one of our
    nation's most useful tools for maintaining world stability. Our
    ``Presence''--the presence of United States Marines forward
    deployed at critical points around the globe contributes
    significantly to this nation's ability to ensure world
    stability.
        But, the old adage, ``You have to spend money to make
    money,'' is true. And you have done just that. The money you
    have provided the Marine Corps has been well spent. We have
    endeavored to be frugal. We fully understand and appreciate
    Congress' efforts to balance our federal budget and provide for
    the financial security of our nation. But even in the face of
    that daunting task, you have seen the value of equipping and
    funding your Marines. And I want to thank you for that. I want
    to thank you on behalf of that vigilant Marine standing his
    post in the rain on the other side of the world. Due to your
    foresight, he's warm and dry in his new Gor-Tex parka. I want
    to thank you on behalf of the Marine infantryman, who is today,
    walking in a pair of comfortable, quality boots--boots built to
    support him in ``every clime and place.'' You cannot believe
    what a difference that makes. I want to thank you for the
    ammunition, the spare parts, and operating moneys which
    translate into training and readiness. Readiness is paramount.
        I want you to know that we not only appreciate what you
    have done for us over the last several years, but that we have
    endeavored to enhance our capabilities utilizing that which you
    have provided. We feel strongly that we have succeeded in that
    undertaking. As an example, the funds provided for the
    Warfighting Laboratory have been put to good use in our Sea
    Dragon experiments. The first Advanced Warfighting Experiment
    (AWE), Hunter Warrior is complete. We learned much. We
    anticipate learning even more from the next AWE, Urban Warrior
    which is now underway with an anticipated conclusion in the
    spring of 1999. In Urban Warrior we are investigating new
    technologies, concepts and organizations for operations in the
    burgeoning urban littorals--areas which the QDR and the NDP
    both agree will be important in the decades ahead. But we are
    not just testing new ideas--not just gathering data. As a
    result of the Lab's conclusions, we are actually fielding new
    capabilities. I've spoken before of the Chemical Biological
    Incidence Response Force, now a unique part of the nation's
    defense. But, there is much more. We have begun to field non-
    lethal weapons sets with our Marine Expeditionary Units world-
    wide. These sets don't, in any way, dilute the lethality of the
    Marine Air-Ground Task Force but rather they give the commander
    a broader selection of capabilities. And, this summer, our
    MEU's will deploy with the Dragon Drone, an Unmanned Aerial
    Vehicle. In a short period of time--certainly very short when
    compared to traditional research, development and acquisition
    procedures--we have taken an off the shelf piece of equipment,
    the Dragon Drone, enhanced its performance, conducted
    experimentation, and then fielded a capability that greatly
    increases the battalion commander's ability to fight. This
    single UAV provides over-the-horizon day or night
    reconnaissance, surveillance, target acquisition, and even
    delivers non- lethal weapons. Given its breadth of
    capabilities, this is an inexpensive system with a price tag of
    between $45,000 and $90,000, depending on the configuration.
        All these things and much, much more are discussed in our
    booklet ``United States Marine Corps Concepts and Issues
    1998.'' I commend it as an excellent resource which provides
    information on a range of Marine Corps topics from, procurement
    programs, to personnel programs such as recruiting and our
    transformation process, to our operational concept, to the
    activities of the Marine Corps Warfighting Laboratory and its
    series of Advanced Warfighting Experiments.
        When I first came before Congress, I was asked, if I could
    have anything for the Marine Corps, what would it be? I told
    you, I'd like to retire some of our Korean War vintage personal
    equipment and outfit your Marines with modern gear that would
    make them more effective in the field. You helped with that and
    so much more. Again--thank you. I further thank you for
    recognizing the value of the V-22 tiltroter aircraft. This
    aircraft exponentially increases the effectiveness of our
    forward deployed expeditionary forces. The QDR recognized this,
    and today, because of the foresight of the Congress, the
    administration, and the Department of Defense (DOD), we will
    more rapidly assimilate this unique capability, having moved 11
    planes from the out-years into the current Future Years Defense
    Program (FYDP). This action had two very advantageous effects.
    First, it decreased the unit cost, and saved the American
    people tens of millions of dollars. Second, and more
    importantly, there is no new capability being procured by the
    DOD today which yields such a significant--such a
    revolutionary--difference, in our ability to fight the nation's
    battles, as the V-22 Osprey. And I don't just mean a tactical
    difference, although the scope of tactical applications is
    truly staggering. The procurement of an operational V-22
    capability has enormous strategic implications. Because it
    flies at speeds only achievable with a fixed wing aircraft and
    because it can refuel in flight, the Osprey can self deploy. We
    can pick up combat loaded Marines in CONUS and move them to
    point of crisis--quite literally anywhere in the world. And, we
    don't need an airstrip when we get there. It flies like an
    airplane, takes off, hovers, and lands like a helicopter and
    has a greater payload and greater range than mid-sized
    helicopters. When we field operational squadrons of V-22's, the
    warfighting CINC's and the NCA will have a host of options
    never before available--options and capabilities found in no
    other military in the world.
        America depends on and uses her Corps of Marines. This has
    never been truer than it is today. During the cold war, Marines
    were called upon to respond to crisis about once every fifteen
    weeks. Since the cold war, that commitment has tripled to once
    in every five weeks. Since my testimony just last year, the
    people have sent us to do their bidding in the world, on ten
    separate occasions. We were there. We were ready. And to ensure
    we continue to be ready, we maintain an average of 23,464
    Marines forward deployed--ready to respond when the nation
    says, ``Send in the Marines!'' We do two things for this
    nation, we make Marines and we win battles. Congress, who
    handles the purse strings of the nation, has done much to equip
    us to win those battles. I want to tell you the people's money
    has been well spent. I ask you for your continued support.

                          Carrier rotation in the gulf

        Senator Stevens. Mr. Secretary, we did take part of the
    committee to the South Pole, and on the way we happened to see
    Adm. Bob Natter, who was moving the Seventh Fleet, the
    Independence battle group, around to the Persian Gulf. We had a
    very interesting visit with him and some of his people, a very
    interesting coincidence. You mentioned that deployment.
        Can you tell the committee a little bit more about what the
    rotation policy will be for the Navy, and your personnel now,
    in terms of that deployment. It looks like an early and
    definite deployment.
        Secretary Dalton. Well, we plan to have the two carrier
    battle groups and the amphibious-ready group in the gulf for
    the foreseeable future. The Independence responded to the call,
    and I have a personal good feeling for that ship.
        I spent my youngster cruise on that when I was a
    midshipman, and it is the oldest ship in our fleet today, and
    continues to do an outstanding job, but we anticipate being
    there in the force that we are there today for the foreseeable
    future.
        In terms of the rotation, the U.S.S. Carl Vinson is
    steaming toward the gulf today and will be replacing or
    relieving the U.S.S. George Washington. Excuse me. The Stennis.
    Excuse me. The U.S.S. John Stennis will be relieving the George
    Washington, and we are staying on our 6-month deployment
    schedules.
        We learned a valuable lesson in the seventies when we
    reached a hollow force by keeping our people deployed for long
    periods of time, 8, 9, 10, sometimes 11-month deployments.
        Our people come into the Navy and Marine Corps to go to
    sea, they expect to deploy, but we have learned through
    experience that 6 months is the right period of time, and this
    6-month rotation cycle is one that we adhere to. For it to be
    broken, it actually has to be approved by the Chief of Naval
    Operations, and he has only done that rarely in the last few
    years.
        So by staying on that rotation, having these ships relieved
    by their shipmates and counterparts coming into the gulf is the
    right thing to do.
        Obviously, keeping that number of carriers and that
    amphibious ready group in the gulf for a long period of time
    does take away from their capability to be someplace else, so
    that is a strain, and we are also steaming these ships longer
    than their steaming days per quarter, or higher, on the
    deployment in the gulf than they normally would be, because
    they have a big job to do.
        So that is the plan, and it is one that we can certainly
    carry out for an interim period of time. If we had to do it
    long term, it would put a strain on us and not be able to cover
    other commitments in other parts of the world.
        Senator Stevens. Thank you very much. Gentlemen, I hope the
    committee will not run the clock, but I ask each of you to
    limit your questions somewhere around 5 to 7 minutes.

                              New attack submarine

        Senator Inouye.
        Senator Inouye. Thank you. Mr. Secretary, last year the
    Congress approved legislation for a contractor teaming
    arrangement and the procurement of four new attack submarines
    over the coming years. Can you give this committee a status
    report on the new attack submarine program?
        Secretary Dalton. Yes, sir, Senator. The Congress directed
    that we budget four submarines in the fiscal year defense plan
    [FYDP], and at this low production rate the most economical
    approach to build submarines at two yards was to look for
    efficiencies in the major portions of the production. This was
    an innovative, unique approach to having these two yards team,
    and we appreciate the support of this committee in allowing us
    to do that.
        We think it will save some $600 million over the FYDP by
    having these two yards work together in this way, and I am very
    pleased with the progress to date. So far, of the 12,000
    drawings, some 5,000 are already complete, the contract
    proposal was received from Electric Boat and Newport News in
    mid-December. We expect to award the contract for the first
    submarine in the second quarter, by the end of June. The
    project is on schedule for mockup development and we will
    actually cut steel on production of a prototype of the
    bulkhead, in April. So the program is on schedule and it is
    doing well. It is one that was a real innovation on behalf of
    the Navy Department but I am convinced that it is in the best
    interest in the Department of the Navy and the taxpayer.
        Senator Inouye. Admiral Johnson, on November 21 of last
    year, your Vice Chief of Naval Operations announced that the
    Pacific missile range facility [PMRF] is the best choice to
    conduct antiballistic missile defense programs. Can you tell us
    why PMRF was designated the best choice?
        Admiral Johnson. Senator Inouye, there are several reasons
    that brought the Vice Chief to that statement, and I will just
    state a couple of them here. First, and really foremost, in my
    mind, is the open, unencumbered space attendant to the Pacific
    missile range facility.
        A secondary and also very important reason for us is that
    the first two ships that will be equipped with the area theater
    ballistic missile defense capability are home ported in Pearl
    Harbor. It is a logical fit for them to execute the test
    program that will commence next year in the local area, for
    quality of life for the crew, for what we have learned in the
    Mountain Top experiments that we did previous, et cetera, so it
    is a very strong allegiance we have with the PMRF.

                            Recruiting and retention

        Senator Inouye. General Krulak, in your prepared statement
    you note the high rate of crisis to which the marines are
    responding. In fact, you say that it used to be once every 15
    weeks, now it is triple, once every 5 weeks.
        Other services somehow connect high rates of deployment to
    their problems of retention and recruiting, and yet I note from
    your report that you do not seem to be suffering from the same
    problem. What is the reason?
        General Krulak. I think it is a couple of reasons, sir. One
    is the ethos of the Marine Corps, they come in, as the
    Secretary says, to deploy. They are the type of young men and
    women of character who literally say we are going to come here,
    we know we are going to be worked very hard, that is why we
    have come into the service, and so that is their basic
    philosophy coming in.
        Second, I think they get a heck of a challenge, they are
    doing something very important for the Nation, and there is not
    a young man and woman around who does not get fired up about
    the opportunity to do something meaningful for their country.
        Third, I think they get good leadership, to be very honest,
    and I do not mean from the general level, I mean from the
    corporal, and the sergeant, and the gunnery sergeant level,
    maybe the captains and the lieutenants, but at the base level
    they are really being led by tremendously fine men and women.
        Fourth, that is reflected in not only our accessions,
    recruiting, but more importantly, in retention. By the end of
    this first quarter, we had utilized 88 percent of all of our
    available boat spaces to reenlist people.
        At the end of 3 months we only had 12 percent of the corps
    left to go, we literally had to slow retention in order to
    allow those people who were coming up in the following months
    to get an opportunity to reenlist in the corps, all of it,
    because I think they are getting the type of challenge that
    they sought when they came in, in the beginning.
        Senator Inouye. Thank you very much. Mr. Secretary, your
    commander of the Pacific Fleet, Admiral Clemins, has made it a
    high priority to have new housing and other facilities on Ford
    Island, and obviously, we do not have that kind of money to
    budget this type of activity, so a suggestion was made that the
    Navy enter into agreements with the private sector to offset
    the costs of this proposal. Can you tell me what the status is?
        Secretary Dalton. Senator, as you point out, Admiral
    Clemins, CINCPACFLEET, has submitted a conceptual plan for the
    development of Ford Island. It is his judgment that this will
    provide a focal point for Pearl Harbor, a quality residential
    community for the Navy Department, and also establish a place
    for Navy history and culture. He has also proposed draft
    legislation which would give the Navy Department the broad
    authority to lease or convey the property to private entities
    to construct and operate military housing and other facilities.
    We are reviewing that proposal within the Navy Department
    today, and I look forward to getting the briefing and seeing if
    we can move forward with it as well.
        Senator Inouye. Are you optimistic?
        Secretary Dalton. Yes, sir; from what I know about it, it
    is a good proposal, but I do not have the details yet. I know
    that Admiral Clemins feels very positive about it, and he and
    his staff have done a great deal of work on it. I look forward
    to seeing it personally.
        Senator Inouye. Thank you.
        Senator Stevens. Senator Bond.

                                   F/A-18E/F

        Senator Bond. Thank you very much, Mr. Chairman. Mr.
    Secretary and Admiral Johnson, we have heard that the E/F, the
    Navy's F/A-18E/F program is your No. 1 priority, can you also
    assure us that long-lead funding for the F-18 will be protected
    from reprogramming raids, to fill other shortfalls, so that a
    multiyear procurement may be securely negotiated in the near
    term?
        Secretary Dalton. Senator, as I said in my opening
    statement, this is our No. 1 priority, this program is doing
    extremely well. It is on time, on budget, under weight. We are
    in the test phase of the program, and there are always issues
    that we deal with in the test phase, but this program is doing
    extremely well. We do want to, indeed, protect this program,
    and go forward with the multiyear.
        The CNO has been actively engaged, actually been down to
    fly the Super Hornet, as Congressman Cunningham has recently.
    We always welcome that and would welcome any of you that would
    like to go----
        Senator Stevens. They both came back safely----
        Secretary Dalton. Yes, sir, they did.
        Senator Stevens [continuing]. The plane and the
    Congressman.
        Secretary Dalton. Absolutely.
        Senator Stevens. Good.
        Secretary Dalton. Let me ask the CNO to expand on that,
    please.
        Admiral Johnson. Only to say, Senator Bond, that personally
    I want to build a fence around the E/F so that nothing
    encumbers our climb to steady-state procurement, so that we can
    lock in the multiyear, that is really important to us, that is
    why the 30-year plan this year is important.
        We have to get up on that ramp stabilized, so we can get
    those airplanes, for the best dollar value, out to the fleet,
    ASAP.
        Senator Bond. Thank you very much, Admiral, and Admiral,
    addressing the Navy standoff, SLAM-ER, does the Navy have a
    unique requirement for a man in the loop in your standoff air-
    to-surface weapon, and could you explain what parameter is met
    by including a man in the loop, for the benefit of the----
        Admiral Johnson. Yes, sir; I think the best way to say it
    simply is that the reason the Navy is so enthusiastic about
    SLAM-ER is because it does satisfy the man-in-the-loop
    requirement, which gives us the capability to reprogram that
    missile. Relocatable target flexibility, that is really what it
    is all about.
        By the way, we have had four in a row, very successful, not
    trivial profile test shots with the SLAM-ER, so we are very
    excited about that missile.
        Senator Bond. But the man in the loop, as I understand it,
    is because there is a pilot----
        Admiral Johnson. Indeed.
        Senator Bond [continuing]. Who is much close to the----
        Admiral Johnson. Exactly.
        Senator Bond [continuing]. Missile and the target.
        Admiral Johnson. It gives you the combat tactical
    flexibility to essentially deal with relocatable targets, real-
    time.
        Senator Bond. That is the point I want to make. Thank you.
        Admiral Johnson. Yes, sir.
        Senator Bond. For a moving target you can make that----
        Admiral Johnson. Indeed.
        Senator Bond [continuing]. Reprogramming. Final question.
    Mr. Secretary, I know your budgeting a funding plan which takes
    advantage of a proposed multiyear procurement for the T-45.
    Would you please explain that for the committee?
        Secretary Dalton. Yes, sir, we are, and we are pleased with
    the progress of the T-45. We had a very nice roll out of that
    down at Meridian, MS, last year. The T-45 is doing well, and we
    are moving forward with the multiyear.
        Senator Bond. What is your time line for the execution once
    authorization is granted?
        Secretary Dalton. Let me answer that for the record, if I
    could, please, Senator.
        Senator Bond. All right. Thank you very much, Mr. Chairman.
        [The information follows:]

        The timeline for the execution of the T-45 Multi-Year
    Procurement is 15 aircraft per year for fiscal year 1999-2002,
    and 4 for fiscal year 2003. This 64 aircraft buy (at a savings
    of $47.4 million over the current non-MYP plan) completes the
    T-45 buy of 187 aircraft required under current planning
    factors. The final T-45C aircraft bought in fiscal year 2003
    will be delivered in fiscal year 2005. Once authorization for
    fiscal year 1999 funds is received, the MYP contract can be
    awarded shortly thereafter. Current plans are for a December/
    January award.

                                 300 ship Navy

        Senator Stevens. Senator Cochran.
        Senator Cochran. Thank you, Mr. Chairman. Mr. Chairman, I
    join you in welcoming this distinguished panel of witnesses
    before our committee today.
        In looking at the budget request for the Navy and the
    Marine Corps, there are obviously very strong efforts to meet
    the needs that we have for a mobile force that can project
    power around the globe right now, that force is stretched
    pretty thin, and I think that is very clear from not only the
    statements that have been submitted to the committee, but also
    the budget requests, particularly as it relates to helping meet
    some of the needs for having equipment and ships that are
    modern and capable to meet this ever-growing challenge that we
    face around the world.
        In that connection, I know that there has been a goal for
    some time of 300 ships for the Navy. That is the operational
    requirement that has been viewed as the Navy's goal, but you
    look at the money that is in the budget for ship building and
    it does not really keep pace with the need for new ships coming
    into the fleet to maintain a 300-ship Navy. I think the
    increased rate of construction that is projected in this budget
    is something like 5 ships to 6 ships per year, you really need
    to build about 10 ships each year over the next several years
    to get us on the track to meet that goal.
        Have we abandoned the goal of a 300-ship Navy, or are we
    getting ourselves in trouble in the out-years by not having
    more money devoted to ship building?
        Admiral Johnson. Senator Cochran, no, we have not abandoned
    that. We, indeed, plan to be at 300-plus ships well into our
    future. It does not make sense to build ships before we need
    them.
        We, indeed, were building up to a 600-ship Navy during the
    1980's, so we have a relatively young fleet. It is important
    that we build ships when we need them, but let me emphasize the
    point that early in the 21st century we are going to need to
    build more ships.
        This DD-21, the surface craft of the 21st century that I
    referred to in my opening statement, is a ship that we are
    going to be building more of, and that ship is going to have
    fewer sailors aboard, less than 100 compared to the over 300
    that we have aboard ships that are of a similar type ship that
    we have sailing in the Navy today.
        The life cycle cost savings from that is some 70 percent.
    It is really significant. We think that by taking that approach
    we will be able to build more of those ships, and, indeed, keep
    our Navy at the size that we need to be in order to meet the
    commitments around the world.
        We no longer need the 600-ship Navy that we once thought,
    because the ships that we are building today are so much more
    capable and can do so much more with even fewer sailors than
    those that they are replacing.

                                  LHD's/LHA's

        Senator Cochran. We noticed also that the ship groups that
    you have deployed in the Persian Gulf area, the general area,
    include an LHD Marine Corps battle group, along with two
    carrier groups. It illustrates the importance, I think, of the
    Marine Corps participation in that exercise, but also similar
    challenges that we have had in the past.
        One question that I raised the other day in a meeting with
    Admiral Johnson was whether or not you are planning to ask for
    long lead funds for a new LHD.
        It seems to me that at one point we were talking about a
    12-ship LHD fleet, we are substantially below that, and not
    going to be able to reach that unless we do get some funds in
    the budget and start preparing for the construction of another
    LHD. I would like to get the Secretary's reaction, and then
    both Admiral Johnson's and General Krulak's response to what
    that need might be.
        Secretary Dalton. Senator Cochran, we are committed to the
    12 amphibious ready groups for our Navy Department. We are
    studying the option of whether to procure another LHD, or to do
    a SLEP, a Service Life Extension Program plan for the LHA's. We
    are looking at that option, and also considering the option of
    perhaps even accelerating the LHX, the next generation.
    However, we have not made a decision with respect to that, we
    are addressing it in our POM-00, which will be coming near
    term, and evaluating each of those options. I think options is
    the key word with respect to that, but let me ask the Chief of
    Naval Operations [CNO] and the Commandant to express
    themselves.
        Senator Cochran. Well, let me just follow up with this
    additional question.
        Secretary Dalton. Yes, sir.
        Senator Cochran. What is the preferred way--to build a new
    LHD or to repair the LHA's?
        Secretary Dalton. There are pros and cons to each way, in
    terms of considering costs, production, and also the ability to
    insert new technology. Those are the things that we are
    considering as we look at each of those options.
        Senator Cochran. Admiral Johnson.
        Admiral Johnson. Just a couple things to add, Senator
    Cochran. One is, and I think it is very important for the
    record that I mention the ``Quadrennial Defense Review'' on the
    front end in my remarks. The ``Quadrennial Defense Review''
    validated what Chuck Krulak and Jay Johnson would say is
    something that is fundamental to the future of the Navy and
    Marine Corps team, and that is 12 carrier battle groups and 12
    amphibious ready groups, so as the Secretary said, 12 is the
    right number. How we shape the amphibious ready group for the
    21st century is very important to us, obviously.
        We are looking at the options. For me, in order to provide
    for the Commandant's marines, I need the best, most combat-
    capable platform I can get that will allow me to keep ahead of
    the technology curve, and however that translates into these
    options, that is what we are going to go for, but we are very
    excited about the future prospects for the 21st century.
        Senator Cochran. I could not agree more. Twelve big deck
    amphibs is key, not just for the Marine Corps, but for the
    Nation.
        We have talked a little bit about where they are now, and
    we say there is only one in the Persian Gulf. The reality is,
    it just got there, relieved one that is now in the Gulf of
    Aden, there is one that is coming through into the
    Mediterranean, as we speak, there is one in Stonewater Bay,
    Australia, as we speak, so we have four amphib ready groups
    right now operating, four deployed, for the Nation.
        The capability issue is key. You will want to have the most
    capable ship, you do not want to get something that is not
    going to take you into the 21st century.
        Senator Cochran. Thank you very much. Thanks, Mr. Chairman.
        Senator Stevens. Senator Dorgan.

                         capability to perform Missions

        Senator Dorgan. Mr. Chairman, I thank the witnesses, I
    thank Secretary Dalton and the General and the Admiral for
    being here. The discussion about appropriations is normally a
    discussion about unmet needs, which brings our attention to
    capability.
        I read, and see, and hear from time to time people
    describing the Defense Department and the military branches as
    not capable to perform their missions, substantially weaker
    than at the height of the cold war, and so on and so forth.
        So I wonder if you could just give us the description of
    capability at this point. Are you concerned about your
    capability, are you fully capable of performing all the
    missions? And, again, I ask that question, understanding that
    the discussion about appropriations is always about unmet
    needs.
        General Krulak. That is a very good question, sir, because
    you have come to the real hub, because it does have to do with
    money, also. It's the question of capability versus a system,
    or a platform, or numbers of people, and too often we get
    wrapped around the latter and not around the former, which is a
    capability.
        In the Marine Corps we are capable of executing that which
    we have signed up to execute. We have never been a two MRC
    force, we have always just been a one. We are capable of doing
    that.
        Our problem is simply what's going on behind the scenes, as
    we come back, or as Jay will tell you, as he comes back. The
    ability to get that carrier battle group or the amphibious
    ready group back up on the step, ready to go out when the
    whistle blows, is taking longer, and taking more money because
    of the systems. Now you are on this end of it--because the
    systems are aging, and the cost of maintenance and repair is
    increasing. The capabilities there, sir, it is what backs that
    capability up as you prepare for the next wave to go out.
        Senator Dorgan. That relates to the kind of question
    Senator Cochran asked about the replacement of ships, and so
    on----
        General Krulak. That's correct.
        Secretary Dalton. Yes, sir. Absolutely.
        Admiral Johnson. I would only add, Senator Dorgan, that the
    committee knows well that we are a rotational force, and when
    you cast it in the terms of capability, I would tell you, as
    Chuck did for the Marines, that the Navy forces that are out
    forward are absolutely capable of executing the full spectrum
    of their mission tasking.
        The concern, the unmet need discussion, really, in my view,
    belongs on the nondeployed side of our lives, and that is where
    our focus of effort is being put right now.
        We are a tiered readiness force. We always have been by
    design. We are fully combat ready when we deploy, when we come
    home we step off the readiness ladder, if you will, and then
    work our way back up over the period called the interdeployment
    training cycle.
        What has happened to us right now is that if you describe
    that interdeployment training cycle as a bathtub, I would use
    the term that the bathtub has gotten deeper. The climb out of
    the bathtub to go back on the deployment step comes later in
    the turnaround, and it is a steeper climb out.
        That is where we are focusing our money, that is where we
    are focusing our priorities, so that we can get ourselves back
    to what I would consider a normal turnaround.

                     Theaterwide ballistic missile defense

        Senator Dorgan. I have a couple of additional questions.
    Secretary Dalton, you and I talked yesterday, and I asked you
    about the theaterwide ballistic missile defense system that the
    Navy is developing.
        Can you describe for us generally the capability of that
    system? I had read that you are accelerating that program. What
    are the consequences of that?
        Secretary Dalton. Senator Dorgan, our Navy theater
    ballistic defense program is on track, we feel very good about
    the progress that we have made.
        In the area defense program, the contracts are let and
    designs and reviews are complete. The missiles are being built,
    the computer programs are in test. I am confident that we will
    achieve our initial operational capability in 2001, as
    scheduled.
        We are also very positive about the Navy theaterwide, and
    the progress that we have made there. We have reviewed each
    capability and how well it is doing. Indeed, it is part of our
    forward deployed sea base theater ballistic missile [TBM]
    capability.
        I think the Navy Department has, indeed, stepped forward,
    and of all the services, we feel very positive about the
    contribution that we are making in this regard. I think that
    it's going to be very important to our future. Let me ask the
    CNO to expand on those remarks.
        Admiral Johnson. Only to add, sir, that within the Navy
    budget what we have done with the program you have before you
    is we are preparing the force, if you will, preparing the fleet
    to accept theater ballistic missile defense capability.
        We have put over $1.2 billion into the various programs
    that will allow us to do cruiser conversions, that will allow
    us to forward fit into the DDG-51's, the CEC, and area theater
    ballistic missile capability. We have what I would consider a
    very robust program, because we think this is right, not only
    for the Navy, but for the country.
        Senator Dorgan. That potentially puts a seal over a carrier
    group.
        Admiral Johnson. Indeed, sir. The area, in terms of
    envelopes, let us just say the area is designed to go forward
    with the battle groups and provide protection for our forces,
    for the Marines, for the Army, for the allies, whoever needs
    them in the execution of a mission, in the littorals.
        The theater systems have a much broader reach, and they
    are, by orders of magnitude, larger in their capacity.
        Senator Dorgan. Just one brief question. I have had some
    inquiries from North Dakota, General Krulak, about a marine
    reserve plan. Are you considering an operational unit of marine
    reserve in North Dakota?
        General Krulak. Yes, sir, we are. We should be nearing a
    decision. The time line I have been given is about 30 days to
    the decision point.
        Senator Dorgan. Mr. Chairman, thank you again. I think the
    information provided this morning is very useful, and I
    appreciate your being here.
        Senator Stevens. Senator Bumpers.

                              F/A-18 capabilities

        Senator Bumpers. Just so you can be thinking about it, I
    have two major areas of concern. One is what seems to me like a
    premature retirement of a lot of good ships, and second is the
    F-18.
        I confess that I have been adamantly opposed to the Air
    Force's F-22. I thought that based on all the best information
    I could get that the F-18 was quite capable of defeating just
    about anything for the next 20 years, and so I opted for the E/
    F, and have been a staunch proponent of it.
        Now, all the literature in the newspaper stories are
    casting very serious doubts on the capabilities of the E/F,
    wing drop, and other problems which the General Accounting
    Office [GAO] has identified.
        This is like a lot of things, depending on who you talk to
    you get different answers on how severe the problems will be.
    The wing drop seems to be the most serious.
        On the one hand the GAO says the development costs of that
    F-18E/F, to correct the wing drop and other problems, could be
    very substantial and well above the roughly $4.9 billion
    scheduled for the development of the E/F and they are scheduled
    to come out with a new report, which I do not think has been
    released yet, setting out in a more precise way what these
    development costs are likely to be.
        My question is: What do you say to the GAO report, which is
    pretty damning on the F-18?
        Secretary Dalton. Senator Bumpers, we have gone through the
    GAO report and have very good answers for each of the points
    that they raise. The F-18E/F Super Hornet is an outstanding
    aircraft. It has much greater range than the C/D, its
    predecessor. It also has much greater stealth capability and
    much greater payload capability, both taking out and bringing
    back. It has much greater room for growth. There is no more
    room for growth in the C/D. The E/F is an aircraft that we have
    advanced to a long degree, as I said before, on time, on
    budget, underway.
        The wing drop issue that you raise; on a scale of 1 to 10,
    I would characterize it as a 2 or a 3, 10 being a very severe
    problem. We have dealt with problems in this test program that
    are far more serious than the wing drop. We had issues with
    engines, and hydraulics, and so forth that may be considered
    fours or fives in terms of severity. This wing drop issue is
    not a significant problem. However, it is important to us to
    address it, and we are. We have a fix in hand to deal with
    that.
        Senator Bumpers. What is the fix?
        Secretary Dalton. The fix is a perforated wing faring that
    is not going to have any negative impact with respect to range,
    stealth, any of the parameters that deal with the aircraft. We
    have done some testing with it and the testing has been very
    positive. We have not finished the testing but I am very
    optimistic that, indeed, this problem has been addressed. We
    just need to finish the testing with it, but it is essentially
    done.
        As I mentioned earlier, the CNO has actually been down to
    fly the aircraft, and is an aviator by his own warfare
    specialty in the Navy, and can address the specifics of it.
    Well, let me ask him to do that, if I could.
        Senator Bumpers. Before you do that, let me ask you, you
    are familiar, I am sure, with the GAO's recommendation, quote,
    ``That the Secretary of Defense direct the Secretary of the
    Navy to not approve contracting for any additional F/A-18E/F's
    until the Navy demonstrates through flight testing that
    identified aircraft deficiencies have been corrected.'' Are you
    adhering to that?
        Secretary Dalton. Senator Bumpers, I would not ask the
    Secretary of Defense to approve a funding request for this
    aircraft until I was convinced that, indeed, it was safe; that
    it had met the performance characteristics, and met the
    requirements that the aircraft should have.
        So the Secretary does not have to worry about making the
    decision. I am not going to recommend that he make that
    decision until I am satisfied. But as I say, I feel very good
    about where we are today. All we need to do is complete this
    testing. We are very far down that road with respect to having
    dealt with that problem.
        Senator Bumpers. Admiral Johnson.
        Admiral Johnson. To add, Senator Bumpers, the test program
    is a combination of flight testing, fluid dynamics testing,
    wind tunnel testing. Every move is being vetted by an
    independent blue ribbon panel of experts, so we have the right
    people working the issue.
        As the Secretary said, this is not a big deal. Some would
    choose to make it so, but it is not a big deal. By the time it
    has to be dealt with in the context of the budget, the wing
    drop will be officially behind us.
        The pathway we are on will take us to a Navy program review
    this month, if the weather allows to keep the flight testing
    going, this month, and it will be done.
        The GAO report showed us no surprises. I will tell you, we
    had opened our books to them. We were very forthcoming with the
    test team. There were no show stoppers or surprises in there.
    This is a model program.
        Senator Bumpers. Well, Mr. Chairman, I will submit a few
    additional questions in writing to the Secretary. The GAO
    report, incidentally, that was promised for late February or
    March, to my knowledge, that has not come out, has it?
        Secretary Dalton. No, sir; I have not seen the second
    report.
        Senator Bumpers. When I submit my questions, and I will put
    in the letter to you, I would prefer no answers until that
    report has come out, and we will see where we are then.
        Secretary Dalton. Yes, sir; I will be happy to comply with
    that.

                               Ship service life

        Senator Bumpers. My other question is this: I know that the
    DDG-51's, the Arleigh Burkes, those are highly preferable ships
    in this environment, but we are retiring 5 frigates, 23 guided
    missile frigates, and a couple of Virginia-class cruisers, I
    think, notably, the U.S.S. Arkansas, which is 19 years old, and
    was at the time promised a 35-year life. I mean we depend on
    those things here.
        When you tell us a ship has a 35-year life, we expect it to
    have a 35-year life. Now, the rule is, No. 1, that it cannot
    meet the kind of new threat that you expect.
        I have a question on that, what is the threat, and who is
    offering the threat? But you are familiar with Admiral
    Reason's, I think, where he said, ``I would rather have three
    hulls than one Arleigh Burke,'' and we are putting a lot of
    good hulls that are not obviously quite state of the art in
    mothballs.
        The U.S.S. Arkansas cost $300 million. Today that ship
    would cost in the neighborhood of $900 million. Now, if you can
    overhaul and refuel that ship for $200 million, why is that not
    a good bargain for an additional 10 to 15 years of service?
        Secretary Dalton. Well, Senator Bumpers, a nuclear-powered
    cruiser like the Arkansas, the overhaul and replacing the
    nuclear core, and so forth, it is a very expensive issue. As we
    have gone through this right-sizing process of downsizing, and
    ridding ourselves of older ships, we have used benchmarks of
    times like that to consider having ships like that
    decommissioned.
        We have done the same thing with submarines.
        Senator Bumpers. Well, Mr. Chairman, I have taken up too
    much time already. General Krulak, I guess you are doing
    everything about right, I do not have any questions for you.
    [Laughter.]
        Of course, as a marine, I would probably think that whether
    you were or not.
        Senator Stevens. Senator Domenici.

                         Personnel problems/statistics

        Senator Domenici. I just have a couple of questions. I
    understand there has been testimony regarding personnel
    problems such as Naval Academy cheating, those things are being
    addressed, but I would like to ask some other questions
    regarding personnel problems.
        Do you have any way of comparing such things as spousal and
    child abuse 7 years ago, 8 years ago, versus now, substance
    abuse cases, maybe even divorces, while in the service, with
    families, versus another period of time?
        I wonder if there is any indication that these kinds of
    problems are changed by deployments, long periods of
    deployment?
        Secretary Dalton. Senator, first of all, one of the primary
    lessons of leadership that we teach our people is take care of
    your people. Indeed, we consider it the responsibility of
    commanding officers and unit leaders to be aware of what is
    going on in the lives of the people that they lead. In addition
    to that primary responsibility. Yes, sir, we do surveys on a
    regular basis with respect to seeing how we are doing with some
    of the things that you mentioned. For example, with regard to
    substance abuse, we have made great progress in the Navy
    Department with respect to that. In the eighties we had major
    problems with substance abuse, and in some cases we had ships
    with some 50 percent of our people testing positive with drugs.
    Today, we are essentially a drug-free Department of the Navy,
    because we administer tests on a routine basis, and, indeed,
    anyone who tests positively for drugs is significantly
    disciplined and, indeed may be out of the service. So we have I
    think done very well with that.
        Another issue that we have found that is at the core of
    some of the problems that you refer to is alcohol abuse. We
    have made a major effort in the Navy and in the Marine Corps to
    de-emphasize and de-glamorize the use of alcohol. We call the
    program in the Navy right spirit, and in the Marine Corps
    semper fit, and it is working. We have made significant
    progress in reducing problems that are related to alcohol, and
    we found that most of the things to which you referred, 80 or
    90 percent of the cases turned out to be alcohol related. So
    getting to the core of that issue, I think, indeed, addresses
    it.
        Senator Domenici. Do you have anything that compares years
    past with now in these areas?
        Secretary Dalton. Yes, sir; I can answer that for the
    record. We do have some statistics we can show you with respect
    to that.
        Senator Domenici. I think for myself, the General and the
    Admiral, I think you ought to be concerned about trends in
    these areas among the military personnel, because we all are
    looking at what is going to cause things to fall apart, and
    frankly, if you have drug abuse, and alcohol, and child and
    spousal abuse, and very high divorce rates, I mean pretty soon
    it is going to be very hard to keep people in the military, or
    they are not going to be the kind of people you have been
    bragging about as the best suited and most fit in the world.
        So if you can supply something----
        Secretary Dalton. Yes, sir.
        Senator Domenici [continuing]. Showing some way to measure
    success, and if you do not have it, then maybe you ought to
    state in the record how you might go about doing some
    comparisons.
        Secretary Dalton. Yes, sir; I'd be very happy to do that.
        Senator Domenici. That is enough for that.
        Secretary Dalton. Yes, sir.
        Senator Domenici. The chairman has been very good in
    delaying for me, who came very, very late. I want to leave you
    with some written questions regarding the T-38.
        Secretary Dalton. Yes, sir.
        Senator Domenici. I mean the F-18. Excuse me. In detail. I
    have a number of questions about it, but now I want to ask you
    about your respective budgets, as it pertains to contracting
    out, or privatization.

                           Privatization/outsourcing

        How did the Navy and the Marine Corps determine that
    contracting out saves 20 percent, and why did the Air Force
    assume a different savings? They claim 25 percent.
        Could you tell us, what did you study and what are your
    models for saying that we are going to save 20 percent if we do
    these things?
        Admiral Johnson. I will be happy to provide you the
    specific matrix for the record. I would comment, Senator
    Domenici, that the commitment that the Navy has made in this
    budget and the subsequent years is to study, via the A-76
    process, 80,500 full-time equivalents. It gets back to the
    business of trying to control our infrastructure, and reduce
    and be more efficient within our infrastructure.
        I have heard numbers from 10 percent, to 35, to 40 percent
    goodness in those A-76 studies, depending on who you talk to
    and what the specifics of the study are. I am not smart enough
    today to tell you what the right number is, but I would tell
    you that our experience to date in the small samples we have
    had has been somewhere between 20 and 30 percent.
        We will fund those studies to take us on a pathway to try
    to realize over $1 billion a year in savings by 2003. That is a
    very ambitious plan, but it is one that we are taking forward
    in earnest, and I will provide the rest for the record, sir.
        [The information follows:]

        The savings reflected in the Navy's FYDP are derived from
    our expectation that ``competition'' not ``contracting out''
    will result in significant savings. This expectation is based
    on research and analysis performed by the Center for Naval
    Analysis (CNA). CNA reviewed our experience implementing OMB
    Circular A-76 in the 1980's and found that ``competition'', not
    ``contracting out'', resulted in cost savings of approximately
    30 percent, regardless of the outcome of the cost comparison.
    As a matter of interest, approximately half of the functions
    studied remained in-house after the competition, albeit in a
    more streamlined, efficient organization. CNA also reviewed the
    Navy's inventory of commercial activities and determined that
    conducting cost comparisons of activities involving
    approximately 80,000 full-time equivalents would yield the kind
    of savings we have incorporated into the Navy's FYDP. The CNA
    analysis formed the basis for Navy's competition savings
    projections. I cannot address the Air Force's savings
    assumptions, but I will be happy to provide you with a copy of
    CNA's analysis that forms the basis of our estimate that
    competition yields average savings of 30 percent.

        General Krulak. Sir, we are very cautious about putting
    wedges out there, thinking that we are going to reap great
    benefits.
        We are doing exactly what Jay is saying, we are running the
    A-76 studies, we are putting money up front to get a good idea
    of what really we can expect in the out-years. But I think that
    both Jay and I have seen what can happen if you get too
    overenthused about money in the out-years if it does not come.
        I would also echo the issue about the infrastructure, and
    go back. I think we all see an infrastructure problem, where
    you have too much infrastructure, and some of it is really not
    adding to the capability that you need, and sooner or later we
    are going to have to get at that.
        Senator Domenici. General, and Mr. Secretary, and Admiral,
    I raise these questions because I understand how difficult it
    is when others are doing a quadrennial defense review and the
    dollar amount for you to save is set in advance from above.
        You were told this is how much you have to spend on
    defense, and then you go about putting the pieces together. I
    am very concerned that somewhere along the line we were not
    going to be able to make ends meet. You came up with this
    privatization and contracting out to make the ends meet, and
    frankly, I do not think you are going to achieve it.
        I am not suggesting that any of you have ulterior motives
    in putting it in, I just do not believe when push comes to
    shove you can save that much money. I do not think you are
    going to get them done, and I guess I just worry about that,
    because every year we think we have lived within our means, and
    there is always something that turns up that we could not
    achieve, and this could be a very big one when you consider all
    the services.
        I would hope that you would advise us specifically how you
    are going to go about measuring this and what are your time
    intervals for making these decisions. Could you put that in a
    kind of record statement for us, so we will have some
    information.
        Admiral Johnson. Yes, sir; I would be glad to, and we do
    have a good system for measuring that, but we will provide that
    to you.
        Senator Domenici. On my previous question, when I asked you
    to submit more information, no aspersions on anybody at this
    table, but the Defense Department, in general, has difficulty
    answering questions like that in a timely manner. Normally,
    they take 2 or 3 months on any issues about marital abuse,
    drugs, and the like, I do not think it will do us much good
    unless you do it rather expeditiously.
        Secretary Dalton. Yes, sir; we will provide an answer to
    you expeditiously.
        [The information follows:]

                                            SPOUSE AND CHILD ABUSE STATISTICS
    ----------------------------------------------------------------------------------------------------------------
                                                                           Fiscal year--
                                             -----------------------------------------------------------------------
                                                1990     1991     1992     1993     1994     1995     1996     1997
    ----------------------------------------------------------------------------------------------------------------
    Reported Spouse Abuse Incidents.........    4,169    5,605    6,345    6,344    6,057    5,228    3,424    3,357
    (Rate of incidents reported per 1,000
     spouses)...............................  ( \1\ )  ( \1\ )    (240)   (25.5)   (24.5)   (22.4)   (13.9)   (16.3)
    Reported Child Abuse Incidents..........    3,735    4,997    5,351    5,368    4,122    3,822    2,435    2,606
    (Rate of incidents reported per 1,000
     children)..............................  ( \1\ )  ( \1\ )   (13.1)   (13.5)   (13.8)   (10.5)    (7.1)    (7.8)
    ----------------------------------------------------------------------------------------------------------------
    \1\ Unknown.

        Navy abuse incident reports have decreased significantly since
    fiscal year 1993. This trend may be due to downsizing, improved
    screening of cases through use of the Navy's Risk Assessment Model,
    and/or fear of adverse career consequences leading to decreased
    reporting. The Congressionally directed Abuse Victim Study showed that
    fear of negative career consequences for servicemembers was the major
    disincentive for reporting family violence (Defense Authorization Act
    for Fiscal Year 1993 (Public Law 102-484)).
        We have no evidence or indication that deployments or long periods
    of deployment directly impact the incidence rates of child or spouse
    abuse. Personal childhood experiences, learned behavior patterns, and
    individual psychological factors are thought to influence the incidence
    of child or spouse abuse more directly. Situational family stress, such
    as work stress, does not appear to be a strong predictor of child or
    spouse abuse, but may increase risk when found in interaction with
    other known risk factors such as those above. We recently completed a
    survey of Navy recruits at Great Lakes Recruit Training Center which
    indicates that a significant number of recruits have a personal history
    of childhood physical and sexual abuse, along with exposure to a
    variety of other traumatic events. This history of childhood trauma,
    which predates entry into naval service, is likely to contribute to a
    variety of personnel and health problems unless assistance is provided.
    We are working on intervention programs to minimize the potential for
    negative consequences in the future.

                                                ALCOHOL ABUSE STATISTICS
    ----------------------------------------------------------------------------------------------------------------
                                                                           Fiscal year--
                                              ----------------------------------------------------------------------
                                                 1991       1992      1993      1994      1995      1996      1997
    ----------------------------------------------------------------------------------------------------------------
    Total Alcohol Incidents..................     5,986      5,850     5,750     6,123     5,717     5,225     3,063
    (Percent of total Navy Population).......       (1)        (1)       (1)       (1)       (1)       (1)       (1)
    Underage Drinkers........................     1,916      1,521     1,721     1,923     1,533     1,587       978
    (Percentage of total incidents)..........      (32)       (26)      (30)      (31)      (27)      (30)      (32)
    Total Navy DWI's.........................     4,900      3,440     2,544     2,357     2,043     1,905     1,066
    DWI Underage Drinkers....................     1,068        666       315       263       198       179       107
    (Percent of total DWI's).................      (21)       (19)      (12)      (11)      (10)       (9)      (10)
    Discharges for Alcohol Abuse.............       832      1,052       836       611       489       587       576
    (Officer/Enlisted).......................   (3/829)  (5/1,047)   (3/833)   (1/610)   (2/487)   (0/587)   (0/576)
    ----------------------------------------------------------------------------------------------------------------

                                                  DRUG ABUSE STATISTICS
    ----------------------------------------------------------------------------------------------------------------
                                                                        Fiscal year--
                                        ----------------------------------------------------------------------------
                                            1991       1992       1993       1994       1995       1996       1997
    ----------------------------------------------------------------------------------------------------------------
    Total Sample Tested................      1.40M      1.35M      1.22M      1.07M     992.8K     936.1K     446.5K
    (Percent testing positive).........      (.64)      (.80)      (.84)      (.96)      (.76)      (.66)  \1\ (.84)
    Discharges for Drug Abuse..........      2,221      3,350      2,971      2,491      2,216      1,982      1,972
    (Officer/Enlisted).................  (6/2,215)  (2/3,348)  (2/2,969)  (1/2,490)  (0/2,216)  (0/1,982)  (0/1,972)
    ----------------------------------------------------------------------------------------------------------------
    \1\ Through 2nd quarter.

                               divorce statistics
        Navy does not have sufficient historical data concerning personnel
    divorces to show a trend in the last 7 or 8 years. 1997 was the first
    year questions concerning divorce were included in our annual Navy-wide
    Personnel Survey. Divorce trends can be determined as data from future
    Navy-wide Personnel Surveys are collected.

                 Coast Guard/Navy ship procurement commonality

        Senator Domenici. I have no further questions, Mr.
    Chairman.
        Senator Stevens. Thank you very much. Mr. Secretary, the
    Coast Guard has told us it wants to start a new long-range
    cutter in the year 2000, and it appears to us that there may be
    some commonality there between their program and your plans to
    start the DD-21 ship.
        Have you had any conversations with the Coast Guard to see
    if it is possible to combine those programs for the efficiency
    that might come from buying two vessels at the same time?
        Secretary Dalton. Mr. Chairman, I know that the Chief of
    Naval Operations has had some discussions with the Commandant
    of the Coast Guard, let me ask him to----
        Senator Stevens. Admiral Johnson.
        Admiral Johnson. Yes, sir; I am talking to Bob Kramek, and
    our staffs are engaged. We are looking at all kinds of options
    for commonality, as they go forward and we go forward. You are
    right on with the question and the issue.
        We need to do what makes sense for both of us. We are
    doing--incidentally, at this moment, we have just, in kind of a
    test case, turned one of our PC's over to the Coast Guard for
    them to evaluate for their use as well. We have a lot of
    interchange going on, and specific to DD-21, the answer is yes.
        Senator Stevens. Before he left Senator Bumpers asked me to
    inquire from you about the reenlistment rate of naval pilots.
    In past discussions we have now learned that the Air Force will
    cap their deployments in 45 days in the Iraq area because
    patrolling that no-fly zone is diminishing critical pilot
    skills for combat.
        Could you tell us how you are going to handle your
    deployments there and what has been your recent reenlistment
    rate?
        Admiral Johnson. Our deployments are fine, Mr. Chairman, in
    the context of the pilots, and the flight time, and the
    training. Because we are rotational we set a 6-month portal-to-
    portal limit on our deployments, a 2-to-1 turnaround ratio,
    minimum, and what we call a 50-percent home tempo, cast 2 years
    forward and 3 years back by the schedule. Those are the matrix
    by which we build the plans to deploy.
        Everything we are doing today and out forward, whether it
    is two carrier battle groups in the Arabian Gulf, or wherever
    they are, the plans contain that matrix. The specific concern
    about the pilot retention is really a multifaceted reality, is
    probably the best way to say it. I am very concerned about the
    retention of our pilots. I do not believe that it is
    specifically tied to that deployment scheme. I believe that the
    most significant impacts come on, as I said earlier, not to
    pilots, but it relates directly to pilots, the nondeployed side
    of our lives.
        We have to give them airplanes to fly. We have to give them
    the training throughout the turnaround. We have to compensate
    them, we have to care about them, and they will stay on the
    team, and we are executing a multipronged attack to deal with
    the pilot retention challenge right now.
        Senator Stevens. Are the Navy pilots going to take up part
    of the no-fly pattern----
        Admiral Johnson. Indeed.
        Senator Stevens [continuing]. Flying those no-fly squares
    out there?
        Admiral Johnson. Indeed. We have been part and parcel of
    Operation Southern Watch in the no-fly zone since the
    beginning----

                                Pilot retention

        Senator Stevens. What has been your reenlistment record?
    The Air Force is somewhere between 29 and 33 percent.
        Admiral Johnson. Yes, sir; ours is actually in the low
    thirties right now. I would tell you that if you want to look
    at the bonus take rate this year, if you aggregate the numbers,
    required versus taking the bonus right now, we are sitting at
    59 percent, which you think, well, that sounds pretty good.
        The truth of it is, in selected communities we are down in
    single digits, and so I have serious concerns, but my pilot
    retention concern is one where I would say, today, my pilot
    retention is not as critical as Gen. Mike Ryan would tell you,
    but as I tell him, I am trying to draw lead on it, because in 2
    years, if I do not pay attention, and we do not do the things I
    am describing, we will be right where he is.
        Senator Stevens. I think that deployment, ready deployment,
    ought to be a good place to test that, and I would hope that
    you would monitor that.
        Admiral Johnson. Yes, sir, we do.
        Senator Stevens. I cannot think of a worst deterrent for a
    combat-trained pilot to send him or her out to fly 3 and 4
    hours in the morning and the afternoon on a square, I can tell
    you. A commuter assignment on a local airplane, I believe,
    would be more preferable than that to any pilot, in my opinion.
        Admiral Johnson. Yes, sir.
        Senator Stevens. At least keep track of it for us, will
    you?
        Admiral Johnson. Yes, sir, Mr. Chairman. I would only add
    to you, sir, that we do have what I would consider a very good
    training and operational skill program that we execute in the
    gulf.
        General Krulak. I would also mention, sir, that we are out
    there flying, too, having the same issues facing us. We fly the
    same squares.

                                      V-22

        Senator Stevens. I think it is going to impact us all.
    These are definite deployments in such an environment.
        General, I want to chat with you a minute about the V-22. I
    notice that Senator Cochran has a couple more questions. I am
    told that the V-22 is now exceeding its maintenance goal by a
    factor of 200 percent, but we do have some problems about a
    cost overrun on the V-22.
        Are you up to speed about the problems that the Marine
    Corps is encountering with the V-22, and can you give us any
    indication of what the program unit cost would be as a result
    of these problems?
        General Krulak. Well, first off, I would say that we really
    are not experiencing anything that I would term a major
    problem. We are right now, with the engineering manufacturing
    development [EMD] models, over 300 hours of test flights on the
    overall program, over almost 1,200 hours.
        It has met for the first time its speed requirements, its
    max speed, it is doing well within the parameters. It has met
    or exceeded all the key performance parameters that we have
    established for it.
        The issue that has come up that has caused a little
    consternation is a bearing problem that burned out on one of
    the test flights that caused us to look very hard at that, slow
    down, our test program for about 1 month, as we investigated
    what caused that to happen, and what would be a solution.
        We found out the cause, and, in fact, we have solved it,
    but that put the testing back slightly. Obviously, when you
    have something like that the cost of the test program goes up a
    little bit.
        We see none of those impacting on the entry of that system
    into the fleet, nor do they have a major impact on the overall
    cost of the aircraft. As a matter of fact, in June 1999, the
    Marine Corps will be standing up its training squadron for the
    V-22.
        I mean we used to talk about, well, the V-22 is years and
    years away, we are going to stand up the first training
    squadron in June 1999.
        So this aircraft is coming, it may not be coming as fast as
    we would all like it to come, but it is going to be here, and
    when it gets here, it is going to change not only the
    operational capability of all Armed Forces, there will be
    strategic implications with this system.
        Senator Stevens. I have been told that because of a series
    of critical problems that we are into a period of forced
    redesign portions of the V-22. I am pleased to hear what you
    are saying about standing up the squadron, but can we do that
    with the rotor problems, and the problems of the bearing, and
    the nose gear, and the----
        General Krulak. Absolutely. The vast majority of those are
    already fixed. Like I said, the bearing has been solved, the
    nose gear is a minor fix. As we talk about any aircraft, as you
    go through the EMD, that is what it is for, to test the
    aircraft, find out what is not operating the way you want it to
    operate, and fix it.
        There is nothing in this program that is causing me any
    concern. I am very excited about where we are going.
        Senator Stevens. None of them are safety related yet.
        General Krulak. No, sir; the issue of the bearing obviously
    caught our attention. We stopped flying in the parameter that
    that bearing failed on, we brought in the experts, they have
    come up with a fix, and we are back to flying at Pax River, and
    as a matter of fact, this last month got 50 hours in, which is
    pretty doggone good for a test in 1 month.
        Senator Stevens. I am sure you remember the history of that
    plane in this committee. I want to make certain that it
    follows----
        General Krulak. Sir, I absolutely remember that, and I can
    tell you, if anything came up that I was concerned with, I
    would be in front of this committee immediately.
        Senator Stevens. Let me shift back to you, Mr. Secretary.
    What about the year 2000 computer programming crisis that is
    affecting the Department, is that a serious problem for your
    Department and the Department of the Navy?
        Secretary Dalton. Mr. Chairman, we are taking this problem
    very seriously. It impacts potentially every ship, submarine,
    aircraft, and shore installation in the Navy Department, as
    well as all of our supporting infrastructure. We are committed
    to preventing any year 2000 failures within naval units and
    facilities, and we have prioritized our funds to address
    accelerated resolution of any problems. We have established the
    target date of this summer, June 30, for completing the fixes.
        I get quarterly reports on that, my next quarterly report
    for this quarter, as a matter of fact, is next week. I will see
    just how well we are doing with it. It also has the attention
    of Secretary Cohen, and he is asking for periodic reviews.
        It is simply imperative that we address it, and that we
    resolve each of the problems within commands through the Navy
    Department to ensure that our critical warfighting and
    warfighting support capabilities all remain intact.
        If we did not get this problem solved, clearly it would be
    a problem, a significant problem for the Department. So we are
    addressing it and are committed to it. We recognize the
    importance of it.

                                   Adak reuse

        Senator Stevens. I am going to submit the rest of the
    questions, but I want to ask one question concerning my State,
    and that is the Adak series of questions that Senator
    Murkowski's legislation will deal with a permanent solution for
    Adak, we hope will be signed this year, but there is no
    guarantee that will take place, and I know that you have been
    reluctant to work out an interim leasing arrangement.
        People are going to take over that island, they have
    visited us now, and I think that we have informed the Navy,
    they have a substantial number of entities that wish to start
    leasing portions of that base, as it is going to be turned over
    to them, but some of the issues are perplexing out of your
    people.
        One of them is that the Navy wishes to approve every
    visitor that comes to Adak, and second, that the Navy does not
    want to have families relocated to the portion of the former
    base that the Aleut people will take over under a temporary
    arrangement. Can you give us any idea of what the situation is
    going to be?
        I was personally visited by some of the Russian people who
    intend to lease a portion of that for their water fleet, which
    does not fish in our waters, but is closer to their fishing
    grounds than their own home ports.
        I think it is essential for us to move forward and see if
    we can utilize those facilities, if they are not occupied by
    families, they are going to have to be heated anyway, and it is
    a critical situation.
        Can you give us just a minute or two, Mr. Secretary, what
    is the situation at Adak?
        Secretary Dalton. Yes, sir; we have a proposed interim
    lease for the Navy facilities on Adak that we have been
    negotiating, I think, since the middle of February. This lease
    extends through the end of the year, December 31, 1998. After
    that, the military purpose ceases. Because the Navy will
    substantially conclude its environmental remediation by the end
    of this year, after the first of next year, the Interior
    Department assumes responsibility for the property, and would
    lease it to the Aleuts.
        We support Senator Murkowski's proposed legislation, which
    will be the subject of a hearing, I think, before this
    committee this month. I think that legislation will transfer
    the property to the Aleut nations, and it would be done by the
    Interior Department.
        Admiral Johnson. Sir, I really have nothing to add, except
    to say that we are going to be as supportive as we can possibly
    be to work this out, because I think it is in everyone's best
    interest to do so here in the short term.
        Senator Stevens. Yes, sir; well, we appreciate what you can
    do, I think it is a marvelous opportunity for these people, who
    have had really no basic commercial base before, to be able to
    utilize all those facilities. Senator Cochran.

                    Navy theaterwide missile defense program

        Senator Cochran. Mr. Chairman, I know that Admiral Johnson
    has already answered a couple of questions about the Navy
    theaterwide missile defense program. Some recent reports,
    though, indicate that in the Pentagon there may be some who
    think that fielding both theater high altitude defense [THAAD]
    and the Navy theaterwide program will be unaffordable through
    2005.
        Is it not correct that these two systems complement each
    other, and that from an operational military perspective, the
    question of THAAD and Navy theaterwide is not an either/or
    proposition?
        Admiral Johnson. My answer to that, Senator Cochran, is
    yes, I believe them to be complementary systems, and you know
    my enthusiasm for Navy theaterwide. I am not as conversant on
    THAAD, but I am very encouraged, I will tell you, by the
    cooperation.
        In fact, I just spent 1\1/2\ hours with Admiral West, the
    Deputy at BMDO last week, talking about these issues, so I am
    encouraged by the way we are working together on this thing,
    and I am very anxious to get our system integrated.
        Senator Cochran. Last year we added in this committee $10
    million to enhance the cooperative engagement capability [CEC]
    program by putting communications equipment on satellites.
        Do you agree that by giving this additional capability to
    CEC that we will improve the military benefits of our sea-based
    missile defense capability?
        Admiral Johnson. My specific answer would probably be best
    coming for the record, sir. My anecdotal answer would be yes,
    but let me get it for the record.
        Senator Cochran. If you could, and identify the benefits of
    CEC for cruise and ballistic missile defense.
        [The information follows:]

        The Cooperative Engagement Capability (CEC) is a sensor
    netting system that can provide air defense systems with fire-
    control quality track information that can greatly enhance the
    sea-based missile defense capability. Navy priorities are to
    ensure the successful integration of CEC with surface ships and
    air-based sensors followed by the fielding of CEC on surface
    combatants, aircraft carriers, and amphibious ships. Funding is
    focused on achieving these goals.
        Although the Navy has no current requirement for satellite
    range extension of CEC, the Navy has used past Congressional
    funding to evaluate existing and planned space-based sensors
    for potential integration with CEC. We've found that
    integration of CEC with SBIRS-Low provides the highest
    potential for military utility and have consequently invested
    $3.7 million of the $10 million of fiscal year 1998
    Congressional funding to develop the engineering requirements
    for the integration of CEC with SBIRS-Low. Our studies also
    recommend Milstar MDR and Advanced EHF be explored as CEC
    relays. Although we are interested in pursuing this, the
    integration of CEC with ships and aircraft is the first step
    and has much higher priority. We need to spend the remainder of
    the Congressional funds to ensure that these near-term
    priorities of the CEC program are met.

        Admiral Johnson. CEC is fundamental; it is fundamental to
    our theater and area systems. That is part of why we are
    embedding CEC into the entire aegis fleet, forward fit and back
    fit, so that we will be able to capitalize, if you will, and
    take advantage when the theater and area systems come to us. It
    is fundamental to that.
        Senator Cochran. My final question on the subject of sea-
    based missile defense has to do with the fact that some of our
    Spruance, well, all of the Arleigh Burke-class destroyers are
    equipped with vertical launch systems, some other ships are as
    well, including cruisers, are provided adequate support from
    sensors, and a fast interceptor missile.
        Is there any technical reason that we could not make use of
    these existing assets to provide national ballistic missile
    defense?
        Admiral Johnson. You just tripped past this fighter pilot's
    base of knowledge on that, and I would be happy to provide that
    for the record.
        Senator Cochran. That would be good. And we would also ask
    if you could point out for the record any technical or
    operational advantages for such an approach to national missile
    defense.
        Admiral Johnson. Aye, aye, sir.
        Senator Cochran. I have another question or two that I
    would like to submit to the Secretary as well, Mr. Chairman.
        Senator Stevens. Yes, sir, Senator. Thank you.
        [The information follows:]

        The Navy does not currently have a National Missile Defense
    (NMD) mission and consequently has no NMD program. The Navy's
    ballistic missile defense developments focus on the Navy Area
    TBMD and Navy Theater-wide TBMD (NTW) programs and are
    consistent with the Ballistic Missile Defense Organization's
    objectives. Both programs have been recently determined to be
    ABM Treaty compliant.
        As you know, the current ABM Treaty permits limited
    capability for defense of a single U.S. missile field but
    prohibits the use of mobile land-based, air-based, sea-based
    and space-based systems in an NMD role. For discussion
    purposes, what follows assumes that use of sea-based systems
    would be permitted at some future time.
        You asked, given sensor support and a fast interceptor
    missile, whether there is any technical reason that we could
    not make use of existing Spruance and Arleigh Burke-class ships
    for NMD. We believe that the ships you mention, indeed all our
    ships equipped with the Vertical Launching System, could
    feasibly be upgraded as you suggest. We have not examined this
    in depth or conducted an engineering analysis, however, and
    would have to do so to give you a firm answer and provide any
    estimates of cost. However, if given an NMD mission, our
    initial approach would be to modify our existing Aegis Cruisers
    to provide such a capability. The 22 VLS equipped cruisers
    would provide a sufficient force structure to deploy our
    initial capability.
        As to the broader question of whether there are technical
    or operational advantages to equipping some of our ships to
    provide NMD, I believe there are enough indications that
    advantages exist to warrant a thorough examination.
        As you know, BMDO is tasked by the fiscal year 1998 Defense
    Authorization Conference Committee to report its assessment of:
    the potential to upgrade the Navy's upper-tier program into a
    limited NMD capability; the technical feasibility of upgrades
    and integration on sea-based systems into land-based NMD; the
    additional benefits and costs of doing so; and the status of
    ABM Treaty compliance of a sea-based capability.
        In view of BMDO's effort and as the Navy staff has not yet
    conducted an in-depth engineering analysis, I defer my response
    on technical and operational advantages of a Navy NMD role
    until after Lt Gen Lyles delivers his report to Congress on
    April 15, 1998. After that, I would be pleased to provide a
    briefing to the Committee to go over this issue in more detail.

                            Retention--exit surveys

        Senator Stevens. Senator Domenici.
        Senator Domenici. Mr. Chairman, I am not sure that the
    Defense Department, including the three gentlemen before us,
    are capable of giving us an analysis of why people are leaving
    the military, and I am not sure that they are capable of
    telling us why people do not leave the military.
        So I would just like to ask, is it correct that there are
    some surveys done by the Navy and the Marines when people leave
    the service as to why they are leaving, and is that totally
    confidential, and are those who give the answers, are they
    totally protected against what they say?
        Secretary Dalton. We certainly protect the privacy of the
    individual, Senator. However, as a matter of procedure, we have
    out calls with people when they leave the service. There they
    speak with their executive officer, or commanding officer, or
    leading division officer, in terms of assessing the person's
    plans for the future. The individual is asked about time aboard
    that ship or aboard that command, and in terms of assessing the
    reasons for the change in professional career plans.
        But we also have that information that we can provide to
    you for the record with respect to what the statistics are, and
    what we find are some of the reasons.
        [The information follows:]

        We collect information on Sailors' attitudes through our
    Retention/Separation Questionnaire, given to enlisted Sailors
    when they reenlist, extend or separate. Officers are asked to
    complete the questionnaire when they leave active duty or
    execute a permanent change of station move. Response to the
    questionnaire is voluntary. Sailors are asked to rate their
    satisfaction with 45 aspects of Navy life and to identify the
    most important reason for leaving or thinking of leaving the
    Navy. Officer and Enlisted ``Reasons for Leaving the Navy''
    data for the fourth quarter of fiscal year 1997 are attached.

                            ALL OFFICERS REASONS FOR LEAVING THE NAVY, FISCAL YEAR 1997/QTR4
    ----------------------------------------------------------------------------------------------------------------
                                                FYTD              No.               Qtr1     Qtr2     Qtr3     Qtr4
                   Description                  rank     Item    resp.     PCT      rank     rank     rank     rank
    ----------------------------------------------------------------------------------------------------------------
    AMT OF FAMILY SEPARAT...................        1       37      368    17.53        1        1        1        1
    PROM AND ADVANCE OPPORTUN...............        2       39      202     9.62        2        2        4        4
    PAY (BASIC).............................        3       24      165     7.86        4        3        2        2
    QUAL OF LEADERSHIP/MGMT.................        4        5      145     6.91        3        4       10        3
    FAIRNESS IN PERFRM EVAL.................        5       45      110     5.24        6        5        5        7
    ENJOYMENT FROM JOB......................        6        3       93     4.43        5        9        3        6
    CONTROL OVER JOB ASGNMN.................        7       44       84     4.00        7        7        7        8
    JOB FULFILLMENT/CHALLEN.................        8        2       78     3.72        9       11        6        5
    NUM OF PCS RELOCATIONS..................        9       20       74     3.53       12        6       16       10
    QUAL OF NAVY LIFE.......................       10       18       66     3.14       11       10       11        9
    AMOUNT OF JOB SECURITY..................       11       31       64     3.05        8       12        9       11
    RETIREMENT BENEFITS.....................       12       26       53     2.53       14        8       17       15
    LENGTH OF WORKING HOURS.................       13        8       50     2.38       16       17       15       12
    AMOUNT OF SEA DUTY......................       14       16       49     2.33       19       16        8       13
    COMPETENCE OF SUPERVIS..................       15       12       48     2.29       10       15       14       14
    GEOGRAPHIC LOC OF JOBS..................       16        9       37     1.76       17       18       23       16
    RECOG FOR ACCOMPLISH....................       17        7       36     1.72       13       14       22       24
    AMT PERS AVL TO DO JOB..................       18       11       36     1.72       18       13       25       19
    SPECIAL PAYS (BONUS)....................       19       25       34     1.62       26       20       12       18
    USE OF SKL/TRNG ON JOB..................       20       42       29     1.38       22       27       13       20
    SPOUSE CAREER OPPORTUN..................       21       19       27     1.29       28       22       24       17
    AMOUNT OF PAPERWORK.....................       22       10       26     1.24       31       19       20       21
    RESPECT FROM SUPERIORS..................       23        1       25     1.19       15       25       18       29
    QUAL AND AMOUNT EQUIP...................       24       14       22     1.05       24       21       27       25
    QUAL OF FAM MED CARE....................       25       21       20      .95       25       26       29       26
    AVL OF DEP MED/DEN CARE.................       26       38       20      .95       21       29       43       22
    ASGN TO JOB W/TECH,PROF.................       27       41       20      .95       29       24       33       28
    NUM OF QUICK RESP TASKS.................       28        6       18      .86       23       31       19       23
    REGULATIONS AND DESCIPLIN...............       29        4       17      .81       20       28       21       31
    COMPENS FOR PCS MOVES...................       30       30       15      .71       36       23       30       33
    ASGNMNT TO LDRSHIP JOBS.................       31       43       13      .62       30       30       34       34
    ACCESS TO EDUC/TRNG.....................       32       40       12      .57       37       35       32       27
    LIVING COND SEA AND OSEA................       33       15       11      .52       27       33       35       30
    QUAL OF GOVT HOUSING....................       34       17        7      .33       32       34       28       37
    DEPENDENT FACIL/SCHOOLS.................       35       22        5      .24       34       41       36       32
    MARRIED VS SINGLE PAY...................       36       28        5      .24       33       37       39       38
    QUAL OF MED/DEN CARE....................       37       29        5      .24       35       32       40       41
    COMPETENCE OF COWORKERS.................       38       13        4      .19       38       36       26       36
    AVAIL OF HOUSING........................       39       35        4      .19       43       40       31       35
    EDUCATION BENEFITS......................       40       27        1      .05       40       38       38       40
    QUAL OF COMMISSARY/EXCH.................       41       32        1      .05       41       39       41       42
    QUAL OF FAMILY SVC CEN..................       42       23  .......  .......       39       42       37       39
    SUPPORT AND RECREAT SVCS................       43       33  .......  .......       42       43       42       43
                                             -----------------------------------------------------------------------
          TOTAL.............................  .......  .......    2,099   100.00  .......  .......  .......  .......
    ----------------------------------------------------------------------------------------------------------------

        General Krulak. Sir, we do run exit surveys, we do not keep
    the answers confidential, because we use them to improve and
    attack the very issues that cause that male or female marine to
    decide to go someplace else or take another job, so we look at
    that very closely.
        The actual, whether or not we say who it came from,
    obviously, that is not what is important, what is important is
    what did they say, why are they leaving, and once we get that,
    we take steps to correct, if at all possible, the things that
    drove them out. Some of them cannot be corrected, others we
    believe can.
        Senator Domenici. Admiral, what do you say about that?
        Admiral Johnson. Very much the same as the Commandant, sir.
    We study and try to take action on separating priority
    criteria. It gets back to many things, there is no simple
    answer to it, as you well know, sir. It is a complex issue,
    with lots of moving parts, but some of it can be tied to family
    separation, some of it can be tied to compensation, some of it
    can be tied to Optempo, and so it goes.
        What we are trying to do inside the Navy is to square with
    ourselves, on the leadership side, on the empowerment side,
    within the chain of command, on the execution side, on the
    funding streams, to allow them to train and be ready, and be
    proud, and these are pretty fundamental to ensuring that we do
    not get into the real retention traps, so it is a very complex
    thing, but the specific answer to your question is, yes, we
    know why they leave, we know what the surveys say, and we take
    them very seriously.
        Senator Domenici. Are these surveys literally available?
        Admiral Johnson. Yes, sir.
        Senator Domenici. Are yours available?
        General Krulak. Yes, sir.
        Senator Domenici. Are they only of people as they exit? Do
    you do any surveys of the people who stay in uniform?
        Admiral Johnson. Yes, sir.
        Senator Domenici. You do.
        Admiral Johnson. We do that as well, but----
        Senator Domenici. Are those anonymous?
        Admiral Johnson. Yes, sir.
        Senator Domenici. Could we have samples of those
    questionnaires, for the record, of what you do in that regard,
    surveys, or whatever they are?
        Admiral Johnson. Absolutely. Yes, sir.
        Senator Domenici. Could you tell us how they are analyzed,
    and who analyzes them?
        General Krulak. You bet.
        Admiral Johnson. Yes, sir.
        [The information follows:]

        The Marine Corps has recently developed a survey to measure the
    opinions of both groups--those leaving the Corps as well as those who
    choose to stay. ``The Marine Corps Climate Battery Surveys'' include a
    variety of questions concerning retention and separation. Questions
    include both traditional personnel issues (such as pay, benefits,
    quality of life, harassment, and discrimination) and elements key to
    the business of the Marine Corps (leadership, training, and readiness).
    We will be able to use the information from this survey--the design of
    which was completed by the Center for Naval Analyses in November 1997--
    to help answer the following questions:
        Do Marines' opinions square with their behavior? Is there a
    relationship between the stay/leave decision and the reasons cited for
    each type of decision?
        Are leavers more dissatisfied than stayers are? If so, on what
    aspect of Marine Corps life do leavers and stayers have significantly
    different opinions?
        These surveys will be analyzed for trends (both good and bad) that
    provide an opportunity for the Corps to take corrective (or
    reinforcing) action. The analysis will be done by our Manpower
    Analysis, Evaluation, and Coordination Branch at Headquarters, Marine
    Corps.
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        Senator Domenici. Now, I want you to know, and none of this
    is directed at any of you, or anybody in the hierarchy, in
    terms of any accusations, it is just that we still read a lot
    of things, and sometimes what is written is not very authentic,
    or it is very small, but we read in various military papers,
    other newspapers that cover the military, that there are a lot
    of complaints that have to do with leadership within the
    military by those who fly airplanes, by those who are leaving.
    That is hard stuff for those who are leaders to hear, and it is
    certainly hard to do anything about it.
        I trust you implicitly that you would be interested in
    them, knowing what they think about you, you and those under
    you, and that you would try to do something about it. I know in
    the military somebody gives orders and somebody takes orders,
    and I understand that. You cannot have a military without that.
        So I would like you to give us for the record everything
    you do in an effort to find out what those people leaving think
    has gone wrong, and whatever you do to those that are not
    exiting, find out what is wrong that you might have to fix. If
    you can give us that for the record, that would be very
    appreciated by this Senator.
        Admiral Johnson. I will be glad to.
        [The information follows:]

        The annual Navy-wide Personnel Survey and Quality of Life Survey
    were designed to collect opinion data on a systematic basis and to
    provide timely information on issues of importance to policy makers.
    The samplings, representative of the entire Navy population, allow the
    identification and analysis of trends in opinions and attitudes toward
    plans, programs, and policies that materially affect the performance
    and morale of Navy Personnel. Both surveys are administered and
    analyzed by the Navy Personnel Research and Development Center in San
    Diego, California. Copies of the 1997 Navy-wide Personnel Survey and
    1997 Quality of Life Survey are provided for the record.
        We also collect information on Sailors' attitudes through our
    Retention/Separation Questionnaire, given to enlisted Sailors when they
    reenlist, extend or separate. Officers are asked to complete the
    questionnaire when they leave active duty or execute a permanent change
    of station move. Response to the questionnaire is voluntary. Sailors
    are asked to rate their satisfaction with 45 aspects of Navy life and
    to identify the most important reason for leaving or thinking of
    leaving the Navy. A copy of the Navy Retention/Separation Questionnaire
    and OPNAV Instruction are provided for the record. Officer and Enlisted
    ``Reasons for Leaving the Navy'' data for the fourth quarter of fiscal
    year 1997 are also attached.
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                            ALL OFFICERS REASONS FOR LEAVING THE NAVY, FISCAL YEAR 1997/QTR4
    ----------------------------------------------------------------------------------------------------------------
                                                FYTD              No.               Qtr1     Qtr2     Qtr3     Qtr4
                   Description                  rank     Item    resp.     PCT      rank     rank     rank     rank
    ----------------------------------------------------------------------------------------------------------------
    AMT OF FAMILY SEPARAT...................        1       37      368    17.53        1        1        1        1
    PROM AND ADVANCE OPPORTUN...............        2       39      202     9.62        2        2        4        4
    PAY (BASIC).............................        3       24      165     7.86        4        3        2        2
    QUAL OF LEADERSHIP/MGMT.................        4        5      145     6.91        3        4       10        3
    FAIRNESS IN PERFRM EVAL.................        5       45      110     5.24        6        5        5        7
    ENJOYMENT FROM JOB......................        6        3       93     4.43        5        9        3        6
    CONTROL OVER JOB ASGNMN.................        7       44       84     4.00        7        7        7        8
    JOB FULFILLMENT/CHALLEN.................        8        2       78     3.72        9       11        6        5
    NUM OF PCS RELOCATIONS..................        9       20       74     3.53       12        6       16       10
    QUAL OF NAVY LIFE.......................       10       18       66     3.14       11       10       11        9
    AMOUNT OF JOB SECURITY..................       11       31       64     3.05        8       12        9       11
    RETIREMENT BENEFITS.....................       12       26       53     2.53       14        8       17       15
    LENGTH OF WORKING HOURS.................       13        8       50     2.38       16       17       15       12
    AMOUNT OF SEA DUTY......................       14       16       49     2.33       19       16        8       13
    COMPETENCE OF SUPERVIS..................       15       12       48     2.29       10       15       14       14
    GEOGRAPHIC LOC OF JOBS..................       16        9       37     1.76       17       18       23       16
    RECOG FOR ACCOMPLISH....................       17        7       36     1.72       13       14       22       24
    AMT PERS AVL TO DO JOB..................       18       11       36     1.72       18       13       25       19
    SPECIAL PAYS (BONUS)....................       19       25       34     1.62       26       20       12       18
    USE OF SKL/TRNG ON JOB..................       20       42       29     1.38       22       27       13       20
    SPOUSE CAREER OPPORTUN..................       21       19       27     1.29       28       22       24       17
    AMOUNT OF PAPERWORK.....................       22       10       26     1.24       31       19       20       21
    RESPECT FROM SUPERIORS..................       23        1       25     1.19       15       25       18       29
    QUAL AND AMOUNT EQUIP...................       24       14       22     1.05       24       21       27       25
    QUAL OF FAM MED CARE....................       25       21       20      .95       25       26       29       26
    AVL OF DEP MED/DEN CARE.................       26       38       20      .95       21       29       43       22
    ASGN TO JOB W/TECH,PROF.................       27       41       20      .95       29       24       33       28
    NUM OF QUICK RESP TASKS.................       28        6       18      .86       23       31       19       23
    REGULATIONS AND DESCIPLIN...............       29        4       17      .81       20       28       21       31
    COMPENS FOR PCS MOVES...................       30       30       15      .71       36       23       30       33
    ASGNMNT TO LDRSHIP JOBS.................       31       43       13      .62       30       30       34       34
    ACCESS TO EDUC/TRNG.....................       32       40       12      .57       37       35       32       27
    LIVING COND SEA AND OSEA................       33       15       11      .52       27       33       35       30
    QUAL OF GOVT HOUSING....................       34       17        7      .33       32       34       28       37
    DEPENDENT FACIL/SCHOOLS.................       35       22        5      .24       34       41       36       32
    MARRIED VS SINGLE PAY...................       36       28        5      .24       33       37       39       38
    QUAL OF MED/DEN CARE....................       37       29        5      .24       35       32       40       41
    COMPETENCE OF COWORKERS.................       38       13        4      .19       38       36       26       36
    AVAIL OF HOUSING........................       39       35        4      .19       43       40       31       35
    EDUCATION BENEFITS......................       40       27        1      .05       40       38       38       40
    QUAL OF COMMISSARY/EXCH.................       41       32        1      .05       41       39       41       42
    QUAL OF FAMILY SVC CEN..................       42       23  .......  .......       39       42       37       39
    SUPPORT AND RECREAT SVCS................       43       33  .......  .......       42       43       42       43
                                             -----------------------------------------------------------------------
          TOTAL.............................  .......  .......    2,099   100.00  .......  .......  .......  .......
    ----------------------------------------------------------------------------------------------------------------

                            ALL ENLISTED REASONS FOR LEAVING THE NAVY, FISCAL YEAR 1997/QTR4
    ----------------------------------------------------------------------------------------------------------------
                                                FYTD              No.               Qtr1     Qtr2     Qtr3     Qtr4
                   Description                  rank     Item    resp.     PCT      rank     rank     rank     rank
    ----------------------------------------------------------------------------------------------------------------
    PROM AND ADVANCE OPPORTUN...............        1       39    1,547    11.11        1        2        3        1
    AMT OF FAMILY SEPARAT...................        2       37    1,525    10.95        2        1        2        2
    PAY (BASIC).............................        3       24    1,474    10.58        3        3        1        3
    QUAL OF LEADERSHIP/MGMT.................        4        5    1,113     7.99        4        4        5        4
    QUAL OF NAVY LIFE.......................        5       18      927     6.66        5        5        4        5
    FAIRNESS IN PERFRM EVAL.................        6       45      688     4.94        8        6        8        6
    ENJOYMENT FROM JOB......................        7        3      643     4.62        7        7        7        7
    RESPECT FROM SUPERIORS..................        8        1      591     4.24       10        8        6        8
    AMOUNT OF SEA DUTY......................        9       16      585     4.20        6        9        9        9
    RECOG FOR ACCOMPLISH....................       10        7      501     3.60        9       11       10       11
    COMPETENCE OF SUPERVIS..................       11       12      477     3.43       11       10       11       12
    RETIREMENT BENEFITS.....................       12       26      451     3.24       12       13       12       10
    JOB FULFILLMENT/CHALLEN.................       13        2      366     2.63       13       12       14       13
    LIVING COND SEA AND OSEA................       14       15      270     1.94       17       16       13       14
    GEOGRAPHIC LOC OF JOBS..................       15        9      259     1.86       14       14       17       16
    REGULATIONS AND DESCIPLIN...............       16        4      251     1.80       15       15       15       15
    AMT PERS AVL TO DO JOB..................       17       11      190     1.36       16       18       18       17
    LENGTH OF WORKING HOURS.................       18        8      174     1.25       20       20       16       19
    MARRIED VS SINGLE PAY...................       19       28      169     1.21       19       17       22       21
    CONTROL OVER JOB ASGNMN.................       20       44      150     1.08       22       24       19       18
    ACCESS TO EDUC/TRNG.....................       21       40      141     1.01       21       19       28       22
    USE OF SKL/TRNG ON JOB..................       22       42      134      .96       18       21       21       24
    COMPETENCE OF COWORKERS.................       23       13      125      .90       26       27       20       20
    ASGN TO JOB W/TECH,PROF.................       24       41      119      .85       27       22       23       23
    NUM OF PCS RELOCATIONS..................       25       20      106      .76       23       23       24       25
    QUAL OF MED/DEN CARE....................       26       29       91      .65       24       26       31       28
    AMOUNT OF JOB SECURITY..................       27       31       82      .59       31       28       25       30
    SPECIAL PAYS (BONUS)....................       28       25       81      .58       30       25       30       32
    QUAL OF FAM MED CARE....................       29       21       80      .57       28       30       29       27
    QUAL AND AMOUNT EQUIP...................       30       14       75      .54       32       29       27       29
    AVL OF DEP MED/DEN CARE.................       31       38       74      .53       25       33       32       31
    EDUCATION BENEFITS......................       32       27       71      .51       41       32       26       26
    AMOUNT OF PAPERWORK.....................       33       10       53      .38       29       35       33       36
    DEPENDENT FACIL/SCHOOLS.................       34       22       49      .35       36       31       39       35
    SPOUSE CAREER OPPORTUN..................       35       19       47      .34       35       34       35       34
    QUAL OF FAMILY SVC CEN..................       36       23       43      .31       39       37       36       33
    AVAIL OF HOUSING........................       37       35       39      .28       42       36       37       37
    NUM OF QUICK RESP TASKS.................       38        6       37      .27       34       38       34       39
    QUAL OF GOVT HOUSING....................       39       17       33      .24       33       39       38       40
    SUPPORT AND RECREAT SVCS................       40       33       34      .24       38       40       41       38
    ASGNMNT TO LDRSHIP JOBS.................       41       43       27      .19       40       41       40       41
    QUAL OF COMMISSARY/EXCH.................       42       32       18      .13       37       43       42       43
    COMPENS FOR PCS MOVES...................       43       30       17      .12       43       42       43       42
                                             -----------------------------------------------------------------------
          TOTAL.............................  .......  .......   13,927   100.00  .......  .......  .......  .......
    ----------------------------------------------------------------------------------------------------------------

        The perception of Marine Corps leadership is an important aspect of
    the Climate Battery Surveys. The very first question asks ``What is the
    main reason you have decided to stay on (or separate from) active duty
    Marine Corps service? Rather than just choose from among distractors,
    Marines have the opportunity to provide their own words in this answer.
        Further along in the survey are questions such as ``How satisfied
    are you with the quality of leadership in the Marine Corps?;''
    questions about chain of command responsiveness; the character of
    leaders; and even the dreaded ``zero-defect mentality.'' The reason for
    these straight-forward questions about Marine Corps leadership is to
    identify shortcomings, both real and perceived, that separating Marines
    see in those of us privileged to lead the Corps.

                          increased Operational tempo

        Senator Stevens. Secretary Dalton, Admiral Johnson, and
    General Krulak, we appreciate your visit with us here today,
    and we are committed to do our best to help you.
        With regard to Senator Domenici's questions, I do not think
    it takes a rocket scientist, Senator, to understand the
    difference in deployment today, as compared to even 10 years
    ago. It is just overwhelming.
        And the tasks that we have assigned to military and
    peacekeeping are probably the most boring, mundane tasks that a
    military person in uniform has ever been asked to take on, and
    they just seem to go on, and on, and on, and on.
        I think those deployments are having an impact on the
    morale and really the retention of our armed services, and some
    of us would like to have some way to change that. But in the
    current situation of the world, it does not seem possible.
        But I do agree with Senator Domenici: We ought to do our
    best to try to analyze that and see if there is anything that
    Congress might do to help meet some of the forces of these
    people who have been highly trained at a great expense for the
    taxpayers, some of the things that cause them not to reenlist.
        It is the reenlistment rate that really has raised a lot of
    questions from both sides of the aisle here, and I have had
    many questions from other Senators just this last week, since
    we got that amazing statistic from the Air Force, and yours,
    Admiral, is not much better. Do you have a----
        General Krulak. Sir, we have a pilot retention problem, but
    I think that Senator Bond hit the nail on the head, it has
    nothing to do, well, minimal to do with money.
        There are so many things that are involved here, we almost
    insult them when we say, ``Hey, here, have some more money.''
        It has to do with the issue of leadership, it has to do
    with the issue of challenge, it has to do with the issue of
    coming back home, and when they do, that they get flight hours,
    and that the flight hours they get are meaningful, and they are
    sweating under their arms when they come back off the training
    op, that is what they come in for.
        If you do not give them that, and somebody else offers them
    a big check in 15 days of work a month, and the rest they can
    be with their families, they are going to take that. So it is
    more than just what is going on out in the far reaches, it is
    what we are doing back here that counts.
        Senator Domenici. But, Mr. Chairman, in general, we really
    know we cannot keep robbing from the Defense Department to pay
    for emergencies. One-half the things you mentioned are because
    of that.
        Senator Stevens. Absolutely, sir.
        Senator Domenici. You come home and the equipment is not
    what it ought to be, because you have not been maintaining the
    equipment, because the budget did not provide it, and you are
    taking care of it over there in an emergency situation.
        Senator Stevens. You would not find a service chief that
    would not stand on this table and beat on it and say amen to
    what you just said.
        Senator Domenici. Well, we are going to try to do something
    about it, if we have to put more money in, we are going to put
    it in, I mean I am----

                         Additional committee questions

        Senator Stevens. Well, we have to find some more money, we
    will take that trip and see if we can get some help on this
    current deployment. Thank you, gentlemen, 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 Hon. John H. Dalton
                   Questions Submitted by Senator Ted Stevens
                                      cvx
        Question. Why does the Navy need a new class of aircraft carriers?
    Do you intend to evolve the current (Nimitz) design or will it be a
    totally new design?
        Answer. The Navy's vision for CVX is to develop a new class of
    aircraft carriers to significantly reduce total ownership cost and
    incorporate an architecture for change and flexibility, while
    maintaining the core capabilities of Naval aviation (high-volume
    firepower, survivability, sustainability and mobility) for the 21st
    Century and beyond. Achieving this vision will require significant
    design changes to incorporate advances in technology and to focus the
    design on enhanced affordability since little carrier research and
    development has been undertaken since the 1960's.
        The Navy is currently analyzing several alternative designs for
    CVX. These alternative designs run the gamut from an evolution of the
    current Nimitz design to a totally new design which includes a new
    hull, new propulsion plant, new communications suite, new distributive
    systems, new functional arrangements and significant improvements in
    ship survivability and signature management.
                             status of a-12 lawsuit
        Question. What can you tell us about the status of the A-12 lawsuit
    and the Navy plans to proceed in its defense? If the verdict is upheld
    on appeal, would the Navy be liable for the $1.8 billion cost or would
    the cost be apportioned DOD-wide? What would be the effect on the Navy
    modernization accounts?
        Answer. On February 23, 1998, the Court of Federal Claims entered a
    judgment against the United States for over $3.8 billion plus interest.
    The amount is erroneous because it fails to reflect $2.6 billion in
    progress payments already paid to the contractors. The Government's
    initial appeal, filed contemporaneously with the judgment, was
    dismissed on March 19, 1998. The dismissal provides an opportunity to
    correct the judgment in the trial court. A new appeal will be filed
    after the correction of the judgment, which we believe will occur very
    soon.
        No payment of any amount will be paid until all appeals have been
    exhausted. If and when a judgment in some amount becomes final, payment
    will be made by the Treasury from the Judgment Fund. How and when the
    Department of Defense may reimburse the Judgment Fund would be
    determined at that time.
        At this time it is impossible to predict any effect on Navy
    modernization accounts.
                                   f/a-18e/f
        Question. How much of a delay has the Navy experienced at this
    point in the F/A-18E/F production program?
        Answer. None. The F/A-18E/F is on production schedule. The first
    twelve Low Rate Initial Production (LRIP) aircraft are on schedule for
    delivery starting in January 1999. They will be delivered with the
    porous wing fold fairing, the correction for wing drop, incorporated.
                         per user fee contract strategy
        Question. The Department of the Navy/Fleet and Industrial Supply
    Center procured personal computer software using a new ``Per User Fee''
    contracting and saved $48 million. In addition to saving money, the new
    strategy eased software installation and reduced security risks
    associated with the installation. Does the Department intend to use
    this innovative approach on other contracts? Can it be expanded to
    other Departments?
        Answer. The Department of the Navy is enthusiastic about innovative
    licensing of software in various forms and intends to pursue
    alternatives vigorously as guided by pioneering experiences such as
    that undertaken by the Fleet and Industrial Supply Center Philadelphia/
    Defense Logistics Agency team. These approaches hold great promise
    throughout the Federal Government.
                                     ______

                   Question Submitted by Senator Thad Cochran
                               apl barracks barge
        Question. It is my understanding that the Navy is currently in the
    process of soliciting bids for the acquisition of two APL barracks
    barges; $33 million has been appropriated for this acquisition.
        Based on the bids which have been received, is this funding
    sufficient to acquire both barges? If not, how does the Navy plan to
    fund this requirement?
        Answer. The Navy is soliciting bids for the acquisition of two APL
    barracks barges. Bids are due March 17, 1998. Bid packages will be
    reviewed after the bid date to determine adequacy of funds. If funding
    is insufficient, appropriate action will be taken based upon degree and
    probable cause of the higher than expected bid amounts.
                                     ______

                Questions Submitted by Senator Pete V. Domenici
                                 privatization
        Question. How did the Navy and the Marine Corps arrive at the
    number of civilian and military jobs to be eliminated and/or contracted
    out?
        Were specific, individual studies performed to analyze the savings
    and appropriateness of activities to compete? Or, was a goal imposed
    ``from the top?''
        How did the Navy/Marine Corps determine that contracting out saves
    20 percent? Why does the Air Force assume different savings? Please
    provide copies of the analysis you performed to come to the conclusion
    that 20 percent was the right number.
        Answer. The savings reflected in the Navy's FYDP are derived from
    our expectation that ``competition'' not ``contracting out'' will
    result in significant savings. This expectation is based on research
    and analysis performed by the Center for Naval Analysis (CNA). CNA
    reviewed our experience implementing OMB Circular A-76 in the 1980's
    and found that ``competition'', not ``contracting out'', resulted in
    cost savings of approximately 30 percent, regardless of the outcome of
    the cost comparison. As a matter of interest, approximately half of the
    functions studied remained in-house after the competition, albeit in a
    more streamlined, efficient organization. CNA also reviewed the Navy's
    inventory of commercial activities and determined that conducting cost
    comparisons of activities involving approximately 80,000 full-time
    equivalents would yield the kind of savings we have incorporated into
    the Navy's FYDP. The CNA analysis formed the basis for Navy's
    competition savings projections. I cannot address the Air Force's
    savings assumptions, but I will be happy to provide you with a copy of
    CNA's analysis under separate cover that forms the basis of our
    estimate that competition yields average savings of 30 percent.
        Question. With fewer military personnel and DOD civilians after all
    this contracting out, what will be the impact on overseas rotation and
    ``perstempo'' problems?
        Answer. I need to reiterate that we are interested in increasing
    ``competition'' not ``contracting out.'' Our policy provides a
    structured check and balance system between military manpower
    requirements and proposed shore infrastructure reductions for
    regionalization, outsourcing or privatization initiatives to ensure
    that our military readiness is not adversely affected. The need to
    maintain a sea-to-shore rotational base, along with the need to
    maintain certain critical skills, has indeed limited our ability to
    compete certain military-intensive functions. For this reason, the
    Navy's plan to achieve the savings reflected in this budget focuses on
    competing civilian-intensive functions.
        Question. How will the Navy and the Marine Corps monitor and
    document the progress in achieving your outsourcing programs and
    achieving the planned savings? How will these data be confirmed by an
    outside party?
        Answer. The Navy is conducting a ``competition'' program, not an
    ``outsourcing'' program. The Navy generally relies upon the cost
    comparison process established by OMB Circular A-76 to ensure that our
    competitions result in the most cost effective outcome. Circular A-76
    not only provides rigorous guidelines for identifying the costs of both
    in-house and private sector performance but it also incorporates an
    independent review process and provides all affected parties with an
    independent appeal process. The independent reviews will be conducted
    by both independent contractors familiar with the commercial activity
    studies and by in-house Navy auditors. Actual savings of the
    competition will include both personnel and other operating costs. To
    monitor and document our progress in achieving the planned
    ``competition'' savings, the Navy has established an annual reporting
    system. This system will track actual costs for five years subsequent
    to the implementation of the cost comparison decision. Savings
    conformance will be determined by an analysis of actual total operating
    costs against planned total operating costs. Based on our past
    experience, we expect actual costs to track well with the cost
    comparison estimates. In addition to review by the independent
    reviewing official, the appeals officer, and all other interested
    parties during the cost comparison phase, cost comparison data will be
    available for public scrutiny and external review by the Naval
    Inspector General, the Naval Audit Service, the DOD Inspector General,
    the General Accounting Office, and other interested parties.
        Question. What actions do you plan if the savings do not
    materialize as planned? More outsourcing? Cuts in procurement? Force
    structure? Readiness?
        Answer. Failure to achieve the projected savings would have a
    serious impact on the Navy's ability to fund the modernization program
    without taking vertical cuts that would jeopardize other existing
    requirements. For the Marine Corps, the effect of less than anticipated
    savings would be a decrease in procurement and an increase in Operation
    and Maintenance. To limit the risk of jeopardizing other requirements
    and to ensure we meet the savings projected in the FYDP, we are also
    aggressively pursuing related cost savings initiatives such as
    regionalization, privatization, community use and public-private
    ventures.
                                   readiness
        Question. What do your latest, 1998, data show about pilot
    retention? Is it getting better or worse? Is it better or worse for
    married pilots? With families? What are the socio-economic profiles of
    the pilots leaving? Staying?
        Answer. The Navy's two primary predictors of pilot retention,
    resignations and Aviation Continuation Pay (ACP) take rates,
    demonstrate that pilot retention continues to be on the decline. Pilot
    resignations increased from 414 in fiscal year 1997 to 540 in fiscal
    year 1998, while fiscal year 1998 ACP take rates, as shown in Table 1,
    were much lower than required.

                                         TABLE 1.--FISCAL YEAR 1998 ACP PROGRAM
    ----------------------------------------------------------------------------------------------------------------
                                                          Aircraft    Bonus    Number    Number   Eligible   Percent
                    Aviation subcommunity                   type     amount   required  eligible   applied   of goal
    ----------------------------------------------------------------------------------------------------------------
    VFA Pilot...........................................    F/A-18   $17,000        23        81        11        48
    VF Pilot............................................      F-14    17,000        13        62         4        31
    VAQ Pilot...........................................     EA-6B    19,000        14        28         3        21
    VS Pilot............................................       S-3    19,000        15        32         2        13
    VAW/VRC Pilot.......................................   E-2/C-2    10,000        17        58         7        41
                                                         -----------------------------------------------------------
          Carrier Pilot Take Rate.......................  ........  ........        82       261        27        33
                                                         ===========================================================
    VP Pilot............................................       P-3    10,000        46       200        44        96
                                                         -----------------------------------------------------------
          Prop Pilot Take Rate..........................  ........  ........        46       200        44        96
                                                         ===========================================================
          Pilot Take Rate...............................  ........  ........       128       461        71        55
    ----------------------------------------------------------------------------------------------------------------

        Thus far this year only 27 eligible carrier pilots (33 percent of
    the needed 82) applied for ACP agreements that obligated them through
    14 years of commissioned service. This take rate, lowest in program
    history, is a sound predictor that critical department head billets
    will not be filled since those that have not signed an agreement are
    free to leave the Navy. These two indicators of resignations and take
    rates together highlight a continued trend of low pilot retention. The
    Navy does not track retention by socio-economic profiles such as
    retention for those married or with families.
        For the Marine Corps, as of March 16, there have been 70 fixed wing
    pilot resignations in fiscal year 1998. These figures and the trend for
    the year are well below the fiscal year 1997 rate (92) and slightly
    higher than the fiscal year 1996 rate (69) as of March of each year.
        The Marine Corps does not track pilot resignations by single/
    married/divorced categories. Current percentages of overall USMC
    Officers (O-3 and O-4) include the following: 80 percent Married, 4
    percent Divorced and 16 percent Single. There is no common thread to
    the socioeconomic profiles of the pilots leaving or staying. All pilots
    are now eligible for the Aviation Continuation Pay (ACP) program,
    making them the highest paid company/field grade (O-3 and O-4) officers
    in the Marine Corps.
        Question. What are the specific complaints of pilots leaving the
    Navy?
        Answer. Table 1 lists ``reasons for leaving'' as cited by Naval
    Aviators on fiscal year 1997 exit surveys. It is noteworthy that no
    requirement exists to complete an exit survey.

    Table 1.--Reasons for Leaving the Navy Cited by Pilots in Fiscal Year
    1997 Exit Surveys

                                                                     Percent
            Reason for Leaving                                        Citing
    Family Separation.................................................    20
    Promotion Opportunity.............................................    14
    Quality of Leadership.............................................    12

    Amount of Sea Duty

                                                                           8

    Note.--These results were compiled from 126 completed exit surveys: the
    number represents only 30 percent of the aviators who resigned in fiscal
    year 1997. Additionally, the CNO's Aviation Retention Team compiled the
    below list of reasons for resigning.
    These anecdotal reasons were heard from direct discussions with the
    fleet during visits by the team to various aviation commands: Increased
    amount of family separation; Frustration with Navy leadership; High
    operational tempo; Inadequate funding to support operations; Erosion of
    compensation/benefits; Reduced promotion opportunity; and Inadequate
    infrastructure.

        In September 1997, a USMC Aviation sponsored briefing team,
    composed of junior field grade officers traveled to both coasts to
    visit ready rooms and talk to aviators about the facts and myths of a
    career as a Marine aviator. Aviators provided the team with frank
    discussion and openly voiced their concerns. There was no single reason
    that influenced an aviator's decision to resign. The major reasons
    cited to the briefing team for leaving the Corps included: Increased
    airline hiring; Increased amount of family separation; Desire to fly
    more hours (AV-8B and CH-53); Excessive time in Joint/Inter-/Intra-
    service exercises which limit training for individual pilot skills; and
    Uncertainty about future military downsizing.
        Question. Which of your ``quality of life'' programs are working?
    Which are not? Which generate the best pay-off in terms of retention?
    Please provide the data and analysis to substantiate your answer, or
    are you using judgement or anecdotal evidence to assess the degrees of
    success or failure? Does the Navy have any studies on these issues? By
    independent organizations? Please provide copies.
        Answer. I've just received the results of the 1997 Navy Bureau of
    Naval Personnel (BUPERS) QOL survey that asked a representative sample
    of Sailors about their perceptions and use of 29 of our QOL programs.
    Their answers tell us that most of our QOL programs are working, in
    terms of both readiness and retention.
        When we asked members to rank those programs that they feel
    contribute the most to their readiness, officers cite as their top
    three: (1) Tuition Assistance (TA)--47 percent; (2) Morale, Welfare,
    and Recreation (MWR) Sports and Fitness Ashore--46 percent; and (3) MWR
    Recreational Activities Ashore--33 percent.
        The top three programs for maintaining readiness among enlisted
    are: (1) TA--60 percent; (2) Montgomery GI BILL (MGIB)--51 percent; and
    (3) MWR Recreational Activities Ashore--32 percent.
        Regardless of pay grade, MWR and Voluntary Education (VOLED)
    programs have the greatest impact on readiness.
        The most frequently used QOL programs were cited as MWR Recreation
    Activities Ashore (Officer--85 percent, Enlisted--85 percent), MWR
    Sports and Fitness Ashore (Officer--84 percent; Enlisted--85 percent),
    and Navy Campus Education Centers (Officer--37 percent; Enlisted--61
    percent). QOL programs with the highest quality ratings were: TA (78
    percent); MGIB (77 percent); and Navy Campus Education Centers (70
    percent). 25 of 29 QOL programs were rated ``good'' or ``very good'' by
    a majority of our Sailors.
        Out of 29 QOL programs that were rated, four did not receive a
    ``good'' or ``very good'' assessment: (1) Spouse Employment Assistance
    (39 percent); (2) Single Sailor Program Ashore (42 percent); (3) Good
    Relationships, Strong Marriages, and Healthy Families (49 percent); and
    (4) Outreach and Command Representative Program (50 percent).
        These programs are relatively new, and many of our Sailors may not
    be as familiar with them as some of our more established efforts.
        Some programs haven't been well publicized. The least recognized
    programs among officers included the Chaplains Religious Enhancement
    Development Operation (CREDO) (15 percent), Relationships, Families,
    and Marriages (13 percent), and the Volunteer Program (12 percent),
    while enlisted reported less recognition for Academic Skills (26
    percent), CREDO (25 percent), Outreach/Command Representative Program
    (22 percent), and Single Sailor Ashore (20 percent).
        Sailors report that MWR and VOLED programs most significantly
    affect their retention decision. When asked, ``Would you reconsider
    your decision to remain in the Navy if programs were reduced or
    eliminated,'' officers listed TA, MGIB and MWR Sports/Fitness Ashore as
    the top 3 programs affecting their retention decision. Enlisted members
    listed TA, MGIB and Navy Campus Education.
        A recently completed study by the Center for Naval Analysis (CNA)
    on the ``Effectiveness of the Navy's Voluntary Education Program'' has
    told us that participation in off-duty education programs has a clear
    relationship to both promotability and retention. Sailors who
    accumulate college credits have a significantly higher probability of
    making E-5 in five years. College participants have a significantly
    higher reenlistment rate. As credits accumulate, the probability of
    first reenlistment increases. The CNA study also examined the program's
    cost effectiveness. Investment in Academic Skills improvement provides
    a dramatic return of between $9 to $22 for every Navy dollar invested
    in the program in reduced recruiting and training costs. The final
    report for this study is expected in mid April.
        Our most recent data on QOL programs is presented here, though the
    report on the findings of the 1997 QOL Survey (prepared by Navy
    Personnel Research and Development Center (NPRDC)) is pending. NPRDC is
    a Navy personnel research laboratory that is staffed primarily by
    civilian research psychologists. Although NPRDC research psychologists
    work with some guidance from Navy/BUPERS sponsors, they maintain their
    scientific integrity.
        Marine Corps quality of life (QOL) programs contribute to military
    mission outcomes. This was demonstrated in the 1994 ``Quality of Life
    in the Marine Corps'' study conducted by the Navy Personnel and
    Research Development Center (NPRDC). This study statistically linked
    the QOL program investments to readiness and retention. This study is
    scheduled to be readministered in 1998 to reassess Marines' QOL across
    11 areas and their relation to mission outcomes.
        There is a myriad of QOL program-specific research, such as the MWR
    Patron Needs Assessment, also conducted by NPRDC and completed in 1997.
    According to data, the top 10 programs/services rated as most important
    to Marines were: (1) Exchange; (2) Information, Tickets and Tours
    (ITT); (3) Fitness Centers; (4) ATM Machine; (5) Military Clothing
    Store; (6) Gas Station; (7) Movie Theater; (8) Barber Shop; (9) Auto
    Hobby Shop; and (10) Swimming Pools. Two other recent QOL program-
    specific studies conducted were: the Effectiveness of the Voluntary
    Education Program, performed by the Center for Naval Analysis, and the
    Spouse Employment Survey and Analysis, performed by Human Technology,
    Inc. and CODA Inc.
        The Marine Corps has a robust QOL research program, with many
    ongoing initiatives to determine both Marine and mission needs. In
    1998, an ``Assessment of Program Contributions to Military Outcomes,''
    will obtain effective program measures for 22 MWR and Human Resources
    programs, and assess each program's contribution to military outcomes.
        Another study, the ``Marine Corps MWR Leadership Assessment,'' will
    gather commander's and senior NCO leadership recommendations for MWR
    mission support. Both studies will be conducted by NPRDC.
        Research results are used as the basis for policy and resource
    decisions. Combined with commanders' leadership experience and
    judgment, the Marine Corps QOL programs provide a demonstrate return on
    investment to mission outcomes. All of our Quality of Life programs are
    producing positive results.
        One of the programs which is working very well is the Voluntary
    Education Program (VOLED). VOLED participants have significantly better
    promotion prospects. Academic skill participants are more likely to
    cross-rate. VOLED participants have significantly lower demotion rates
    and higher reenlistment rates.
        Family Programs improve Quality of Life for Marines and their
    families and enhance retention and readiness by providing the tools
    needed to meet the challenges of the military lifestyle. Family Service
    Centers provided 289,000 units of service in their first year of
    operation in 1988. In 1997, 1.7 million units of service were provided.
    A recent study by Caliber Associates looked at selected family service
    center programs (all services) and determined that there was a nexus
    between family service center programs and readiness.
        The Marine Corps child care programs are also providing essential
    services which affect readiness. The demand for child care exceeds the
    current capacity but we are reviewing our delivery systems to make
    certain that we are providing the services that families most require.
    For example, we are focusing on ways to expand care for children three
    years and under as this represents the greatest percentage of our unmet
    need.
        Question. What changes have been occurring in spouse, child, and
    substance abuse for the past two years? Please differentiate between
    officers and enlisted, length of service, and among major military
    specialties and PERSTEMPO rates. What is the role of the current high
    PERSTEMPO in any changes in family or substance abuse? Please provide
    copies of any analysis you have of the relationship.
        Answer.
        Navy.--There have been no significant changes in spouse and child
    abuse for the past two years. We have no evidence or indication that
    rank, rate, length of service or military specialty have had any direct
    impact on incidence rates of child or spouse abuse. Data from the Navy
    Central Registry shows the following:
        Number of incidents reported for the last five years:

    ----------------------------------------------------------------------------------------------------------------
                                                                                        Fiscal year--
                                                                        --------------------------------------------
                                                                           1997     1996     1995     1994     1993
    ----------------------------------------------------------------------------------------------------------------
    Spouse Abuse:
        Incidents reported.............................................    3,357    3,424    5,228    6,057    6,344
        Substantiated..................................................    2,493    2,558    3,586    4,053    4,277
    Rates of spouse abuse incidents reported per 1,000 spouses.........     16.3     13.9     22.4     24.5     25.5
    Child Abuse:
        Incidents reported.............................................    2,606    2,435    3,822    4,122    5,368
        Rates of child abuse incidents reported per 1,000 children.....      7.8      7.1     10.5     13.8     13.5
    ----------------------------------------------------------------------------------------------------------------

        Navy abuse incident reports leveled off and decreased in fiscal
    year 1993, fiscal year 1994, fiscal year 1995 and fiscal year 1996. We
    believe this is due not only to downsizing, but also to improved
    screening of cases with our Risk Assessment Model. It may well be that
    fear of career consequences has decreased reporting, as indicated by
    the Abuse Victim Study which was required by the Defense Authorization
    Act for Fiscal Year 1993 (Public Law 102-484).
        In general, substance abuse in the Navy has declined in the past 18
    years. We credit our aggressive prevention and deterrence efforts, to
    include education, providing healthy alternatives and a vigorous drug-
    testing program. In contrast to the post-Vietnam era, our culture, with
    respect to drug abuse, is one of ``Zero Tolerance.'' The goals of our
    urinalysis program have always been to deter and detect drug abuse, as
    well as provide data on the prevalence of drug abuse. We've been quite
    successful--the proportion of sampled servicemembers testing positive
    for drugs has fallen from approximately 7 percent in 1983 to less than
    1 percent in recent years, with no changes in drug abuse trends over
    the past two years. Alcohol abuse has shown a similar decline. In 1982,
    41 percent of Navy personnel reported ``loss of productivity'' (late
    for work, missing work, etc.) because of alcohol abuse. That number,
    while still too high, declined to 20 percent in 1995. We anticipate
    that DOD's Worldwide Survey on Substance Abuse, currently in progress,
    will show additional reductions in fiscal year 1996 and fiscal year
    1997.
        In fiscal year 1996 and fiscal year 1997, our urinalysis positivity
    rate remained below 1 percent. In those years, officers accounted for
    less than .05 percent of all positive samples and enlisted personnel
    ages 25 and under accounted for approximately 70 percent of all
    positive samples. Historically, first term personnel account for the
    majority of all positive urinalysis samples. PERSTEMPO does not appear
    to influence our rates of substance abuse.
        In the last two years, we've implemented testing of all Navy
    applicants at Military Enlistment Processing Stations (MEPS) upon entry
    into the Delayed Entry Program (DEP). The result has been approximately
    4 percent of all applicants tested positive for drug abuse. Our Navy
    Drug Screening Labs (NDSL's) also began using a better THC chemical
    reagent that is more sensitive to a broader range of THC metabolites.
    The result has been an increase of approximately 700 additional urine
    samples testing positive for THC in fiscal year 1997 over fiscal year
    1996. We've also revised our Self-Referral for Drug Abuse Policy so
    that it protects Navy's investment in training and experience by
    preventing fraudulent use of the self-referral program, while it
    continues to help those who have been diagnosed as drug dependent.
    Also, we've implemented an Inhalant Abuse Policy to establish
    guidelines for processing personnel who abuse inhalants for
    administrative separation.
        Other important initiatives include implementation of Urinalysis
    Program Coordinator Training to standardize our urine specimen
    collection and submission procedures. We have distributed software that
    helps commands better manage their urinalysis programs and track
    substance abuse trends. We've also upgraded our Navy Drug Resource
    Website (NAVDWEB) with improved graphics, easier instructions, and more
    information.
        In alcohol abuse prevention efforts, we introduced our ``Right
    Spirit'' Alcohol Abuse Prevention and Deglamorization campaign in March
    of 1996. This campaign tightens policy, eliminates waivers for underage
    drinking in certain locales, increases education and training, and
    establishes prevention education detachments in San Diego and Norfolk.
        The chart below shows alcohol and drug abuse trends by age and pay
    grade. Heavy drinking is defined as five or more drinks in one setting
    at least once a week.

                                [Past 12 months]
    ------------------------------------------------------------------------
                                                      Percent      Percent
                    Characteristic                    Illicit       Heavy
                                                     Drug Abuse    Drinkers
    ------------------------------------------------------------------------
    Age:
        20 and under..............................         16.6         29.8
        21-25.....................................         10.3         26.6
        26-34.....................................          4.8         15.4
        35 and older..............................          3.0          9.3
    Pay Grade:
        E1-E3.....................................         15.9         32.4
        E4-E6.....................................          6.1         18.2
        E7-E9.....................................          2.0         11.4
        W1-W5.....................................          2.8          9.5
        O1-O3.....................................          2.7          6.1
        O4-O10....................................          1.2          2.0
    ------------------------------------------------------------------------
    Source: Department of Defense Worldwide Survey of Health Behaviors for
      Military Personnel.

        There is no direct evidence that ``downsizing'' and an increased
    PERSTEMPO have contributed to increased spouse, child, or substance
    abuse. We have noted that personal childhood experiences, learned
    behavior patterns, and individual psychological factors appear to
    influence more directly the incidence of child or spouse abuse.
    Situational family stress, such as work stress, is not a strong
    predictor of child or spouse abuse, although it could increase risk
    when occurring in context with the known risk factors I mentioned.
        While we have not noted a relationship between increased PERSTEMPO
    and increased substance abuse, we do recognize that there are warning
    signs that we must closely monitor.
        Alcohol and drug abuse patterns differ among certain socio-
    demographic groups and environmental conditions. We know that alcohol
    and drug abuse is often more common and heavier among younger persons,
    males, and the less educated. Navy, like the other military Services,
    is largely made up of this high risk (male, 17 to 25) population. In
    addition to age, sex and education, marital status and pay grade are
    risk factors. Single Sailors or those who are married without their
    spouse present are more likely to abuse alcohol. Those in pay grades
    E1-E3 and O1-O3 are five times more likely to abuse alcohol or drugs
    than senior enlisted and officers. Isolated duty and long deployments
    are also high risk factors.
        The above data was taken from the 1995 survey. Current Navy data
    shows a trend of decreasing incidents, particularly in drinking and
    driving incidents and injuries. Discharges because of alcohol or drugs
    have not changed. In short, we have not seen evidence of an upturn of
    substance abuse because of PERSTEMPO.
        USMC.--There has been no significant change in substance abuse in
    the past two years. Preliminary figures for the number of substantiated
    incidents follow:

    ------------------------------------------------------------------------
                                                      Domestic
                                                      Violence   Child Abuse
    ------------------------------------------------------------------------
    Fiscal year 1997..............................        1,597          844
    Fiscal year 1996..............................        1,979          969
    ------------------------------------------------------------------------

        The USMC family violence reports do not regularly differentiate
    between officer and enlisted. Also, we have not to date maintained data
    on length of service or major military specialty.
        We commissioned a special study by the University of Maryland
    School of Social Work in fiscal year 1996 to determine if the high
    OPTEMPO in fiscal year 1996 was a causal factor in domestic violence.
    The findings were that OPTEMPO was not a causal factor. However,
    deployments may precipitate incidents of family violence by someone
    already disposed to use violence.
                                    f-18e/f
        Question. In 1998 dollars, what is the current total program unit
    cost for a F-18E, and F-18F? For the C/D (Lot 19) models? (Please
    include all RDT&E, MilCon, and Procurement costs.)
        Answer. Unit procurement cost for the ``E'' and ``F'' (APN 1 and 6)
    for 548 A/C procured as per the fiscal year 1999 President's Budget
    are:
        ``E'' equals $63.875 million/Unit in fiscal year 1998 dollars.
        ``F'' equals $65.692 million/Unit in fiscal year 1998 dollars.
        E&MD (fiscal year 1998 dollars) equals $5,870.1 million as of the
    fiscal year 1999 President's Budget. Amortize this over 548 units:
        ``E'' equals $10.712 million/Unit in fiscal year 1998 dollars.
        ``F'' equals $10.712 million/Unit in fiscal year 1998 dollars.
        Total unit procurement cost including APN 1, 6 and E&MD for the
    ``E'' and ``F'' are:
        ``E'' equals $74.587 million/Unit in fiscal year 1998 dollars.
        ``F'' equals $76.404 million/Unit in fiscal year 1998 dollars.
        This assumes that items such as support, spares, non-recurring and
    E&MD costs are amortized equally across all units and the variants.
        The C/D Lot 19 A/C were procured in fiscal year 1995. As of the
    fiscal year 1999 President's Budget, the unit costs for the ``C'' and
    ``D'' (APN1 and 6) are:
        ``C'' equals $45.372 million/Unit in fiscal year 1998 dollars.
        ``D'' equals $46.946 million/Unit in fiscal year 1998 dollars.
        E&MD (fiscal year 1998 dollars) equals $5,341.5 million as
    projected from the fiscal year 1996 C/D SAR approved program (APB)
    information. Amortized over 1,027 USN units:
        ``C'' equals $5.201 million/Unit in fiscal year 1998 dollars.
        ``D'' equals $5.201 million/Unit in fiscal year 1998 dollars.
        Total unit procurement cost with APN 1, 6 and E&MD for the ``C''
    and ``D'' are:
        ``C'' equals $50.573 million/Unit in fiscal year 1998 dollars.
        ``D'' equals $52.147 million/Unit in fiscal year 1998 dollars.
        Question. What total program unit cost, in 1998 dollars, did the
    Navy project in 1993 for the E/F?
        Answer. Using the 92 DAB estimate and the escalation at that time,
    the unit procurement cost for 1,000 E/F aircraft including both APN 1
    and 6 was: Unit procurement cost equals $61.198 million/Unit in fiscal
    year 1998 dollars.
        E&MD (fiscal year 1998 dollars--escalation at that time) as
    estimated at the 92 DAB amortized over the projected 1,000 A/C was:
    Unit E&MD cost equals $6.001 million/Unit in fiscal year 1998 dollars.
        Total Unit Procurement Cost including APN procurement (1 and 6) and
    E&MD was: Total unit procurement cost equals $67.199 million/Unit in
    fiscal year 1998 dollars.
        Question. Please cite all performance goals stated in 1993 and what
    changes, up or down, have occurred up to the present time on all
    issues, including range, acceleration, maneuverability, and radar cross
    section. Is any consideration being given at this time to changing or
    dropping any of these or other performance criteria?
        Answer. There is no consideration being given at this time to
    change or drop any Key Performance Parameter (KPP). Attached are the
    KPP parameters for the F/A-18 E/F. The objective and threshold values
    represent our ORD requirements. Since 1993 the only change to the ORD
    was to incorporate performance requirements for the F version.
    Originally F-18F performance was to be a fallout since it was only to
    be used as a trainer. With the decision to replace the F-14 with the F-
    18F, performance requirements were established. (See the Key
    Performance parameter enclosure.)
        In those KPP's with multiple entries (e.g., Interdiction Mission
    Radius, Recovery, Payload, Specific Excess Power, etc.) the first entry
    is the ``E'' value and the second is the ``F'' value.) The launch wind
    over deck definition was also changed and based on larger Max Takeoff
    Gross Weight rather than the lower Typical Combat Gross Weight. This
    added 4,000 pounds to the calculation used to determine launch wind
    over the deck requirements for the airplane. This, in effect, increased
    the KPP requirement. Even within this more stringent requirement we
    have margin. The status numbers presented reflect flight test results
    collected to date. This performance data was collected, reviewed and
    validated during OT-IIA. Radar Cross Section is classified; however
    flight testing has been done and the aircraft meets specified
    requirements.
        Question. Please cite the flight test results for each of these
    criteria.
        Answer. On the enclosure (Key Performance Parameters), the status
    numbers reflect flight test results collected to date. This performance
    data was collected, reviewed and validated during OT-IIA.
        Question. A recent draft GAO report lists 420 technical
    deficiencies in the F-18E/F. What is your cost and time estimate to
    resolve all these with no sacrifice in any performance criterion?
        Answer. Current funding and schedule provide sufficient resources
    to correct all deficiencies requiring correction to support a
    successful Operational Evaluation (OPEVAL). All of the corrective
    actions are being tracked individually and cumulatively for impact to
    performance, and all Key Performance Parameters are being met with
    margin to spare.
        Question. In 1993, Naval Air Systems Command compared the
    performance of the A and C models of the F-18 to the goals of the E
    model. See table below. Please provide data from flight test results to
    compare actual F-18E performance to the original goals and to the
    specified earlier F-18's.

    ----------------------------------------------------------------------------------------------------------------
                                                                                                              F-18E
                                                 Initial F-18A   F-18A    F-18C    F-18C    F-18C    F-18E    flight
                                                 Specification   (Lot 1    (Lot     (Lot     (Lot   goal in    test
                                                                  FSD)     14)      15)      19)      1993   results
    ----------------------------------------------------------------------------------------------------------------
    Escort Range (NM)..........................         420         319      302  .......  .......      356  .......
    Interdiction Range (NM)....................         618         437      398  .......  .......      501  .......
    Accel (sec.) 0.8 to 1.6 mach...............          98         144      180  .......  .......      153  .......
    Specific Excess Power(Ps) (Ft./Sec.) at 1,
     3, and 6  Gs..............................  .............  .......  .......  .......  .......  .......  .......
    Approach speed (kts.)......................         128         140      142  .......  .......      144  .......
    ----------------------------------------------------------------------------------------------------------------

        Answer. Provided here within the chart below:

    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        F/A-18C                            F/A-18E
                                                                               F/A-18A ---------------------------------------------------------------------
                                                                     F/A-18E    Lot 1                                              DAB               Flight
                                                                       ORD       FSD     Lot 12    Lot 14    Lot 15    Lot 19     March   PDR June    test
                                                                                                                                  1992      1993     results
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Fighter Escort Radius (NM)....................................       410       362       343       341       331       330       420       423       434
    Interdiction Radius (NM)......................................       430       415       376       374       370       369       520       504       512
    Accel'tion (sec) 0.8M to 1.2M, 35K............................        70        55        58        58        57        57        60        67        67
    Specific Excess Power, Ps (fps) 1g @ 0.9M, 10K................       600       617       599       599       699       695       637       639       661
    Approach Speed (kts)..........................................       150       140       146       146       146       146       144       145       142
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Note.--The ground rules for defining performance specifications have changed over time. The rules for the F/A-18A and the F/A-18E are different. For
      example, the flight profile for measuring Interdiction Radius was different for the F/A-18A than it is for the F/A-18E. The table above uses the F/A-
      18E rules, which have been applied to the other variants for consistency. This is why column one was changed to F/A-18E ORD vice F/A-18A
      specification.

                              f/a-18e/f wing drop
        Question. Please state your view on the media coverage about the F/
    A-18E/F ``wing drop'' problem and about comparisons of E/F performance
    to earlier models of the F-18. Do you believe it useful or important
    for the public to be informed of these issues?
        Answer. Yes, the Department of the Navy fully complies with the
    Principles of Information as established by the Department of Defense
    (see attached).
        Question. Please provide copies of Navy testimony or printed
    reports to Congress or the public identifying the ``wing drop'' problem
    before the first instance of its being reported in the media.
        Answer. Neither printed reports nor Navy testimony were requested
    by Congress or the public prior to initial reporting in the media.
    However, wing drop was included in a list of technical issues to be
    solved in flight test during a briefing to Senator Russell Feingold (D-
    WI) in a visit to NAS Patuxent River, Maryland, in May 1997. For
    informational purposes, provided are an F/A-18E/F Wing Drop Awareness
    Chronology dated February 16, 1998 and responses to questions submitted
    by Mr. Creighton Greene, Professional Staff Member, Senate Armed
    Services Committee, in December 1997.
                                    f-18e/f
        Question. Why does the Navy compare the E/F to the lower
    performance (i.e. Lot 12 version of the C/D model rather than the
    current (i.e. Lot 19) version? Please present a comparison of the C/D
    Lot 12 to Lot 19 on all significant performance criteria.
        Answer. The attached chart provides the comparison of Lot 12 to Lot
    19. As the Navy developed the ORD in 1991, to support the Defense
    Acquisition Board in 1992, the current version of the F/A-18C/D was the
    Lot 12. Therefore, the Lot 12 F/A-18C/D was used to develop the
    performance baseline for the F/A-18E/F. Newer Lots were planned at the
    time but their performance parameters had not been defined.

    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        F/A-18C                            F/A-18E
                                                                               F/A-18A ---------------------------------------------------------------------
                                                                     F/A-18E    Lot 1                                              DAB               Flight
                                                                       ORD       FSD     Lot 12    Lot 14    Lot 15    Lot 19     March   PDR June    test
                                                                                                                                  1992      1993     results
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Fighter Escort Radius (NM)....................................       410       362       343       341       331       330       420       423       434
    Interdiction Radius (NM)......................................       430       415       376       374       370       369       520       504       512
    Accel'tion (sec) 0.8M to 1.2M, 35K............................        70        55        58        58        57        57        60        67        67
    Specific Excess Power, Ps (fps) 1g @ 0.9M, 10K................       600       617       599       599       699       695       637       639       661
    Approach Speed (kts)..........................................       150       140       146       146       146       146       144       145       142
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Note.--The ground rules for defining performance specifications have changed over time. The rules for the F/A-18A and the F/A-18E are different. For
      example, the flight profile for measuring Interdiction Radius was different for the F/A-18A than it is for the F/A-18E. The table above uses the F/A-
      18E rules, which have been applied to the other variants for consistency. This is why column one was changed to F/A-18E ORD vice F/A-18A
      specification.

                                     ______

                Questions Submitted by Senator Richard C. Shelby
                          naval reserve ch-60 aircraft
        Question. Secretary Dalton, I am told that the Navy Reserve has
    stated that one of their highest unfunded priorities is the CH-60. Are
    any of the aircraft requested in the fiscal year 1999 budget for the
    Naval Reserve? How many additional aircraft do the Navy Reserves
    require in fiscal year 1999?
        Answer. The fiscal year 1999 budget does not include the
    procurement of CH-60 aircraft for the Naval Reserve. The Navy's Master
    Helicopter Plan was developed to expand warfighting capability,
    mobilize the force, neck down type/model/series and consolidate the
    force structure. To achieve that aim Navy is moving toward an all H-60
    force consisting of two series helicopters; the CH-60 and the SH-60R. A
    key component of the plan is to eventually mirror the Naval Air Reserve
    Force's helicopter community to that of the Active force. Currently the
    Naval Air Reserve Force operates five different series helicopters; HH-
    60H, UH-3H, SH-3H, SH-2G and the MH-53E. To align the Reserve
    helicopter force with Active forces will require the replacement of all
    existing aircraft with either the CH-60 or the SH-60R. The Naval
    Reserve Force has requirements for 28 airframes through fiscal year
    2008. Two reserve aircraft were appropriated in fiscal year 1998. The
    reserves have included procurement of 2 CH-60's as high unfunded
    priorities in fiscal year 1999.
                              hellfire ii missiles
        Question. Secretary Dalton, is there an unfunded requirement for
    Hellfire II missiles? If so, please tell me how many of these missiles
    are required by the Department of the Navy and what your procurement
    plans are.
        Answer. The Hellfire missiles in the inventory and on contract are
    fully funded. The projected inventory is 4,000 missiles below the
    inventory objective. Based on overall funding priorities, the DON has
    no plans to procure additional Hellfire missiles.
                                     ______

                   Questions Submitted by Senator Judd Gregg
                             operational readiness
        Question. I understand that (1) operational demands are threatening
    to diminish readiness; and (2) past the FYDP period, i.e. 2003 and
    beyond, the Navy is concerned that the average rate of funded
    production will not permit you to maintain both the required ship and
    aircraft inventory.
        Both of these are serious issues, would you expand on them please?
        What is the approximate magnitude of your ship building/repair/
    modernization shortfall beyond fiscal year 2003?
        Answer. The Navy is striving to support operational demands, such
    as maintaining two Carrier Battle Groups in the Persian Gulf, with
    regularly scheduled forward-deploying forces. This level of support
    comes at a cost, in reduced presence in other theaters, and poses
    significant challenges for the Fleet Commanders.
      --Short term impacts are slight due to the forward deployed posture
            and inherent mobility of naval forces which make them an ideal
            choice for crises response and easy to shift between theaters
            when contingencies arise.
      --Longer term support comes at a greater cost due to compressed
            Interdeployment Training Cycles (IDTC) and perturbation to long
            range deployment schedules, which could result in increased
            OPTEMPO/PERSTEMPO.
      --Higher transit speeds, increased flight/steaming hours, and the
            requirement to compress or defer maintenance have potential
            impact on force readiness and quality of life for sailors.
        Our current ship and aircraft procurement plans meet our present
    recapitalization requirements. But, for the long term, Navy will have
    to balance funding and procurement options carefully in order to meet
    our inventory goals.
      --We need to reduce our front end investment costs with initiatives
            such as multi-year procurement.
      --New Attack Submarine (NSSN) teaming arrangement between Newport
            News Shipbuilding and Electric Boat enable us to take advantage
            of one production line rather than two.
      --We are reducing support requirements with programs like ``Smart
            Ship.''
      --We are modernizing and remanufacturing existing aircraft such as
            the SH-60, AV-8B, and AH-1/UH-1.
      --We will extend the nominal service lives of aircraft and ships when
            it makes good business sense.
        Beyond fiscal year 2003 we will need to increase our average
    shipbuilding from 6-7 to 8-10 ships per year.
        Question. The Navy is down to four government Shipyards.
        What do you see as the role of government shipyards, and Portsmouth
    Naval Shipyard in Portsmouth, New Hampshire, in particular, in future
    Navy plans?
        What is the Navy strategy to maintain government shipyards as
    modern facilities with well trained workforces, including apprentices?
        Answer. The public sector's Naval Shipyards are vital assets for
    depot level overhaul and maintenance, including battle damage repairs
    in wartime and voyage repairs in peacetime, of nuclear-powered ships
    and large-deck conventionally-powered surface ships. Naval Shipyards
    provide a responsive, geographically dispersed, labor strike-free
    industrial capability in support of fleet readiness. Naval Shipyards
    provide a vital link to fleet operations by maintaining the capability
    and capacity to effectively overhaul and modernize ships. Portsmouth
    Naval Shipyard is an integral part of the public sector's ship repair
    base through the Future Years Defense Program (fiscal year 1999-2003).
    The workload planned for Portsmouth Naval Shipyard is relatively stable
    across the FYDP. The Navy's strategy is to balance workload in the
    public and private sectors to sustain needed maintenance capabilities
    and support the ship construction program.
        The Navy's strategy provides incentives and/or funding to
    revitalize processes and business practices; to plan, prioritize and
    recapitalize facilities as required; and to continue to provide
    training to shipyard employees to sharpen their skills, increase their
    knowledge levels, and improve upward mobility.
                    excess infrastructure and base closures
        Question. I see that you fully support base closures in the years
    ahead. What type/category of excess infrastructure exists in the Navy?
    What bases are excess to your needs and, therefore, possible candidates
    for closure or realignment?
        Answer. The Navy is currently working with the Office of the
    Secretary of Defense to develop a report for Congress required by
    section 2824 of the Fiscal Year 1998 Defense Authorization Act on the
    closure and realignment of military installations. Excess
    infrastructure in the Department of the Navy will be addressed in this
    report.
                                     ______

               Questions Submitted by Senator Ernest F. Hollings
             fiscal year 1999 reserve personnel, navy [rpn] funding
        Question. In the past five years many have argued, wisely I
    believe, that the Department did not adequately fund our Naval and
    Marine Reserves. Does the fiscal year 1999 Budget adequately fund these
    citizen sailors or did you leave it to Congress to do?
        Answer. The fiscal year 1999 President's Budget funds Naval Reserve
    Annual Training (AT) statutory requirements under U.S. Code, Title 10,
    at a budgeted participation rate of 99 percent for officers and 81
    percent for enlisted personnel. The Inactive Duty Training (IDT) drill
    requirements are budgeted at a participation rate of 99 percent officer
    and 92 percent enlisted. These figures are based on historical
    execution. Our goal is to execute at a level which ensures that all
    reserve personnel perform the required AT and IDT periods.
                                   navy jrotc
        Question. I am receiving letters from students, educators and
    parents from all across South Carolina telling me that this year's
    funding for Navy JROTC programs has been severely cut. Specifically
    they cite that travel funds have been halved, uniform funding has been
    cut so severely that cadets are no longer issued the white coat, that
    replacements for instructors who depart cannot be hired and that funds
    the Congress appropriated are being withheld for other Navy programs.
    If true, this clearly defies the will of Congress. Please answer these
    charges.
        Answer. The Navy currently supports 435 NJROTC units at host high
    schools throughout the United States, with nearly 63,000 cadets and 960
    instructors. NJROTC is a superb youth development program making
    important contributions to the future of our country. The Navy has made
    no severe cuts to its NJROTC program, but available funding in fiscal
    year 1998 is about 2 percent below that of fiscal year 1997,
    principally due to general Congressional cuts to the O&M, Navy account,
    of which this program took a small share.
        Since fiscal year 1992, Navy spending on this program has more than
    doubled, even after inflation. This has occurred over the same time
    period in which total Navy resources have declined by 20 percent. While
    this continued level of funding for NJROTC clearly shows our commitment
    to the program, it is a very real fiscal challenge. Adding to that
    challenge is the link between active duty pay and allowances and NJROTC
    instructor salaries. Back in fiscal year 1992, salaries made up 54
    percent of the program's cost while today they make up 85 percent.
    Since the salary levels are prescribed by law, any unplanned reductions
    to the budget must come out of other areas of the budget such as
    travel, cadet uniforms, etc.
        Regarding uniforms, cadets have never been issued white coats.
    Budget reductions over the past few years, however, have necessitated
    restructuring of the Cadet Sea Bag, without reducing the quality of the
    program. Certain uniform items such as service dress blue jackets with
    white combination hats, which were issued to all cadets, are now only
    authorized for cadet officers and chief petty officers (about 25
    percent of unit).
        To operate within the available funding, it has also been necessary
    to place controls on the authorization and replacement of additional
    instructors at our larger units. We are keenly aware of the difficulty
    this has caused to some NJROTC units and the limits it imposes on
    enrolling additional interested students. One Naval Science Instructor
    and one Associate Naval Science Instructor are the normal minimum at a
    unit. We are limiting further growth of instructors above the minimum
    required to ensure funding remains within that allocated.
        The Navy will continue to support the NJROTC program to the fullest
    extent possible in this time of austere funding.
            gymnasium in support of nuclear power school relocation
        Question. The Navy has made significant progress in preparing to
    move the nuclear propulsion school from Orlando to the Naval Weapons
    Station at Goose Creek, South Carolina. However, in reviewing this
    effort, I am concerned that BRAC requirements to build the needed
    facilities have been ignored. Specifically, a gymnasium was not
    included in the plan. Because of the large number of students added to
    the post population by this move, the small metal building now being
    used as a gymnasium appears clearly unable to support the expanded post
    population. Therefore, BRAC funds to build a gymnasium should have been
    included in this project. Please review Navy plans and advise me of
    your findings with respect to the gymnasium. If you find that a
    gymnasium is not needed, please explain why.
        Answer. A fiscal year 1996 BRAC project, P-016U, is constructing
    six barracks and a core building for the Nuclear Power School in
    Charleston. The core building will contain a fitness center which
    supports the student population and includes a nautilus center, weight
    room, and outside volleyball and basketball courts. This project is
    scheduled for completion May 1998.
                                     ______

                   Question Submitted by Senator Dale Bumpers
                                     ntacms
        Question. In fiscal year 1998 the Congress added to the Navy's
    budget $10 million for pre-EMD engineering to marinize the Army
    Tactical Missile System (ATACMS). It was Congress' intent that this
    seed money was to be followed by a Navy program to integrate the
    marinized Navy Tactical Missile System (NTACMS) into the fleet for the
    Navy's mission to provide fire support in land attack warfare.
        What is the status of the Navy TACMS program? Has the Navy
    requested any funds for the program in the fiscal year 1999 budget?
        Answer. NTACMS, which marinizes the ATACMS missile for submarine
    and surface ship launch, will provide the capability for precision
    strike and interdiction at extended range (160NM). In addition to an
    Anti-Personnel/Anti-Machinery (APAM) warhead, plans include development
    of an improved hard target penetrator. This capability can be fielded
    at significantly reduced cost by leveraging Army ATACMS development and
    fixed production costs.
        The fiscal year 1999 President's Budget provides $145 million of
    NTACMS RDT&E funds over the FYDP, which will support an fiscal year
    2001 EMD start and an fiscal year 2006 IOC.
        The fiscal year 1998 funding was used to develop and refine
    required modifications to the Army ATACMS missile and definition of the
    capsule for submerged launch and the canister for surface launch. These
    will include mechanical, electrical, and data transfer interfaces
    between the missile, the capsule/canister, and the ship. Funds were
    also allocated for the engineering analysis required for ATACMS
    integration to Navy mission planning, weapons and fire control systems;
    for preparation of documentation to support a Milestone II decision,
    Operational Requirements Document, and Concept of Operation
    documentation, and for initial planning for underwater ejection
    testing.
        The majority of the fiscal year 1999 and fiscal year 2000 funding
    is provided to conduct a submerged launch demonstration to validate the
    underwater launch design, which would provide cost and technological
    risk reduction for EMD.
        Fiscal year 2001 to fiscal year 2003 funding supports execution of
    EMD and will refine the hardware and software approaches developed
    during prior risk reduction efforts through critical design reviews.
        Structuring of a complete NTACMS program through procurement in the
    ongoing POM00 build is at risk due to extreme budgetary pressures.
                                     ______

                  Questions Submitted by Senator Byron Dorgan
                          lockheed and northrop merger
        Question. There has been substantial publicity of late concerning
    the proposed merger of Lockheed and Northrop and opposition to that
    plan by the Department of Justice. Northrop is one of the builders of
    the F/A-18E/F, and Lockheed is one of the two contractors chosen to
    compete for the Joint Strike Fighter (JSF) design. The merger, if
    concluded, would leave only three major defense contractors. Do you
    have any concerns about this loss of competition in the aerospace
    industry?
        Answer. Each of the military services provided the Department of
    Defense with their individual assessments of this proposed merger. In
    this process the Navy did express concern in several areas. The
    Department of Defense's overall position across the full spectrum of
    defense business is in opposition to the merger.
                                     cvn-77
        Question. The Navy is asking for accelerated procurement of CVN-77,
    the next A/C carrier. Although this is a Nimitz-class carrier, it is
    billed as a ``transition carrier'' to the CVX, the next class of
    carriers.
        Why is CVN-77 billed as a ``transition carrier?''
        Answer. CVN-77, the tenth Nimitz-class aircraft carrier, has been
    designated as the ``transition ship'' to the next generation of
    aircraft carrier, the CVX. The CVN-77 will incorporate process changes
    and advanced technologies which will reduce the total ownership cost of
    CVN-77, as well as provide opportunities for backfit into the previous
    nine ships of the Nimitz class. Under the ``transition ship'' concept,
    CVN-77 will also provide opportunities to mitigate technology risk for
    CVX.
        Question. What are the features which will differentiate CNV-77
    from other Nimitz class carriers?
        Answer. The CVN-77 RDT&E program, which commenced in fiscal year
    1998, has been structured to identify, evaluate, and select candidate
    transition technologies for incorporation into the CVN-77 design. Such
    incorporation would differentiate the CVN-77 from other Nimitz-class
    carriers, although the degree of differentiation would be reduced once
    the applicable transition technologies are backfit into the previous
    nine Nimitz-class carriers. Currently, the CVN-77 RDT&E program is
    focusing on the following major investment areas:
        Manpower and Material Support.--Manpower Utilization; Ship
    Maintenance and Operational Support; Preservation and Corrosion Control
    Training; and Information Management.
        Design Tools and Processes.--Modeling and Design Tools; and
    Producibility.
        Hull, Mechanical, Electrical, and Auxiliary.--Auxiliary Systems;
    Quality of Life; Human Support Systems; Information Systems; and Hull
    and Structural Systems.
        Combat and Intelligence Systems.--Sensors; Communications;
    Information Management; and Structures and Arrangements.
        Aircraft Launch, Recovery, and Support.--Servicing and Maintenance;
    Weapons Handling; Information Management; Structures and Arrangements;
    and Launch and Recovery.
        Battle Damage Prevention and Recovery.--Damage Control; Hull
    Protection; and Shock Mitigation Signatures.
        Propulsion and Electric Power Generation.--Propulsion Systems;
    Electric Power Generation and Distribution; and Electrical Auxiliary
    Applications.
        Question. What is the total cost increase for the transition
    features as compared to the standard Nimitz-class carrier?
        Answer. The estimate for CVN-77 transition technologies is
    currently being refined in Navy's POM-00 deliberations.
                               trident submarines
        Question. The Navy is reportedly investigating the possibility of
    converting Trident Submarines to conventional cruise or conventional
    ballistic missile platforms. What is the status of this proposal? Isn't
    this an extraordinarily expensive way to deliver a conventional
    payload?
        Answer. Congressional language prohibits removal of any of the 18
    Trident SSBN's from strategic service prior to START II ratification.
    Pending START II ratification, the four oldest Trident SSBN's are
    planned for removal from strategic service, two each in fiscal years
    2002 and 2003.
        Right now, the Trident conversion (SSGN) concept is just a concept
    and not yet a program. No funds have been applied to it in the fiscal
    year 1999 budget, but the Navy continues to evaluate the concept.
        Conversion costs are currently estimated to be approximately $400
    million per ship (includes the refueling overhaul required for 20
    additional years of service life), with a one time initial design cost
    of approximately $170 million.
                                     ______

                   Questions Submitted to Adm. Jay L. Johnson
                   Questions Submitted by Senator Ted Stevens
                               aircraft carriers
        Question. Recognizing the planned capabilities of the Joint Strike
    Fighter, why not move to a larger number of smaller carriers capable of
    responding to multiple crisis rather than build $5 plus billion nuclear
    aircraft carriers?
        Answer. CVX will enter fleet service in 2013. The Navy's carrier
    based version of the Joint Strike Fighter (JSF) is intended to enter
    fleet service in 2012. JSF will be a complement to the F/A-18E/F. The
    Navy carrier version of JSF will not have a vertical takeoff and
    landing capability; rather, it will employ catapulting for takeoff, and
    arresting gear for landing, as does the Navy's current inventory of
    carrier based airplanes. Previous carrier studies have determined that
    the landing area needed for arrested landings needs to be at least 820
    feet long. If we add in a simultaneous launch and recovery requirement,
    then an angled deck of 820 feet and an overall flight deck length of
    over 920 feet is needed. In summary, the flight deck size of any
    proposed CVX is in great part determined by the need to conduct safe
    and effective flight operations.
                                    cvx r&d
        Question. What is the urgency of spending so much R&D money now
    ($190 million in 1999) on a new aircraft carrier design--why can't we
    go at a slower pace?
        Answer. The Navy's vision for CVX is to develop a new class of
    aircraft carrier that significantly reduces total ownership cost and
    incorporates an architecture for change, while maintaining the core
    capabilities of naval aviation (high-volume firepower, survivability,
    sustainability, and mobility). Achieving this vision will require
    significant design changes to incorporate advances in technology and to
    focus the design on affordability drivers, since a new carrier has not
    been designed in over 30 years.
        CVX will be commissioned in 2013 to replace U.S.S. Enterprise (CVN
    65), which will reach the end of its service life at 52 years.
    Construction must begin in 2006 to meet this commissioning date. The
    timeline for design and development of a new, more affordable carrier
    to support required construction start in 2006 necessitates that
    specific development and design efforts start by fiscal year 1999.
        Funding the fiscal year 1999 budget request is critical to initiate
    key technology development programs having major ship configuration and
    design impacts. Among these programs are:
        Advanced Technology Launcher.--Electromagnetic catapult development
    will require development of power conversion and control systems.
    Following component development, land-based testing will be required to
    ensure safety of flight.
        Propulsion Plant Development.--A new, modern propulsion plant
    requires continued funding in fiscal year 1999 to meet an fiscal year
    2006 construction start date. It has been over 30 years since the last
    carrier propulsion plant design. Funding is needed to incorporate
    lessons learned over this period of time into a new design.
        Advanced Protection Systems.--Survivability of the carrier is
    achieved through passive features that protect vital ship spaces and
    are major ship configuration drivers. To keep pace with modern threats,
    and to limit the weight and space impact of upgraded protection
    systems, requires development of advanced armor and protection systems.
    These systems will require small and full-scale, land-based testing to
    ensure adequacy against the threat.
        Information Integration.--Advanced computing plant architectures
    will enable significant reductions in manpower and will ensure
    survivability of the ship's computer-based systems. The information
    architecture and development of the substantial network control systems
    are key to fielding this capability. All of the ship control and
    monitoring systems that will reside on CVX in the future will need to
    be integrated into this architecture.
        Automation for Reduced Manning.--Manpower is the leading driver in
    ship life cycle cost. Automated systems are key to reducing the
    shipboard manpower requirement for CVX. Development of automated
    systems must be undertaken early to enable the ship design to
    incorporate them. Unless these systems are definable early in the
    design process, the ship will be designed to accommodate large numbers
    of personnel and will not be properly arranged to enable backfitting
    automation into the ship.
        Computer Aided Design Tools.--A clean-sheet aircraft carrier design
    has not been undertaken for over 30 years. Modern, computer based tools
    must be applied to efficiently engineer, design, test and simulate
    construction of an aircraft carrier design in the virtual environment
    to significantly reduce overall product cost.
        Question. Based on the AOA performed on the JASSM program, is the
    Navy committed to procuring the JASSM missile?
        Answer. No. The Analysis of Alternatives (AOA) performed for the
    JASSM program verified all of the Navy's current and forecast air
    launched Standoff Outside of Area Defenses (SOAD) requirements are met
    by SLAM-ER+. It is the Navy's intention to continue JASSM development
    as a joint venture with the USAF to ensure that when the JASSM weapon
    is fielded it retains the potential ability to be employed by Navy
    aircraft operating from an aircraft carrier. If at some point in the
    future, Navy/Joint warfare requirements can be better met through
    procurement of JASSM, the SLAM-ER+/JASSM procurement mix will be re-
    evaluated.
                                     ______

                Questions Submitted by Senator Pete V. Domenici
                                 privatization
        Question. How did the Navy and the Marine Corps arrive at the
    number of civilian and military jobs to be eliminated and/or contracted
    out? Were specific, individual studies performed to analyze the savings
    and appropriateness of activities to compete? or, was a goal imposed
    ``from the top?'' How did the Navy/Marine Corps determine that
    contracting out saves 20 percent? Why does the Air Force assume
    different savings? Please provide copies of the analysis you performed
    to come to the conclusion that 20 percent was the right number.
        Answer. The savings reflected in the Navy's FYDP are derived from
    our expectation that ``competition'' not ``contracting out'' will
    result in significant savings. This expectation is based on research
    and analysis performed by the Center for Naval Analysis (CNA). CNA
    reviewed our experience implementing OMB Circular A-76 in the 1980's
    and found that ``competition'', not ``contracting out'', resulted in
    cost savings of approximately 30 percent, regardless of the outcome of
    the cost comparison. As a matter of interest, approximately half of the
    functions studied remained in-house after the competition, albeit in a
    more streamlined, efficient organization. CNA also reviewed the Navy's
    inventory of commercial activities and determined that conducting cost
    comparisons of activities involving approximately 80,000 full-time
    equivalents would yield the kind of savings we have incorporated into
    the Navy's FYDP. The CNA analysis formed the basis for Navy's
    competition savings projections. I cannot address the Air Force's
    savings assumptions, but I will be happy to provide you with a copy of
    CNA's analysis that forms the basis of our estimate that competition
    yields average savings of 30 percent.
        Question. With fewer military personnel and DOD civilians after all
    this contracting out, what will be the impact on overseas rotation and
    ``perstempo'' problems?
        Answer. I need to reiterate that we are interested in increasing
    ``competition'' not ``contracting out.'' Our policy provides a
    structured check and balance system between military manpower
    requirements and proposed shore infrastructure reductions for
    regionalization, outsourcing or privatization initiatives to ensure
    that our military readiness is not adversely affected. The need to
    maintain a sea-to-shore rotational base, along with the need to
    maintain certain critical skills, has indeed limited our ability to
    compete certain military-intensive functions. For this reason, the
    Navy's plan to achieve the savings reflected in this budget focuses on
    competing civilian-intensive functions.
        Question. How will the Navy and the Marine Corps monitor and
    document the progress in achieving your outsourcing programs and
    achieving the planned savings? How will these data be confirmed by an
    outside party?
        Answer. Again, I need to reiterate that we are conducting a
    ``competition'' program, not an ``outsourcing'' program. Navy generally
    relies upon the cost comparison process established by OMB Circular A-
    76 to ensure that our competitions result in the most cost effective
    outcome. Circular A-76 not only provides rigorous guidelines for
    identifying the costs of both in-house and private sector performance
    but it also incorporates an independent review process and provides all
    affected parties with an independent appeal process. The independent
    reviews will be conducted by both independent contractors familiar with
    the commercial activity studies and by in-house Navy auditors. Actual
    savings of the competition will include both personnel and other
    operating costs. To monitor and document our progress in achieving the
    planned ``competition'' savings, Navy has established an annual
    reporting system. This system will track actual costs for five years
    subsequent to the implementation of the cost comparison decision.
    Savings conformance will be determined by an analysis of actual total
    operating costs against planned total operating costs. Based on our
    past experience, we expect actual costs to track well with the cost
    comparison estimates. In addition to review by the independent
    reviewing official, the appeals officer, and all other interested
    parties during the cost comparison phase, cost comparison data will be
    available for public scrutiny and external review by the Naval
    Inspector General, the Naval Audit Service, the DOD Inspector General,
    the General Accounting Office, and other interested parties.
        Question. What actions do you plan if the savings do not
    materialize as planned? More outsourcing? Cuts in procurement? Force
    structure? Readiness?
        Answer. Failure to achieve the projected savings would have a
    serious impact on our ability to fund our modernization program without
    taking vertical cuts that would jeopardize other existing requirements.
    To limit the risk of jeopardizing other requirements and to ensure we
    meet the savings projected in the FYDP, we are also aggressively
    pursuing related cost savings initiatives such as regionalization,
    privatization, community use and public-private ventures.
                                   readiness
        Question. What do your latest, 1998, data show about pilot
    retention? Is it getting better or worse? Is it better or worse for
    married pilots? With families? What are the socio-economic profiles of
    the pilots leaving? Staying?
        Answer. The Navy's two primary predictors of pilot retention,
    resignations and Aviation Continuation Pay (ACP) take rates,
    demonstrate that pilot retention continues to be on the decline. Pilot
    resignations increased from 414 in fiscal year 1997 to 540 in fiscal
    year 1998, while fiscal year 1998 ACP take rates, as shown in Table 1,
    were much lower than required.

                                         TABLE 1.--FISCAL YEAR 1998 ACP PROGRAM
    ----------------------------------------------------------------------------------------------------------------
                                                                                                   Percent
               Aviation subcommunity            Aircraft    Bonus    Number    Number   Eligible  eligible   Percent
                                                  type     amount   required  eligible   applied   applied   of goal
    ----------------------------------------------------------------------------------------------------------------
    VFA Pilot.................................    F/A-18   $17,000        23        81        11        14        48
    VF Pilot..................................      F-14    17,000        13        62         4         6        31
    VAQ Pilot.................................     EA-6B    19,000        14        28         3        11        21
    VS Pilot..................................       S-3    19,000        15        32         2         6        13
    VAW/VRC Pilot.............................   E-2/C-2    10,000        17        58         7        12        41
                                               ---------------------------------------------------------------------
          Carrier Pilot Take Rate.............  ........  ........        82       261        27        10        33
                                               =====================================================================
    VP Pilot..................................       P-3    10,000        46       200        44        22        96
                                               ---------------------------------------------------------------------
          Prop Pilot Take Rate................  ........  ........        46       200        44        22        96
                                               =====================================================================
          Pilot Take Rate.....................  ........  ........       128       461        71        20        55
    ----------------------------------------------------------------------------------------------------------------

        This year only 10 percent of eligible carrier pilots--33 percent of
    required--applied for ACP agreements that obligated them through 14
    years of commissioned service. This take rate, lowest in program
    history, is a sound predictor that critical department head billets
    will not be filled since those that have not signed an agreement are
    free to leave the Navy. These two indicators of resignations and take
    rates together highlight a continued trend of low pilot retention. The
    Navy does not track retention by socio-economic profiles such as
    retention for those married or with families.
        Question. What are the specific complaints of pilots leaving the
    Navy?
        Answer. Table 2 list ``reasons for leaving'' as cited by Naval
    Aviators on fiscal year 1997 exit surveys. It is noteworthy that no
    requirement exists to complete an exit survey, and if a survey is
    completed, it is typically one of the final items an aviator completes
    prior to leaving the service. Hence, it is not always afforded the
    proper effort.

    Table 1.--Reasons for Leaving the Navy Cited by Pilots in Fiscal Year
    1997 Exit Surveys

                                                                     Percent
            Reason for Leaving                                        Citing
    Family Separation.................................................    20
    Promotion Opportunity.............................................    14
    Quality of Leadership.............................................    12

    Amount of Sea Duty

                                                                           8

    Note.--These results were compiled from 126 completed exit surveys: the
    number represents only 30 percent of the aviators who resigned in fiscal
    year 1997. Additionally, the CNO's Aviation Retention Team compiled the
    below list of reasons for resigning.
    These anecdotal reasons were heard from direct discussions with the
    fleet during visits by the team to various aviation commands: Increased
    amount of family separation; Frustration with Navy leadership; High
    operational tempo; Inadequate funding to support operations; Erosion of
    compensation/benefits; Reduced promotion opportunity; and Inadequate
    infrastructure.

        Question. Which of your ``quality of life'' programs are working?
    Which are not? Which generate the best pay-off in terms of retention?
    Please provide the data and analysis to substantiate your answer, or
    are you using judgment or anecdotal evidence to assess the degrees of
    success or failure? Does the Navy have any studies on these issues? By
    independent organizations? Please provide copies.
        Answer. I've just received the results of the 1997 BUPERS QOL
    survey that asked a representative sample of Sailors about their
    perceptions and use of 29 of our QOL programs. Their answers tell us
    that most of our QOL programs are working, in terms of both readiness
    and retention.
        When we asked Sailors to rank those programs that they feel
    contribute the most to their readiness, officers cite as their top
    three: (1) Tuition Assistance (TA)--47 percent; (2) Morale, Welfare,
    and Recreation (MWR) Sports and Fitness Ashore--46 percent; and (3) MWR
    Recreational Activities Ashore--33 percent.
        The top three programs for maintaining readiness among enlisted
    are: (1) TA--60 percent; (2) Montgomery GI BILL (MGIB)--51 percent; and
    (3) MWR Recreational Activities Ashore--32 percent.
        Regardless of pay grade, MWR and Voluntary Education (VOLED)
    programs have the greatest impact on readiness.
        When we examine QOL program use and quality, we see that MWR
    Recreation Activities Ashore (Officer--85 percent, Enlisted--85
    percent), MWR Sports and Fitness Ashore (Officer--84 percent;
    Enlisted--85 percent), and Navy Campus Education Centers (Officer--37
    percent; Enlisted--61 percent) are most frequently used. QOL programs
    with the highest quality ratings are: TA (78 percent); MGIB (77
    percent); and Navy Campus Education Centers (70 percent). We're
    especially pleased that 25 of 29 QOL programs were rated ``good'' or
    ``very good'' by a majority of our Sailors.
        Out of 29 QOL programs that were rated, four did not receive a
    ``good'' or ``very good'' assessment: (1) Spouse Employment Assistance
    (39 percent); (2) Single Sailor Program Ashore (42 percent); (3) Good
    Relationships, Strong Marriages, and Healthy Families (49 percent); and
    (4) Outreach and Command Representative Program (50 percent).
        These programs are relatively new, and many of our Sailors may not
    be as familiar with them as some of our more established efforts. As an
    example, our Single Sailor Program Ashore had been implemented for only
    a short time when we mailed out the survey. Additional public relations
    efforts and time for these programs to mature may improve their
    viability over the long term.
        When we asked respondents about a particular program's quality, we
    also asked why they might not have used the program. The majority of
    respondents (Officer--88 percent, Enlisted--79 percent) told us that
    they didn't feel a need for the program. Only 3 percent of officers and
    enlisted indicated that they preferred off-base programs to our QOL
    programs.
        Some programs haven't been well publicized. The least recognized
    programs among officers included the Chaplains Religious Enhancement
    Development Operation (CREDO) (15 percent), Relationships, Families,
    and Marriages (13 percent), and the Volunteer Program (12 percent),
    while enlisted reported less recognition for Academic Skills (26
    percent), CREDO (25 percent), Outreach/Command Representative Program
    (22 percent), and Single Sailor Ashore (20 percent).
        Sailors report that MWR and VOLED programs most significantly
    affect their retention decision. When asked, ``Would you reconsider
    your decision to remain in the Navy if programs were reduced or
    eliminated,'' officers rated TA (14 percent), MGIB (11 percent), and
    MWR Sports and Fitness Ashore (10 percent) while enlisted rated TA (27
    percent), MGIB (20 percent), and Navy Campus Education Centers (12
    percent) as the top three programs affecting their retention decision.
    Both our officers and enlisted are telling us that educational
    opportunities and fitness programs strongly contribute to our retention
    successes.
        A recently completed study by the Center for Naval Analysis (CNA)
    on the ``Effectiveness of the Navy's Voluntary Education Program'' has
    told us that participation in off-duty education programs has a clear
    relationship to both promotability and retention. Sailors who
    accumulate college credits have a significantly higher probability of
    making E-5 in five years. For example, if a Sailor takes even 15 credit
    hours of college work, he or she has a 43 percent probability of making
    E-5 in five years; with 30 credit hours, the probability increases to
    51 percent. College participants have a significantly higher
    reenlistment rate. As credits accumulate, the probability of first
    reenlistment increases. The CNA study also examined the program's cost
    effectiveness. Investment in Academic Skills improvement provides a
    dramatic return of between $9 to $22 for every Navy dollar invested in
    the program in reduced recruiting and training costs. Overall, the
    VOLED program is clearly very cost effective.
        I also spend a fair amount of time visiting the Fleet, looking at
    our programs and talking to Sailors who let me know how important they
    are to them. The data from these surveys supports what I've seen and
    heard--we need these programs, not only to maintain personal readiness,
    but also to retain our quality Sailors.
        Our most recent data on QOL programs is presented here, though the
    report on the findings of the 1997 QOL Survey is pending. NPRDC is a
    Navy personnel research laboratory that is staffed primarily by
    civilian research psychologists. Although NPRDC research psychologists
    work with some guidance from Navy/BUPERS sponsors, they maintain their
    scientific integrity. I have provided you with copies of both the 1997
    QOL Survey briefing as well as the CNA VOLED briefing.
        Question. What changes have been occurring in spouse, child, and
    substance abuse for the past two years? Please differentiate between
    officers and enlisted, length of service, and among major military
    specialties and PERSTEMPO rates. What is the role of the current high
    PERSTEMPO in any changes in family or substance abuse? Please provide
    copies of any analysis you have of the relationship.
        Answer. There have been no significant changes in spouse and child
    abuse for the past two years. We have no evidence or indication that
    rank, rate, length of service or military specialty have had any direct
    impact on incidence rates of child or spouse abuse. Data from the Navy
    Central Registry shows the following:
        Number of incidents reported for the last five years:

    ----------------------------------------------------------------------------------------------------------------
                                                                                        Fiscal year--
                                                                        --------------------------------------------
                                                                           1997     1996     1995     1994     1993
    ----------------------------------------------------------------------------------------------------------------
    Spouse Abuse:
        Incidents reported.............................................    3,357    3,424    5,228    6,057    6,344
        Substantiated..................................................    2,493    2,558    3,586    4,053    4,277
    Rates of spouse abuse incidents reported per 1,000 spouses.........     16.3     13.9     22.4     24.5     25.5
    Child Abuse:
        Incidents reported.............................................    2,606    2,435    3,822    4,122    5,368
        Substantiated..................................................    1,567    1,356    1,747    1,967    2,179
        Rates of child abuse incidents reported per 1,000 children.....      7.8      7.1     10.5     13.8     13.5
    ----------------------------------------------------------------------------------------------------------------

        Navy abuse incident reports leveled off and decreased in fiscal
    year 1993, fiscal year 1994, fiscal year 1995 and fiscal year 1996. We
    believe this is due not only to downsizing, but also to improved
    screening of cases with our Risk Assessment Model. It may well be that
    fear of career consequences has decreased reporting, as indicated by
    the Abuse Victim Study which was required by the Defense Authorization
    Act for Fiscal Year 1993 (Public Law 102-484).
        In general, substance abuse in the Navy has declined in the past 18
    years. We credit our aggressive prevention and deterrence efforts, to
    include education, providing healthy alternatives and a vigorous drug-
    testing program. In contrast to the post-Vietnam era, our culture, with
    respect to drug abuse, is one of ``Zero Tolerance.'' The goals of our
    urinalysis program have always been to deter and detect drug abuse, as
    well as provide data on the prevalence of drug abuse. We've been quite
    successful--the proportion of sampled servicemembers testing positive
    for drugs has fallen from approximately 7 percent in 1983 to less than
    1 percent in recent years, with no changes in drug abuse trends over
    the past two years. Alcohol abuse has shown a similar decline. In 1982,
    41 percent of Navy personnel reported ``loss of productivity'' (late
    for work, missing work, etc.) because of alcohol abuse. That number,
    while still too high, declined to 20 percent in 1995. We anticipate
    that DOD's Worldwide Survey on Substance Abuse, currently in progress,
    will show additional reductions in fiscal year 1996 and fiscal year
    1997.
        In fiscal year 1996 and fiscal year 1997, our urinalysis positivity
    rate remained below 1 percent. In those years, officers accounted for
    less than .05 percent of all positive samples and enlisted personnel
    ages 25 and under accounted for approximately 70 percent of all
    positive samples. Historically, first term personnel account for the
    majority of all positive urinalysis samples. PERSTEMPO does not appear
    to influence our rates of substance abuse.
        In the last two years, we've implemented testing of all Navy
    applicants at Military Enlistment Processing Stations (MEPS) upon entry
    into the Delayed Entry Program (DEP). The result has been approximately
    4 percent of all applicants tested positive for drug abuse. Our Navy
    Drug Screening Labs (NDSL's) also began using a better THC chemical
    reagent that is more sensitive to a broader range of THC metabolites.
    The result has been an increase of approximately 700 additional urine
    samples testing positive for THC in fiscal year 1997 over fiscal year
    1996. We've also revised our Self-Referral for Drug Abuse Policy so
    that it protects Navy's investment in training and experience by
    preventing fraudulent use of the self-referral program, while it
    continues to help those who have been diagnosed as drug dependent.
    Also, we've implemented an Inhalant Abuse Policy to establish
    guidelines for processing personnel who abuse inhalants for
    administrative separation.
        Other important initiatives include implementation of Urinalysis
    Program Coordinator Training to standardize our urine specimen
    collection and submission procedures. We have distributed software that
    helps commands better manage their urinalysis programs and track
    substance abuse trends. We've also upgraded our Navy Drug Resource
    Website (NAVDWEB) with improved graphics, easier instructions, and more
    information.
        In alcohol abuse prevention efforts, we introduced our ``Right
    Spirit'' Alcohol Abuse Prevention and Deglamorization campaign in March
    of 1996. This campaign tightens policy, eliminates waivers for underage
    drinking in certain locales, increases education and training, and
    establishes prevention education detachments in San Diego and Norfolk.
        Chart 1 shows alcohol and drug abuse trends by age and pay grade.
    Heavy drinking is defined as five or more drinks in one setting at
    least once a week.

                                [Past 12 months]
    ------------------------------------------------------------------------
                                                      Percent      Percent
                    Characteristic                    Illicit       Heavy
                                                     Drug Abuse    Drinkers
    ------------------------------------------------------------------------
    Age:
        20 and under..............................         16.6         29.8
        21-25.....................................         10.3         26.6
        26-34.....................................          4.8         15.4
        35 and older..............................          3.0          9.3
    Pay Grade:
        E1-E3.....................................         15.9         32.4
        E4-E6.....................................          6.1         18.2
        E7-E9.....................................          2.0         11.4
        W1-W5.....................................          2.8          9.5
        O1-O3.....................................          2.7          6.1
        O4-O10....................................          1.2          2.0
    ------------------------------------------------------------------------
    Source: Department of Defense Worldwide Survey of Health Behaviors for
      Military Personnel.

        There is no direct evidence that ``downsizing'' and an increased
    PERSTEMPO have contributed to increased spouse, child, or substance
    abuse. We have noted that personal childhood experiences, learned
    behavior patterns, and individual psychological factors appear to
    influence more directly the incidence of child or spouse abuse.
    Situational family stress, such as work stress, is not a strong
    predictor of child or spouse abuse, although it could increase risk
    when occurring in context with the known risk factors I mentioned.
        While we have not noted a relationship between increased PERSTEMPO
    and increased substance abuse, we do recognize that there are warning
    signs that we must closely monitor.
        Alcohol and drug abuse patterns differ among certain socio-
    demographic groups and environmental conditions. We know that alcohol
    and drug abuse is often more common and heavier among younger persons,
    males, and the less educated. Navy, like the other military Services,
    is largely made up of this high risk (male, 17 to 25) population. In
    addition to age, sex and education, marital status and pay grade are
    risk factors. Single Sailors or those who are married without their
    spouse present are more likely to abuse alcohol. Those in pay grades
    E1-E3 and O1-O3 are five times more likely to abuse alcohol or drugs
    than senior enlisted and officers. Isolated duty and long deployments
    are also high risk factors.
        The above data was taken from the 1995 survey. Current Navy data
    shows a trend of decreasing incidents, particularly in drinking and
    driving incidents and injuries. Discharges because of alcohol or drugs
    have not changed. In short, we have not seen evidence of an upturn of
    substance abuse because of PERSTEMPO.
                                    f-18e/f
        Question. (a) In 1998 dollars, what is the current total program
    unit cost for a F-18E, and F-18F? For the C/D (Lot 19) models? (Please
    include all RDT&E, MilCon, and Procurement costs.)
        (b) What total program unit cost, in 1998 dollars, did the Navy
    project in 1993 for the E/F?
        (c) Please cite all performance goals stated in 1993 and what
    changes, up or down, have occurred up to the present time on all
    issues, including range, acceleration, maneuverability, and radar cross
    section. Is any consideration being given at this time to changing or
    dropping any of these or other performance criteria?
        (d) Please cite the flight test results for each of these criteria.
        Answer. (a) Unit procurement cost for the ``E'' and ``F'' (APN 1
    and 6) for 548 A/C procured as per the fiscal year 1999 President's
    Budget are:
        ``E'' equals $63.875 million/Unit in fiscal year 1998 dollars.
        ``F'' equals $65.692 million/Unit in fiscal year 1998 dollars.
        E&MD (fiscal year 1998 dollars) equals $5,870.1 million as of the
    fiscal year 1999 President's Budget. Amortize this over 548 units:
        ``E'' equals $10.712 million/Unit in fiscal year 1998 dollars.
        ``F'' equals $10.712 million/Unit in fiscal year 1998 dollars.
        Total unit procurement cost including APN 1, 6 and E&MD for the
    ``E'' and ``F'' are:
        ``E'' equals $74.587 million/Unit in fiscal year 1998 dollars.
        ``F'' equals $76.404 million/Unit in fiscal year 1998 dollars.
        This assumes that items such as support, spares, non-recurring and
    E&MD costs are amortized equally across all units and the variants.
        The C/D Lot 19 A/C were procured in fiscal year 1995. As of the
    fiscal year 1999 President's Budget, the unit costs for the ``C'' and
    ``D'' (APN1 and 6) are:
        ``C'' equals $45.372 million/Unit in fiscal year 1998 dollars.
        ``D'' equals $46.946 million/Unit in fiscal year 1998 dollars.
        E&MD (fiscal year 1998 dollars) equals $5,341.5 million as
    projected from the fiscal year 1996 C/D SAR approved program (APB)
    information. Amortized over 1,027 USN units:
        ``C'' equals $5.201 million/Unit in fiscal year 1998 dollars.
        ``D'' equals $5.201 million/Unit in fiscal year 1998 dollars.
        Total unit procurement cost with APN 1, 6 and E&MD for the ``C''
    and ``D'' are:
        ``C'' equals $50.573 million/Unit in fiscal year 1998 dollars.
        ``D'' equals $52.147 million/Unit in fiscal year 1998 dollars.
        (b) Using the 92 DAB estimate and the escalation at that time, the
    unit procurement cost for 1,000 E/F aircraft including both APN 1 and 6
    was: Unit procurement cost equals $61.198 million/Unit in fiscal year
    1998 dollars.
        E&MD (fiscal year 1998 dollars--escalation at that time) as
    estimated at the 92 DAB amortized over the projected 1,000 A/C was:
    Unit E&MD cost equals $6.001 million/Unit in fiscal year 1998 dollars.
        Total Unit Procurement Cost including APN procurement (1 and 6) and
    E&MD was: Total unit procurement cost equals $67.199 million/Unit in
    fiscal year 1998 dollars.
        (c) There is no consideration being given at this time to change or
    drop any Key Performance Parameter (KPP). Attached are the KPP
    parameters for the F/A-18 E/F. The objective and threshold values
    represent our ORD requirements. Since 1993 the only change to the ORD
    was to incorporate performance requirements for the F version.
    Originally F-18F performance was to be a fallout since it was only to
    be used as a trainer. With the decision to replace the F-14 with the F-
    18F, performance requirements were established. (See the Key
    Performance parameter enclosure. In those KPP's with multiple entries
    (e.g., Interdiction Mission Radius, Recovery, Payload, Specific Excess
    Power, etc.) the first entry is the ``E'' value and the second is the
    ``F'' value.) The launch wind over deck definition was also changed and
    based on larger Max Takeoff Gross Weight rather than the lower Typical
    Combat Gross Weight. This added 4,000 pounds to the calculation used to
    determine launch wind over the deck requirements for the airplane.
    This, in effect, increased the KPP requirement. Even within this more
    stringent requirement we have margin. The status numbers presented
    reflect flight test results collected to date. This performance data
    was collected, reviewed and validated during OT-IIA. Radar Cross
    Section is classified; however flight testing has been done and the
    aircraft meets specified requirements.
        (d) On the enclosure (Key Performance Parameters), the status
    numbers reflect flight test results collected to date. This performance
    data was collected, reviewed and validated during OT-IIA.
        Question. A recent draft GAO report lists 420 technical
    deficiencies in the F-18E/F. What is your cost and time estimate to
    resolve all these with no sacrifice in any performance criterion?
        Answer. Current funding and schedule provide sufficient resources
    to correct all deficiencies requiring correction to support a
    successful OPEVAL. All of the corrective actions are being tracked
    individually and cumulatively for impact to performance, and all Key
    Performance Parameters are being met with margin to spare.
        Question. In 1993, Naval Air Systems Command compared the
    performance of the A and C models of the F-18 to the goals of the E
    model. See table below. Please provide data from flight test results to
    compare actual F-18E performance to the original goals and to the
    specified earlier F-18's.

    ----------------------------------------------------------------------------------------------------------------
                                                                                                              F-18E
                                                 Initial F-18A   F-18A    F-18C    F-18C    F-18C    F-18E    flight
                                                 Specification   (Lot 1    (Lot     (Lot     (Lot   goal in    test
                                                                  FSD)     14)      15)      19)      1993   results
    ----------------------------------------------------------------------------------------------------------------
    Escort Range (NM)..........................         420         319      302  .......  .......      356  .......
    Interdiction Range (NM)....................         618         437      398  .......  .......      501  .......
    Accel (sec.) 0.8 to 1.6 mach...............          98         144      180  .......  .......      153  .......
    Specific Excess Power(Ps) (Ft./Sec.) at 1,
     3, and 6  Gs..............................  .............  .......  .......  .......  .......  .......  .......
    Approach speed (kts.)......................         128         140      142  .......  .......      144  .......
    ----------------------------------------------------------------------------------------------------------------

        Answer. Provided here within the chart below:

    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        F/A-18C                            F/A-18E
                                                                               F/A-18A ---------------------------------------------------------------------
                                                                     F/A-18E    Lot 1                                              DAB               Flight
                                                                       ORD       FSD     Lot 12    Lot 14    Lot 15    Lot 19     March   PDR June    test
                                                                                                                                  1992      1993     results
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Fighter Escort Radius (NM)....................................       410       362       343       341       331       330       420       423       434
    Interdiction Radius (NM)......................................       430       415       376       374       370       369       520       504       512
    Accel'tion (sec) 0.8M to 1.2M, 35K............................        70        55        58        58        57        57        60        67        67
    Specific Excess Power, Ps (fps) 1g @ 0.9M, 10K................       600       617       599       599       699       695       637       639       661
    Approach Speed (kts)..........................................       150       140       146       146       146       146       144       145       142
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Note.--The ground rules for defining performance specifications have changed over time. The rules for the F/A-18A and the F/A-18E are different. For
      example, the flight profile for measuring Interdiction Radius was different for the F/A-18A than it is for the F/A-18E. The table above uses the F/A-
      18E rules, which have been applied to the other variants for consistency. This is why column one was changed to F/A-18E ORD vice F/A-18A
      specification.

        Question. Please state your view on the media coverage about the F/
    A-18E/F ``wing drop'' problem and about comparisons of E/F performance
    to earlier models of the F-18.
        Do you believe it useful or important for the public to be informed
    of these issues?
        Answer. Yes, the Department of the Navy fully complies with the
    Principles of Information as established by the Department of Defense
    (see attached).
        Question. Please provide copies of Navy testimony or printed
    reports to Congress or the public identifying the ``wing drop'' problem
    before the first instance of its being reported in the media.
        Answer. Neither printed reports nor Navy testimony were requested
    by Congress or the public prior to initial reporting in the media.
    However, wing drop was included in a list of technical issues to be
    solved in flight test during a briefing to Senator Russell Feingold (D-
    WI) in a visit to NAS Patuxent River, Maryland, in May 1997. For
    informational purposes, provided are an F/A-18E/F Wing Drop Awareness
    Chronology dated February 16, 1998 and responses to questions submitted
    by Mr. Creighton Greene, Professional Staff Member, Senate Armed
    Services Committee, in December 1997.
        Question. Why does the Navy compare the E/F to the lower
    performance (i.e. Lot 12 version of the C/D model rather than the
    current (i.e. Lot 19) version? Please present a comparison of the C/D
    Lot 12 to Lot 19 on all significant performance criteria.
        Answer. The attached chart provides the comparison of Lot 12 to Lot
    19. As the Navy developed the ORD in 1991, to support the Defense
    Acquisition Board in 1992, the current version of the F/A-18C/D was the
    Lot 12. Therefore, the Lot 12 F/A-18C/D was used to develop the
    performance baseline for the F/A-18E/F. Newer Lots were planned at the
    time but their performance parameters had not been defined.

    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        F/A-18C                            F/A-18E
                                                                               F/A-18A ---------------------------------------------------------------------
                                                                     F/A-18E    Lot 1                                              DAB               Flight
                                                                       ORD       FSD     Lot 12    Lot 14    Lot 15    Lot 19     March   PDR June    test
                                                                                                                                  1992      1993     results
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Fighter Escort Radius (NM)....................................       410       362       343       341       331       330       420       423       434
    Interdiction Radius (NM)......................................       430       415       376       374       370       369       520       504       512
    Accel'tion (sec) 0.8M to 1.2M, 35K............................        70        55        58        58        57        57        60        67        67
    Specific Excess Power, Ps (fps) 1g @ 0.9M, 10K................       600       617       599       599       699       695       637       639       661
    Approach Speed (kts)..........................................       150       140       146       146       146       146       144       145       142
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Note.--The ground rules for defining performance specifications have changed over time. The rules for the F/A-18A and the F/A-18E are different. For
      example, the flight profile for measuring Interdiction Radius was different for the F/A-18A than it is for the F/A-18E. The table above uses the F/A-
      18E rules, which have been applied to the other variants for consistency. This is why column one was changed to F/A-18E ORD vice F/A-18A
      specification.

                                     ______

                Questions Submitted by Senator Richard C. Shelby
                               tactical tomahawk
        Question. Admiral Johnson, my understanding is that if funding for
    the Tactical Tomahawk program were approved, the Navy would forgo the
    procurement of approximately 100 missiles. In 1996, Admiral Murphy
    indicated that surface ships were being deployed with only 75 percent
    of their VLS tubes filled. If the Navy proceeds to develop the Tactical
    Tomahawk program without procuring additional cruise missiles, how
    would you assure operational requirements be met?
        Answer. The Navy will rely on an existing inventory of
    approximately 2,800 Block II/III missiles to meet operational
    requirements. There will only be a 25 month period between when the
    last Block III missile is contracted for delivery (September 1999) and
    when the Tactical Tomahawk production line starts (October 2001).
                       vertical replenishment helicopter
        Question. It is my understanding that the Navy concluded the
    Vertical Replenishment Helicopter demonstration this past January. Do
    both the CH-60 and commercial alternatives provide the same mission
    capabilities?
        Answer. The CH-60 Vertical Replenishment (VERTREP) demonstration
    went very well. The prototype aircraft successfully demonstrated
    several phases of the combat logistics mission to include: VERTREP,
    Vertical On Board Delivery (VOD), and amphibious Search and Rescue
    (SAR).
        The CH-60 provides significantly more mission capability than any
    of the commercial helicopters the Navy has demonstrated. It has a very
    robust lift capability, the ability to carry 13 passengers, internal
    cargo, and possesses an extremely good coupled hover capability for
    SAR.
        The comparative capabilities of the CH-60 and the commercial
    alternatives tested by the Navy are as follows:

    ----------------------------------------------------------------------------------------------------------------
                                                        CH-46        CH-60        K-MAX       BELL 212   BELL 214 SX
    ----------------------------------------------------------------------------------------------------------------
    VERTREP (Day/Night) (D/N)......................      YES/YES
                                                       4,000 LBS      YES/YES
                                                                    9,000 LBS       YES/NO
                                                                                     6,000      YES/YES
                                                                                              3,000 LBS      YES/YES
                                                                                                           6,000 LBS
    INTERNAL CARGO.................................    4,000 LBS    9,000 LBS      500 LBS    3,000 LBS    3,000 LBS
    PASSENGER CAPACITY.............................           16           13         NONE            8            8
    SAR (D/N)......................................      YES/YES      YES/YES   YES \1\/NO       YES/NO       YES/NO
    MEDICAL EVACUATION (D/N).......................      YES/YES      YES/YES        NO/NO      YES/YES      YES/YES
    ----------------------------------------------------------------------------------------------------------------
    \1\ K-MAX SAR capability is limited to Day-Visual Flight conditions only.

                            ch-60 helicopter program
        Question. In the President's fiscal year 1999 budget, the Navy
    requested $12.7 million in RDT&E and $139.9 million in aircraft
    procurement for 4 CH-60 helicopters. Is that sufficient or are
    additional funds required to accelerate the program?
        Answer. The funding is sufficient to procure four helicopters.
                                     ______

                    Question Submitted by Senator Judd Gregg
                         ship depot maintenance funding
        Question. Active ship depot maintenance was funded at 96 percent of
    the requirement in fiscal year 1998 and in fiscal year 1999 this
    funding drops to 91 percent of the requirement.
        What is the effect on readiness of this unfunded requirement? What
    type of equipment or ships will not be maintained?
        Answer. With current funding levels, all maintenance required to
    support ship mission capabilities is accomplished. While mission
    essential maintenance and repairs to correct safety deficiencies are
    always completed, deferred or non-accomplished maintenance includes
    quality-of-life improvements, investments in new technology, and some
    maintenance tasks that simply improve system performance or restore
    design operating parameters. Considering ship maintenance in the
    overall Navy budget, current funding levels ensure ship material
    readiness to successfully complete the mission, with a requirement to
    manage a level of risk for deferred work.
                                     ______

                  Questions Submitted by Senator Byron Dorgan
                    f/a-18e/f and joint strike fighter [jsf]
        Question. The current projected cost for the F/A-18E/F is $47
    million per copy, and the projected cost for the JSF is just under $40
    million in today's dollars ($32 to $36 million projected in 1994
    dollars).
        Does the Navy believe that the JSF will materialize as a carrier-
    suitable aircraft?
        Answer. Yes. The current JSF development process shows great
    promise in delivering new technologies and manufacturing processes that
    will lead to a more affordable product.
        Question. Does the Navy believe that the JSF will come in at the
    projected cost?
        Answer. The centerpiece of the JSF Program is affordability. This
    demands a new way of doing business, and JSF is accomplishing that. The
    program has used, from its inception, principles such as Cost As an
    Independent Variable (CAIV) to balance weapon system capability against
    its life cycle cost. The JSF is effectively achieving such a balance
    through the use of Cost and Operational Performance Trades (COPT);
    investing in key technologies; emphasizing design, manufacturing and
    support initiatives; and leveraging the benefits of commonality to
    reduce the total ownership cost to the warfighter.
        Question. Long-term, will the F/A-18E/F be cheaper and a better
    aircraft for the Navy than the JSF?
        Answer. The current program estimates of recurring flyaway costs
    for the F/A-18E/F and the JSF (fiscal year 1997 dollars) are $47
    million and $33 to $40 million respectively. The goal of the JSF
    program is to provide additional capability that will complement the
    capabilities of the F/A-18E/F at an affordable price.
        Question. Does the Navy want the JSF if it comes in at over $40
    million per copy, or would it prefer more F/A-18E/F's?
        Answer. The current estimate of the JSF carrier variant is well
    below $40 million and within the range of the $31 to $38 million
    (fiscal year 1994 dollars) total cost goal. The goal of JSF is to
    provide additional capability that will complement the capabilities of
    the F/A-18E/F at an affordable price. There are no indications at this
    time that JSF will not meet its cost target.
                                     ______

                 Questions Submitted to Gen. Charles C. Krulak
                  Questions Submitted by Senator Thad Cochran
                           lha service life extension
        Question. What is your thinking about the service life of LHA
    ships?
        Answer. My view is that it is wiser to procure new LHD's vice
    refurbishing our LHA's. The LHD is larger, has more carrying
    capability, and can better accommodate our new technology systems that
    have been fielded in recent years or will soon be added to our force.
    In short, it will carry more tanks, aircraft, assault vehicles, and
    LCAC's than its LHA predecessor.
        As currently planned, the LHA service life extension, if initiated,
    would start in fiscal year 2005. Current estimates for the service life
    extension program (SLEP) range from $800 million to $1.2 billion. The
    estimated cost of a new LHD (modified) in fiscal year 2005 is $2.3 to
    $2.5 billion. (This estimate includes approximately $750 million to
    restart the production line.) The cost of a new LHD in fiscal year 1999
    would be approximately 20 to 40 percent more than the cost of the LHA
    service life extension, and would provide the Nation with a much more
    capable LHD that would complement our forward presence forces for 40
    years, as opposed to the 15 to 20 years gained with a service life
    extension. We need to engage this issue actively so a solution can be
    implemented before the end of the LHA's planned service life. I am
    working with the Chief of Naval Operations on this important
    requirement.
        Big deck amphibious ships are at the heart of the Navy-Marine Corps
    team. Building a new LHD, more capable of accommodating leaps in
    technology and expansion of equipment, would be a most welcome
    initiative.
        Question. Using ``ball-park'' figures, about how much does an LHA
    service life extension cost? How does this compare to the cost of
    construction of a new LHD ship, in similar year constant dollars?
        Answer. As currently planned, the LHA service life extension, if
    initiated, would start in fiscal year 2005. Current cost estimates
    range from $800 million to $1.2 billion. Estimated cost of a new LHD
    (modified) in fiscal year 2005 is $2.3 to $2.5 billion. This estimate
    includes approximately $750 million to restart the production line.
        Question. Would you be in favor of Congress adding some or all of
    the $1.3 billion required to construct a new LHD ship in fiscal year
    1999 rather than to perform an LHA service life extension in 2003?
        Answer. I believe procurement of a new LHD is a wiser investment
    for our Nation than refurbishing our oldest LHA. The LHD is larger, has
    more carrying capability, and can better accommodate our new technology
    systems that have been fielded in recent years or will soon be added to
    our force. In short, it will carry more cargo, more aircraft, and more
    LCAC's than its LHA predecessor.
        Big deck amphibious ships are at the heart of the Navy-Marine Corps
    team. Building a new LHD, more capable of accommodating leaps in
    technology and expansion of equipment, would be a most welcome
    initiative when topline constraints permit such an inclusion. I would
    ask however, that financing this requirement not come at the expense of
    other programs financed in the Department's fiscal year 1999 request. I
    am working with the Chief of Naval Operations on this important
    requirement and will continue to do so as we develop future budgets.
                                     ______

                Questions Submitted by Senator Pete V. Domenici
                                 privatization
        Question. How did the Navy and Marine Corps arrive at the number of
    civilian and military jobs to be eliminated and/or contracted out?
        Answer. The Marine Corps has committed to a number of Full Time
    Equivalents for competitive review (5,000). We have not determined the
    number of jobs, either military or civilian, which will be eliminated
    and/or contracted out. This will be determined by the results of the
    competition.
        Question. Were specific, individual studies performed to analyze
    the savings and appropriateness of activities to compete? Or, was a
    goal imposed ``from the top?''
        Answer. Reviewing historical information, the Defense Science Board
    found that savings could be gained through the competitive process of
    all base commercial activities (those functions which could be
    performed by a commercial provider). The commercial activities which
    will be competed by the Marine Corps will be chosen by both
    headquarters and installation commands after analysis of requirements
    (operational and manpower) to determine which functions are inherently
    governmental and therefore remain in-house. The A-76 process, as set
    forth by OMB, tracks initial savings from the competition. The Marine
    Corps will utilize Activity Based Costing to track costs over time for
    both in-house and contract accomplishment.
        Question. How did the Navy/Marine Corps determine that contracting
    out saves 20 percent? Why does the Air Force assume different savings?
    Please provide copies of the analysis you performed to come to the
    conclusion that 20 percent was the right number.
        Answer. The Marine Corps is assuming 30 percent savings if a
    commercial contractor successfully wins an A-76 competition. If the in-
    house Most Efficient Organization wins, savings are assumed to be 20
    percent. These figures are based on the Defense Science Board analysis
    of historical information which is on file with the Secretary of
    Defense. The Marine Corps cannot comment on the Air Force's assumed
    savings rate.
        Question. With fewer military personnel and DOD civilians after all
    this contracting out, what will be the impact on overseas rotations and
    ``perstempo'' problems?
        Answer. The Marine Corps is looking into the effects of competitive
    sourcing on rotational assignments. However, these effects should be
    minimal given our clear distinction between garrison and Fleet Marine
    Force units. The Marine Corps will not execute a program which
    negatively impacts our warfighting capability.
        Question. How will the Navy and Marine Corps monitor and document
    the progress in achieving your outsourcing programs and achieving the
    planned savings? How will these data be confirmed by an outside party?
        Answer. The Marine Corps is implementing activity based costing
    within facilities maintenance and logistics aboard its U.S. bases. This
    will establish a baseline cost for those related base commercial
    activities within two areas which produce approximately 70 percent of
    installation operating costs. These baseline costs can then be compared
    to either the A-76 cost comparison process generated most efficient
    organization costs and/or commercial sector contract offers.
        We expect agencies outside the Marine Corps, such as the Naval
    Audit Service, DOD IG, and GAO will analyze our processes, assumptions
    and competition results.
        Question. What actions do you plan if the savings do not
    materialize as planned? More outsourcing? Cuts in procurement? Force
    structure? Readiness?
        Answer. If actual savings returns differ from planned assumptions,
    budgets will be adjusted based on the shortfalls. Since savings are
    produced by increasing efficiencies in the supporting establishment and
    those savings are to be applied to procurement modernization; the
    effects, for the Marine Corps, of less than anticipated savings, would
    be a decrease in procurement and an increase in Operation and
    Maintenance.
                                   readiness
        Question. What do your latest, 1998, data show about pilot
    retention? Is it getting better or worse?
        Is it better or worse for married pilots? With families? What are
    the socioeconomic profiles of the pilots leaving? Staying?
        Answer. As of March 16, there have been 70 fixed wing pilot
    resignations in fiscal year 1998. These figures and the trend for the
    year are well below the fiscal year 1997 rate (92) and slightly higher
    than the fiscal year 1996 rate (69) as of March of each year.
        We do not track pilot ressignations by single/married/divorced
    categories. Current percentages of overall USMC Officers (O-3 and O-4)
    include the following: 80 percent Married, 4 percent Divorced, and 16
    percent Single. There is no common thread to the socioeconomic profiles
    of the pilots leaving or staying.
        All pilots are now eligible for the Aviation Continuation Pay (ACP)
    program making them the highest paid company/field grade (O-3 and O-4)
    officers in the Marine Corps.
        Question. What are the specific complaints of pilots leaving the
    Marine Corps?
        Answer. In September 1997, an Aviation sponsored briefing team,
    composed of junior field grade officers traveled to both coasts to
    visit ready rooms and talk to aviators about the facts and myths of a
    career as a Marine aviator. Aviators provided the team with frank
    discussion and openly voiced their concerns. There was no single reason
    that influences an aviator's decision to resign. The major reasons
    cited to the briefing team for leaving the Corps include the following:
    (a) Increased airline hiring rates--easily gain employment--greater
    family stability; (b) deployed time away from the family; (c) desire to
    fly more hours (AV-8B and CH-53 concerns); (d) excessive time
    participating in Joint/Interservice/Intraservice Exercises which
    provide limited training value for individual pilot skills; and (e)
    uncertainty about future military downsizing.
        Question. Which of your quality of life programs are working? Which
    are not? Which generate the best payoff in terms of retention? Please
    provide the data and analysis to substantiate your answer, or are you
    using judgment or anecdotal evidence to assess the degrees of success
    or failure? Does the Navy have any studies on these issues? By
    independent organizations? Please provide copies.
        Answer. Marine Corps quality of life (QOL) programs contribute to
    military mission outcomes. This was demonstrated in the 1994 ``Quality
    of Life in the Marine Corps'' study conducted by the Navy Personnel and
    Research Development Center (NPRDC). This study statistically linked
    the QOL program investments to readiness and retention. This study is
    scheduled to be readministered in 1998 to reassess Marines' QOL across
    11 life areas and their relation to mission outcomes.
        There is a myriad of QOL program-specific research, such as the MWR
    Patron Needs Assessment, also conducted by NPRDC and completed in 1997.
    According to data, the top 10 programs/services rated as most important
    to Marines were: (1) Exchange; (2) Information, Tickets and Tours
    (ITT); (3) Fitness Centers; (4) ATM Machine; (5) Military Clothing
    Store; (6) Gas Station; (7) Movie Theater; (8) Barber Shop; (9) Auto
    Hobby Shop; and (10) Swimming Pools. Two other recent QOL program-
    specific studies conducted were: the Effectiveness of the Voluntary
    Education Program, performed by the Center for Naval Analysis, and the
    Spouse Employment Survey and Analysis, performed by Human Technology,
    Inc. and CODA Inc.
        The Marine Corps has a robust QOL research program, with many
    ongoing initiatives to determine both Marine and mission needs. In
    1998, an ``Assessment of Program Contributions to Military Outcomes,''
    will obtain effective program measures for 22 MWR and Human Resources
    programs, and assess each program's contribution to military outcomes.
    Another study, the ``Marine Corps MWR Leadership Assessment,'' will
    gather commander's and senior NCO leadership recommendations for MWR
    mission support. Both studies will be conducted by NPRDC.
        Research results are used as the basis for policy and resource
    decisions. Combined with commanders' leadership experience and
    judgment, the Marine Corps QOL programs provide a demonstrated return
    on investment to mission outcomes. All of our Quality of Life programs
    are producing positive results.
        One of the programs which is working is the Voluntary Education
    Program. Recently a study was completed by Center of Navy Analysis on
    the effectiveness of the VolEd Program. Although the focus of the study
    was the Navy program, we believe similar results would be obtained for
    all services. VolEd participants have significantly better promotion
    prospects. Academic skill participants are more likely to crossrate.
    VolEd participants have significantly lower demotion rates and higher
    reenlistment rates. A copy of the Navy's Report ``Effectiveness of the
    Voluntary Education Program'' (43 pages) is available upon request.
        Family Programs improve Quality of Life for Marines and their
    families and enhance retention and readiness by providing the tools
    needed to meet the challenges of the military lifestyle. Family Service
    Centers provided 289,000 units of service in their first year of
    operation in 1988. In 1997, 1.7 million units of service were provided.
    A recent study by Caliber Associates looked at selected family service
    center programs (all services) and determined that there was a nexus
    between family service center programs and readiness.
        The USMC child care programs are also providing essential services
    which affect readiness. The demand for child care exceeds the current
    capacity but we are reviewing our delivery systems to make certain that
    we are providing the services that families most require. For example,
    we are focusing on ways to expand care for children three years and
    under as this represents the greatest percentage of our unmet need. We
    do not have the data to support an argument in terms of child care's
    payoff for retention.
        Question. What changes have been occurring in spouse, child, and
    substance abuse for the past two years? Please differentiate between
    officers and enlisted, length of service, and among major military
    specialties and perstempo rates.
        What is the role of the current high perstempo in any changes in
    family or substance abuse? Please provide copies of any analysis you
    have of the relationship.
        Answer. In the past two years, there have been no significant
    changes in substance abuse. Preliminary figures for the number of
    substantiated incidents of domestic violence in fiscal year 1997 are
    1,597 and for child abuse 844. The figures for fiscal year 1996 are
    1,979 for domestic violence and 969 for child abuse. The USMC family
    violence reports do not regularly differentiate between officer and
    enlisted. Also, we have not to date maintained data on length of
    service or major military specialty.
        We have commissioned a special study by the University of Maryland
    School of Social Work in fiscal year 1996 to determine if the high
    OPTEMPO in fiscal year 1996 was a causal factor in domestic violence.
    The findings were that OPTEMPO is not a causal factor in family
    violence. However, deployments may precipitate incidents of family
    violence by someone already disposed to use violence.
                                     ______

                Question Submitted by Senator Richard C. Shelby
                               hellfire missiles
        Question. General Krulak, has the Marine Corps obligated the fiscal
    year 1998 funding that was provided for the procurement of Hellfire
    missiles? If not, why not, and when does the Marine Corps intend to
    procure these missiles?
        Answer. The funding for the fiscal year 1998 Hellfire plus-up was
    received at NAVAIR on January 14, 1998. PMA-242, the NAVAIR Hellfire
    Program Office, initiated contract action through the Air to Ground
    Missile Systems (AGMS) Project Office, Redstone Arsenal, Huntsville,
    AL. The Army is the executive agent for Hellfire and has already
    exercised all options on the previous Hellfire Contract, so a new
    contract must be initiated. Contract award is expected NLT June 30,
    1998. Deliveries are estimated to be approximately 24 months after
    contract award.
                                     ______

                   Questions Submitted by Senator Judd Gregg
              chemical biological incident response force [cbirf]
        Question. The Marine Corps has formed a Chemical/Biological
    Incident Response Force (CBIRF) to respond to chemical or biological
    terrorist incidents. I understand that the fiscal year 1999 Department
    of Defense budget request provides approximately $49 million for
    National Guard units to bring in NBC equipment to augment early
    responders in a crisis.
        Please update me on the Marine's Chemical/Biological Response Force
    activities since you appeared here last April?
        Answer. The CBIRF Program has continued on the path of providing
    consequence management support and capability to those who need this
    type of assistance today and who will need it in the future. Fiscal
    year 1998 funding will complete the procurement of mission critical and
    state-of-the-art CBIRF equipment. We have procured both state-of-the-
    art protection for Marines, and special items that will detect and
    track weapons of mass destruction. The Marine Corps has also procured a
    block of modern medical equipment and treatment items to decontaminate
    both equipment and personnel. Some of the most recent efforts include
    portable and mobile mass spectrometers and a standoff chemical detector
    that can identify component agent signatures from a standoff location.
        The Marine Corps is taking another step toward providing a
    consequence management capability around the world. Marine
    Expeditionary Units (MEU's) will have a CBIRF capability added to their
    current mission capability. We have trained one MEU with CBIRF
    capability and it deployed with a small package of equipment on loan
    from CBIRF. We have trained and loaned more extensive equipment to a
    second MEU, and we are preparing the third MEU to be even more capable
    than the first two. The third MEU will be used as a baseline to train
    and equip all MEU's in the future.
        Question. How will the Marine's Response Force coordinate with and
    work with these National Guard Units which are coming on line?
        Answer. The Marine Corps has participated in several coordination
    meetings with National Guard NBC representatives. The joint approach is
    for the National Guard to use the CBIRF's list of equipment as a
    baseline to rapidly construct an operational domestic preparedness
    organization. Using CBIRF equipment will enhance the National Guard's
    ability to respond to incidents involving weapons of mass destruction.
    It will also meet both the Secretary's Quadrennial Defense Review
    recommendations and the intent of the Congress. This will enable the
    National Guard to become a ready asset to both state and local
    authorities in future NBC consequence management. The Marine Corps has
    negotiated National Guard options on all recent CBIRF procurements.
                                     ah-1w
        Question. The Marine Corps has an ongoing program to equip the AH-
    1W Super Cobra helicopter fleet with a Night Targeting System which
    provides the gunner the capability to locate and identify targets at
    night, lock the cross hairs on the target, and fire the missile with
    lethal accuracy, all from a safe distance from the target.
        What is the status of the fiscal year 1998 $10.9 million authorized
    and appropriated for the AH-1W Night Targeting System?
        Answer. The fiscal year 1998 funding has been released with
    contract award NLT June 1, 1998.
        Question. Is there an unfunded requirement for AH-1W Night
    Targeting Systems beyond those programmed in the fiscal year 1999
    budget request?
        Answer. Yes, due to topline constraints, we decided to truncate
    procurement of the AH-1W Night Targeting System (NTS). Our fiscal year
    1999 Budget Enhancement List includes an unfunded requirement of $11
    million in fiscal year 1999 to fund an additional 10 Night Targeting
    Systems.
        The Marine Corps' Night Targeting System (NTS) program is
    structured in two parts, the aircraft installation and the actual
    targeting system itself. As currently programmed, the Marine Corps will
    procure NTS installation kits for all of its 203 AH-1W's and enough NTS
    systems to outfit 178 aircraft. The current acquisition objective for
    NTS is 188. We were only able to finance 178 within topline
    constraints, leaving 10 systems unfinanced. The Primary Aircraft
    Authorization for the AH-1W is 168 and sufficient NTS's are planned to
    modify these aircraft; however, there are insufficient NTS systems to
    outfit the pipeline and attrition aircraft.
        Procuring an additional 10 Night Targeting systems in fiscal year
    1999 would allow the Marine Corps to obtain its force objective of 188
    aircraft. Procurement of these additional systems is required for
    modification of the AH-1W Total Operating Aircraft Inventory (TAOI) to
    maintain this critical warfighting capability until introduction of the
    4BW. I would be concerned, however, if funding for these 10 systems
    came at the expense of other programs currently financed in the fiscal
    year 1999 request or at the expense of funding requested in the fiscal
    year 1998 Supplemental.
                                     ______

                  Questions Submitted by Senator Dale Bumpers
                              amphibious shipping
        Question. In fiscal year 1998 the Congress added to the Navy's
    budget $10 million for pre-EMD engineering to marinize the Army
    Tactical Missile System (ATACMS). It was Congress' intent that this
    seed money was to be followed by a Navy program to integrate the
    marinized Navy Tactical Missile System (NTACMS) into the fleet for the
    Navy's mission to provide fire support in land attack warfare.
        Is deep fire support a necessary requirement for planning and
    successful execution of USMC scheme of maneuver employing MV-22?
        Answer. The MV-22 is a key component of the Marine Corps' concept
    for the projection of naval power into the littorals-Operational
    Maneuver From The Sea (OMFTS). Along with the LCAC and AAAV, the MV-22
    will nearly triple the battlespace within which today's commanders can
    operate. The expanded battlespace envisioned with OMFTS and MV-22
    capabilities has changed the Marine Corps' approach to fire support.
    OMFTS requires rapid movement not just ashore but rather from ship to
    an objective which may be 200 nautical miles from offshore vessels,
    well out of range of current WWII vintage naval gunfire assets. NTACMS
    will provide a fire support asset with the increased range, accuracy
    and lethality necessary to support the operational needs of the OMFTS
    concept. However, due to the cost per missile and the dispersion
    patterns of the NTACMS, the Marine Corps will require improved shore-
    based fire support systems as well. Shore-based systems will provide a
    responsive, streamlined and cost effective fire support means to engage
    low end tactical targets. It is the combined effects of fires, sea-
    based (NTACMS), shore-based and aviation which are exploited to allow
    forces the freedom of maneuver. Deep fire support provided by NTACM's
    is complimentary to aviation and shore-based fire support, all three
    means providing the layered all-weather capability to sustain OMFTS.
        Question. Does the USMC have a requirement for sea-based deep fires
    land attack missile? If so, how has the USMC requirement for deep fires
    land attack missile been addressed?
        Answer. Yes. The Marine Corps requirement for a Land Attack Missile
    is that it must have the range to support Operational Maneuver from the
    Sea (OMFTS) and Ship-to-Objective Maneuver to 200 nautical miles
    inland. It must also have sufficient lethality to prevent enemy
    equipment and/or troops from continuing their mission.
        The Marine Corps' requirement for deep fires Land Attack Missile is
    being adequately addressed by the Navy. The Navy is currently working
    to acquire additional funding to apply towards mid- and far-term Naval
    Surface Fire Support (NSFS) programs, which include a Land Attack
    Missile. The Navy is examining two systems: the Land Attack Standard
    Missile (LASM) and a Naval version of the Army Tactical Missile System
    (ATACMS). The Navy abbreviation is (NTACMS). The Marine Corps does not
    favor one system over another. It simply desires that whatever system
    the Navy selects meet the requirements articulated above. Both would
    currently meet the lethality requirement and both are eventually
    expected to meet the 200 nautical miles range requirement.
        Question. Does the USMC concur with the Navy's assessments of land
    attack missiles being considered for the deep fires mission?
        Answer. Yes. The weapons systems currently under consideration by
    the Navy will eventually meet the Marine Corps' deep fires
    requirements. The two systems are the Land Attack Standard Missile
    (LASM), and a Naval version of the Army Tactical Missile System
    (ATACMS). The Navy abbreviation is (NTACMS). Both would currently meet
    the lethality requirement, and both are expected to meet the 200
    nautical miles range requirement.
                                     ______

                  Questions Submitted by Senator Byron Dorgan
                           joint strike fighter [jsf]
        Question. The Marine Corps is requesting to purchase the Short Take
    Off Vertical Landing (STOVL) version of the Joint Strike Fighter (JSF).
    What is the projected cost of this version of the JSF, in 1997 dollars,
    when it is delivered to the Marine Corps?
        Answer. The Services' Joint Interim Requirements Document (JIRD)
    includes a unit recurring flyaway cost goal of $30 to $35 million in
    fiscal year 1994 dollars for the JSF STOVL variant. This equates to $32
    to $37 million in fiscal year 1997 dollars.
        Question. Will the development of the STOVL version of the JSF on
    the schedule required by the Marine Corps replacement needs necessitate
    additional costs?
        Answer. No, the program was planned to meet USMC needs.
        Question. What portion of the $930 million 1999 budget request for
    development of the JSF will be allocated to development of the STOVL
    version?
        Answer. The JSF variants are being developed as an affordable,
    highly common family of aircraft to meet service requirements developed
    from a joint perspective. Development costs are not severable by
    variant.

                              subcommittee recess

        Senator Stevens. Our next hearing will be on the National
    Guard issues on March 18. We appreciate your courtesy in
    visiting with us.
        General Krulak. Thank you, Mr. Chairman.
        Admiral Johnson. Thank you, Mr. Chairman.
        Secretary Dalton. Thank you, Mr. Chairman.
        [Whereupon, at 12:05 p.m., Wednesday, March 11, the
    subcommittee was recessed, to reconvene at 10 a.m., Wednesday,
    March 18.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 1999

                                  ----------

                           WEDNESDAY, MARCH 18, 1998

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:03 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Ted Stevens (chairman) presiding.
        Present: Senators Stevens, Cochran, Bond, Leahy, Bumpers,
    and Dorgan.

                             DEPARTMENT OF DEFENSE

                             National Guard Bureau

    STATEMENTS OF:
            LT. GEN. EDWARD D. BACA, CHIEF
            MAJ. GEN. PAUL A. WEAVER, JR., DIRECTOR, AIR NATIONAL GUARD
            MAJ. GEN. WILLIAM A. NAVAS, DIRECTOR, ARMY NATIONAL GUARD

                     OPENING STATEMENT OF HON. TED STEVENS

        Senator Stevens. Good morning, Generals. I am sorry to be
    late. I had 25 children from Alaska. It was a long way for them
    to come, so I put them first this morning.
        We are going to hear from two panels today, first the
    leaders of the National Guard will testify on the 1999
    priorities, and they are going to be followed by officials and
    participants from the National Guard Youth Challenge program.
        I want to start with the National Guard Bureau. Lieutenant
    General Baca, it is nice to see you here. He is accompanied by
    the Director of the Army Guard, Maj. Gen. Bill Navas, and the
    Director of the Air National Guard, Maj. Gen. Paul Weaver.
        We have taken the lead, I think, in addressing the question
    of readiness and the maintenance and acquisition of equipment
    for the Guard. In recent years, we have witnessed the results
    of these investments, the tremendous performance of the
    National Guard in every recent overseas contingency mission, as
    well as the support for natural disasters which are occurring
    daily now around the country.
        Despite this success story, there are still proposed cuts
    now in the force structure, and in the OPTEMPO and training and
    infrastructure support funding. We are going to assess these
    funding requirements this morning at the request of Senator
    Cochran and Senator Lott. The subcommittee also wants to review
    the National Guard Youth Challenge Program. I visited that
    program in our State, as you know, and we have our Adjutant
    General here, I understand.
        This program has been very widely recognized for
    achievement and currently is being carried out in 15 States.
    Another 23 States would like to start programs. They are on the
    waiting list, and we need approval of funding for that purpose.
        We have supported the Youth Challenge Program from the very
    beginning. There were a great many skeptics about that program.
    My colleague from Hawaii has just returned from a trip and will
    not be with us this morning, but he and I both feel that the
    programs in our States have been very successful, and I look
    forward to having General Lestenkof--Jake is here to testify
    and describe the Alaska program.
        I know there are others here who have some comments about
    the program, but I want you to know that in partnership, there
    is a bipartisan partnership here on this committee, we will do
    everything we can to address your needs this year and to assure
    you that you have the funds to continue the marvelous success
    you have had in past years.
        So let me first, under the early bird rule, recognize the
    Senator from Vermont. You have an opening statement of any
    kind?
        Senator Leahy. I do not, Mr. Chairman. I know you want to
    get into this. I have already discussed with Generals Navas and
    Baca some issues regarding some Blackhawks in Vermont, and I
    appreciate the very good news we have in that regard, and so at
    the risk of talking them out of it. Thank you.

                       STATEMENT OF SENATOR THAD COCHRAN

        Senator Cochran. Mr. Chairman, I join you in welcoming our
    panel of witnesses. It is always a pleasure to have this
    hearing and review the activity of the National Guard--Army and
    Air Force.
        We appreciate very much the outstanding work that is done
    by the National Guard in our State. We are aware of the fact
    that we have Air Guard units who typically get invited to
    participate in these foreign operations, particularly in the
    Bosnia area.
        We have seen a lot of missions flown by Guard units there.
    With this operational tempo continuing to increase, with the
    deployments to other areas of the country as well I am
    concerned that we are not seeing enough funding allocated to
    the National Guard.
        And I am not accusing anybody of being too frugal with the
    scarce dollars, because we are seeing a declining defense
    budget in real terms, even when we are increasing the
    activities, having emergency deployments and supplemental
    appropriations that we marked up in this committee yesterday. I
    am worried that we are not going to be able to continue to
    recruit the quality of people to serve in the National Guard
    and to fly the planes and do the challenging work that has to
    be done, supposedly on a part-time basis, and still do it with
    a proficiency and skill that the No. 1 power in the world
    expects from its military forces.
        So these are issues that I think we should address this
    morning, and I look forward to your testimony in connection
    with those concerns.

                             balance of Allocation

        Thanks, Mr. Chairman.
        Senator Stevens. Generals, I think you should know that we
    are marking up the budget this morning. Many of our members are
    also members of the Budget Committee, and we have two other
    meetings of our own committee this morning. A number of people
    here on the committee want to submit questions to you and have
    asked me to convey their regards to you.
        I think that we are all very much aware of what the
    situation is, and I was going over the briefing my staff gave
    me to look at last night before this hearing and was struck by
    the percentage that they pointed out. In terms of military
    construction alone, the Guard is going to receive 7 percent of
    Milcon requests, and the Army Guard alone represents 42 percent
    of the combined Active Army and Guard personnel strength.
        The balance of the allocation that are before us in the
    proposed budget submitted by the administration are just out of
    whack. They are going to be very difficult to deal with, but we
    need your help in testimony given and questions that you are
    going to answer this morning.
        We will print all of your statements in the record as
    though read, and urge you to summarize them and give us the
    best advice you can as to how we might deal with these
    problems.
        General.

                     A vital force adding value to America

        General Baca. Thank you, Mr. Chairman. We will be brief.
        Thank you for the opportunity to testify today. You know,
    Senator Stevens, it is always a pleasure to be here before you
    and your committee.
        On a personal note, as this is my last appearance here as
    the Chief of the National Guard Bureau, I would like to thank
    you and the committee for your support during my tenure. I have
    enjoyed a productive relationship with you, which I am proud to
    say will make our National Guard a strong organization.
        Your strong and positive encouragement has enabled us to
    poise this institution for the next century, ready and prepared
    to ensure the security and safety of America.
        I have just returned from a trip to Europe, where I had the
    privilege of witnessing some of the guardsmen on the frontiers
    of freedom. I saw our people maintaining the peace in Bosnia,
    exercising with our Norwegian counterparts and moving air cargo
    in Germany. They are building a bridge to America through the
    National Guard-sponsored State partnership programs which link
    emerging democracies with our States back home.
        Our guardsmen are building a stronger peace overseas,
    strengthening America's defense, and adding value to our
    communities.
        I understand that the next panel is addressing our
    challenged youth program, Senator, and that is just one of the
    ways that we enrich our communities.
        The National Guard is indeed a vital force, with depth and
    breadth across the full range of capabilities. These men and
    women, engaged in actions all over the world, reinforced to me
    the idea that our Guard is truly the face of America. It is our
    best connection to the American people. They willingly
    sacrifice for their families, their careers, and their loved
    ones to go out there and do the tough job that we ask them to
    do. I think you will agree that this takes a special kind of
    dedication. Truly, they bring new meaning to the word
    ``dedication.''
        As you read our posture statement, which we have
    distributed, you will find missions and roles statistics and
    figures, but above all you will find the story of talented
    people who care deeply about this country and readily step
    forward to play an important role in its defense. They are
    among our best and brightest, as well as our most caring and
    devoted citizens.
        The vital force we describe is a combat-oriented balanced
    force, with capabilities across the full spectrum of defense.
    It is relevant to America's national security and national
    defense needs, and it is ready to play its historic role as a
    primary first line ready Reserve Force of America's security.
        As we demobilize from the cold war, the National Guard once
    again is emerging as the inexpensive insurance policy for
    America. As you know, we stand shoulder-to-shoulder every day
    with our Active component counterparts. We are also poised to
    expand our traditional role of homeland defense to meet the new
    threats posed to us by the weapons of mass destruction.
        The Guard has a big job. It is consequently a big
    organization. It is the largest single Reserve component within
    the Department of Defense and, in terms of comparisons with the
    Active and Reserve component numbers, second behind only the
    Active Army.
        We represent almost 500,000 citizen soldiers and airmen
    from every community in America. Our Guard members meet the
    same high standards of performance as their counterparts that
    do the same jobs in the Active.
        On behalf of the dedicated men and women of the National
    Guard, I hope you will honor their commitment with the generous
    support and encouragement that you have always given us. Our
    partnership has been very successful for over 222 years, giving
    the citizens of this country unparalleled security and freedom.
    The Guard remains ready to continue that commitment to our
    country, our States and our communities, but not without
    challenges.

                               prepared statement

        On behalf of the men and women of the National Guard, I
    thank you. I also thank you personally for sharing your time
    with us today and for the opportunity of productively working
    with you during my tenure as Chief.
        Thank you, Mr. Chairman.
        [The statement follows:]
                 Prepared Statement of Lt. Gen. Edward D. Baca
                       defining ``america's vital force''
        For the past four years as Chief of the National Guard Bureau I
    have been honored to represent the nearly half a million dedicated men
    and women who constitute America's organized militia-citizen warriors
    whose traditions and heritage stretch back to the days of the first
    European settlers. A number of reviews have had significant impact on
    our activities over this period: Secretary Aspin's Bottom-Up Review,
    the Commission on Roles and Missions study, the Quadrennial Defense
    Review (QDR), Secretary Cohen's Defense Reform Initiative (DRI), and,
    most recently, the National Defense Panel (NDP) assessment. A single
    consistent vector has emerged from them all: the need to rely more
    heavily on the National Guard in planning America's defense for
    tomorrow. In presenting this, my valedictory posture statement to
    Congress, I address you with a profound conviction--clear and
    unshakable--that today the National Guard is once again emerging as
    America's ``Vital Force.''
    The Imperative of Change
        With our country's defense budgets at the lowest relative levels
    since the beginning of World War II, our military establishment moving
    away from the military constructs of the Cold War, and the emerging
    world order of the 21st century yet to take solid form, there are new
    military requirements to satisfy and new economic imperatives to honor.
    Technologically, this requires us to seek new standards of performance
    and cost-effectiveness. Culturally, however, the process is a familiar
    one.
        The essential requirement is that we reshape the institutions of
    national defense to meet changed realities. The talent to do this--
    adapt in the face of new threats and new opportunities--has been an
    element of national character from the earliest colonial days.
    Americans have been in this situation before and made the right choice:
    trust in and rely on the militia heritage that has sustained us for
    over 360 years.
        The post-Cold War era demands a national defense force that is
    Versatile, Ready, and Affordable. A Total Force approach that relies on
    a strong National Guard satisfies these requirements. As the National
    Defense Panel noted, it is time to resume making full use of one of our
    most valuable national resources--the American citizen soldier. It is
    time to anticipate a growing National Guard role in the defense
    missions of the 21st century, and to resource and mission accordingly.
    And it is time to recognize that the requirements of tomorrow call for
    National Guard forces that are balanced, stabilized, modernized, and
    integrated wholly into the Total Force structure.
    The Guard and National Military Strategy
        Our current National Military Strategy provides a sound blueprint
    for meeting the national security demands of today and building the
    force of tomorrow. In Shaping the international environment to reduce
    risk and enhance global security, our citizen soldiers and airmen bring
    American values, social diversity, and unique technical skills to the
    task of promoting the establishment of democratic institutions abroad.
    In Responding across the full spectrum of conflict when deterrence and
    diplomacy fail, they prove daily that the National Guard is a Global
    Guard which can be as combat-ready as it is resourced to be. And in
    Preparing Now for an uncertain future, they craft innovative approaches
    to training and readiness, developing low-cost solutions to equipment
    upgrade requirements and willingly undertaking new missions as
    committed members of the Total Force team. Their performance is
    magnificent; their potential, unlimited.
        The National Guard leverages minimal investment to sustain enormous
    capability. For less than five percent of the entire DOD budget, we
    provide a reliable, high-quality, commercial-off-the-shelf resource
    that comes ruggedized, missionized, and ready for service. As members
    of a dual-role force with three missions, our men and women have a
    positive impact that can be felt on a global scale, on a national
    scale, and in the neighborhoods and communities across America. Whether
    serving in a Federal capacity to defend national interests in the
    Persian Gulf, in a State capacity to protect lives and property
    threatened by natural disaster, or promoting youth opportunity and drug
    demand reduction programs in their hometowns, your Guard members are
    helping defend and strengthen America in a way no other American
    military organization can.
    The National Guard Vision
        Former Chairman of the Joint Chiefs of Staff General John
    Shalikashvili left a strong legacy in Joint Vision 2010, calling for
    America's military to achieve and maintain full-spectrum dominance by
    leveraging information superiority and technological innovation. We in
    the National Guard have crafted a vision of our own that supports this
    fully and are pursuing it steadily as we become, once again, America's
    Force for the Future.

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

                                   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.

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

                       sustaining a combat-oriented force
        The National Guard is--and must remain--a combat-oriented force. In
    a Federal role, our primary mission is to provide forces for global
    service in support of the unified commanders in chief (CINC). When
    America's military force structure stabilizes, the Army National Guard
    will furnish 58 percent of the Army's combat forces, 36 percent of its
    combat support, and 31 percent of its combat service support. The Army
    Guard's 15 enhanced Separate Brigades are included in CINC war plans
    for both Korea and Southwest Asia. The Air National Guard, already
    well-integrated into a Total Force team with the Air Force and Air
    Force Reserve Command, currently provides 100 percent of our nation's
    homeland air defense, almost 80 percent of the Air Force's combat
    communications, nearly half of its theater airlift and aerial refueling
    aircraft, and almost one-third of its fighter/bomber assets. Dedicated
    air defense will be eliminated in the future, but the units now
    performing this task will re-role as general purpose fighter forces and
    continue pulling their weight on the combat team.
        Balance remains a critical issue to be monitored closely. Balance
    is the key to flexibility, and flexibility is vital if we are to be
    ready to meet the uncertain threats of the future: major theater war
    involving regional strongmen; asymmetric attacks that skirt our
    strengths and attempt to strike only at our perceived vulnerabilities;
    transnational challenges posed by radical ideologies and criminal
    factions; and the unanticipated--and unanticipatable--wild-card threats
    yet to emerge. The Army National Guard must continue to field a
    proportional mix of combat, support, and service support forces. The
    Air National Guard must continue to operate a combination of fighter,
    bomber, airlift, and support aircraft, and maintain appropriate other
    ground, space, and related support skills. And both services must
    expand into the new mission areas of national defense and the new
    technologies of warfare as these evolve. Regrettably, some would like
    to see the Guard restricted to a combat support role, or restructured
    with limited warfighting capabilities that were consolidated in a few
    regions of the country where, hypothetically, they would be ``more
    accessible'' for contingency use.
    A Warfighting, War-Winning Organization
        As we continue promoting integration among the components for more
    effective warfighting, it is time to end such ``policy debates'' once
    and for all. The National Guard must continue sharing risk on the
    battlefield and in the skies over it. The lesson of Vietnam is that
    nations, not armies, fight wars. As JCS Chairman, General John W.
    Vessey, Jr., observed ``If you do not have public support, your
    security policies are invalid.'' The National Guard has a presence in
    more than 2,700 communities across all 50 States, the District of
    Columbia, Guam, the Virgin Islands, and Puerto Rico. When the National
    Guard goes to war, families and townships throughout America go to war.
    This fosters broad domestic support for just action and discourages
    questionable ventures. If an international contingency is not
    considered appropriate for the National Guard, its validity as an act
    of national security merits serious reconsideration. As to willingness
    to serve, the majority of Guard members performing Federal missions
    abroad today are volunteers. Volunteerism is in keeping with our
    traditions and beliefs, and carries the additional benefit of providing
    unified commanders early access to National Guard resources.
        Approaching the issue from another angle, some have suggested that
    war today may be ``too technical'' for America's citizen soldiers and
    airmen. Let that be put to rest, also. Among other examples of the
    skill of our soldiers and airmen, members of the Army Guard serve with
    the National Training Center's elite Opposition Force (OPFOR), and the
    Air National Guard has won or shared approximately half of the Air
    Force's prestigious William Tell air-to-air competitions since 1970.
    Guard members not only develop and maintain high levels of basic
    proficiency in their military specialties, they do so while running
    commercial businesses, managing warehouses, teaching school, repairing
    computers, serving as community leaders, and supporting and raising
    families that may not even live in the community where the member
    trains and serves. They sacrifice to serve, and serve with skill. Our
    deployment record shows that the Global Guard always performs with
    distinction when properly tasked and resourced.
    The Global Guard
        Since Desert Storm the National Guard has consistently demonstrated
    its commitment to the Total Force, participating in over 40 major
    contingency, peacekeeping, and humanitarian operations. Several have
    involved extended participation--Haiti and Bosnia, for example--and
    many have been both extended and joint--such as participation on the
    Sinai Multinational Force of Observers and in operations enforcing the
    northern and southern no-fly zones over Iraq. Our men and women have
    taken on every new task assigned and mission offered with their
    customary zeal. During my tenure, that has included such missions as
    command of national air defense, transitioning into bomber aircraft,
    entering the field of space operations, providing infantry units for
    peacekeeping in Bosnia (the first activation of an Army Guard infantry
    unit since the Vietnam War), and even taking over the responsibility
    for supporting National Science Foundation operations in Antarctica.
    Support for theater CINC's has more than doubled over the past four
    years, rising from 454,000 mandays in fiscal year 1993 to over a
    million mandays in fiscal year 1997 even as our budget fell slightly.
    The continued high Operations Tempo (OPTEMPO) and Personnel Tempo
    (PERSTEMPO) of the Active forces makes this increase in Guard activity
    essential, and our people are clearly up to the task.
        Last year America's Guard men and women conducted operations in
    more than 70 countries in support of all five theater CINC's. Overseas
    activity involved training in countries like Brazil, Australia, Egypt,
    and Singapore, deploying to Qatar, Bosnia, and Korea for peacekeeping,
    and performing counternarcotics missions in Central and South America.
    The broad scope of our capabilities was exemplified by Wyoming Air
    Guard operations in Indonesia suppressing forest fires that had
    enshrouded the island nation and Malay peninsula in smoke for months,
    and by the Missouri Army Guard training Fijian soldiers in bridge
    construction. Whatever additional overseas demands the future may hold
    in store, count on your citizen soldiers and airmen to carry them out
    with the Guard's hallmark skill.
                 promoting democracy abroad through engagement
        A major additional task in the National Guard's Federal role is
    that of Preventive Defense. We are uniquely postured to promote
    democratic practices abroad and find ourselves in frequent demand for
    nation-building programs, such as the North Atlantic Treaty
    Organization's Partnership for Peace program, European Command's Joint
    Contact Team Program, Southern Command's Traditional CINC Activities
    Program, and other similar activities sponsored by the Office of the
    Secretary of Defense, the Joint Staff, and various State Department
    agencies. Many are undertaken under the aegis of the State Partnership
    Program.
        There is good reason to call on the National Guard when America
    wants to present its best face to the world. Our professional militia
    provides an influential example of how a military force can be
    effective while deferring to civil authority and the rule of law. This
    is the ultimate embodiment of democratic values, particularly to the
    states of eastern Europe and the Former Soviet Union struggling to
    break with repressive pasts. National Guard personnel and the militia
    system under which they operate are models for the world. They
    illustrate how a military force of the people remains committed to the
    people. The wealth of civilian skills our Guard members take overseas--
    and the diversity of non-military professions they represent--are also
    important, giving our men and women a versatility and credibility as
    goodwill ambassadors that no other American military arm can match.
    The State Partnership Program
        Much of the Guard's success in promoting democracy abroad is the
    result of the State Partnership Program. To date, 30 States and Puerto
    Rico have joined as Partners or Associate Partners in extending the
    hand of friendship from grassroots America to 31 countries that would
    emulate our ways and institutions. Foreign military personnel and
    political leaders visit our country to observe how the National Guard
    operates within the State and Federal framework, and National Guard
    members reciprocate with visits back to the partner country in which
    they provide detailed information on civil-military topics like search
    and rescue, medical support, disaster response, military law, and
    family programs. Importantly, these are more than just military-to-
    military contacts. By involving governors and mayors, their staffs,
    State legislatures, and the families and friends of our Guard men and
    women in building these bridges of friendship, we promote political
    ``buy-in'' on national security strategy at the local level and foster
    cooperation between the Federal and State governments in other
    productive ways.
        Tasking in this area is growing rapidly. During 1997, Guard members
    repaired hospitals and orphanages in the Republic of Georgia, conducted
    joint training in Estonia, provided civil engineering support for
    nation-building projects in Cambodia, and hosted counterpart visits by
    military representatives from Hungary, Bulgaria, and Brazil, to name
    just a few of the activities conducted under this valuable bilateral
    linkage. In New Horizons, the largest combined training-humanitarian
    support exercise conducted in the western hemisphere, more than 3,400
    Guard personnel from several states conducted engineering projects in
    Belize and Panama over a 6-month period, sharpening the military skills
    of our militia men and women while demonstrating their ability and
    willingness to enhance the quality of life for hemispheric neighbors.
    We are firmly committed to sustaining this effort, which has our Guard
    men and women ``transforming the world one orphanage at a time.''
                  maintaining a balanced force of capabilities
        In our Constitutionally mandated State role, the National Guard
    mission is to provide emergency support to the governors of the States
    and Territories. This includes disaster response, support to law
    enforcement officials in cases of civil disturbance, and assistance
    with such activities as wilderness rescue. While not a record year,
    1997 still saw Guard members respond to over 300 emergency callups when
    their fellow Americans required help, providing 280,000 mandays in
    support of State and regional neighbors.
        Flooding in California, Colorado, Hawaii, Idaho, Kentucky,
    Minnesota, Nevada, North and South Dakota, and Ohio, much of it record
    level, led to callups, as did tornadoes in Arkansas and Michigan. When
    Hurricane Danny lashed the Alabama coast, National Guard members were
    standing by to provide life-saving assistance and remained on scene to
    help stricken communities get started down the long path to recovery.
    In Alaska, the Army and Air Guard were credited with saving 113 lives
    in rescues of people lost, injured, or marooned across the State. On
    Guam, militia men and women provided search, rescue, and security
    support to federal and local agencies following the tragic crash of
    Korean Airlines Flight 801. And in an effort that is certain to presage
    further inter-State cooperation, crews from the Air National Guards of
    Oklahoma, Texas, and Wyoming joined those of embattled New Mexico last
    December to airdrop feed to cattle stranded by blizzards.
    Readiness and Redundancy
        The unpredictability and devastating impact of such emergencies
    underscores how important it is for the National Guard to field a
    balanced mix of forces and capabilities in each State and geographic
    region. Command, control, and communications; transport; engineering;
    military police; search and rescue--all of these capabilities, as well
    as several others, must be immediately available to State authorities
    when required.
        We in the National Guard, in full cooperation with the States, the
    Federal Emergency Management Agency (FEMA) and other governmental
    authorities, are actively searching for new efficiencies in disaster
    response operations. The conclusion of Emergency Management Assistance
    Compacts between neighboring States is one example. These establish
    conditions and procedures under which Guard members from one State can
    provide assistance to another State with the agreement of both
    governors, and reflect the Guard's concern with cost-effectiveness and
    resource conservation. A number of States already have signed compacts
    with their neighbors, paving the way for sharing personnel and
    equipment during times of crisis. The growing involvement of America's
    citizen soldiers and airmen in domestic counterterrorism and post-
    attack response operations is sure to lead to other forms of inter-
    State cooperation.
        At heart, however, it can never be forgotten that our
    responsibility to the States is mandated by the Constitution. This
    cannot be suspended by the apparent efficiencies of wholesale
    consolidation that well-intentioned cost-cutting staffs may postulate.
                         presenting the face of america
        The National Guard is the face of America. Our people and our
    values are the people and the values of the nation, at all times and in
    every corner of the country. The militia tradition of service to nation
    and neighbor springs from this. Half of the signers of the Declaration
    of Independence were militiamen, as have been 18 of the 41 Presidents
    and numerous members of Congress. In the 105th Congress alone, more
    than 70 members have served or are currently affiliated with the Guard
    or Reserve.
    Diversity and Opportunity
        One of our greatest strengths is the diversity of those who
    comprise our ranks. They and their families strengthen our mettle,
    infusing the organization with new blood, new perceptions, and new
    ideas. They volunteer from all of America's varied social, educational,
    and economic backgrounds, and represent a true melting pot of race,
    creed, color, and gender. Their sole common denominator is commitment
    to this great country and the finest qualities it engenders in the
    human spirit. Our sole common demand of them is that they embrace the
    core values we nurture as an institution--integrity, loyalty,
    dedication, service, selflessness, compassion, family, and patriotism--
    and endeavor to live up to them in every undertaking.
        Within the National Guard there are only two measures of merit for
    promotion: performance, and adherence to the values for which we stand.
    This even-handed approach pays large dividends in attracting talent and
    fostering loyalty. While we neither targeted specific ethnic groups for
    recruitment nor established race- or gender-based promotion quotas,
    minority representation in all ranks increased steadily throughout the
    1990's. The percentage of minorities in the Air Guard grew almost 4
    percent during the past 5 years and now stands at 19.4 percent. In the
    Army Guard, the increase was 1.5 percent and the current minority total
    stands at 26 percent. Percentage point increases for the officer corps
    alone are roughly identical, making it clear that the Guard is an equal
    opportunity force from top to bottom.
        The percentage of women in the National Guard likewise continues to
    increase, as do the number of women attaining positions of authority.
    For example, in 1997 the New York Guard appointed its first female
    battalion commander, the Florida Guard promoted its first women to flag
    rank, and Vermont selected the first woman Adjutant General in the
    Guard's history. These skilled professionals were among notable record-
    setters last year but were by no means the only ones. They are sure to
    be followed by others in the years ahead as the role of America's
    militia continues to grow.
    People Programs
        The men and women of the National Guard remain our greatest
    resource. As Guard OPTEMPO and PERSTEMPO accelerate to ease the burden
    on a heavily committed Active force, it becomes increasingly important
    to ensure our members' families are cared for during absences. Living
    in communities with family and friends is an advantage some stay-behind
    spouses enjoy, but others lack such safety nets. Fortunately, our
    Family Partnership Program, one of the most extensively networked in
    the Department of Defense (DOD), is the strongest it has ever been. Our
    people know that if they are called up to serve halfway across the
    country or halfway around the world, they can leave home confident that
    their families will be cared for.
        Another major concern for National Guard members eager to serve is
    the potential impact of a callup on their civilian jobs. Will service
    for State or nation adversely affect their job security, skill
    development, or promotion opportunities? The answer is no for three
    reasons. The first is the patriotism and support of the American
    business community. Most employers understand that there is a moral
    bottom line that outweighs the one in account ledgers. For those few
    who fail to appreciate that, the Uniformed Services Employment and
    Reemployment Rights Act passed by an insightful Congress in 1994
    updates the legal ``livelihood safeguards'' for our citizen soldiers
    and airmen. For that, we remain grateful. The third element is a
    strong, highly dedicated staff in the Office of the National Committee
    for Employer Support of the Guard and Reserve. They are working
    aggressively to protect the reemployment rights of those who have to
    leave their jobs for six to nine months to enable the Global Guard to
    perform its worldwide missions.
        Recruiting and retention are always concerns for the military
    during periods of institutional turbulence, heavy operational demand,
    and a strong domestic economy. All three conditions are occurring today
    and yet the National Guard continues to attract and keep high-quality
    personnel. Last year we met or exceeded all of our goals. In part, this
    was due to the innate patriotism and selflessness of many young men and
    women in our society, the abiding appeal of the militia tradition, and
    the National Guard's sincere commitment to superior leadership, quality
    training, and equal treatment. Pragmatically, however, we also
    recognize the value of such inducements as the Montgomery G.I. Bill and
    the education assistance programs some States provide. The importance
    of academic incentives was proven beyond any doubt when New York's
    offer of tuition-free education in the State's 70 public colleges and
    universities rocketed the Empire State Guard ``from worst to first'' in
    recruiting and retention nation-wide over a two-year period.
    Adding Value To America
        A community-based organization like the National Guard cannot claim
    to ``present the face of America'' without giving something back to the
    society from which it springs. That is why we have a third mission
    exemplified in the phrase The National Guard ``Adds Value to America.''
    This is the mission your National Guard members perform within their
    communities, serving as role models for disadvantaged youth, providing
    health care for the indigent, assisting adult Americans to develop
    better job skills, and supporting organizations and agencies whose
    activities at the local level make hometown America a better place to
    live and work. Currently, 21 States and Territories conduct youth
    programs that are considered among the most successful in the nation at
    a per capita cost that is lower than juvenile and adult correctional
    institution costs, the Job Corps, and National Service.
        Our most effective intervention program for at-risk youth is
    ChalleNGe which provides academic instruction and training in job
    skills and life-coping behaviors to unemployed high school dropouts.
    Sponsored in 21 States, the program consists of a five-month
    residential phase followed by a year of close mentoring and leads to a
    General Educational Development (GED) diploma for most participants.
    The number of young men and women graduating from ChalleNGe over the
    past five years is rapidly approaching 13,000, with almost 80 percent
    receiving their GED. The fiscal year 1998 Defense Bill removed the
    provisional status of ChalleNGe and made it a permanent program under
    Title 32.
        STARBASE (Science and Technology Academics Reinforcing Basic
    Aviation and Space Exploration), another of our major youth programs,
    exposes students from inner city schools to ``hands-on'' experiments
    where they apply math and science to real-world problems in aviation
    and space-related disciplines. STARBASE is conducted in 14 States and
    Territories and reaches over 10,000 students each year.
        The Youth Conservation Corps (YCC), our third principal program, is
    directed toward the same population as ChalleNGe. It is a six-to-ten
    week residential program that uses military-based training to develop
    pride, self-discipline, and an understanding of cooperation and
    citizenship in at-risk youth. Over 600 young men and women have
    completed YCC training since its inception five years ago.
    Drug Demand Reduction
        Illegal narcotics trafficking poses one of the most pervasive and
    deadly threats our nation faces, and we in the Guard take the campaign
    against it seriously. In our Federal and State roles, we actively
    support a wide range of foreign and domestic counternarcotics and drug
    interdiction operations. As an organization grounded in hometown
    America, though, we know that our schools and neighborhoods are also
    battlefields where the struggle is waged one precious life at a time.
    Our Guard men and women fight it on those terms by supporting drug
    demand reduction efforts as part of the Guard's community support
    mission.
        Our members and their families participate in many of the over
    8,000 separate drug demand reduction programs underway nationwide that
    focus on community coalition building, circulating anti-drug messages,
    developing leadership within vulnerable groups, and promoting high
    standards of citizenship. While our personnel normally allow local
    community groups to take the lead, National Guard members are in high
    demand to conduct substance abuse education programs, to mentor at-risk
    individuals, and to perform other tasks where they can be showcased
    within their own communities as positive role models. Since all of our
    own youth programs have embedded drug-prevention themes, many Guard men
    and women are proficient in demand reduction instruction and
    techniques. For the past two years, we have also been a partner in the
    Community Anti-Drug Coalitions of America, enabling us to contribute
    to--and draw on--an enormous base of counterdrug resources distributed
    across the face of America.
                  remaining the first line of homeland defense
        One common thread running through all recent DOD studies has been a
    reaffirmation of the National Guard's responsibility to remain the
    first line of homeland defense. It is a task we accept willingly.
    Weapons of Mass Destruction and Emergency Response
        ``I must say, there is probably no more important mission facing
    the Department of Defense right now than being prepared to defend this
    country at its home in the event of a chemical or biological attack.
    And the Guard has to be at the forefront.'' Deputy Secretary of Defense
    John J. Hamre
        The Fiscal Year 1997 Defense Authorization Act tasked DOD to
    implement programs to prevent and respond to terrorist incidents
    involving Weapons of Mass Destruction (WMD), and to support State and
    local emergency response agencies involved in these activities with
    training and equipment. Studies mandated by that act have since made it
    clear that the National Guard, by virtue of our grassroots community
    presence throughout the nation, extensive training experience, and
    inherent State disaster response duties should play a vital role in
    this critical aspect of homeland defense.
        This is a natural mission for America's militia. Our first charter
    in the New World three-and-one-half centuries ago was community
    defense. We have never failed our fellow citizens in living up to that
    trust. We were providing organized on-scene support within minutes of
    the tragedy in Oklahoma City two years ago, and will be there again
    whenever and wherever our neighbors need help. Our State Area Commands
    are important hubs in the nationwide emergency response network, and
    our Adjutants General serve as the Emergency Manager in almost half of
    the States. The Reserve Component Automation System (RCAS), which we
    are extending into Guard and Reserve facilities across the nation, upon
    completion will provide electronic access into communities large and
    small for emergency information flow. In conjunction with the National
    Guard Defense Learning Initiative, RCAS also offers a mechanism for
    training local personnel in counterterrorism and WMD disaster response.
        As the first step, Guard professionals are participating in
    training local emergency responders in a program that initially will
    cover 120 cities. Other tasks will certainly follow. If our enemies try
    to strike at the American people in their homes, schools, churches, and
    shops, they will find the National Guard vigilant, determined, and
    ready.
    Counternarcotics and Drug Interdiction
        Counterdrug operations make up an important part of all three
    National Guard mission areas. In addition to the demand reduction
    programs we promote within our communities, we have both Title 10 and
    Title 32 responsibilities in our nation's counterdrug fight. Under
    Title 10, the Army and Air National Guard help theater CINC's detect
    and monitor attempts to smuggle narcotics into the United States and
    its Territories from their regions. We do this by deploying individuals
    and units to locations abroad where they perform ground-based and
    airborne surveillance, provide linguistic support, augment intelligence
    staffs, and assist in other ways. Our recurring deployments to Panama
    for Operations Coronet Nighthawk and Constant Vigil are familiar
    examples of this.
        Under Title 32, the National Guard supports various Federal, State,
    and local law enforcement agencies in counternarcotics and drug
    interdiction operations within the country and Territories. We furnish
    equipment, manpower, and special expertise that other agencies have
    come to rely on heavily over the past few years in campaigns against
    drug smuggling, distribution, and domestic cultivation. From assisting
    in cargo inspection at U.S. ports of entry to providing aerial
    reconnaissance and photointerpretation for interception operations and
    the location of illicit domestic drug crops, Guard members are
    recognized as key players on the U.S. counterdrug team.
        During 1997, Guard men and women--all volunteers--participated in
    9,260 counterdrug missions and helped seize considerable amounts of
    processed narcotics and amphetamines, vehicles, and weapons, as well as
    almost 30 million marijuana plants. More than 96,000 arrests were made
    and almost $200 million in currency confiscated in these operations.
    Guard members' status as agents of their State exempts them from the
    posse comitatus restrictions that prevent other U.S. military forces
    from being used in a similar way. Counterdrug support is performed in
    addition to regular wartime mission training and enhances basic
    military skills.
    Homeland Defense Missions
        Other related homeland defense missions are likewise natural tasks
    for our citizen soldiers and airmen. When a National Missile Defense
    system is fielded, we should have a strong--if not commanding--presence
    in the system's control centers and maintenance facilities. This will
    be a wholly logical extension of the national air defense mission the
    Guard now performs, and our capability was demonstrated in the days of
    Nike-Hercules missiles.
        Related directly to that is the Guard's potential future role in
    all forms of U.S. Space Operations. Missile launch, satellite control,
    and space system management are missions in which scientists,
    technologists, and other highly skilled National Guard professionals
    could couple civilian work specialties with their military training and
    discipline to serve national defense.
        Information Warfare is another important new military function in
    which the Guard has a major role to play. As America continues its
    transformation to an information-based society, we find ourselves newly
    vulnerable to electronic attack on the cyber-systems that have become
    essential for financial transactions, commerce, communications,
    transportation, and the other arteries sustaining our social structure.
    The ability to detect assaults and counter-attack swiftly and
    effectively is essential. There is an excellent fit here between many
    Guard members' civilian professions and national defense service, and
    we expect to become steadily more involved as this ``combat specialty''
    evolves.
        The operation of Remote Weapon Systems, such as unmanned aerial
    vehicles (UAV) and other systems yet to emerge, is still another area
    in which your National Guard can play a productive, cost-effective
    role. While training at home to deploy these systems overseas for
    conventional combat purposes, we would be able to increase the scope
    and potency of our participation in State missions such as drug
    interdiction surveillance, search and rescue, and disaster response.
                   fueling the revolution in military affairs
        Today's Revolution in Military Affairs is the product of two
    factors: exciting technological advance and mundane fiscal constraint.
    The men and women of the Army and Air Guard are strangers to neither.
    They understand fully the need to develop alternate ways of doing
    business to ensure that we remain effective in a newly lethal
    environment under prevailing tight budgets. Long accustomed to doing
    more with less, we have made a virtue of necessity by developing a
    culture that embraces ``smart innovation,'' or, as it has been put,
    ``thinking outside the box without destroying the box.'' Several of our
    past initiatives continue to pay large dividends, and the dynamism of
    our people is producing more daily.
    Technology and Innovation
        The National Guard is an aggressive proponent of leveraging
    technology for greater effectiveness and readiness. In the
    complementary RCAS, Warrior Net, and Distance Learning Network, we are
    doing with electrons what President Eisenhower did with the interstate
    highway system. These PC-based networks eventually will link every
    Guard armory and air facility in the nation with appropriate
    headquarters and specialty training units for the distribution and
    exchange of automated information management data, decision-making
    support mechanisms, distance learning, and disaster response
    communications and coordination. Over the past four years we have
    dramatically intensified our focus on computer linkage--originally
    established primarily to reduce training and administrative expense--to
    good effect, and now the demand on these networks to support other
    activities is growing steadily. With linkage to other Federal and State
    directorates and agencies--such as the Army's Directorate of Military
    Support, FEMA, and the counterdrug community--these systems become a
    national telecommunication resource of major consequence.
        The Army and Air Guard both have enjoyed substantial success in
    employing simulation technology to meet the persistent challenge of
    providing realistic training at reasonable cost. The Army National
    Guard's Project SIMITAR (Simulation in Training for Advanced
    Readiness), encompassing more than 30 training simulation initiatives,
    has produced several effective systems for bringing the battlefield
    into the armory and continues to offer new opportunities for developing
    and maintaining solid basic skills in battle management and gunnery.
    Similarly, the Air National Guard has forged ahead in orchestrating the
    development of low-cost, high-fidelity Unit Training Devices (UTD) for
    fighter aircraft. Based on commercial-off-the-shelf (COTS) components,
    these UTD's provide valid procedural and tactical training for fighters
    without incurring actual flying hour costs and have been particularly
    beneficial for unit conversions. In ongoing initiatives, the Air Guard
    is pursuing the development of a next-generation simulator for the B-1
    bomber and working closely with the Active component on linking
    simulators around the country for distributed interactive mission
    training.
        Our citizen soldiers and airmen have come up with a number of other
    ideas for lowering the price tag of military strength. The Air National
    Guard and Air Force Reserve Command are teaming on a COTS-based
    aircraft upgrade program, Combat Quadrangle, that will give their
    aircraft around-the-clock combat capability, survivability in high-
    threat environments, data link systems, and precision attack at an
    eminently affordable price. The Army Guard has employed a slightly
    different but equally innovative and cost-effective approach to
    modernization in its RETROEUR (Retrograde of Equipment from Europe)
    program, in which Army equipment made excess by overseas force
    drawdowns is redeployed from Europe, repaired at Army Guard centers in
    the U.S., and redistributed among Active, Guard, and Reserve units.
        Innovation, however, is not limited to acquiring better hardware at
    lower cost. Guard ingenuity is evident also in the development of
    better, more efficient processes to save time and money. As one
    example, the Army Guard's Home Station Mobilization initiative will
    reduce the cost of processing personnel mobilized for deployment and
    speed them to ports of embarkation more rapidly. Another, the Army
    Guard's Fort State initiative, is a proposal of truly blockbuster
    dimensions for leveraging existing Guard infrastructure and experience
    to provide services such as maintenance, supply, and transportation to
    the Active and Reserve components within States. The DRI called for
    outsourcing 150,000 commercially oriented military and civilian support
    positions; the NDP, 600,000. Under Fort State, many of these tasks
    would be ``outsourced'' to Guard installations where they could be
    consolidated for greater efficiency.
                    the path ahead--total force integration
        We in the National Guard are proud of our roles, both as the
    Federally tasked Global Guard and as ``America's Team'' for State and
    community missions. We are firmly dedicated to remaining key players in
    the Total Force of tomorrow and are working hard to foster still closer
    cooperation and integration between the Active and Reserve components.
        Collaboration between the Active and Reserve components of the Air
    Force continues to set the standard for Total Force integration and
    interoperability. The Air Force elected to absorb almost 27,000 QDR
    manpower cuts--and the loss of one fighter wing equivalent--from the
    Active component while reducing the Reserve component by only 700
    positions, plussing-up Guard fighter squadrons to 15 aircraft each, and
    transferring modern assets to Guard and Reserve units from Active ones.
    An Active Air Force officer last year became the first leader of an Air
    Guard unit when he assumed command of Connecticut's 103d Fighter Wing.
    And the Guard, Reserve, and Active Air Force consult regularly on
    mission distribution.
        In its efforts to foster closer Active-Reserve ties, the Army
    National Guard completed its force-balancing exchange of 12,000
    positions with the Army Reserve last year and is now implementing the
    Division Redesign program to convert 12 combat maneuver brigades into
    combat support and combat service support units. While complex--the
    process involves some 50,000 Guard members in more than 30 States--this
    is a high priority program to enhance the Army's deployability by
    providing augmentation in vital war mobilization and sustainment
    fields. The assignment of Active Army officers as commanders of
    selected Guard units continues. And in a bold move to break down
    communication barriers, the Army Chief of Staff has begun meeting with
    the Guard's State Adjutants General on a quarterly basis.
        A number of other positive steps have been taken toward integration
    over the past year. At the recommendation of the DRI, up to half of the
    staff of the Directorate of Military Support, DOD's 911 service for
    disaster response, will be drawn from the National Guard, and the
    Deputy Director will be an Army Guard general officer.
        In another initiative, the Secretary of the Army approved a plan to
    establish two fully integrated Active-Guard divisions, each composed of
    an Active component division headquarters and three Army Guard enhanced
    Separate Brigades. The first will be headquartered at Fort Riley,
    Kansas, and include mechanized infantry brigades from North Carolina,
    South Carolina, and Georgia. The second will be headquartered at Fort
    Carson, Colorado, and include infantry brigades from Oklahoma,
    Arkansas, and Indiana.
        We are moving ahead on all fronts. Much remains to be done, but I
    am optimistic about the future in view of our accomplishments and
    progress over the past few years. America's National Guard has always
    answered the call of its communities, States, and nation. The men and
    women of the National Guard can be counted on to remain true to that
    heritage as we forge ahead into the landscape of tomorrow.

        Senator Stevens. Thank you.
        First, let me on behalf of the committee thank you for all
    you have done to work with us to try and improve the conditions
    of the Guard. Your watch has really been a significant one, I
    think, in terms of the changing relationship between the
    Congress and the National Guard, and you have helped us in the
    so-called National Guard Caucus here to really call attention
    to all Members of the Congress the plight of the National Guard
    and Reserves, and I personally thank you.
        I also personally thank you for coming with me to Alaska. I
    am sorry that you brought home so much fish. We will just have
    to leave that go. [Laughter.]
        But I do thank you for your courtesy in coming to Alaska so
    often and really trying to find ways to improve the situation
    of the Guard up there.
        Let me turn to General Navas.

                    STATEMENT OF MAJ. GEN. WILLIAM A. NAVAS

        General Navas. Thank you, Mr. Chairman, members of the
    committee. Thank you for this opportunity again to talk to you
    today, as well as for your past support on the part of
    America's Army that is your National Guard. I have submitted a
    statement for the record, but would like to spend just a few
    minutes giving you some background on how we arrived at the
    present budget.
        As you know, 1997 and 1998 were tough years for all of the
    Army, including the National Guard. The 1999 budget is in many
    ways a step forward. As submitted, it represents two things.
    First of all, it represents an unprecedented level of
    cooperative effort between the Department of the Army and OSD.
    For the first time in history, the National Guard funding issue
    was made a major budget issue within the Office of the
    Secretary of Defense level.
        We started with a shortfall of $113 million and at the
    Chief of Staff of the Army's request we worked with the Army
    staff and we were able to reduce that shortfall by $197
    million. That is the first time in my 10 years working in the
    Pentagon that I have ever seen a plus-up of the Guard
    accomplished inside the Army. That kind of progress is good
    news.
        However, the second thing that this budget represents, as
    General Reimer told the other Chamber last week, is a shortfall
    of $634 million to meet minimum readiness sustainment
    requirements of the Army National Guard.
        General Reimer has said that he recognizes the severity of
    this problem and that is one of his highest priorities.
        This shortfall means that our requirement will be met at
    only 71 percent. By comparison, the Active Army requirements
    are met at 80 percent, and the Army Reserve's requirements at
    81 percent. When you consider that the Guard's requirements
    themselves have been tiered in accordance with defense planning
    guidance, meeting them at 71 percent amounts basically to a tax
    over a tax.
        First, they are tiered to reflect the readiness levels
    required for our units that deploy later and then they are
    again funded at a lower level, and that is precisely where most
    of the shortfall will impact, disproportionately on the
    soldiers of those later-deploying units. It is on those units
    that training has already been drastically curtailed. It is in
    those units that hundreds of our finest NCO's must choose
    between going to training to lead their soldiers or going to
    schools to complete the courses of instruction that the Army
    has prescribed in order for them to remain eligible for
    participation in the Guard.
        It is in those units that the special training assemblies
    are so necessary for the preparation of good training, and it
    is funded only at 11 percent, and it is at those units that
    full-time manning is at barebones subsistence levels.

                               prepared statement

        In sum, we are making progress but we still have a ways to
    go, and I look forward to answering your questions, and thank
    you again for the support that this committee has given us.
        [The statement follows:]

                Prepared Statement of Maj. Gen. William A. Navas

        Mister Chairman, members of the subcommittee: Thank you for
    the opportunity to appear today and to provide an overview of
    current Army National Guard programs. I would like to begin by
    saying that 1998 finds the Army National Guard more active,
    with a higher operational tempo, than at any time in recent
    history. During the past year our personnel contributed nearly
    7,500,000 man-days in support of DOD mission requirements,
    including deployments to over 70 nations worldwide. Even as
    overseas commitments reached new levels in 1998, Guard soldiers
    provided more than 280,000 man-days in support of domestic
    emergency missions here at home. Domestic Army National Guard
    missions encompass a wide variety of support, including
    disaster relief, medical support and humanitarian assistance
    operations. Additionally, this large domestic portfolio is
    expanding to encompass the emerging use of the Army Guard in
    dealing with the consequences of Weapons of Mass Destruction
    (WMD). In short, the Guard in 1998 finds itself working closely
    with the Active Army to meet increasing international and
    domestic mission requirements.
        The maintenance of this high level of operational tempo has
    not come without cost. While I support the President's budget
    and the efforts of the leadership of the Army and DOD, the 1
    percent Army-wide budget shortfall forecast by the Army affects
    the Army National Guard to a similar degree. This funding
    constraint will affect nearly every area of Army National Guard
    operations, including operations, training, education and
    maintenance activities. These resource constraints will
    continue to challenge the Army Guard even as we reach new
    levels of domestic and international support.
        As Congress has repeatedly recognized in the past,
    modernization of Guard equipment is essential to the effective
    integration of Active Component and Guard forces. Initiatives
    like the Active Component/Reserve Component aviation
    modernization plan illustrate the effective cooperation in this
    area. In addition to aviation modernization, the ground force
    is seeing significant advances, with fielding of the M109A6
    Paladin howitzer and additional Multiple Launch Rocket Systems
    currently underway. Initial fielding of the Avenger Air Defense
    platform is also taking place. These initiatives will enable
    the Guard to more effectively support DOD and Total Army
    requirements around the world.
        Recruiting and retaining quality soldiers represents
    another continuing success story for the Guard. Last year the
    Army National Guard was the only Army component that exceeded
    its strength goal. In 1997 we established a strength target of
    367,000 personnel, and we finished the year at 370,046
    personnel--101 percent of our goal. I would add that although
    we did not make all of our acquisition quality goals, each
    soldier met the quality requirements for his or her Military
    Occupation Specialty (MOS) upon enlistment. Our overall quality
    is excellent. Sixty-two percent of our soldiers fall in
    Category I-IIIa, and 98.8 percent of our soldiers are high
    school graduates or the equivalent.
        The Army National Guard continues to explore ways to deal
    with on-going resource constraints. Our efforts center upon the
    innovative use of current and emerging simulations technologies
    to reduce costs for military training and education. These
    efforts include a significant investment in distance learning
    and the use of low cost, high quality simulation technologies
    for training. Along with the Active Component, we foresee a
    simulation driven revolution in the way that our soldiers are
    educated and trained. In a world of increasing resource
    constraints, it is a revolution that must come sooner rather
    than later.
        Despite resource constraints, the Army National Guard
    continues to work effectively in concert with the Active
    Component Army to meet the needs of the Department of Defense
    and the Nation. 1998 finds the Army National Guard an
    increasingly relevant force committed to serving in any
    required capacity.
                                    ------

                       Fiscal Year 1999 Posture Statement
                               executive summary
        Fiscal year 1997 witnessed an unprecedented level of activity and
    change for the Army National Guard (ARNG). Activities during this
    period included the continuing evolution of Guard force structure, on-
    going modernization initiatives aimed at ensuring continued mission
    relevance for Guard units, and increased efforts to support a work
    environment that engenders Total Army values and effective human
    relations among all Guard members.
        The high Guard operations tempo (OPTEMPO) witnessed in fiscal year
    1996 continued into fiscal year 1997 as the Army National Guard
    maintained its support for missions in Bosnia and other points
    worldwide. During fiscal year 1997, over 27,000 Army Guard soldiers
    deployed to more than 70 nations and provided over one million man-days
    in support of DOD mission requirements. Additionally, Guard soldiers
    and airmen provided over 280,000 man-days in support of 308 state
    missions, including disaster relief, medical support, humanitarian
    assistance, counter-drug, and counter-terrorism operations.
        Even as the Army Guard experienced its highest OPTEMPO in recent
    years during fiscal year 1997, efforts continued to reorient Guard
    force structure and physical plant to meet the challenges of the post-
    Cold War world. The continuing reorganization of the Guard force
    structure necessitated large scale training in new occupation
    specialties and the extensive fielding of new and complex military
    equipment. The successful execution of this wide array of missions was
    due in large part to an amazing degree of dedication on the part of
    Army Guard soldiers and their families around the country and overseas
    throughout the world. With their help, the Army Guard successfully met
    all major challenges in fiscal year 1997.
        In the years ahead, the Army National Guard leadership will
    continue to ensure that the Guard remains a multi-mission capable force
    that is both relevant and increasingly modern. As a first responder in
    both domestic and international missions, the Guard and its citizen
    soldiers will continue to justify the special trust placed in them by
    the nation they support.
                   the army national guard: past and present
        The National Guard predates the founding of the nation and a
    standing national military by almost a century and a half. America's
    first permanent militia regiments, among the oldest continuing units in
    history, were organized by the Massachusetts Bay Colony in 1636. Since
    that time, the Guard has participated in every U.S. conflict from the
    Pequot War of 1637 to Operation Desert Storm in 1991.
        The Army National Guard is a centuries-old institution, with roots
    deeper than the colonial ``Minutemen.'' The Guard plays a vital role in
    our national defense and emergency preparedness systems. Today, the
    Guard has emerged as the foremost reserve of the Army, capable of
    providing organized and trained units to engage in missions shoulder to
    shoulder with the active Army.
        A subject of extensive debate and compromise during the
    Constitutional Convention of 1787, the National Guard finds its origins
    in explicit provisions of the United States Constitution. Throughout
    the nation's history, the Guard has been an integral component of the
    defense and domestic emergency-response networks of the States and the
    United States. Federal law clearly sets forth the Army National Guard's
    Federal role: ``to provide trained units and qualified persons
    available for active duty in the armed forces, in time of war or
    national emergency and at such other times as the national security
    requires, to fill the needs of the armed forces whenever, during, and
    after the period needed to procure and train additional units and
    qualified persons to achieve the planned mobilization, more units and
    persons are needed than are in the regular components.''
        Detailed Federal guidelines, both statutory and regulatory, govern
    the organization and operation of the National Guard. Regulations
    issued by the National Guard Bureau spell out the policies, procedures,
    and responsibility of the Guard, and provide guidance for the
    employment of Army Guard units, personnel and equipment in support of
    State and local government authorities. The Federal government
    determines the number of authorized National Guard personnel and the
    unit mix available across the country. However, the States reserve the
    authority to locate units and their headquarters and Federal officials
    may not change any branch, organization, or allotment located entirely
    within a State without the approval of the governor.
        Just as the Federal government's relationship to the wide range of
    State activities and responsibilities has evolved over the years, so
    too have the Federal and State roles of the National Guard changed in
    order to meet the national interest as well as the particular needs and
    circumstances of each State and Territory. The Guard's unique status is
    exemplified by the fact that Guard members, unlike their counterparts
    in the active Army or Army Reserve, take an oath to their State
    constitutions secondary to their oath to the United States
    Constitution.
        Today, the National Guard fulfills a vital national defense role.
    Strategic planning integrates Army National Guard units into crucial
    combat, combat support, and combat service support elements of our
    nation's military forces to provide a trained, capable, and cost
    effective military force, able to provide rapid augmentation,
    reinforcement, and expansion in time of call-up or mobilization. From
    its origins as a self-equipped, community militia in colonial times,
    the National Guard has emerged as a well-armed fighting force and a
    valuable component in the nation's emergency preparedness network, the
    only force with this dual responsibility.
                              current initiatives
        National Guard support at both State and Federal levels has long
    been a mainstay of our government's ability to meet the needs of its
    people. The Guard's primary federal mission is to provide trained and
    ready forces in support of the National Military Strategy (NMS). At the
    State level, the Guard provides forces that are effective, trained and
    ready, but here its purpose is to accomplish a wide variety of state
    requirements, including disaster relief, medical support, civil
    disturbance support to local authorities, counter-drug support and a
    variety of other missions. Among current Federal missions is Guard
    support to Bosnia. Management of the consequences of Weapons of Mass
    Destruction (WMD) use will soon be added to Guard mission requirements.
    Guard Support Trends--Bosnia
        Participation in Operation Joint Endeavor and Operation Joint Guard
    represents the largest overseas Guard deployment since the Gulf War.
    The Army Guard mobilized 3,482 soldiers from 97 different units and 42
    States under Presidential Selected Reserve Call-up (PSRC) authority in
    support of Operation Joint Endeavor/Guard in Europe. The Bosnia mission
    provides a look at the future of the Guard.
        Requirements arising from the Bosnia mission have had an impact on
    almost all major Guard formations. For example, all eight National
    Guard Divisions have contributed to Bosnian mission support.
    Additionally, October 1997 saw the first overseas operational
    deployment of an ARNG combat unit in recent times as members of the
    29th Infantry Division (Light), Virginia ARNG and Maryland ARNG,
    departed for duty in Bosnia.
        As the upward trend in support for non-traditional missions like
    Bosnia continues, Army Guard Combat, Combat Support and Combat Service
    Support formations will be increasingly challenged.
    An Emerging Mission--Weapons of Mass Destruction
        In an event of far reaching consequences for the Guard and the
    Nation, the Congressionally mandated ``Defense Against Weapons of Mass
    Destruction Act of 1996'' charged the Department of Defense with the
    domestic anti-terrorism mission.
        In early 1995, Congress directed that a program be established ``to
    improve the capabilities of State and local emergency response agencies
    [to deal with the WMD threat], and the National Guard provides the
    States with a ready asset to augment first responders.'' In keeping
    with this sentiment, the Emergency Response Assistance Program (ERAP)
    was signed into law as a part of the Fiscal Year 1997 Defense
    Authorization Act. This law mandated that DOD assist State and local
    emergency responders in training and the loan of appropriate equipment.
    This legislation further designated the National Guard as a means of
    support for these state and local organizations. Because of its
    experience in working with state and local organizations, the National
    Guard is uniquely positioned to assist these agencies.
        Acting on the recommendations in the ERAP, Congress appropriated
    $10 million in fiscal year 1998 for detailed planning and concept
    studies designed to facilitate ARNG participation in addressing the
    terrorist WMD threat. Included in these studies will be a work plan
    that focuses on a four pillared approach to the mission: information
    and architecture; infrastructure; doctrine and training; and force
    structure.
    Pillar I: Information and Architecture
        Information management and an effective communications architecture
    will be critical parts of the Guard WMD consequence management effort.
    As a result, the first pillar of the Guard WMD study involves use of
    Federal Emergency Management Administration's (FEMA) Emergency
    Information system (EIS) software. The EIS provides a variety of
    standardized emergency management functions, including near real-time
    mapping, communications and integrated information flow at the state
    and local levels. The Guard will use the Reserve Component Automation
    System (RCAS) to interface with EIS as it integrates ARNG capabilities
    with those of FEMA. With the full integration of FEMA and ARNG
    information architectures, it is expected that the Guard communications
    infrastructure will function as a national communications highway for
    the flow of domestic emergency information. This information management
    system can also assist other government agencies, as well as supporting
    development of the Global Disaster Information system (GDIS).
    Pillar II: Infrastructure
        A central reason for the emerging Guard WMD mission lies in the
    unique Guard domestic support capability. With a wide variety of
    communications and logistics assets in all 54 States and Territories,
    the Guard continually responds to a variety of natural and man-made
    disasters.
        At the implementation level, the Guard can provide planning and
    exercise coordination for disaster response training, as well as
    assisting in the procurement of urgently needed equipment.
    Additionally, in 45 percent of the states, the Adjutant General is also
    the State Emergency Management Officer, thus providing a direct link
    between the Guard and the State agencies it supports. Finally, when the
    Guard completes the EIS communications integration outlined in Pillar
    I, every armory can serve as a Operations Center or Disaster Field
    Office if necessary. The combination of Guard infrastructure and State
    level integration will greatly improve the nation's ability to deal
    with the use of WMD and all other disasters as well.
    Pillar III: Doctrine and Training
        No effort as broad and far reaching as the anti-terrorism/WMD
    program can be effective without proper doctrine and training for those
    involved in the program. During fiscal year 1998, $466,000 will be used
    for training to be conducted by the National Interagency Counterdrug
    Institute (NICI). NICI, which provides training and military support
    operations to DOD agencies, is working with NGB to develop new courses
    that will train Guardsmen in their responsibilities as first
    responders. Additional courses on the specific nature of WMD are also
    planned. Use of the National Guard Distance Learning Network (See
    Training Technologies--Distance Learning) to support the teaching of
    these classes is also being considered. The Guard Distance Learning
    Network is also available to other agencies for WMD and related
    instruction on a space available basis.
    Pillar IV: Force Structure
        The final component of the Guard WMD study plan involves
    development of the force structure necessary to implement DOD WMD
    directives. In September 1997 the Secretary of Defense directed the
    development of ``a complete model for the integration of the RC into
    Consequence Management Planning for WMD domestic terrorist incidents.''
    To that end, a Joint Service Tiger Team was established in November
    1997 and charged with several missions:
      --Develop a response model and identify requirements.
      --Identify missions, areas of operations and units.
      --Determine manpower, equipment and training shortfalls.
      --Determine funding requirements for start-up and Operations and
            Maintenance (O&M).
        The completed plan was briefed to the Deputy Secretary of Defense
    (DEPSECDEF) in mid-December 1997.
    Current Status
        The Deputy Secretary of Defense recently provided the ARNG $23
    million and 220 Active Guard and Reserve (AGR) personnel authorizations
    to support WMD related activities in fiscal year 1999. This support
    includes funding for the upgrades to current chemical decontamination
    and reconnaissance capabilities. When formed and trained, Guard units
    with WMD capabilities will retain day-to-day mission requirements while
    maintaining a stand-by national consequence management capability.
    Additionally, these units will conduct first responder training at the
    local level and be prepared to provide consequence management
    augmentation for the Commanders in Chief (CINC). The Study Work plan
    will examine the best way to attain the most appropriate force
    structure.
        Support for the development of a robust Guard WMD consequence
    management capability comes from the highest levels of government.
    Secretary of Defense William Cohen noted, ``The Guard and Reserve are
    going to play a major role in dealing with detection of chemical and
    biological weapons. These responsibilities will include how to
    intervene and how to deal with the victims of terrorism when it
    occurs.''
                        army national guard vision 2010
        Army National Guard Vision 2010 is the conceptual link between
    America's community based land force to Army Vision 2010, ``Army After
    Next'' and Joint Vision 2010. ARNG Vision 2010 outlines a full
    commitment to implementing the joint operational concepts of dominant
    maneuver, precision engagement, focused logistics, and full-dimension
    protection--a seamless force.
        With 34 percent of the Army's strength, more than half the combat
    power, nearly 70 percent of field artillery, and more than a third of
    Total Army combat support and combat service support capabilities, the
    Army National Guard is a full partner in rapid strategic mobility, and
    tailor-to-task organizational flexibility.
        Ultimately, the Army National Guard will increase its key role in a
    seamless force that can be committed cross-dimensionally along the
    entire spectrum of contingencies. Through the alignment of warfighting
    missions and capabilities, and the integration of Active, Guard, and
    Reserve units, America's Army will continue to provide a force of
    trained leaders and soldiers.
        In doing so, we will achieve our common goal of shaping a joint
    force to accomplish our primary task: to deter conflict--but, should
    deterrence fail, to fight and win our nation's wars.
    Effective State Support
        Our equally vital role of providing assistance and support to our
    states and territories will not change. States' Adjutants General and
    their respective Governors, who serve as peacetime Commanders in Chief,
    rely heavily on the embedded capabilities and training of Army Guard
    units. The assessable, flexible, and effective response of the Guard
    during domestic and community support missions will continue to play a
    central role in state level support planning and mission execution.
        With 3,222 armories in 2,700 communities across America, the Army
    Guard provides community visibility and presence that is increasingly
    critical in an age when general military experience and familiarity
    have steadily declined. This community based force will continue to
    provide a host of other capabilities that guarantee ARNG vitality at
    the State and Federal level through 2010 and beyond.
                            shaping the 21st century
        Reaching the goals outlined in Vision 2010 presents the Guard with
    significant challenges in the years ahead. Efforts are, however,
    already underway to move the ARNG along the road to ensure a successful
    ``vision implementation''. These initiatives include the on-going Army
    National Guard Division Redesign Study (ADRS) and placement of Active
    Component Officers in selected ARNG leadership positions. In the
    logistical arena, the new Fort State initiative promises to
    significantly streamline the ARNG/Active Component infrastructure
    requirements. These and other initiatives will serve to reshape the
    ARNG as it enters the 21st Century.
    Division Redesign
        Efforts to mold a force capable of addressing the likely threats of
    the next century are not confined to the National Guard. In May 1995,
    the Commission on Roles and Missions recommended that the Army
    reorganize lower priority Reserve Component forces to fill force
    shortfalls in higher priority areas. In keeping with this
    recommendation, the Army conducted Total Army Analysis 003 (TA003) in
    late 1995 to determine potential shortfalls in personnel required to
    implement the National Military Strategy (NMS). As a result of TA003,
    the Army determined that nearly 124,800 additional Combat Support and
    Combat Service Support (CS/CSS) personnel would be required to fully
    implement the NMS. Following this conclusion, the ARNG commissioned the
    Army National Guard Division Redesign Study (ADRS) to examine ways it
    could address this shortfall in CS and CSS personnel.
        As a result of the study, the Guard will convert a number of units
    from Combat to Combat Support and Combat Service Support formations in
    the coming years. Among other suggestions, the ADRS recommends the
    conversion of up to 12 ARNG combat brigades and their associated
    divisional slice elements to CS/CSS units during fiscal year 1999-2012.
        Implementation of the ADRS will occur in four phases. Three combat
    brigades will be converted in each of phases one and two. Phases three
    and four will see conversion of remaining units in the two ARNG
    divisions affected by the redesign. The end state will find the two
    affected divisions fully converted to CS/CSS or composite divisions.
    The first Brigades designated for conversion were tentatively
    identified at the Division Project Action Committee (DIVPAC) in
    December 1997.
    Current Status
        Recent events have resulted in a decision by the Army to accelerate
    the ADRS conversion process. Following guidance from the Secretary of
    the Army, funding will be included in upcoming Program Decision
    Memorandums (POM) to procure necessary conversion equipment by fiscal
    year 2007 and to complete the conversion process by fiscal year 2009.
    Active Component/National Guard Divisional Integration
        An additional proposal contained in ADRS established two AC/NG
    Integrated Divisions, each consisting of an active Army headquarters
    company (staffed by some of the 5,000 AC support personnel) and three
    eSB's. A Division Commander would become responsible for the combat
    readiness of the three brigades and the other elements necessary to
    create a full division capable of deploying in wartime.
        This concept was approved by the Secretary of the Army and Forces
    Command is now in the process of implementing it. The 30th Mechanized
    Infantry Brigade (North Carolina), the 218th Mechanized Infantry
    Brigade (South Carolina), and the 48th Mechanized Infantry Brigade
    (Georgia) will make up a division headquartered at Fort Riley, Kansas
    with a forward element at Fort Jackson, South Carolina. The other
    Integrated Division, to be headquartered at Fort Carson, Colorado, will
    be composed of the 39th Infantry Brigade (Arkansas), the 45th Infantry
    Brigade (Oklahoma), and the 76th Infantry Brigade (Indiana) and will
    have a forward element at Fort Polk, Louisiana. The activation date for
    the two divisions is planned for 1 October 1999.
    AC Officers Serving in Key Positions in the ARNG
        Demonstrating their commitment to more effective integration,
    Active Component and Guard leaders implemented a test program placing
    limited numbers of Active Duty Officers in ARNG command positions when
    requested by an Adjutant General. The intent of the program is to
    foster a greater degree of understanding between members of the active
    and reserve forces. While available commands and categories for this
    initiative are currently under review, placing AC officers in command
    of ARNG troops demonstrates a tremendous degree of resolve on the part
    of AC and Guard leaders.
    Fort State
        The ARNG's Fort State initiative seeks to leverage existing
    infrastructure and experience within states and territories to perform
    services such as maintenance, calibration, controlled humidity
    preservation, supply, and transportation within DOD at reduced cost.
    Under the Fort State concept, entire states are considered to be
    ``installations'' as defined in Army Regulation 5-9. This allows the
    use of ARNG maintenance and logistics assets anywhere in the state to
    support DOD requirements, rather than restricting these activities to
    the confines of military bases.
        A Fort State feasibility analysis, undertaken at the request of the
    Active Army leadership, will examine Total Army requirements as set
    against ARNG state level capabilities. The economy achieved through
    more efficient use of various support functions at the state level will
    both save money and further strengthen Active Component--ARNG
    integration and cooperation. The final Fort State study, due in fiscal
    year 1998, will be an implementation plan to provide quality, low cost
    services to customers throughout the Department of Defense.
                                   readiness
        Army National Guard readiness goals include sustaining a highly
    trained and ready force that meets all wartime operational, logistic,
    and personnel standards. The ARNG is a leader in programs designed to
    enhance the readiness of high priority units. Chief among its programs
    are efforts to maintain open lines of communication. Each month, the
    Director of the ARNG presents issues/and or problems to the Army's
    leadership during the Chief of Staff of the Army's (CSA) Monthly
    Readiness Review. The Director of the ARNG also provides quarterly
    reports to the Commanding General, Forces Command. The Army National
    Guard staff conducts on-site visits and video teleconferences (VTC)
    with major combat units and high priority units to achieve and improve
    unit readiness. All of these activities serve to ensure Guard readiness
    at the highest possible levels.
        Fiscal year 1998 unit training readiness highlights will include
    unit rotations at the Joint Readiness Training Center (JRTC) at Fort
    Polk, Louisiana as well as the National Training Center (NTC) at Fort
    Irwin, California for Oregon's 41st Infantry Brigade (JRTC) and Idaho's
    116th Cavalry Brigade (NTC) respectively. Preparatory leader
    development training, as well as the exercises themselves, will
    demonstrate the ability of the Army National Guard to fully meet its
    assigned readiness goals in a crisis or wartime scenario.
    Forward Support Package Readiness
        Guard Forward Support Package (FSP) units are CS and CSS units
    designated to support Active Component divisional, Corps and Theater
    level units. Slated to respond to the NMS's two nearly simultaneous
    Major Theater War (MTW) scenario, the 209 ARNG FSP units are the
    highest priority Guard units. These units support 5\1/3\ AC divisions,
    two Corps headquarters, and two theater slices. Between the October
    1996 and October 1997 Unit Status Reports (USR), there was a 3 percent
    decline in FSP readiness due to a 2 percent decrease in duty military
    occupational specialty qualified (DMOSQ) soldiers and a 3 percent
    decline in equipment on hand. Currently, there are 4 FSP units deployed
    in support of Operation Joint Guard in Bosnia.
    eSB Readiness
        The fifteen enhanced Separate Brigades (eSB) of the ARNG are the
    principal Reserve Component ground combat maneuver force of the Army. A
    new structure within the Guard, eSB Brigades, are expected to achieve
    readiness goals of personnel, equipment on hand, equipment
    serviceability, and training by its scheduled 30 September 1999
    deadline.
        The ARNG is working hard to assist in meeting eSB readiness goals.
    In order to ensure that Guard eSB successfully achieve targeted
    readiness levels, the ARNG is using video-teleconferences to track
    management by objectives and resolve issues regarding eSB modernization
    and readiness.
        In fiscal year 1997 the Army National Guard divisional units
    supported Forces Command (FORSCOM) lane training for enhanced Separate
    Brigades during the 1997 Annual Training Period. This approach to
    training provided a dual readiness benefit--as the eSB's trained attack
    and defend mission profiles, opposing forces from divisional formations
    provided these units opportunities to train on the opposite task. This
    provided an excellent force-on-force training environment in a very
    cost effective manner. The eSB's were provided with a ``tailor made''
    OPFOR, designed to meet their requirements, while the ARNG divisions
    received training opportunities that would not otherwise have been
    available.
    Divisional Readiness
        Recent trends in readiness funding continued to provide challenges
    for the eight ARNG Divisions in fiscal year 1997. As was the case in
    fiscal year 1997, the level of funding in fiscal year 1998 will
    continue to generate resources for minimal divisional readiness and
    deployability. This resourcing is sufficient to provide 28 miles out of
    a required 288 miles for each M1 Abrams tank in the armored and
    mechanized divisions. Maintenance personnel in these units conduct
    repairs on their M1's using initial issue repair parts that are still
    available. Additionally, current resource levels support required
    professional education in lieu of Annual Training (AT) for many
    Guardsmen assigned to the divisions. Finally, current divisional
    resource levels typically support separate eight hour daily drill
    sessions rather than continuous Saturday through Sunday weekend drill
    periods.
    Home Station Mobilization
        Home Station Mobilization (HSM) is an initiative proposed by the
    ARNG during the Power Projection Functional Area Assessment (FAA)
    conducted by Forces Command (FORSCOM). HSM empowers the State Area
    Commands (STARC) to assume responsibility for all mobilization
    inprocessing activities now conducted by mobilization stations.
    Following STARC processing, a unit selected for HSM would by-pass the
    traditional mobilization station and move directly to their ports of
    embarkation. The STARC's would also validate HSM units for deployment.
    As a direct result of this program, early deploying units would be
    available much more rapidly by eliminating time required for movement
    through a separate Active Component installation prior to embarkation.
        The Army National Guard has successfully demonstrated its
    capability to conduct HSM's over the past two years. To date, sixteen
    units have Home Station Mobilized and deployed in support of Operation
    Joint Guard. United States Army, Europe (USAEUR) Deputy Chief of Staff
    for Operations (DCSOPS) made the following comment: ``HSM has
    demonstrated that it can effectively augment the traditional
    mobilization process. This can be invaluable during a large scale
    mobilization and could reduce the surge on the traditional mobilization
    stations.''
    Budget
        The Army National Guard is funded by three separate budget
    appropriations: Personnel (NGPA), Operations and Maintenance (OMNG),
    and Military Construction (MCNG). The ARNG fiscal year 1999 Budget
    Estimate Submission (BES) for these three accounts totals nearly $5.9
    billion. This represents approximately 9.3 percent of the Army's $63.4
    billion budget for this period. In addition, the Army has identified in
    its investments accounts, equipment that may be distributed to the ARNG
    for implementation of the Division Redesign, which converts up to 12
    ARNG Brigades to Combat Service/Combat Service Support to meet the
    demands of the Army.

                                    ARMY NATIONAL GUARD APPROPRIATIONS BY FISCAL YEAR
                                                  [Dollars in millions]
    ----------------------------------------------------------------------------------------------------------------
                                                                                                         Change from
                                                                      1996         1997         1998         1997
                                                                                                          (percent)
    ----------------------------------------------------------------------------------------------------------------
    Personnel...................................................       $3,349       $3,397       $3,334        -1.85
    Operations and maintenance..................................        2,444        2,298        2,419        +5.27
    Military construction.......................................          137           78          118       +51.28
    ----------------------------------------------------------------------------------------------------------------

                                   recruiting
        The Army National Guard continued its aggressive recruiting efforts
    in fiscal year 1997. Recruiting goals for the year included maintaining
    a 367,000 end strength consisting of 41,659 commissioned and warrant
    officers and 325,341 enlisted soldiers. In pursuit of these ambitious
    goals, gains of 59,262 enlisted and 4,163 officers were planned for the
    year. Recruiting managers also assumed that enlisted losses during this
    period would not exceed 62,528 personnel.
        The Guard was extremely successful in its fiscal year 1997
    recruiting efforts, attaining an end strength of 370,046--101 percent
    of the fiscal year 1997 objective. At the end of fiscal year 1997, ARNG
    end strength included 40,756 officers and 329,290 enlisted personnel.
    Non-prior service accessions quality is good. The Guard met the Army
    quality goal of no more than 2 percent Test Category (TC) IV. The Guard
    fell short of the DA goal of 90 percent High School Diploma Graduates
    (HSDG) and 67 percent TC I-IIIa. We assessed 82.8 percent HSDG and 17.2
    percent General Education Diplomas (GED), and did not enlist any non-
    high school graduates in fiscal year 1997. The Guard recruited 55.4
    percent TC I-IIIa.
        The ARNG recruiting strategy ties recruiting and retention into
    attrition management. The foci of attrition management are to recruit
    quality soldiers, to retain MOS qualified soldiers and to reduce the
    loss of first term soldiers to the lowest rate possible. Guard
    attrition management efforts were very successful in 1997, with 107.1
    percent of recruiting goals met with just 18.1 percent attrition during
    the same period.
    Retention Incentives
        The Army Guard continues to offer education incentives through the
    Montgomery G.I. Bill. Enlistment in the Guard for six years provides
    financial assistance of $208.93 a month for full-time post-secondary
    education or up to $7,521.48 over a 10 year period. Enlistment bonuses
    for enhanced units, reenlistment bonuses for everyone, and affiliation
    bonuses have been reauthorized to those who qualify.

                                                    FORCE COMPOSITION
    ----------------------------------------------------------------------------------------------------------------
                        Category                       Total                          Strength
    ----------------------------------------------------------------------------------------------------------------
    Minority Officers..............................      5,297  13.0 percent of assigned.
    Minority Enlisted..............................     89,906  27.3 percent of assigned.
                                                    ----------------------------------------------------------------
          Total Minority Membership................     95,203  25.7 percent of assigned.
                                                    ================================================================
    Black Officers.................................      2,632  6.5 percent of assigned.
    Black Enlisted.................................     55,032  15.6 percent of assigned.
                                                    ----------------------------------------------------------------
          Total Black Membership...................     57,664  15.6 percent of assigned.
                                                    ================================================================
    Hispanic Officers..............................      1,646  4.0 percent of assigned.
    Hispanic Enlisted..............................     23,863  7.2 percent of assigned.
                                                    ----------------------------------------------------------------
          Total Hispanic Membership................     25,509  6.9 percent of assigned.
                                                    ================================================================
    Women Officers.................................      3,409  8.4 percent of assigned.
    Women Enlisted.................................     30,846  9.4 percent of assigned.
                                                    ----------------------------------------------------------------
          Total Women Membership...................     34,255  9.3 percent of assigned.
    ----------------------------------------------------------------------------------------------------------------

        The ARNG exceeded the fiscal year 1997 goal of 59,267 accessions by
    actually accessing 63,495 personnel, which was 107 percent of the goal.
    Non-prior service accessions totaled 28,378, or 47.8 percent of
    program. Prior service accessions constituted 35,117 personnel, or 59.2
    percent of program. Of non-prior service accessions, 100 percent
    possessed high school or equivalent degrees with 55.4 percent scoring
    in the highest test categories. Only 1.8 percent scored in the lowest
    test categories.
                               full-time support
        The Army National Guard's (ARNG) Full-Time Support (FTS) Program
    was established by Congress to organize, administer, recruit, train,
    and maintain Army National Guard units. The FTS program provides two
    distinct types of personnel--Active Guard and Reserve (AGR) soldiers
    and Military Technicians (MT). AGR soldiers perform a variety of day-
    to-day military duties, while Military Technicians provide numerous
    maintenance and logistical support related functions. FTS manpower
    requirements are established by workload-based staffing standards (the
    number and type of required personnel) in training support, recruiting,
    maintenance, and readiness management workcenters. Requirements are
    determined through a detailed analysis of workload in each case. Grades
    are determined through classification studies.
        The Army National Guard receives FTS authorization levels from
    Congress via the National Defense Authorization Act and allocates full-
    time resources to the States and Territories on a ``first-to-fight,
    first-to-resource'' methodology. This resourcing methodology results in
    a greater percentage of FTS personnel being assigned to, and in support
    of, early deploying Force Support Package units and enhanced Separate
    Brigades.
        The Army National Guard provides justification to the Department of
    the Army, Department of Defense, Congress and other interested parties
    to ensure directed missions are supported with adequate levels of FTS
    personnel.
        In fiscal year 1998, Congress authorized the ARNG 22,310 AGR
    soldiers. The projected Congressional AGR authorization for fiscal year
    1999 is 21,763. Congress also authorized Military Technician strength
    for fiscal year 1998 at 24,974 (this figure includes 2,400 non-dual
    status technicians). Fiscal year 1999 projected Military Technician
    strength is expected to decrease to 23,815. Both the AGR and Military
    Technician programs are expected to continue experiencing significant
    reductions in the future. The 1998 National Defense Authorization Act
    reduces the non-dual status Military Technician positions 50 percent by
    fiscal year 2002 and totally eliminates them by fiscal year 2007.
    Active Duty for Special Work (ADSW)
        More than 1,340 Guard soldiers participated in the Active Duty for
    Special Work (ADSW) program during fiscal year 1997. Used to support
    special projects, ADSW tours are temporary, lasting 179 days or less.
    Projects included events such as command and staff visits, annual
    medical/dental screenings, operation of training activities, unit
    conversions to new weapons systems, study groups, support at training
    sites and exercises, and short term mission and administrative support.
    Active Guard Reserve (AGR)
        AGR soldiers perform numerous daily organizational management
    functions that are essential to the operational capability of Guard
    units nationwide. Funding for these essential personnel for fiscal year
    1999 is projected at 58 percent of requirements. The Guard is actively
    pursuing initiatives designed to stabilize and ultimately restore
    support for required AGR manning.
        In addition to financial issues, the development of an effective
    AGR officer progression program also poses challenges for the ARNG. An
    increase in the number of controlled grades is needed to allow better
    management of AGR officer and enlisted progression. This increase would
    also provide increased promotion opportunities for junior enlisted AGR
    personnel.
        Reductions in overall AGR strength are programmed. The Temporary
    Early Retirement Authority (TERA) program is used as a force-shaping
    tool to assist in achieving these reductions. A total of $13.2 million
    was appropriated for fiscal year 1998 to facilitate the reduction of
    488 AGR officers.
        Resourcing for the AGR program continues to decrease even as the
    need for these personnel increases. A reduction of 450 AGR
    authorizations is scheduled in fiscal year 1999 with an additional
    1,000 AGR soldiers programmed to leave the force between fiscal year
    2000 and fiscal year 2002 as a result of Quadrennial Defense Review
    impacts. Continued funding of transition benefits is an important
    element in the AGR strength management plan.

                                    AGR RAMP
    ------------------------------------------------------------------------
                                                                   Percent
                                         Required    Authorized   (req/auth)
    ------------------------------------------------------------------------
    1993.............................       40,475       24,686           61
    1994.............................       40,376       24,180           60
    1995.............................       40,330       26,350           59
    1996.............................       39,689       23,390           59
    1997.............................       37,594       22,655           62
    1998.............................       38,547       22,310           58
    1999.............................       38,458       21,763           56
    2000.............................       38,403       21,313           55
    2001.............................       38,403       21,053           55
    2002.............................       38,403       20,763           54
    ------------------------------------------------------------------------

    Military Technicians
        Military Technicians are civilian employees of the Guard who
    perform a myriad of maintenance and associated logistical support
    functions. These functions, which include essential equipment
    maintenance and logistical support activities, are critical to the
    deployability of Guard units throughout the country.
        The ARNG Military Technician strength for fiscal year 1998 will be
    24,974, a decrease of 512 from fiscal year 1997. Projected authorized
    positions for fiscal year 1999 total 23,815 which represents 56 percent
    of the Guard's validated 42,473 Military Technician requirement.
    Despite force structure reductions, equipment modernization initiatives
    continued to generate increased requirements for Military Technicians.
    Modern equipment such as the Apache helicopter, Abrams tank, Bradley
    Fighting Vehicle, Patriot Missile and Multiple Launch Rocket Systems
    (MLRS) require more maintenance manpower than the equipment replaced by
    these systems. Guard units can operate and maintain these systems at a
    cost saving to the Total Force, but doing so requires more Full Time
    Support.
        The combination of Military Technicians and AGR's remains the most
    efficient means of manning the ARNG's FTS program. The FTS program
    objective remains unchanged--to enhance unit readiness and
    deployability through improved training, personnel administration,
    maintenance and supply for soldiers and their equipment.

                            MILITARY TECHNICIAN RAMP
    ------------------------------------------------------------------------
                                                                   Percent
                                         Required    Authorized   (required/
                                                                 authorized)
    ------------------------------------------------------------------------
    1993.............................       37,495       27,084           72
    1994.............................       37,317       27,259           73
    1995.............................       39,340       25,489           65
    1996.............................       38,617       25,500           66
    1997.............................       44,115       25,500           58
    1998.............................       42,521       24,974           59
    1999.............................       43,867       23,815           56
    2000.............................       43,721       23,161           55
    2001.............................       43,721       22,671           55
    2002.............................       43,721       22,237           55
    ------------------------------------------------------------------------

                            equipment modernization
        Intensive efforts to modernize Guard Combat, Combat Support and
    Combat Service Support systems continued throughout fiscal year 1997.
    These efforts affected virtually every major Guard organization and
    most major ARNG aviation and ground combat systems.
    Aviation Modernization
        UH-60, C-23, and C-12 series aircraft were the focus of aviation
    modernization efforts during fiscal year 1997. The Army National Guard
    continues to intensively monitor the modernization of aviation units
    equipped with the UH-60A/L utility helicopters. A total of 298 UH-60A
    and 76 UH-60L helicopters have been distributed to Army National Guard
    units. This quantity represents about 40 percent of the Army National
    Guard total requirement of 939 modern utility helicopters. Planned UH-
    60L procurement for Active Army units will release additional UH-60A
    helicopters for redistribution to Army National Guard units. After
    redistribution, the Army National Guard will still be short 444 of the
    total UH-60 requirements, based on final retirement of all UH-1
    helicopters by the year 2000.
    Ground System Modernization
        On the ground, Total Army field artillery modernization efforts
    provided resourcing for 18 ARNG M109A6 PALADIN howitzer battalions.
    Nine PALADIN battalions will be fielded to Echelons Above Division
    (EAD) units, eight will be fielded to the heavy enhanced Separate
    Brigades, and one is to be fielded to a strategic reserve brigade.
    Fielding will begin in fiscal year 1998 and concludes in fiscal year
    2001. A total of four additional Multiple Launch Rocket System (MLRS)
    battalions were resourced for the ARNG. Kansas and South Carolina
    completed fielding during fiscal year 1997, while Arkansas and South
    Dakota are scheduled to begin fielding in fiscal year 1998, with
    completion by fiscal year 1999. The ARNG fire support force will
    include a total of 10 MLRS battalions at the end of fiscal year 1999.
        The ARNG completed the fielding of the M1 Abrams Tank to all armor
    and cavalry units in fiscal year 1997.
        Modern Bradley Fighting Vehicles (BFV) (M2A2/M3A2) have been
    distributed to four of the eight heavy enhanced Separate Brigades: the
    48th Infantry Brigade (Mechanized), the 116th Armored Brigade, the
    155th Armored Brigade, and the 278th Armored Cavalry Regiment. Although
    they are authorized the M2A2/M3A2 model (483 M2A2's and 52 M3A2's), the
    remaining four heavy enhanced Separate Brigades, 30th Infantry Brigade
    (Mechanized), 218th Infantry Brigade (Mechanized), 256th Infantry
    Brigade (Mechanized), and 81st Infantry Brigade (Mechanized) are
    equipped with the basic M2.
        This second group of enhanced Separate Brigades was originally
    scheduled to receive M2A2/M3A2 series vehicles by fiscal year 2000.
    Unfortunately, this fielding has been postponed to fiscal year 2008
    through fiscal year 2010. The Army National Guard continues to work
    with the Department of the Army (DA) Staff to find modernized equipment
    to support Army National Guard requirements. The 49th Armored Division
    was fielded 303 M2A0's/M3A0's in fiscal year 1997.
        The Army National Guard major missile materiel modernization effort
    in fiscal year 1997 was the Avenger Fire Unit. Nine Avenger unit
    conversions are programmed to occur in Florida, Ohio, New Mexico and
    South Carolina between fiscal year 1997 and fiscal year 1999. 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. These battalions will provide for the
    entire Army Corps Short Range Air Defense (SHORAD) mission. Two
    additional battalions have been programmed for fiscal year 2000-03. By
    the end of fiscal year 2003, all Army National Guard ADA Avenger/
    Stinger battalions will be 100 percent filled with Avenger Fire Units.
        Requirements for the movement of heavy vehicles and equipment (such
    as M1-series tanks) on the battlefield are met with the M1070/M1000
    Heavy Equipment Transportation System (HETS). The Army National Guard
    has a requirement for 927 of these modern 70-ton capacity systems;
    there are currently 385 on-hand. This year, elements of the Tennessee
    Army National Guard received a partial issue of 77 new HETS's. The Army
    National Guard will work with DA to prioritize the purchase of
    additional HETS's to fill other high priority units with this highly
    capable tractor/trailer combination (the only tractor/trailer
    combination that can move the M1A1 Abrams Main Battle Tank).
    National Guard and Reserve Equipment Appropriation
        In fiscal year 1998 National Guard and Reserve Equipment
    Appropriation (NGREA) funds were used to purchase night vision goggles,
    engineer construction equipment, tactical wheeled vehicles, and
    training simulation equipment. This equipment is critical to improving
    the readiness and deployment posture of many Army National Guard units.
        ARNG units must be properly equipped to perform assigned missions
    side-by-side in America's Army with Active Component (AC) units and
    coalition partners.
    RETROEUR
        The Army National Guard's program to redeploy, repair, and
    redistribute excess Army equipment from the draw down of forces in
    Europe continues to be a resounding success. Today, there are five
    operational Army National Guard RETROEUR (Retrograde of Equipment from
    Europe) repair sites: Fort Riley, Kansas (wheeled and track equipment);
    Camp Shelby, Mississippi (wheeled and track equipment); Piketon, Ohio
    (engineer and wheeled equipment); Fort Indiantown Gap, Pennsylvania
    (M3A2 Bradley and wheeled vehicles); Camp Withycomb, Oregon
    (communications-electronics equipment); and Blue Grass Station,
    Kentucky (receive, classify, and redistribute non-rolling stock
    equipment).
        Federally reimbursed state employees comprise the workforce for
    these sites except for Fort Indiantown Gap, Pennsylvania and Camp
    Withycomb, Oregon where temporary federal employees make up the work
    force. Of the 350 employees, 75 percent are Army National Guard
    soldiers and 25 percent are civilians.
        As of November 30, 1997, RETROEUR repair sites have received 8,610
    vehicles and 17,400 pieces of communications-electronics equipment.
    Vehicles received thus far include M1A1 tanks, M113 personnel carriers,
    M3A2 CFV's, M88 tank recovery vehicles, High Mobility Multipurpose
    Wheeled Vehicles (HMMWV), CUCV's, and five-ton trucks. Once an item has
    been repaired, the Army Material Command directs the shipments to
    organizations within all three components of the Army. A total of 5,844
    vehicles and 9,846 communications-electronics items have been repaired.
        In addition to providing a valuable means to redistribute assets
    within America's Army, the RETROEUR initiative provides hands-on
    maintenance, supply accountability, and warehouse management training
    for many Army National Guard soldiers. The Army National Guard RETROEUR
    Program has enhanced the equipment readiness of the Active Army, Army
    National Guard, and Army Reserve. The RETROEUR program is scheduled to
    complete all work by the end of fiscal year 1998.
                             facilities management
        The Army National Guard operates over 3,200 owned and 90 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 18,000 training, aviation, and logistical facilities located
    throughout the nation.
    Military Construction
        Fiscal year 1997 saw a number of much needed military construction
    projects initiated throughout the nation. In all, 50 major construction
    projects worth over $179.5 million were awarded in fiscal year 1997. An
    additional 39 projects are scheduled to be awarded in fiscal year 1998.
    The fiscal year 1997 appropriation of $78 million funded 16 projects,
    including $52 million for major construction, $20 million for planning
    and design and $5.5 million for unspecified minor construction.
    Facility Operations and Maintenance
        In fiscal year 1997, $203.5 million, or $3.13 per square foot, was
    provided for real property operations and maintenance, about $26.3
    million less than in fiscal year 1996. This program pays for salaries
    required to support facility operations and maintenance as well as
    providing funds 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
    increased from 62.6 million square feet in fiscal year 1996 to 65
    million square feet in fiscal year 1997, just as equipment
    modernization and aging facilities have increased 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
    1998, that amount is $2.95 per square foot, or $2.30 in constant fiscal
    year 1988 dollars; a decrease of over 30 percent.
    Base Realignment and Closure Commission (BRAC)
        The BRAC Commission findings and recommendations in June of 1995
    will result in the transfer of four active component installations to
    the National Guard over the next few years. Transfer of Fort Pickett,
    VA, and Fort Chaffee, AR, are scheduled for 1998. Fort Indiantown Gap,
    PA, is scheduled to transition in 1999 and Fort McClellan, AL, in 2000.
                           operations and maintenance
        In the upcoming year, the Army Guard will press on with its effort
    to forge a military that is ``second to none'' when meeting its tough
    federal and domestic agenda. In times of national emergency--military
    or budgetary--our free society has demanded much from its citizen-
    soldiers and, as the following pages will attest, no other force has
    responded more effectively to that call than the Army National Guard.
    The Year in Review
        In 1997, Army National Guard soldiers deployed to Europe for
    Operation Joint Endeavor/Guard. More than 27,600 of our soldiers went
    overseas to support these real-world missions and other training.
    Domestically, the Guard expended over 280,000 man days to respond to
    natural disasters and in the performance of other state duties. All of
    these requirements were accomplished simultaneously with the
    inactivation of 416 Army Guard units or elements of units, personnel
    reductions in excess of 10,608 positions, changes to unit missions and
    ambitious annual training and equipment modernization programs.
    Throughout this period, Guard soldiers and their families remained the
    centerpiece of the ARNG strategy. Today, more than ever, the all-
    volunteer force relies heavily on Guard families' resolve and
    commitment as well as a strong community support base. The many
    personal and professional sacrifices ARNG soldiers and their supporters
    make in peace and war will continue to be the benchmark upon which all
    other reserve forces in the world are measured and tested.
    The Army National Guard Overseas
        During fiscal year 1997, Army National Guard soldiers deployed
    overseas for real-world missions, to support combatant commands and
    United Nations Peacekeeping Forces, and to participate in routine
    training exercises. Army Guard units also supported overseas
    commanders-in-chief strategies for nation assistance. In all, 27,665
    soldiers deployed overseas.
    Task Force ABLE SENTRY (TFAS) Initiative
        In August 1997, 65 Army National Guard soldiers from three states
    deployed to TFAS in Macedonia as part of the 1st Armored Division's TF
    1-6. The TFAS mission is to ensure that the unrest in former Yugoslavia
    does not spill over the border to the South, into Macedonia. The
    battalion task force assumed the TFAS mission on 5 September as part of
    the United Nations Preventive Deployment Force in Macedonia. The
    following units were tasked to provide the first Combat Support/Combat
    Service Support slice to TFAS:

    Presidential Selective Reserve Call-up (PSRC) Support to Task Force Able
    Sentry

            Units/State                                             Soldiers

    220th Military Police Company/CO..................................     9
    1-106th Aviation Assault Battalion/IL.............................    22
    203rd Engineer Battalion/MO.......................................    34
                            -----------------------------------------------------------------
                            ________________________________________________
          Total.......................................................    65

        These soldiers returned in early 1998 after a six-month rotation
    with TFAS. The initiative has been an overwhelming success not only for
    the ARNG, but also for America's Army in our fulfillment of U.S.
    national objectives.
        The Guard's two Special Forces (SF) Groups supported Joint Chiefs
    of Staff (JCS) exercises and Joint Combined Exercise Training (JCET).
    In the Pacific Theater, these exercises included Foal Eagle, Frequent
    Storm, ULCHI Focus Lens and Cobra Gold. Additionally, eight Special
    Forces medics deployed in support of efforts to identify remains from
    Southeast Asia. In the U.S. Southern Command, JCET operations involved
    400 soldiers who trained in Belize, Bolivia, Colombia, Ecuador, El
    Salvador, Honduras, Panama and Suriname.
        Approximately 650 Guard soldiers deployed to the Jungle Operations
    Training Center in Panama, while another 200 medical personnel deployed
    to U.S. Southern Command to provide medical/dental care and
    preventative medicine education for local populations.
        About 4,600 Guard soldiers deployed overseas in fiscal year 1997 to
    conduct humanitarian and civic assistance projects and host-nation
    mission support. These personnel participated in the construction or
    rehabilitation of 21 schools, seven clinics, three community centers,
    four water wells, and 21.4 km of ``farm-to-market'' roads. The Army
    Guard also deployed 2,321 Military Police worldwide for force
    protection, installation security, and law enforcement missions. Other
    accomplishments include the deployment of 3,090 soldiers for the
    USAREUR Equipment Maintenance programs and the Combat Equipment Group-
    Europe (CEG-E) as well as deployments to all theaters for Joint Chiefs
    of Staff (JCS) directed exercises such as Nuevos Horizontes 1997
    (Belize) and Nuevos Horizontes 1997 (Panama), Fuerzas Defenzas, Bright
    Star, Atlantic Resolve, Tradewinds, ULCHI Focus Lens, Keen Edge and
    Northwind. Additionally, the ARNG provided over 1,000 soldiers to the
    Theater and Equipment Maintenance Site (TEAMS) for organizational and
    direct support maintenance along with over 1,500 soldiers comprised of
    maintenance, logistics and medical personnel to augment USARSO in its
    support of the ARNG and JCS exercises and RETRO Panama operations.
    RC to AC Program
        The Department of the Army (DA) continued support to the Reserve
    Component to Active Component (RC to AC) program. The goal of this
    program is to relieve the personnel and OPTEMPO of active Army units
    through integrated use of RC soldiers. The Guard provided 6,853
    soldiers who provided 119,138 mandays in relief of the Active Component
    troops.
    Military Exchange Programs
        Army Guard soldiers participated in three company-size reciprocal
    unit exchanges with the United Kingdom and Germany. The exchanges
    provide soldiers and units with valuable training while permitting each
    to become familiar with the other's military doctrine and tactics. The
    Minnesota Army National Guard established a formal unit exchange with
    the Norwegian National Guard. This company-size exchange focuses on
    winter warfare operations. Thirteen Guard officers were exchanged with
    officers from the United Kingdom and Germany for two weeks of annual
    training.
        Finally, the Puerto Rico Army National Guard participated in the
    Latin American Co-op Exchange Program in the Caribbean basin. Each
    year, more than 500 soldiers from Puerto Rico deploy to the Dominican
    Republic, Jamaica, and Barbados.
    State Partnership Program
        The Army Guard participated in the European Command's Joint Contact
    Team Program (JCTP) under the auspices of the National Guard's State
    Partnership Program (SPP). Under the program, the Army National Guard
    serves as a model of a military force subject to civil authority for
    Central European and former Soviet Union countries.
        The Guard is also providing instruction on military support to
    civil authorities in planning and responding to civil emergencies and
    natural disasters. Other areas of special interest for these countries
    are recruiting, retention, training of reserve forces, and mobilization
    to support active Army forces.
        In fiscal year 1997, the Army Guard provided traveling contact
    teams, seminar participants, and state Adjutant General/Governor visits
    to Central European and former Soviet Union countries, as well as
    hosting numerous familiarization tours to the partner states in the
    continental United States. In fiscal year 1997, approximately 390
    soldiers deployed to Belarus, Bulgaria, Czech Republic, Croatia,
    Estonia, Hungary, Kazakhstan, Kyrgystan, Latvia, Lithuania, Macedonia,
    Moldova, Poland, Republic of Georgia, Romania, Slovakia, Slovenia,
    Turkmenistan, Ukraine and Uzbekistan.
        For fiscal year 1998, the European Command's Joint Contact Team
    Program (JCTP) is being funded to support 10-12 Military Liaison Team
    positions and approximately 145 events in the European Theater.
    Partnership for Peace
        The National Guard Bureau also supports Partnership for Peace (PfP)
    events. In fiscal year 1997, the Guard hosted familiarization and
    observation tours for the Czech Republic, Estonia, Hungary, Kazakhstan,
    Latvia, Lithuania, Moldova, Republic of Georgia, Slovakia, Slovenia,
    and Ukraine.
    Foreign Military Sales Support
        The Vice Chief of Staff of the Army has directed the Guard to
    provide training in support of Foreign Military Sales (FMS) to the
    Republic of Singapore. The Texas Army National Guard provided CH-47D
    helicopter crewmember training and aircraft support to the Republic of
    Singapore Air Force.
    Future Operations
        In fiscal year 1998 the Army Guard plans to deploy nearly 22,000
    soldiers to overseas theaters. These deployments will consist of JCS
    directed exercises, command sponsored exercises, Humanitarian and Civic
    Assistance projects, Medical and Engineer Readiness and Training
    exercises, Special Operations Forces exercises, and various types of
    mission augmentation support to overseas commands. Additionally, Guard
    soldiers will participate in individual and small unit exchanges with
    the Armed Forces of the United Kingdom, Germany, France, the
    Netherlands, Norway, Dominican Republic, Barbados, and Jamaica.
    Operational Support Airlift Command (OSACOM)
        The Guard's Operational Support Airlift Command (OSACOM) underwent
    significant changes in 1997. The Command was reorganized into two
    organizations: the Operational Support Airlift Agency (OSAA) and
    OSACOM.
        The Operational Support Airlift Agency provides command and control
    over the Operational Support Airlift Command; manages the resourcing
    for CONUS and OCONUS based Operational Support Airlift airplanes;
    maintains an airlift data collection and analysis system for the
    purposes of airlift asset management; and provides accountability for
    all fixed wing OSA missions and ensures compliance with DOD, Army and
    ARNG directives, policies and regulations.
        The Operational Support Airlift Command provides command and
    control the Operational Support Airlift Regional Flight Centers and the
    Untied States Army Priority Air Transport Detachment. It also provides
    priority air transportation for the senior leadership of the Army,
    secure transport of classified materials and responsive OSA support to
    all Army components.
        In fiscal year 1997, OSAA/OSACOM executed 9,520 missions,
    transporting 77,685 passengers, airlifting 1,103,668 pounds of cargo
    and flying more than 50,600 hours. OSAA/OSACOM has also provided pilots
    and aircraft in support of a CENTCOM mission in Saudi Arabia and pilots
    to support Operation Joint Guard. In fiscal year 1998, OSAA/OSACOM is
    projected to fly over 64,000 hours. OSAA continues to provide quality
    assurance of all Army mission requests submitted to Joint Operational
    Scheduling Airlift Center (JOSAC) and oversight on performance of JOSAC
    missions by Army OSA providers to increase the efficiency of OSA
    support for all Army users. OSAA plans to inspect all ARNG Fixed Wing
    (FW) OSA assets in fiscal year 1998 and fiscal year 1999 through a
    Command Inspection Program (CIP). OSAA continues to improve automation
    capabilities through equipment and software upgrades that will allow
    rapid resource adjustments based on operational demands.
    The Army National Guard at Home
        In fiscal year 1997, men and women of the Army and Air National
    Guard in 54 states and territories served their communities during 308
    emergency response missions, expending over 280,000 mandays. Of these
    308 call-ups, 146 were natural disasters, 35 were civil emergencies, 39
    were in support of law enforcement agencies, and 88 were other
    miscellaneous types of missions. The ability to call upon the Guard on
    an ``as-needed'' basis for State support missions demonstrates the
    value of a part-time, trained, and ready community based force. These
    domestic support missions reinforce the Guard's preeminent role as the
    military's first responder when emergencies strike.
        The National Guard's most significant domestic activities during
    fiscal year 1997 involved operations supporting recovery from natural
    disasters. Army Guardsmen provided assistance during Hurricanes Fran
    (North Carolina), and Hortense (Puerto Rico and the Virgin Islands),
    and numerous emergency support functions in connection with flooding in
    the Midwest and the Ohio River valley. Internationally, the Wyoming
    Guard deployed three C-130 aircraft (two equipped with the Modular
    Airborne Fire Fighting Systems (MAFFS) to Indonesia in October 1997 to
    assist in fighting fires affecting that nation's rain forest.
    El Nino Consequence Management
        Experts studying this weather trend predicted the worst El Nino in
    recent years. The Guard is consistently prepared to assist in recovery
    from natural disasters associated with these weather effects. As an
    integral part of these efforts, the ARNG assisted state and local
    agencies in managing consequences of the El Nino phenomenon.
        A conference on El Nino took place in January 1998 at the National
    Interagency Counterdrug Institute (NICI) in San Luis Obispo, CA, with a
    primary purpose of promoting cooperation and mutual support between the
    states. Key issues discussed included the status of compacts between
    States/Territories, the development of El Nino threat awareness,
    assessment, and the study of potential impacts on certain geographic
    areas of the country.
        The ARNG continues to monitor the status of engineer equipment,
    water purification units, and sandbag inventories within states likely
    to be affected by El Nino, and other flood-prone states and is
    continuing to plan for a variety of assistance and support.
    Depot Maintenance
        The Army National Guard depot maintenance program is based on a
    ``repair and return to user'' premise. This means Army National Guard
    equipment is repaired to deployable standards and returned to the
    owning units. The Army National Guard does not have an equipment
    maintenance float.
        Backlogs and carryover from year to year increase the unserviceable
    equipment that must be supported. A depot maintenance backlog decreases
    the Army National Guard capability to meet assigned materiel readiness
    goals, decreases the quantities of serviceable equipment available to
    support Army National Guard training programs, and impairs the Army
    National Guard capability to rapidly mobilize and deploy high priority
    units. Depot level maintenance of aging Army National Guard equipment
    is the key to obtaining the highest possible level of Army National
    Guard equipment readiness.
        The Army National Guard Depot Maintenance Program is funded at 35
    percent of its total requirement for fiscal year 1999. Funding for this
    vital area is expected to increase slightly in the out years but depot
    maintenance requirements for the enhanced Separate Brigades continue to
    remain a key concern. For fiscal year 1999, funding levels for the
    enhanced Separate Brigades remain at 60 percent, while the funded
    levels for divisions is eight percent of depot maintenance
    requirements.
                             training and education
        The Guard continued to place great emphasis on the training and
    education of ARNG personnel in 1997. Training and education initiatives
    included the Select, Train, Promote and Assign Policy and the Distance
    Learning Initiative. Additional support in this area was provided by
    the Visual Information Support Center in Nashville, TN. Finally,
    operations at ARNG Aviation Training Sites (AATS) and the Army's Combat
    Training Centers round out Guard Training and education efforts.
    Select, Train, Promote, and Assign Policy
        The Select, Train, Promote, and Assign (STPA) Policy is a personnel
    management system designed to increase readiness through more effective
    personnel management practices. This policy directs the expenditure of
    individual training funds to those enlisted soldiers on a promotion
    list for current or projected vacancies. The intent is to match
    individual and unit training requirements at the appropriate grade
    level and occupational specialty. This procedure maximizes the use of
    scarce training money and delivers trained soldiers to fill unit
    vacancies.
    Distance Learning
        In many ways, the Distance Learning Program represents the future
    of training and education in the Army National Guard. The Distance
    Learning Program upgrades armory space to high tech classrooms, all of
    which are linked by fiber optic cable to centralized teleconference
    facilities. The result is a fully interactive classroom where both
    military and non-military studies can be conducted.
        The Distance Learning initiative continues to expand its scope in
    compliance with congressional intent and funding. Nine prototype
    classrooms with their supporting communications links are operational
    in Maryland, West Virginia, and Virginia. During fiscal year 1998,
    plans call for installation of over 150 additional distance learning
    classrooms impacting all states and territories. The classroom network
    is primarily intended to increase the mobilization readiness of the
    National Guard force structure via advanced information technology
    classrooms and networks. Concurrently, the infrastructure will provide
    state-of-the-art technology assets to local communities through shared
    use arrangements. Close collaboration has been maintained with DOD
    agencies, state and local governments, and other civil and military
    organizations to ensure the implementation of appropriate technologies.
        Critical to the success of the distance learning program is the
    establishment of a robust and dynamic telecommunication infrastructure
    which combines voice, video, and data traffic into one economical,
    highly efficient integrated network. The ARNG is currently provisioning
    a comprehensive communications network utilizing Asynchronous Transfer
    Mode (ATM) technology which will extend from NGB to all State Area
    Commands (STARC) and ultimately to every classroom connected to the
    architecture. This network will consolidate and upgrade numerous
    telecommunications functions currently operating in solitary, stovepipe
    environments. When fully operational, the system will provide
    significant opportunities for more efficient, effective, and economical
    communications links throughout the ARNG. As of first quarter fiscal
    year 1998, all States and Territories will be connected to the new
    digital network and classroom expansion is beginning.
    Visual Information Support Center
        The Visual Information Support Center (VISC) in Nashville,
    Tennessee, continued to serve as the Army Guard production center for a
    variety of Visual Information (VI) products including regional
    multimedia imaging, banners, posters and the duplication of videotapes
    and compact discs. During fiscal year 1997, the VISC developed visual
    information products for recruiting and retention and drug demand
    reduction for a variety of DOD and State organizations. In addition,
    the VISC produced several training and public service announcements and
    documented numerous Army Guard events for historical purposes. The VISC
    also provided audio-visual support to Marketing NCO Class 1997-2002 and
    the 1997 Public Affairs workshop. Finally, the VISC Rapid Response
    Documentation Team videotaped numerous ARNG units engaged in disaster
    relief support missions.
    ARNG Aviation Training Sites (AATS)
        The ARNG missions three Aviation Training Sites designated as
    national training assets for the Total Army. The Eastern ARNG Aviation
    Training Site (EAATS) is located at Fort Indiantown Gap, Pennsylvania
    and conducts Aviator Qualification Courses, Enlisted Training Courses,
    NCOES and Foreign Military Sales training for UH-1, UH-60 and CH-47D
    helicopters. The Western ARNG Aviation Training Site (WAATS) is located
    at Silver Bell Army Heliport, Marana, Arizona and conducts Aviator
    Qualification Courses, Enlisted Training Courses, NCOES, and Foreign
    Military Sales training for AH-1F, OH-58 helicopters and RAID aircraft.
    AH-1F training is only conducted at the WAATS for the Total Army and
    future plans are to conduct AH-64A helicopter training at this location
    in fiscal year 1999. The High Altitude Aviation Training Site (HATS) is
    located in Gypsum, Colorado and conducts high altitude power management
    courses in Utility and Observation aircraft for Active Component,
    Reserve Component and Foreign Military Sales. The Aviation and Safety
    Division, in coordination with Operational Support Airlift Command
    (OSACOM) also operates the Fixed-Wing Aviation Training Site (FWATS) in
    Clarksburg, West Virginia. The FWATS conducts Aircraft qualification
    courses in C-12, C-26, and C-23 fixed wing aircraft for the Total Army.
    Both the EAATS and WAATS are regional simulation sites, offering
    simulation support to the Total Army in AH-1F, UH-1H, UH-60, and AH-64
    helicopters. Future plans will move a CH-47D simulator to EAATS and an
    additional AH-64 Combat Mission Simulator (CMS) to WAATS in fiscal year
    1998.
    Combat Training Centers (CTC)
        The ARNG participates in all of the Army's CTC's; The National
    Training Center (NTC), Fort Irwin, CA, the Joint Readiness Training
    Center (JRTC), Fort Polk, LA, the Combat Maneuver Training Center
    (CMTC), Hohenfels, GE, and the Battle Command Training Program (BCTP),
    Fort Leavenworth, KS. The Brigade Command Battle Staff Training Program
    (BCBST) is a subset of BCTP. The Army CTC program is divided into live
    simulation (NTC, JRTC, and CMTC) and constructive simulation (BCTP and
    BCBST). The ARNG CTC program schedules units to attend the CTC's in the
    following capacities; rotational (BLUFOR) units, augmentation to other
    ARNG and AC rotational (including BLUFOR) units, augmentation to CTC
    Opposing Forces (OPFOR), and other types of support based on the needs
    of the CTC's.
    National Training Center (NTC)
        The National Training Center, located at Fort Irwin, CA is the
    Army's premier heavy maneuver Combat Training Center (CTC). As large as
    the state of Rhode Island, the fully instrumented NTC allows live
    Brigade level force-on-force exercises to be conducted numerous times
    each year. The ARNG receives one brigade rotation at the NTC each year.
    Rotations are allocated to the eight mechanized infantry/armored
    enhanced Separate Brigades (eSB's), making the rotation schedule once
    every eight years for each brigade. Based on associated Active
    Component unit input and using FORSCOM/ARNG Reg. 350-2, dated 1 March
    95, (FORSCOM Commander's Assessment Matrix), the Adjutant General
    determines whether the unit has met the training requirements and will
    attend its scheduled rotation. The 116th enhanced Separate Armored
    Brigade (ID) will attend in fiscal year 1998, and the 155th enhanced
    Separate Armored Brigade (MS) is scheduled to attend in fiscal year
    1999.
        The ARNG receives and allocates five Leader Training Program (LTP)
    rotations annually. The LTP's are six days in length, and enhance staff
    coordination and combat decision making skills. Three LTP's are
    allocated to heavy brigades that attend NTC. Two LTP's go to light
    brigades that will attend JRTC. LTP's include a Tactical Exercise
    Without Troops (TEWT) and a JANUS battle staff trainer simulated
    exercise tied to the CTC terrain and fought against the CTC OPFOR.
    Joint Readiness Training Center (JRTC)
        The Joint Readiness Training Center (JRTC) is the light infantry
    equivalent of the Army's NTC. Located at Fort Polk, LA, JRTC hosts
    light infantry and special operations forces from all components for
    rotations stretching throughout the year. The ARNG receives one brigade
    rotation each year. The rotations are allocated to the seven light
    infantry enhanced Separate Brigades (eSB's). As with the other eSB's,
    the Adjutant General determines if the unit will attend. The 41st eSB
    (OR) is scheduled to attend in fiscal year 1998 and the 29th eSB (HI)
    is scheduled to attend in fiscal year 1999.
        The ARNG receives and allocates two LTP rotations annually. These
    rotations are allocated to the eSB's based on units' relative calendar
    proximity to scheduled JRTC rotations.
        As with the NTC, training opportunities exist for Combat Arms,
    Combat Support and Combat Service Support units to augment BLUFOR and
    OPFOR units and to provide installation support.
    Combat Maneuver Training Center (CMTC)
        The Combat Maneuver Training Center (CMTC), Hohenfels, Germany,
    combines aspects of the NTC and JRTC for U.S. Forces assigned to U.S.
    Army Europe. Attendance at the CMTC involves Overseas Deployment
    Training (ODT). The scheduling of units and training opportunities is
    managed by NGB. Elements of the 3d Battalion, 126th Infantry (Air
    Assault), Michigan Army National Guard, augmented the 1st Battalion
    508th Airborne Battalion Combat Team's AC BLUFOR rotation in August and
    September 1997. Opportunities exist for Combat Arms, Combat Support and
    Combat Service units to augment the OPFOR and to provide installation
    support. ARNG support for the CMTC is considered vital to the Center's
    continued viability as a CTC.
    Training Opportunities
        In addition to dedicated Guard rotations at NTC and JRTC, numerous
    opportunities exist for Guard units to augment Active Component
    maneuver forces at the CTC's. Units required by the CTC's for the
    augmentation of Active Component rotations include Field Artillery MET
    sections and Tactical Operations Centers (TOC), Main Support
    Battalions, ADA Batteries, MP Platoons, chemical companies, and MI
    companies. In addition, each NTC and JRTC rotation requires engineer
    and infantry elements to serve as Opposing Forces (OPFOR), and various
    CSS assets to provide general rotation support.
                         leveraging training technology
        The Army National Guard made extensive use of simulation in
    training again this year. As in the past, these simulations have
    provided a stressful training environment for commanders, staffs,
    units, and individual soldiers to practice skills necessary for
    fighting and winning on today's battlefield. Simulations provide
    equivalent difficulty and greatly enhanced repetitive training at a
    fraction of the cost of ``full-up'' live training experiences. The Army
    National Guard plans to aggressively pursue the leveraging of
    simulation technologies in Guard training in the future.
    Simulation in Training for Advanced Readiness (Project SIMITAR)
        The joint Defense Advanced Research Projects Agency (DARPA)/ARNG
    project SIMITAR (Simulation in Training for Advanced Readiness)
    continued its development of training simulation technologies,
    methodologies and strategies for use by ARNG heavy maneuver Brigades.
    The interjection of these initiatives into the 48th Bde. (Georgia
    ARNG), and the 116th Cavalry Bde. (Oregon, Montana, and Idaho National
    Guard) continued in fiscal year 1997 with an NTC rotation by the 48th
    Bde. Concurrently, the 116th Bde. completed a SIMITAR assisted Annual
    Training (AT) at Gowen Field Idaho in which the Bde. successfully
    qualified on Tank Table VIII by day two of the AT period. 116th
    followed up this success by conducting Table XII by day six. Both of
    these milestones were achieved through use of a variety of training
    simulations that allowed execution of most preliminary gunnery and
    maneuver activities prior to the Annual Training (AT) period.
        Simulation in training initiatives developed or modified by project
    SIMITAR include the A-FIST, the ARPA Reconfigurable Simulator
    Initiative (ARSI), the Digital Systems Test and Training Simulator
    (DSTATS), and an updated version of the JANUS battle-staff trainer
    developed in cooperation with DARPA. Fiscal year 1997 also witnessed
    the introduction of several completely new initiatives, including D-
    FIRST and Bradley FIST. D-FIRST is a live force-on-force company-team
    level system that replaces MILES by using highly accurate Global
    Positioning System (GPS) devices to track engagements. Bradley-FIST, an
    initiative that combines the Bradley Conduct of Fire Trainer (COFT)
    with the Engagement Skills Trainer (EST), allows Bradley Crewmembers to
    interact with dismounted elements simultaneously in simulation for the
    first time.
    STEP (SIMITAR Training Exportable Package)
        Following the success of the SIMITAR program, ARNG leaders explored
    ways to apply the most successful aspects of this experimental effort
    to the Guard as a whole. The result of this study is the SIMITAR
    Training Exportable Package (STEP). Like SIMITAR, STEP is a training
    package designed to prepare brigades for a Combat Training Center (CTC)
    rotation. The package contains a training strategy, methodologies and
    technologies that when applied give ARNG brigades the skill set
    required to perform Brigade Combat Team (BCT) operations at a CTC.
        STEP is a unit sustainment training program that is home station
    based and employs simulations to the greatest extent possible to
    conduct structured training. The strategies, methodologies and
    technologies developed for SIMITAR are refined, packaged and presented
    to ARNG separate brigades during years 6, 7, and 8 of their 8 year
    training cycle.
    STEP provides training in three key areas:
        Battlestaff Training.--This component uses the JANUS constructive
    exercise system to train battalion and brigade battle staffs in a
    rigorous and structured way. JANUS exercises are executed at home
    station.
        Unit Collective Training.--This component employs both virtual
    maneuver and virtual gunnery devices to conduct training at home
    station. The Compressed Gunnery Strategy is the center piece of the
    collective piece which allows a unit to conduct both gunnery and
    maneuver in the same year.
        Combat Service Support (CSS) and individual training.--STEP uses
    computer based training systems to the maximum extent possible. A CSS
    training strategy that focuses on CTC support to maneuver battalions in
    all three combat missions is emphasized.
        STEP is the system required to prepare a BCT to meet the rigors of
    a CTC rotation. By implementing a sequential and progressive training
    strategy that is device based coupled with demanding live training, an
    ARNG separate brigade can have a successful CTC rotation.
    Aviation Reconfigurable Manned Simulator
        The Army National Guard is developing an Aviation Reconfigurable
    Manned Simulator (ARMS) as a cost-effective solution to enhance flying
    safety and readiness. This system is being developed with the mutual
    cooperation and support of the U.S. Army Aviation Center (USAAVNC) and
    the Army's Simulation, Training and Instrumentation Command (STRICOM).
    It can be quickly reconfigured to each of the rotary and fixed wing
    airframes flown in the Army Guard. The device is a collective training
    simulator which provides for a 360 degree virtual environment, a helmet
    mounted display system, accurate cockpit housing, realistic controls
    and essential panels, and tactile-interactive cockpit panels. Each ARMS
    provides training in individual and crew tasks, and focuses on
    collective, combined arms, and joint service operations. Reconfigurable
    simulators such as ARMS complement existing older technology simulators
    as well as future training technologies. ARNG Aviation's requirement is
    for six company-size sets of 6 cockpits each for a total of 36
    cockpits, each set transportable to any ARNG unit as needed.
    Training, Readiness and Operations Unit Planning, Execution and
            Resourcing System
        The Training, Readiness and Operations Unit Planning, Execution and
    Resourcing System (TROUPERS), will provide ARNG leaders with the tools
    to maximize training benefits and support the full execution of
    training funds. TROUPERS is a reports generator that draws information
    from existing Standard Army Management Information System (STAMIS)
    databases and provides the state and national leadership tools to plan,
    allocate resources and monitor the execution of annual training,
    schools, special training and Inactive Duty Training. The system allows
    senior leaders access to budget information relating to reservation,
    obligation, execution and forecasted year-end execution for Annual
    Training, Individual Duty Training, Schools and Special Training.
                                 safety program
        The Army National Guard safety program is based upon individual
    responsibility and leader commitment to safe operations in all
    environments. Guard supervisors and soldiers at all levels must work to
    ensure that all possible precautions are observed during deployments,
    training, or on domestic support operations. Central tenants of the
    Guard safety program include risk management, leadership, discipline,
    and strict adherence to Total Army safety standards.
    Aviation Safety
        The ARNG takes an aggressive approach to safety, and this has
    resulted in the lowest aviation accident rate in the history of the
    Army National Guard. The Army National Guard leads the rest of DOD in
    aviation safety and has developed a safety program that other military
    organizations emulate.
        Despite dwindling resources, the ARNG safely executed an aggressive
    flying hour program in fiscal year 1997 with a Class A-C accident rate
    of only 2.76 accidents per 100,000 flying hours. Unfortunately, the
    year was marked by an increase in the engine failure rate in the UH-1
    Huey helicopter that resulted in two serious accidents. The reliability
    of this engine is being reviewed and flight restrictions have been
    placed on affected aircraft pending further engineering studies.
        The greatest challenge to Army National Guard aviation safety is
    the continued reduction in aviation training funds. Units have reported
    a decrease in pilot proficiency in high demand aviation tasks such as
    night vision goggle operations and multi-ship low level flight. Given
    current trends in aviator proficiency and increased operational
    demands, an eventual increase in the aviation accident rate is
    anticipated.
    Ground Safety
        Army National Guard efforts in ground safety were highly successful
    in fiscal year 1997. The Army National Guard experienced a five percent
    decrease in ground accidents during the course of the year. Of the
    accidents that occurred in fiscal year 1997, sixty-five percent
    resulted in personal injury, nineteen percent involved Army Motor
    Vehicles and eleven percent involved privately owned vehicles. However,
    vehicular accidents account for a disproportionately high number of
    fatal injuries. In an effort to combat vehicular accidents the Army
    National Guard launched an aggressive campaign that included unit level
    training and a national awareness campaign.
    Occupational Safety and Health Administration (OSHA)
        The Army National Guard experienced an eight percent decline in
    workers compensation claims in fiscal year 1997. The Army National
    Guard will continue to emphasize employee training and OSHA compliance
    to decrease accidents. In addition, the Army National Guard will come
    into full compliance with DOD mandated ergonomics programs.
        Ergonomic related injuries are the leading cause of ARNG workman's
    compensation claims. The Army National Guard has developed a new
    partnership with the Department of Labor that includes early
    intervention and return to work of injured employees.
    ARNG Risk Management
        The Army National Guard's primary focus for fiscal year 1998 is to
    comply with the Army's mandate to integrate risk management into all
    processes and operations. The Guard will use risk management as its
    primary accident prevention and loss avoidance tool.
        The goals of the ARNG risk management integration program include
    educating all Guard soldiers and civilians on the five steps of Army
    risk management and incorporating risk management into mission
    planning, policy and processes.
                             environmental program
        The Army National Guard Environmental Program emphasizes
    responsible stewardship of the land and facilities managed by the ARNG
    and ensures compliance with environmental laws and regulations. This is
    accomplished by promoting the Army's environmental goals through the
    ARNG environmental compliance, conservation and restoration efforts in
    all 54 states and territories.
    Compliance
        Increased funding will help accelerate the ARNG's transition to a
    more proactive compliance posture. Prior to fiscal year 1998 the ARNG
    did not receive sufficient funding to meet all of its environmental
    requirements. As a result, spending was confined to critical
    environmental projects.
        For fiscal year 1999, funding for ARNG environmental programs is
    sufficient to allow for the completion of many deferred projects,
    thereby permitting a renewed emphasis on pollution prevention and
    environmental stewardship. For example, expanded solvent substitution
    programs will simultaneously reduce hazardous waste generation,
    disposal costs, and exposure risks to soldiers and civilians. Moreover,
    improvements to Spill Prevention Control and Countermeasure Plans,
    secondary containment systems for fuel tankers, and wastewater
    treatment systems will soon occur.
        The ARNG will consequently possess the resources necessary to
    support and enhance training and to provide power projection platforms
    from its more than 3,200 highly dispersed CONUS facilities.
        Maintaining a high degree of environmental compliance will require
    timely and accurate corporate information management. To this end, the
    Windows Compliance Assessment and Sustainment Software (WINCASS) will
    fully integrate the ARNG's Environmental Compliance and Assessment
    System (ECAS) into a developing, comprehensive environmental reporting
    network. ECAS will be the first automated tool to implement alternating
    internal and external assessments and will permit continuous evaluation
    of regulatory compliance conditions and management systems.
    Conservation
        The National Environmental Policy Act (NEPA) requires that the ARNG
    consider the significant environmental effects of its major actions or
    decisions. Pursuant to the NEPA, programmatic environmental assessments
    will realize cost savings to the ARNG for fiscal year 1999. Moreover,
    all installations will continue working to ensure Integrated Natural
    Resource Management Plans and Cultural Resource Management Plans are in
    place by fiscal year 2000. The Forestry Reinvention initiative will
    streamline timber sales, ensuring greater return of funds to the
    installations and local communities. The Integrated Training Area
    Management (ITAM) implementation strategy to analyze and manage
    environmental impacts on training facilities and maneuver areas. This
    is being aggressively implemented at 54 separate locations with the
    goal of having all primary training sites under the same system by
    fiscal year 1999.
    Restoration
        The ARNG's most significant environmental challenge continues to be
    the clean-up of past-practice contamination. In fiscal year 1999 NGB
    and Massachusetts ARNG will be in the final stages of actions
    associated with ground water investigation and pollution prevention
    activities at the Massachusetts Military Reservation (MMR). However,
    additional challenges to resolution of existing EPA administrative
    orders at MMR could require budgeting and expenditure beyond fiscal
    year 1999 dollars. This budget must also meet the costs of the
    continuing evaluation of other sites and the cleaning of those where
    contamination is identified. Moreover, restoration of facilities
    recently acquired by the ARNG such as Fort McClellan, Fort Indiantown
    Gap and others that are contaminated from past DOD practices will also
    require funding.
        The Army National Guard is conducting Preliminary Assessments and
    Site Inspections (PA/SI) with program management funds from the
    Environmental Restoration Army (ER, A) account. Unfortunately,
    dramatically increasing numbers of requirements will likely overwhelm
    funding. Because of this, the ARNG will require Operations and
    Maintenance (OM) funding to conduct required PA/SI activities projected
    for fiscal year 1999 and later years.
               in touch with our past . . . focused on our future
        A look back at fiscal year 1997 shows an Army National Guard that
    successfully met its obligations to its people and to the Nation as a
    whole. As the information in the preceding pages attests, the Guard did
    more in 1997 with proportionally fewer resources than at any other time
    in its long history. Despite these successes, current trends suggest
    that the Guard faces even greater challenges in the years ahead. Aided
    by Army National Guard Vision 2010, and the leadership of Guardsmen
    throughout the country, the Guard will successfully meet every
    challenge as it enters the 21st century.
                                     ______

                   Appendix A: NCO's and Soldiers of the Year
        The Army National Guard consists of far more than equipment or
    funding. The people that make up the Guard represent its greatest
    resources. Accomplishing Guard missions would be impossible without the
    dedicated work by Guard members throughout the nation. This page is
    dedicated to those Guard soldiers who distinguished themselves during
    fiscal year 1997. We salute them, and Guard members like them
    everywhere.
        SGT Richard S. Boggan, Co. A, 1st Bn, 20th Special Forces Group,
    Auburn, Alabama, First Army NCO of the Year.
        SSG Pamela B. Paff, HHC, 1st Bn, 207th Aviation, Anchorage, Alaska,
    Pacific Region NCO of the Year.
        SSG Todd D. Smith, 3650th Maintenance Co (-), Golden, Colorado,
    Fifth Army NCO of the Year.
        SPC Daniel K. Lankford, 1993d Personnel Detachment, Enterprise,
    Alabama, First Army Soldier of the Year.
        SPC James L. Redcorn, Jr., E Troop, 145th Cavalry, McAlester,
    Oklahoma, Fifth Army Soldier of the Year.
        SPC Le Kim Lee, Co. C (Medical), 29th Support Battalion, Honolulu,
    Hawaii, Pacific Region Soldier of the Year.
                                     ______

              Appendix B: Constitutional ``Charter'' of the Guard
        our charter is the constitution of the united states of america.
        Militia Clauses. Article I, Section 8 of the U.S. Constitution
    contains a series of ``militia clauses,'' vesting distinct authority in
    the Federal government and the State governments.
        Clause 14 provides that the Congress has three constitutional
    grounds for calling up the militia: ``to execute the laws of the Union,
    suppress insurrections, and repel invasions.'' All three standards
    appear to be applicable only to the Territory of the United States.
        Clause 15 gives Congress the power ``to provide for organizing,
    arming, and disciplining the militia, and for governing such part of
    them as may be employed in the service of the United States.'' That
    same clause specifically reserves to the States the authority to
    establish a State-based militia, to appoint the officers, and to train
    the militia according to the discipline prescribed by the Congress. As
    written, the clause seeks to limit Federal power over State militias
    during peacetime.
        Armies Clause. The ``armies clause'' in Article I, Section 8
    conferred on the Congress the power to provide for the common defense
    of the United States, declare war, raise and support armies, and make
    rules for the ``government and regulation of the land and naval
    forces.'' The Congress also was granted authority to make all laws
    ``necessary and proper'' for carrying out such powers. Under this
    provision, congressional power over the National Guard appears to be
    far-reaching.
        Other Relevant Provisions. Other sections add to the constitutional
    underpinnings of our national defense structure. Article I, Section 10
    provides that no State, without the consent of the Congress, shall keep
    troops or ships of war in time of peace, or engage in war unless
    actually invaded. This section was qualified, however, by the Second
    Amendment to the Constitution, which was intended to prevent the
    Federal government from disarming the militia. Part of the Bill of
    Rights that the Anti-Federalists insisted on, states: ``A well-
    regulated militia, being necessary to the security of a free State, the
    right of the people to keep and bear arms shall not be infringed.''
        In addition, Article IV, Section 4 provides that the Federal
    government ``shall guarantee to every State in this Union a republican
    form of government,'' and shall protect each of the States against
    invasion. At State request, the Federal government was to protect the
    States ``against domestic violence.'' Through these provisions, the
    potential for both cooperative Federalism and for tension between the
    ``militia'' and ``army'' clauses was built into the Constitution.
        Article II, Section 2 places all forces, including the militia when
    in Federal service, under the control of the executive branch by making
    the president commander-in-chief. Article I, Section 8 gave the
    ultimate control to the Congress, however, by granting it the sole
    power to collect taxes to pay for the military, to declare war, and to
    employ the militia for common purposes of internal security. Existing
    State militias could be maintained, although troops could be called
    into national service. But the founding fathers moderated that
    authority by leaving the individual States with the explicit
    responsibility for appointing officers and for supervising peacetime
    training of the citizen-soldiers.
        Militia Act of 1792. Federal policy subsequently expanded and
    clarified the role of the militia. The Militia Act of 1792 required all
    able bodied men aged 18-45 to serve, to be armed, to be equipped at
    their own expense, and to participate in annual musters. The 1792 act
    established an idea of organizing these militia forces into standard
    divisions, brigades, regiments, battalions, and companies, as directed
    by the State legislatures.
        For the 111 years that it remained in effect, this act defined the
    position of the militia in relation to the Federal government. The War
    of 1812 tested this unique American defense establishment. To fight
    that war, the new republic formed a small regular military, and trained
    it to protect the frontiers and coastlines. Although it performed
    poorly in the offensive against Canada, this small force of regulars,
    when backed by a well-armed militia, accomplished its defensive mission
    in the War of 1812. Generals like Andrew Jackson proved, just as they
    had in the Revolution, that regulars and militia could be effective
    when employed as a team.
        With the coming of the Civil War, State militias played a pivotal
    role. Because the Regular Army was so small throughout the nineteenth
    century and the Army Reserve did not exist, the majority of Army units
    which carry Civil War battle honors are from the Army National Guard.
        Posse Comitatus. In 1867, the Congress suspended the southern
    States' right to organize their militias until a State was firmly under
    the control of an acceptable government. The U.S. Army was used to
    enforce martial law in the South during Reconstruction. Expansion of
    the military's role in domestic life, however, did not occur without
    debate or response. Reaction to the use of the Army in suppressing
    labor unrest in the North and guarding polls in the South during the
    1876 election led to congressional enactment of the Posse Comitatus Act
    in 1878. Designed to limit the president's use of military forces in
    peacetime, this statute provided that:

            it shall not be lawful to employ any part of the Army of the
            United States * * * for the purpose of executing the laws,
            except on such cases and under such circumstances as such
            employment of said force may be expressly authorized by the
            Constitution or by any act of Congress * * *

        Concern over this new domestic role also led the States to
    reexamine their need for a well-equipped and trained militia, and
    between 1881 and 1892, every State revised the military code to provide
    for an organized force. Most called their State militias the National
    Guard following New York's example.
        The Dick Act. Beginning in 1903 through the 1920's, legislation was
    enacted that strengthened the National Guard as a component of the
    national defense force. The Dick Act of 1903 replaced the 1792 Militia
    Act and affirmed the National Guard as the Army's primary organized
    reserve.
        The National Defense Act of 1916 further expanded the Guard's role
    and guaranteed the State militias' status as the Army's primary reserve
    force. Furthermore, the law mandated use of the term ``National Guard''
    for that force. Moreover, the President was given authority, in case of
    war or national emergency, to mobilize the National Guard for the
    duration of the emergency. The number of yearly drills increased from
    24 to 48, and annual training from five to 15 days. Drill pay was
    authorized for the first time.
        The National Defense Act Amendments of 1920 established that the
    chief of the Militia Bureau (later National Guard Bureau) would be a
    National Guard officer, that National Guard officers would be assigned
    to the general staff, and that the divisions, as used by the Guard in
    World War I, would be reorganized. Subsequent amendments to the act,
    the National Guard Mobilization Act of 1933, created the National Guard
    of the United States as a component of the Army at all times, which
    could be ordered into active Federal service by the President whenever
    Congress declared a national emergency.
        Following the experience of fighting an unpopular war in Vietnam,
    the 1973 Total Force Policy was designed to involve a large portion of
    the American public by mobilizing the National Guard from its thousands
    of locations throughout the United States when needed. The Total Force
    Policy requires that all active and reserve military organizations of
    the United States be treated as a single integrated force. A related
    benefit of this approach is to permit elected officials to have a
    better sense of public support or opposition to any major military
    operation. This policy echoes the original intentions of the founding
    fathers for a small standing army complemented by citizen soldiers.

                   STATEMENT OF MAJ. GEN. PAUL A. WEAVER, JR.

        Senator Stevens. Let me welcome you, General Weaver, on
    your first appearance before the committee. We are delighted to
    have you here before us and look forward to the opportunity to
    work with you, and we will be happy to have your statement.
        General Weaver. Mr. Chairman and members of this great
    committee and staff, I am glad to be here not only on behalf of
    the 109,000 men and women of the Air National Guard, but also
    as a part of the total Air Force team, one team speaking with
    one voice and with one vision of the future.
        I have entered a statement for the record.
        Today, more than ever, the Air Force relies on its total
    force, Active, Guard, and Reserve working together to meet
    today's peacekeeping and wartime commitments. The Air National
    Guard continues to play a national role in every major
    deployment and contingency tasking, with an average 1997
    participation of 5,000 volunteer Guard men and women deployed
    each month.
        Most importantly, I know this committee fully understands
    that this is with the full support of their families, their
    communities, and their employers, and it is this full spectrum
    link of families, communities, and employers that allows
    continued use of our military forces in support of our national
    security strategy while satisfying the values criteria of the
    American public.
        But it is also worth noting that this Air National Guard
    participation is not just around the edges. It is in the thick
    of things wherever and whenever the Air Force is involved.
        Please let me point out that the first bombs dropped in
    Bosnia were dropped from a Maryland Air National Guard A-10
    unit that was deployed to the theater. The second bombs dropped
    were by Massachusetts A-10 unit, also deployed to the theater.
        These are people that only days earlier were having
    breakfast with their families and going to their civilian jobs,
    but were now proudly serving this great Nation through the use
    of air power, which reduced the overall level of violence and
    stopped the genocide. That link with the civilian population is
    critical as our military strategy runs the gamut from small-
    scale contingencies to major theater wars.
        Something else worth noting is that while the Air National
    Guard and Reserve participated in only 11 contingencies and
    humanitarian missions between 1953 and 1990, we were a part of
    more than 40 contingencies between 1991 and 1997. The frequency
    and tempo is rising, and that calls for your continued
    congressional support.
        As our Nation continues to transition from the cold war era
    to meet the 21st century strategic challenges, we know the Air
    National Guard and the Air Force Reserve will be involved in
    even more mission areas that are total Air Force endeavors to
    provide the aerospace power resources which are so much of a
    part of our American advantage.
        We are working diligently to develop new concepts which
    emphasize the revolution in both business and military affairs,
    coupled with new future total force unit ideas that will assure
    that we can continue to provide the aerospace advantages in an
    era of constrained resources.
        But we can only do so much internally. The American warrior
    of the future, whether on land, sea, or air, must always be
    able to rely on the aerospace advantage when he or she goes
    into harm's way. The obligation to assure that aerospace
    advantage is always available is a solemn trust both the Air
    Force and the Congress share together.

                               prepared statement

        We in the Air National Guard are proud of our expanding
    role in the national defense, and look forward to the next
    phase of transformation and our continued partnership with the
    total Air Force and with this great Nation.
        Sir, I look forward to your questions.
        [The statement follows:]
              Prepared Statement of Maj. Gen. Paul A. Weaver, Jr.
        Mr. Chairman and members of the Committee: Thank you for the
    opportunity to appear before this committee, not only on behalf of the
    109,000 men and women of the Air National Guard, but also as part of
    the Total Air Force team.
        It is an honor for me to represent this world class organization,
    which has a proud heritage and an essential role in this nation's
    defense. With the inception of the National Guard 361 years ago in the
    Massachusetts Bay Colony, the ideal of the American soldier emerged--a
    civilian who would take up arms when the nation was endangered, and
    then return to civilian pursuits when the crisis had passed. This
    concept has remained unchanged throughout our nation's history and
    guardsmen and women have proudly served in every American conflict.
    Today we are deployed around the world in support of peacekeeping
    missions, contingencies and exercises. We also are hard at work in our
    communities, whenever and wherever we are needed.
                  air national guard role in national security
        Mr. Chairman, please allow me to share with you an array of
    relevant Air National Guard issues. These issues are relevant for
    Congressional consideration in reviewing our role as an integral part
    of the national defense strategy. I am proud to provide you our current
    Air National Guard posture.
    The Quadrennial Defense Review
        One very important aspect of the Quadrennial Defense Review (QDR)
    was the reaffirmation of the importance of the Total Force Policy. The
    Air Force fully embraces this concept and we proudly provide a
    significant portion of the wherewithal for our service to effectively
    accomplish its entire range of military options. The Air National Guard
    budget for fiscal year 1999 reflects this support as we convert four F-
    16 air defense units to F-16 general purpose fighter units. In
    addition, this budget converts one F-16 squadron to C-130's, and one F-
    16 training unit to F-15's to better serve the needs of the entire
    nation.
    The Air National Guard Long Range Plan
        With our telescope on tomorrow, the Air National Guard has
    developed a Long-Range Air National Guard Plan that provides a
    framework within which to implement our strategic vision. It contains
    expectations of our commitment to maintain a ready force capable of
    projecting American military power and providing community support. It
    further outlines our plans to modernize those capabilities to protect
    our Nation's security and community interests well into the next
    century.
    Air National Guard Stability
        Fiscal year 1999 is a year of relative stability within the Air
    National Guard. While we have five unit conversions as a result of the
    QDR, our manpower, aircraft, flying hours, and facilities are generally
    consistent with fiscal year 1998. We expect this stability to continue.
    For the Guard, this means that after an extended period of turmoil
    surrounding unit deactivations, personnel drawdowns and other necessary
    changes, our people see light at the end of this tumultuous tunnel. We
    see the Air National Guard of the future. It is lean, well equipped,
    highly motivated, and extremely well trained to accomplish any mission.
                   contemporary air national guard operations
        As our Nation continues the transition to meet 21st century
    strategic challenges, the Air National Guard will be involved in even
    more mission areas as our Total Air Force continues to provide the
    aerospace resources which are so much a part of our American advantage.
    Readiness
        We are ready to deliver appropriate and sufficient forces whenever
    and wherever called, whether for an international crisis, peacekeeping
    mission, or a hometown emergency. Personnel and training, well-
    maintained aircraft and equipment, and financial resources are critical
    to our success. A shortfall in any of these negatively impacts our
    readiness levels. Unique to the reserve components, however, our
    readiness is also a function of family and employer support for our
    largely part-time force. It is a testament to the Air Force's
    commitment to Total Force Policy that the percentage of Air National
    Guard units maintaining the highest two readiness levels is virtually
    identical to the active component.
        Since 1986, the active Air Force has downsized by nearly 40
    percent, while military operations other than war have greatly
    increased. This has necessitated a greater reliance on the reserve
    components, the Guard and Reserve, to relieve the stress of high
    OPSTEMPO/PERSTEMPO. While the Air National Guard and Air Force Reserve
    participated in only 11 contingencies and humanitarian missions between
    1953-1990, we were a part of more than 40 between 1991-1997. The
    frequency and tempo are rising and we need your continued support.
    The Total Air Force
        In 1997, the Air National Guard participated in every major
    deployment and contingency tasking, with an average of 5,000 volunteer
    guard men and woman deployed each month. It's important to note that
    this Air National Guard participation was not ``just around the
    edges.'' We were in the thick of things side by side with the Air
    Force. For example, the first bombs dropped in Bosnia were dropped by a
    Maryland Air National Guard A-10 unit deployed to the theater. Equally
    noteworthy, the second bombs dropped were by a Massachusetts Air
    National Guard unit. These are people who only weeks earlier were
    performing their civilian jobs, but were now proudly serving the Nation
    through the application of air power.
        Our successful integration into the total force is derived from
    three key factors: the recognition of our capabilities by Air Force
    commanders, a commitment to participate as a full partner in the Air
    Force budgeting process, and staff integration.
        The National Defense Panel observed that the Guard would play an
    increasing role in a variety of worldwide operations. Today, more than
    ever, the Air Force relies on the Total Force, Active Duty, Air
    National Guard and Air Force Reserve working together to meet all
    commitments. Combatant commanders long ago ceased to ask whether Air
    Force units deployed to their theaters were active duty, Guard or
    Reserve. Warfighting commanders rightfully expect any unit from our
    Total Force to provide needed capabilities.
        The Air National Guard is also a full partner in the Air Force
    corporate budget process. We are involved in every stage of the
    planning, programming and budgeting cycle, and have membership with the
    active duty Air Force and Air Force Reserve on each programming panel,
    the Air Force Group, Air Force Board and Air Force Council. The Air
    Force continues to fund our OPSTEMPO/PERSTEMPO, training,
    infrastructure and personnel at levels comparable to the active duty
    force. Likewise, they provide the source of our modernization, which is
    based on the needs and requirements of our gaining Major Commands
    (MAJCOM's). We greatly appreciate the support Congress has shown to the
    Air National Guard in the past, enabling us to enhance our capabilities
    beyond what would have been possible under existing budget constraints.
        Our current staff integration initiative will strengthen an already
    superb working relationship with the active Air Force. By the end of
    fiscal year 1999 we will assign additional Air Guard personnel to
    unified and operating commands. We already have Guard members in place
    at Air Combat Command, Air Mobility Command, most other MAJCOM's and in
    several directorates on the Air Staff. The results have been
    tremendous. The Air Force is also committed to place active duty
    personnel at the National Guard Bureau and field units. We now have
    people where the decisions on force structure, equipment, and force
    employment are made and they ensure Guard capabilities are recognized
    and used. Likewise, active duty members serving with the Guard become
    proponents of the Total Force approach.
                         air national guard operations
        The Air National Guard's budget of $4.5 billion represents real
    added value for this country. While it totals just 7.1 percent of the
    Air Force budget and 1.6 percent of DOD's, as the chart below shows, it
    provides a significant portion of the Air Force's military capability
    of the total force.

                                                                     Percent

    Air Sovereignty...................................................   100
    Fighters..........................................................    34
    Theater Airlift...................................................    46
    Tankers...........................................................    45
    Bombers...........................................................    12
    Combat Rescue.....................................................    30
    Strategic Airlift.................................................    16

        In support of this capability, Air National Guard aircrews serve an
    average of 110 days per year. As I mentioned earlier, an average of
    5,000 Guard members were deployed each month during fiscal year 1997 to
    support exercises, contingencies, and military operations around the
    world. Air National Guard members deploy on a rotational basis, helping
    to reduce active duty PERSTEMPO while accommodating their civilian
    employment. We have been very successful in meeting our deployment
    commitments with volunteerism by rotating members. An example is our
    fighter community. The first group to deploy takes aircraft, then
    members, perhaps from other units, replace the aircrews and maintenance
    personnel while aircraft remain throughout the deployment. This process
    of replacing crews continues for the duration of the deployment,
    permitting full support to the Air Force mission, while keeping the
    individual TDY rate to an acceptable level.
        In many cases, the Guard and Reserve work together to provide
    extended support to the active force. An example of a joint Guard and
    Reserve mission was the 24 July to 25 October 1997 deployment to
    perform sustainment airlift from Ramstein Air Base, Germany, to the
    forces in the Balkans. Other major operations in 1997 included: the
    deployment of security forces to Saudi Arabia; the deployment of civil
    engineers, firefighters, and air traffic controllers to Taszar,
    Hungary, as part of Operation Joint Guard; the use of KC-135's to
    refuel fighter aircraft enforcing the no-fly zone over Bosnia; and the
    use of F-15's and F-16's to enforce the no-fly zone over Northern Iraq,
    as well as the use of rescue crews to provide combat rescue support for
    those forces.
        In 1997, the Air National Guard flew over 3,200 readiness support
    airlift missions, 700 airborne transport missions, 500 fighter
    deployment air refueling missions, and performed a variety of other
    challenging operations. For example, in October 1997, three 153rd
    Airlift Wing C-130 aircraft, crews, and support personnel from the
    Wyoming Air National Guard deployed to Jakarta, Indonesia, to help
    fight devastating forest fires. The crews flew hundreds of hours during
    their 60-day deployment using their specially equipped C-130's to help
    suppress fires over 3.5 million acres. During their deployment, the
    153rd extinguished more than 70 fires in open forest areas in the face
    of incredible challenges posed by heavy smoke and extremely dry
    conditions. This support allowed the Government of Indonesia sufficient
    time to develop an effective fire fighting plan of its own and organize
    follow-on indigenous and commercial support to battle remaining fires.
        As part of the overall restructuring of the Air Force, the Air
    National Guard has expanded its operational capability to include heavy
    bomber operations. The 184th Bomb Wing at McConnell AFB, KS was the
    first Air National Guard unit to become fully mission capable in the B-
    1 bomber and the 116th Bomb Wing at Robins AFB, GA also soon will
    achieve mission capable status. These two Air National Guard units
    represent approximately 30 percent of the total B-1 capability. The Air
    National Guard has demonstrated its capability in all aspects of the B-
    1 mission, to include long-range Global Power missions to various
    overseas locations. We are now examining ways to include these units
    and assets into the Air Expeditionary Force.
    Space Operations
        Air National Guard involvement in the space operations mission
    began in January of 1996, when we activated the Air National Guard's
    first space operations unit, the 137th Space Warning Squadron, in
    Greeley, CO. Our participation in other space mission areas has also
    continued to progress. The 236th Combat Communications Squadron in
    Hammond, LA has continued its outstanding support of the Space Warfare
    Center and the Air Force Space Support Teams.
        Our success within the space operations world has evolved quickly
    and continues to expand. As a result, the National Guard Bureau has
    extended its reach to Space Command by establishing a Space Transition
    Team at Buckley Air National Guard Base, CO. Its purpose is to act as
    an agent of the National Guard Bureau for mission transitions and
    identification of potential Air National Guard roles in space
    operations. The Guard's unique ability to recruit and retain quality
    personnel with specific capabilities and skills has not gone unnoticed.
    This capability is a hallmark for the future; where the Air National
    Guard will be a key supplier of skills and capabilities not normally
    found within the active duty Air Force.
    Homeland Defense
        Our homeland defense is a vital mission for the Air National Guard.
    A nation's right to exercise absolute control and authority over its
    national airspace above its territory, international waters, and
    territorial seas, better known as ``Air Sovereignty,'' is an enduring
    mission. In January 1994, 1st Air Force was placed under the command of
    an Air National Guard General Officer, Major General Philip G. Killey;
    a first. This transition of the Air Defense command and control
    organization to the Air National Guard strengthens the Air Defense
    role. While the QDR reroles four air defense units in fiscal year 1999
    to general-purpose fighters, our commitment to this mission remains
    solid.
        In the future, the Air National Guard is destined to play an even
    greater role in our nation's defense against threats within our
    national borders, such as domestic terrorism, weapons of mass
    destruction and the counter-drug program. In many cases, the most
    effective counter to domestic threats is a community-based network of
    concerned citizens willing to become involved. This captures the very
    essence of the Air National Guard and as we acquire and integrate
    evolving technologies, we will exploit these technologies in support of
    the domestic mission. The Air National Guard is uniquely postured to
    pursue this course of action and we will truly make a difference.
                           air national guard family
        The concept of family within the Air National Guard is the essence
    of our ability to achieve our goals and objectives. Our family includes
    our Air Guard members, military and civilian, full-time and
    traditional, their families and dependents, and our employers within
    the communities in which we live and work. Without strong, deep-rooted
    commitment and support from all our families, our ability to execute
    the Air National Guard mission is adversely impacted.
    Recruiting and Retaining Quality People
        Despite the tremendous increase in deployments and OPSTEMPO, and in
    some cases because of it, the Air National Guard is having tremendous
    success in attracting and keeping high quality personnel. We finished
    fiscal year 1997 manned at 101.9 percent of our programmed strength,
    with a retention rate of 90 percent, the highest of any reserve
    component. We cannot, however, rest on our laurels. We must continue to
    offer attractive jobs, compensation and enlistment bonuses to ensure we
    preserve our capabilities.
    Diversity
        Our Air Guard family membership must reflect the communities it
    serves. With this in mind, no issue is of greater importance to the Air
    National Guard's future than diversity. We must take action now so that
    in the future our organization represents the diversity of the American
    people. We have made great strides and, as we execute the guidance in
    our long-range Air National Guard plan, we will ensure our family
    represents a mosaic of the nation and the communities, in which we live
    and serve.
    The Enlisted Force
        My vision for the next four years, as the new Director, is
    stability, along with focus on the Enlisted Force, Families and
    Employer Support. Our enlisted force is the force that sets us apart.
    We all know what they can do and have done over the years. They are a
    group of unsung heroes who deserve acknowledgment of their
    achievements. More importantly, they are an integral part of our
    future. These are the men and women who ensure our equipment is
    maintained in classic Air National Guard condition. These are the men
    and women who will pick up the mantle and learn tomorrow's missions,
    like the space mission. These are the men and women who will develop
    new techniques and methods of efficiency to save the Air Force and our
    Nation's resources. These are the men and women who will enhance our
    communication link to communities across our Nation and ensure that we
    have a vital link to a new generation of personnel to follow in their
    footsteps. They will help us begin to solve our diversity challenge,
    because they will represent a cross section of our communities. Most
    importantly, they will help us create new standards. Lastly, these are
    the men and women who will remain the backbone of our organization.
    Families
        Consistent with our commitment to national mobility requirements is
    the necessity for family support programs that will provide nurturing
    and stability for our Air Guard families. Our national, state, and unit
    plans provide reassurance to our members that, in time of need, the Air
    National Guard family will support its own. We have a network of family
    support volunteers in every Guard community across the country. They
    provide a source of support and comfort to those who remain behind.
    Employer Support
        It is our Guard employers across America, who enable our citizen
    soldiers and airmen to leave their jobs during the times they serve the
    Nation. It is our employers who keep those jobs secure until they
    return. It is the American employer who helps us provide training for
    our people that make them even better when they undertake their Guard
    jobs. It is our employers across America who are our link to our
    communities. And it is the employers of America, who provide us a broad
    recruiting base from which we can attract diversity. Employers will
    play an increasingly important role in making sure we succeed in the
    21st Century.
    Modernization
        Whether responding to contingency operations world-wide, or helping
    communities recover from a natural disaster, the Air National Guard is
    using equipment that has been procured and modernized with funds
    primarily from Air Force procurement accounts, including $300 million
    in fiscal year 1999, and the National Guard and Reserve Equipment
    Account (NGREA). We appreciate the Air Force and congressional support
    of our modernization efforts and have put these funds to good use. A
    near-term readiness enhancement is our modernization focus and we
    stretch every dollar to get the most ``bang for our buck''. We
    specialize in finding timely, low-cost, off-the-shelf solutions to our
    equipment needs--solutions that have the greatest return on investment
    for our warfighters.
        When we talk modernization, we are committed to making sure our
    equipment is completely compatible with our active Air Force
    counterparts and based on a validated requirement. Keeping aircraft and
    equipment modernized is the lifeblood of the Guard. Without it, we will
    never remain ``relevant'' and that is why it has such a high priority.
        Our modernization focus is the Combat Quadrangle--four initiatives
    that satisfy warfighting CINC requirements. These are:
      --The ability to conduct 24 hour combat operations--which we are
            satisfying with our Night Vision Imaging System (NVIS).
      --Survivability in high threat environments--which we satisfy with a
            host of electronic combat enhancements. These include the
            Countermeasure Management System (CMS), the Pylon Integrated
            Dispenser System (PIDS), and improved radar warning receivers.
            This also includes Airlift Defense System (ADS) as a
            prerequisite for participation of HC-130 aircraft's in many
            contingencies.
      --Enhanced battlefield communications--which we fulfill with our
            Situational Awareness Data Link System on the F-16 and A-10,
            and the Fighter Data Link (FDL) on the F-15 aircraft.
      --The ability to conduct precision attack--which we will satisfy with
            a full and open competition for a low cost; non-developmental
            self-designated laser system.
        As a foundation to the Combat Quadrangle, training systems are
    required to hone combat skill support in all our programs. Air National
    Guard members are trained and motivated, but without the right
    equipment, we are hampered in our ability to respond.
        In that vein, we intend to procure low-cost targeting pods which
    will provide precision weapons capability to our fighter fleet and
    improve F-16 combat capability. There are also many opportunities to
    take advantage of the electronic battlefield. The A-10 and F-16
    Situation Awareness Data Link (SADL) provides pilots with an all-
    weather, low-cost data link using off-the-shelf Enhanced Position
    Location Reporting System radios. It is secure and jam resistant. It
    provides fighter-to-fighter, fighter-to-ground and ground-to-fighter
    data link information transfer. Its purpose is to save soldiers' and
    airmens' lives by preventing fratricide and enhancing situation
    awareness while providing increased combat ID capability. SADL
    capitalizes on the Army and Marine Corps digitized battlefield and have
    growth capability to ensure compatibility with future upgrades.
        The Tactical Airborne Reece System (TARS), will equip the Virginia,
    Michigan, District of Columbia, Indiana, and Iowa Air National Guard
    with a capability for commanders to view the battle scene and make
    accurate warfighting decisions. The South Carolina Air National Guard,
    to be equipped with the HARM Targeting System, will suppress enemy air
    defenses with pinpoint accuracy. The Night Vision Imaging System (NVIS)
    will allow us to take the fight to the enemy around the clock and has
    just achieved Initial Operational Capability (IOC) at the 122FW, Fort
    Wayne, IN.
        The Quadrennial Defense Review has presented us with challenges to
    modernize our F-16A model fleet, currently positioned at five bases. We
    are examining a variety of different options for these aircraft,
    including: a Structural Life Extension Program (SLEP), a Mid-Life
    Update (MLU), or the purchase of new aircraft.
        Modernization of our mobility forces continues as well with major
    avionics upgrades to our 224 KC-135 aircraft. The PACER CRAG (Compass,
    Radar and Global Positioning System) installations began in January at
    the 163rd Air Refueling Wing, March ARB, CA. The installations are a
    total force program: three Air National Guard Contract Field Teams
    (CFT's), one Air Force Reserve Command CFT and the Programmed Depot
    Maintenance line at Tinker will complete installations of the entire
    fleet over the next three years.
        The C-130J is a welcome addition to the Air National Guard airlift
    fleet. We are working closely with Air Mobility Command and Air Force
    Reserve Command to ensure adequate testing, support and training are in
    place as this new capability is fielded.
        Counterdrug forces in eleven states will be improved over the next
    year as new high-reliability 3rd generation Forward Looking Infrared
    Radars (FLIR's) are fielded. We will continue to improve our
    Counterdrug aircraft in response to the needs of federal and state law
    enforcement agencies.
                                   conclusion
        We are proud of our expanding role in the defense of our nation. We
    look forward to the next phase and our continued partnership with the
    Total Force. Together the Guard, the Reserve, and the Air Force will
    continue to provide America an unmatched capability to project military
    power anytime, anywhere in the world. This nation will always be a
    militia nation--defenders of freedom. The challenge for us will be to
    address the right mix of the right forces into the 21st century. The
    partnership of the reserve components and the Air Force will continue
    to grow stronger because of our Total Force Policy.
        Thank you again for your support.

        Senator Stevens. Thank you very much, General Weaver. I
    note that behind you is Gen. Russ Drew Davis. General Davis,
    the committee wants to thank you personally for your assistance
    in arranging our trip to Antarctica. We were pleased to fly
    with the National Guardsmen going into and coming out of
    Antarctica, which demonstrates really what the Air Guard is all
    about.
        I want to yield first to my colleagues, because they may
    have problems with schedules. Senator Cochran.
        Senator Cochran. Thank you very much, Mr. Chairman. I do
    not have a problem.
        Senator Stevens. Sometimes people have to go to other
    committees.

                        Operational tempo and retention

        Senator Cochran. I understand. I am glad you are checking.
    The question that I raised in my opening statement is really
    one that concerns me, and that is whether or not you are seeing
    any difficulty developing, recruiting, and in promotion and
    retention of the quality and the numbers of men and women you
    require to maintain the operational tempo and fulfill the
    requirements and missions that are assigned to the National
    Guard. What is the status of that situation, General Baca?
        General Baca. Mr. Chairman, just let me say that last year
    was one of the busiest years we have had in both Army and Air,
    and last year we met our recruiting objectives and we were the
    two top components in meeting our recruiting and retention
    objectives, and I would like to yield to General Navas, who can
    give you a little bit more detail on that, but we have done I
    think exceptionally well under the conditions we have had.

          Army National Guard recruiting and retention versus OPTEMPO

        General Navas. Senator, last year was a banner year for the
    Army National Guard. We finished our year 3,000 soldiers above
    our program end strength of 367,000. We finished about 370,000.
    Not only that, but our attrition, that is, the soldiers we
    lose, was at an all-time low at 18 percent, coming down from 28
    percent back in 1995. We have constantly improved our quality
    of the Guard, overall quality, not only of initial entry, and
    we are striving to even improve that, especially in the
    category 3B, so we have had a great year.
        This year our end strength has been reduced by 5,000 as
    part of the QDR cuts, and we are starting that ramp down from
    almost 370,000 at the beginning of the fiscal year to an end
    strength 362,000, and so we are establishing that ramp down and
    yet we are maintaining our quality goals, and also our
    attrition rate has been very good.
        Actually, our retention rate is at 88 percent for new
    individuals, and 119 percent of our careerists, so I would say
    the problem is the other way, is basically trying to renew the
    force, if you will, so I feel very comfortable with the
    recruiting and retention we have had.
        However, as you look to the future with the level of
    funding that we have, and with the lack of adequate funding to
    send those individuals to school as I mentioned in my opening
    comments, we are having NCO's, noncommissioned officers, make a
    very, very tough choice. Do they go out there and train or lead
    their soldiers during the periods of collective training, or do
    they need to be away from that training to attend their own
    personal training?
        We are asking these very dedicated Americans to make a very
    tough choice, be with their soldiers and do their leadership
    responsibilities, or go out there and do what could be seen as
    a selfish thing, to go and go to school to be promoted, and the
    reason we do that is because we do not have in our low-priority
    units enough dollars to do both.

                          status of Air National Guard

        Senator Cochran. What is the situation in the Air Guard,
    General Weaver?
        General Weaver. Sir, if I may brag for a moment, we are the
    busiest Reserve component of all the Reserve components. Per
    capita we have the best retention rate, at 90 percent. We have
    never been busier. We are deployed everywhere the Air Force is
    deployed. The morale, the retention rate has never been higher.
    In fact, in some of our busier units the retention rate is the
    highest. It is hard to explain at times.
        When General Fogelman, the previous Chief of Staff of the
    Air Force, briefed that he did not want his people away from
    home more than 120 days a year, our air crew members averaged
    between 80 and 110 days away from home a year with their
    deployments and other requirements in the Air National Guard,
    and if you tack on their civilian jobs, some of our airline
    pilots are upwards of 240 to 270 days away from home a year.
        I heard it expressed, and my concern for the future is from
    one of our air crew members. He said, when I have got my wife
    mad at me and I have got my employer mad at me, and when I have
    got the Guard mad at me equally, then I know I have got it
    well-balanced.
        I am concerned for the future. We are asking our
    individuals to do a lot. They are always standing up to the
    challenge, as evidenced by this latest buildup in Southwest
    Asia. My first phone call was from General Cross on a Monday
    morning, during the intense buildup. When he was expecting
    about 25 percent from the Air Force Reserve and the Air
    National Guard to supply airlift and tanker support,
    overwhelmed him with about 54 percent of the requirements he
    had both from the Air Force Reserve and the Air National Guard,
    truly a testimony of our men and women in our Reserve
    component.
        We are over end strength right now by about 1,000. I really
    expect to maintain that. No one wants to leave the Air National
    Guard, and we are happy for that, but I do have concerns about
    our OPTEMPO for the future, as does the Air Force and the Air
    Force Reserve.

                                Pilot retention

        Senator Cochran. When we had the Chiefs before us the other
    day one of the concerns expressed was the shortage of pilots
    and the fact that we are seeing a lot of pilots move out of the
    military into civilian jobs because of the great demand and the
    growth in that area. Is this reflected at all in the Air Guard?
        General Weaver. We are recruiting every available pilot off
    of active duty. If you take a C-5 aircraft commander, you and I
    as American taxpayers pay about $9 million to get him upgraded
    to aircraft commander. If he leaves the Air Force to go to the
    airlines, we want his next call either to be the Guard or
    Reserve.
        The problem is, what we are seeing is that they are coming
    in the Guard and Reserve, but then, all of a sudden, they are
    seeing the same type of OPTEMPO that is reflective of some of
    the reasons why they got off, for quality of life issues off
    the active duty Air Force. We have concerns along those areas
    as well.
        We brought in as many pilots as we possibly could. We still
    have a backlog of potential candidates to come in the Guard,
    but that line is starting to shrink a little bit because as
    they are getting off active duty they are also realizing that
    the total force, the Guard and Reserve, is part of that OPTEMPO
    as well.

                          Army National Guard funding

        Senator Cochran. We heard your comments about negotiating
    in the Office of Secretary of Defense over the $700 million
    shortfall, more or less. In your minimum requirements you were
    able to restore over $100 million through those negotiations,
    and obviously those needs were quite clear to everyone
    concerned, or you would not have been able to do that.
        But what happens to that other $600 million, and what
    impact does that have in real practical terms about what you
    are going to have to cut? Can you tell us some of the things
    that are going to fall by the wayside without those funds?

                      Army National Guard shortfall status

        General Navas. Yes, sir; our initial shortfall--and this,
    like I said, was very positive. General Reimer asked me around
    November, said I want to help you. What is your shortfall? I
    submitted a letter saying that we needed $813 million to be
    able to meet our minimum training requirements to meet defense
    planning guidance. We worked this issue and we were able to get
    $179 million added up, so there is still a shortfall of $634
    million.
        That shortfall is basically $156.2 million in schools and
    special training. This is sending individuals to school to be
    able to meet their professional qualifications.
        In the case of the Army National Guard we established a
    policy of select, train, and promote, so that we could make our
    promotions in the enlisted grades based on the qualified
    individuals, so now when we select an individual he needs to be
    trained before he can be promoted. Sometimes we have to defer
    that training because we do not have the dollars to send that
    individual.

                          Schools and special training

        Senator Stevens. General, can I interrupt you? As I
    understand, you have only 50 percent of the amount you need to
    continue your present school levels. That is not a shortfall.
    That is a catastrophe.

                               Funding shortfall

        General Navas. Sir, we are funded at 39 percent, and if you
    understand that within that 39 percent we have to give priority
    to those units that are in a higher-priority rating. It is not
    spread evenly across the force.
        So that is what I meant in my opening statement that we are
    sending individuals to school in lieu of obtaining or attending
    annual training with their units, so when we are doing the
    collective training we do not have what we call enough boots in
    the ground there to be able to do a meaningful collective
    training, and so we have a major shortfall in that regard.
        Then there is basically a $10 million shortfall for our
    AGR's, our Active Guard and Reserve. That would mean that
    either we take money from the already underfunded schools and
    special training account to retain the AGR, or we will have to
    let go about 160 soldiers, full-time soldiers from our ranks,
    which are the ones that basically plan, organize, train, and
    coordinate our training, so that is basically the bulk of the
    personnel account in the area of operations and maintenance.
    That is about a $450 million shortfall, which is basically in
    the surface operational tempo.
        Operational tempo, as you know, is the dollars we get to
    train our units, and again, this is tiered. To meet our DPG,
    defense planning guidance requirements, not even title XI
    requirements at platoon level training, but to do an individual
    crew and squad, we need about 200 OPTEMPO miles. Our lower
    priority units are funded at about 12, 13, 14 percent of that
    requirement. We have units that get about 22 miles to do that
    training, so, therefore, there is very little collective
    training that these units can do.

                      Real property and depot maintenance

        Also, we have about a $98 million shortfall in our real
    property maintenance. Last year the congressional markup was
    very generous with us, and we got about an $87 million, $89
    million to increase our real property maintenance, which is
    crucial to maintain the condition of our facilities where we do
    our maintenance, where we do our training. It is a quality of
    life issue also.
        And then there is the ``Depot maintenance'' account that is
    underfunded about $94 million. Without that ``Depot
    maintenance'' account our equipment is getting to the point
    where it is not being adequately sustained and maintained.
    Should we need to bring those units rapidly up, then we are
    going to have a problem in that.

                      Distance learning and communications

        Our distance learning and our communications accounts are
    underfunded by about $73 million. That means that we might not
    be able to do our full support to the RCAS program to be able
    to continue funding it. Our distance learning initiative is
    going to be slipping.
        You are aware that we established a goal that we are,
    hopefully, on track with the support of the Congress of having
    a distance learning classroom within 60 minutes of driving
    distance of every Guardsman, and we are working toward that
    goal.
        That was supposed to be completed by the end of 1999. We
    had said by the end of the century. We are on our way with a
    shortfall of $3 million. We might have a delay on that, and
    that is crucial to be able to--that is an investment in the
    future, because if we do not have money to send individuals to
    school, what we try to do is take the school to the
    individuals, so we can save the travel time, we can save the
    time away from home, we could help alleviate the PERSTEMPO, so
    this is an investment in the future that we need to make, and
    we need to find a way to sustain this program.
        So that is basically where in a macro sense the $634
    million, that is where we are short, and I would be more than
    glad to submit for the record a much more detailed version of
    those numbers.
        Senator Cochran. That would be very helpful. We appreciate
    that.
        [The information follows:]

             Details of the $634 Million Shortfall in ARNG Programs

        Schools are currently funded to $81 million, which
    represents a 39 percent funding level of the Army validated
    requirements. Funds are aimed at preparing members of early
    deploying units with requisite skills to meet the rigorous
    deployment timeline demanded by the increased reliance on the
    Army National Guard. Funding for schools is tiered toward the
    ``First to Fight'' units. There are not sufficient funds to
    maintain Military Occupational Specialty Qualification for the
    entire force. The requested $90 million increase to the schools
    funding will allow Force Support Package, enhanced Separate
    Brigades, and Early Deploying units to send 100 percent of
    required personnel to Professional Development and Military
    Occupational Specialty Qualification training. The remaining
    tiered units will be able to send 50 percent of required
    personnel to this training. This program is essential to the
    retention of quality personnel.
        Special Training is currently funded to $28 million, which
    represents an 11 percent funding level of the Army validated
    requirements. The requested increase of $66 million will fully
    fund enhanced Separate Brigades, Opposing Forces support for
    Lanes Training, Combat Training Centers training, and Joint
    Chief of Staff exercises. It will fund 84 percent of
    operational readiness sustainment requirements such as
    planning, support of training exercises, preparations for
    operational missions, and Readiness for Mobilization Exercises.
    This program is critical to providing forces trained to perform
    their assigned wartime missions.
        Bonuses are currently funded to $127 million, an 88 percent
    funding level of the Army validated requirements. With an
    addition of $18 million, the program will be funded to 100
    percent of requirements. This program covers the Health
    Professional Bonuses, the Montgomery GI Bill, the Enlisted
    Recruiting Bonus, the Student Loan Repayment Program, and
    Separation Pay. The increased funding for this program is
    essential to maintain End Strength and meeting the Chief of
    Staff, Army's quality goals.

                  representing the needs of the National Guard

        General Baca. Senator, General Reimer in his testimony
    before the National Security Committee did recognize that as an
    underfunding for the National Guard and did list it as one of
    his top priorities.
        Senator Stevens. General, what the two of you just said,
    particularly what General Navas has said--and are you finished?
        Senator Cochran. Yes, sir.
        Senator Stevens. I apologize for interrupting you, but it
    demonstrates a different relationship between the Army Guard
    and the Air Guard in terms of the total Pentagon structure, and
    it is something I have been trying to address. It is nice to
    know you were able to submit a letter to try to address this
    imbalance, but General Weaver sits at the board when the
    allocations are made, and this just cannot continue.
        We are now operating under caps, gentlemen. We are in a
    situation where if we try to raise anything that is in the
    budget it is automatically looked at as pork by one-half of our
    people and attacked in the press by people who do not
    understand the situation that these budgets are underfunded to
    start with, and I do not think we have had the leeway we have
    had in the past to correct your situation and the fact that the
    Army Guard budget comes in so underfunded creates the largest
    problem for this committee in the whole year, and somehow or
    another it has to change.
        We have to find a way so General Navas and his successor is
    sitting there at that allocation board and that budget fairly
    represents the needs of the Guard Bureau as it assumes greater
    and greater responsibilities, and those are falling now equally
    heavy on the Army Guard as they have traditionally on the Air
    Guard, but the Air Guard, because of its relationship, has a
    much different situation coming before us.
        I will have some other questions to ask you later, but it
    just--it really bothers me now, when we are operating under
    these caps and we have limits in terms of this, and we are
    going into the budget.
        We are at $3.7 billion in outlays less because of the
    Congressional Budget Office [CBO] analysis than the Office of
    Management and Budget thought we had. You put that in terms of
    actual authorization fulfillment and appropriations for the
    authorization base, and it is a substantial reduction, and that
    is across the board, but basically it has fallen on you.
        It has fallen on the Army Guard, which I think is very
    unfortunate, and it really represents an antagonism toward the
    Guard that is not warranted under the current circumstances of
    our requirements worldwide.
        General Navas. Sir, may I make a statement?
        Senator Stevens. I am going to call on my friend here. I
    will get back to you later. Senator

                   Army National Guard aviation modernization

        Senator Leahy. I am glad to have General Baca and General
    Navas and General Weaver here.
        I would say to General Baca, you have led the Guard during
    a period in our history where I think it has demonstrated very
    much the importance of the Guard in our Nation's defense. I
    think that trend is going to continue. Obviously, the concerns
    I have, and Senator Stevens and Senator Cochran and the others
    have is just whether the resources are there.
        I understand the Active Army and the Army Guard
    acknowledged a shortfall of 90 Blackhawk helicopters in Guard
    warfighting units. This committee has strongly supported the
    Blackhawk program, and I am pleased the administration and the
    Army no longer plan to terminate the Blackhawk. What kinds of
    units are affected by this shortfall? For example, would there
    be a cost savings associated with the procurement of 10
    additional aircraft?

                         Blackhawk helicopter shortfall

        General Navas. Sir, I think we have turned the corner on
    the modernization of the Army National Guard aviation fleet. If
    you recall, we had a shortfall of, if we were going to replace
    the aging UH-1 fleet in the Army National Guard, which is
    basically our light utility helicopter, there was not light
    utility helicopter substitutes, so basically the plan would
    have been to substitute all of those Hueys with Blackhawks.
    That would have created a tremendous shortfall on the order of
    400 and some Blackhawks.
        What we have done, working with the Army in an Army
    aviation modernization plan is to establish a requirement for
    90 Blackhawks over the next years, of which 50 of them are in
    the POM, and we still have 40 of them that we need to work and
    see how we can get that as we build the programs. This would
    allow us to modernize our priority units, mostly our air
    ambulance units, with the required Blackhawks.
        Also, we have, working with the Army, looked at ways to
    alleviate the light utility helicopter shortfall by cascading
    equipment, by looking at perhaps some other alternatives, by
    transferring missions from the Active Army to the Guard, and
    this is a work in progress that we have, but at least we see an
    initial plan to recognize and procure over about 90 Blackhawks
    over the next 5 years which would basically go a big way into
    modernizing an otherwise aging fleet.

                                  F-16 upgrade

        Senator Leahy. Thank you.
        General Weaver, at the risk of sounding parochial,
    something that never happens in the Appropriations Committee
    but I will break with tradition, it was announced that
    Vermont's F-16 unit, the 158th Fighter Wing in Burlington, is
    going to change its mission from air defense to general
    support. Is the Guard going to upgrade these jets so they can
    deliver precision weapons? Are they going to have to be
    upgraded?
        General Weaver. Yes, sir; again, thanks to this great
    committee in the past, what we have been able to do through the
    Guard and Reserve ``Equipment'' account is to take an entire
    missile design system [MDS], or the F-16 fleet, and put the
    ability on those aircraft to do what the warfighting CINC's
    actually need, precision-guided munitions and what-not.
        We still have a way to go with all of our F-16 fleet, but
    we are in the throes of putting a precision strike capability
    on our F-16's, the data linkup requirements from the F-15's,
    the F-16's, and the A-10's, night vision capability, so it is
    great to have the air machine, but unless it is the air machine
    that the CINC's really need to be able to fight with, it is
    going to be tough in the future to be a participant in the
    total force.
        But again, thanks to this committee, in the past we have
    been able to modernize those F-16's and look forward; to be
    able to do that.
        Senator Leahy. If you could have your office keep me posted
    on how it is going on that particular unit in Vermont, I would
    appreciate it.
        General Weaver. Yes, sir.

                              Civilian technicians

        Senator Leahy. My last question, General Navas, I saw the
    Army Guard is reducing the number of civilian technicians in
    Vermont by something like 20 percent. I wonder, are these cut
    because of the ``Quadrennial Defense Review'' [QDR], and are
    there similar cuts in other States?
        General Navas. Sir, as you know, the Congress established a
    floor of 25,500 military technicians. We had some force cuts
    taken in the Army back, not as part of the quadrennial review,
    but prior to that, based on the 1993 off-site. Those cuts to
    the technicians were appropriated because when you take the
    structure down you take civilians.
        There was an action by the Department of Defense that took
    down--took civilian cuts and applied them to the technicians,
    so that was kind of a double whammy, because not only you took
    the cuts proportional to the force structure, but then it came
    down to also another cut, so that left us with a shortfall of
    about 811 technicians from that ceiling.
        Now we have in the way--and this is an accounting issue.
    The way the civilian pay is accounted for, or programmed, there
    is a time lag, and due to the fact that we have so many diverse
    zip codes where you have the locality pay adjusted, and also
    because of the nature of our civilian force, that we have a lot
    of wage grades, there is a shortfall of $68 million that we do
    not have available to pay for our technicians. Since we manage
    technicians to the budget, the number of technicians that we
    can field out there would be reduced by that amount.
        Senator Leahy. I understand the reason for it. I just
    wanted to make sure that we are not facing a disproportionate
    number of cuts in our State and I am thinking of the percentage
    of our force reduction, but it appeared to me--without knowing
    the numbers from the other States it appeared to me as though
    we were getting a disproportionate cut in Vermont.

                          Military technicians budget

        General Navas. Sir, we are trying to manage technicians to
    budget, and also we are also giving priority to the high
    priority units, and this is precisely--and again, I do not want
    to sound like a broken record, but when you tiered your
    resources and then you have to allow for States that have high
    priority units at the low priority units, you barely are able
    to meet the minimum requirement of 50 percent. In some cases we
    are going to 34 and 32 percent fill, and I think that happens
    in some States where they do not have the higher number of high
    priority units, so that is how we allocate the technician cut.
        Senator Leahy. Thank you.
        Thank you, Mr. Chairman. I have to go to a Judiciary
    Committee hearing, but I appreciate the opportunity to be here.
        Senator Stevens. Thank you for coming.
        Senator Dorgan.

                                Happy Hooligans

        Senator Dorgan. Mr. Chairman, thank you very much. I
    appreciated the testimony. Let me address a question to General
    Weaver, if I might. General Weaver is familiar with the Happy
    Hooligans in Fargo.
        General Weaver. Yes, sir, very well.
        Senator Dorgan. It might be interesting to note for the
    committee and the chairman that the Happy Hooligans are farmers
    and pharmacists and barbers and plumbers and teachers, and they
    have won two occasions, including one recent occasion, the
    William Tell Award, which is the award given to the best
    fighter pilots in the world.
        So it is, on at least one recent occasion, National Guard
    pilots, flying the wrong airplane, because the William Tell
    competition was expected to have been won by, I believe, the F-
    15, a bunch of farmers and teachers and others from Fargo, ND,
    won the trophy for the best fighter pilots in the world, and
    that is some distinction for a National Guard unit.
        General Weaver. I could not say it better myself, sir.
        Senator Dorgan. Well, I will say it again, then.
    [Laughter.]
        General Weaver. That picture of the Happy Hooligans is also
    in our front office, sir.

                                  F-16 upgrade

        Senator Dorgan. We are enormously proud of them.
        Let me ask you a question about the airplanes they fly, and
    this is a good segue to do that. They fly F-16A's at this
    point, and I am wondering what the plans are to go to F-16C's
    at some point.
        General Weaver. Sir, as we went through the QDR, and when I
    say we, please understand that is total force, Air Force, Guard
    and Reserve, the Air Force was intent on modernizing our A
    models and they saw an opportunity to be able to do that by
    reducing force structure on the active side, taking C models
    off of active duty and putting them directly into our Guard
    units where we have the A models.
        Because of a problem later that seemed to be too difficult
    to do at the time without having further conversations
    concerning BRAC and what-not, it was deemed too difficult to do
    at the time. The Air Force, the Air National Guard, and the Air
    Force Reserve are still looking to possibly doing that in the
    future, but we do have concerns about the upgrades in the
    future of our A models, as I said earlier, to make them
    available for the CINC's, the warfighting CINC's with the
    precision-guided munitions and all the things we need to go on
    our fighters for the war fight.
        I would look at the future, the different options that we
    have got to do that, either SLEP-ing the surface life extension
    program, the cost-effective one, but it does not really give us
    a lot of capability, mid-life one that we are looking at as far
    as putting a lot more money, or possibly purchase of new ones
    in the future, or if we are able to, as we look, as we still
    downsize the Air Force possibly in future years, to take some
    of that force structure off of active duty and as they have
    done in the past to modernize our force structure in the Guard
    and Reserve.
        Senator Dorgan. Let me ask you a question, and I am meeting
    later with General Ryan later today, and I will not tell him
    what you said, but I am curious, we are enormously proud. Why
    would a National Guard team win the William Tell award under
    any circumstances? Wouldn't you expect them never to win?
        General Weaver. Well, it was interesting, and it was also
    during--I tell a story. It was during BRAC at the time, the
    last BRAC round, and I sat on the Base Closure Executive Group
    for the U.S. Air Force, representing the Air National Guard,
    and during that week, as the results were being given, they had
    the Happy Hooligans and our individuals from Vermont really at
    the low end, and no one really took them seriously, and during
    the week it was reported every day what the results were, and
    during the week they were slowly coming up through the ranks as
    the contest went on, and as you know, that weekend all the
    results were known, and the Happy Hooligans were No. 1 and
    right behind them were our Green Mountain Boys from Vermont,
    but it was not announced Monday at that staff meeting about who
    really won that contest with those much older airplanes and the
    much older fighter pilots, but it served us well during the
    Base Closure Executive Group.
        Senator Dorgan. That is good to know, and it says a lot
    about the quality of the people flying those planes and the
    crews that maintain them.

                                Disaster relief

        Let me, Mr. Chairman, just finally say to Generals Navas
    and Baca that you know that North Dakota suffered this enormous
    disaster last year, the worst flood in 500 years and seven
    blizzards, the worst in 50 years, 3 years' worth of snow in 3
    months.
        It was a pretty significant disaster, and we received
    enormous help from the men and women of the Guard, and we could
    not have pulled through what we pulled through in North Dakota
    without the help that the Guard provided, and the men and women
    of the Guard risked their lives to save other lives and we are
    enormously grateful for what your men and women did in North
    Dakota, and most of them, of course, are our friends and
    neighbors.
        General Baca. Thank you, Senator. I am sure you can be
    justifiably proud of your Guardsmen, and I tell you, I get the
    same reports literally from States all over the Nation from
    their Governors and from their elected representatives, and the
    Guard traditionally for 361 years has done that mission, and we
    are very proud of the way we do it.
        Senator Dorgan. Mr. Chairman, thank you for calling this
    hearing, and I have a Commerce Committee hearing going on as
    well, but I appreciate very much your calling this.

                               F-16 modernization

        Senator Stevens. Thank you very much. We appreciate your
    coming, Senator.
        General Baca, let me just put it this way. As I look at
    this budget, based upon 1998 levels alone the Army Guard has
    $184 million that it is short on personnel, $450 million short
    on O&M, $200 million short on procurement and $160 million
    short on Milcon, a total of $994 million shortfall for the
    Army.
        And in the Air Guard we see $160 million shortfall in
    Milcon, $260 million shortfall in procurement, particularly in
    the C-130J's, and $150 million short in other equipment, a
    total of $570 million. Now, that is just off the 1998 level.
    That would not allow for any increase, and all the problems you
    face in worldwide deployments. We are at least $1\1/2\ billion
    short out of a total of some $10 billion.
        You have about $10\1/2\ billion, and you are about $1\1/2\
    billion short of the 1998 level alone. That, with the budget we
    have presents us with a tremendous difficulty to just keep up
    the pace we established last year. So I want to ask you some
    basic questions about that.
        Let me ask General Weaver first, if I may, what is your
    highest priority in replacing your equipment, the F-16A's or
    the C-130J's?
        General Weaver. It is the modernization of our F-16's over
    all, sir, to give them the precision guided munitions we really
    need to do. If I am looking to get to the war fight I need our
    fighters to be able to have all of the right things that the
    CINC's need. That is the night vision stuff, the precision-
    guided munitions, in order to be able to be a part of the
    fight.
        The C-130J's have been really great as far as the
    modernization of our C-130's and our older ones, and I have to
    give the credit to the Air Force for this year, under General
    Ryan's guidance with General Cross, in taking the C-130
    community and putting a program together for the future with
    all of the C-130's and what we need to do, and it is a total
    force plan.
        But the important part of the war fight, getting to the war
    fight, is our precision-guided requirements for our F-16's and
    F-15's as well, sir.

                             Pacific rim operations

        Senator Stevens. General Navas, General Lestenkof is going
    to be here later, but we are working now in the Pacific rim to
    give our Guard, the Alaska Guard a greater role in contingency
    requirements in the whole Pacific. The level of search and
    rescue is down, the level of deployment is down, and there is a
    requirement now for a greater role of the Alaskan Guard to
    fulfill some of those gaps. Is there support in the Guard
    leadership for this expanded role of the Alaska Guard in the
    Pacific?

              Alaska National Guard's expanded role in the Pacific

        General Navas. Yes, sir, definitely. We have been working
    very hard over the last 1\1/2\, 2 years, with General Lestenkof
    in looking at like we are doing, in fact, with most of our
    Guard structure to try to look for a mission for the units so
    that then once the unit is missioned, then we can apply
    resources to that unit.
        We have been looking at converting some of the structure in
    Alaska to some more relevant structure like aviation. We have a
    plan there to put more aviation structure in Alaska. We have
    started with Blackhawks.
        Senator Stevens. Let me ask you about that, if I may. We
    have planned to try to get additional UH-60 Blackhawks into the
    Alaska Guard, and we have also got a request for cold weather
    equipment to upgrade the existing helicopters. Which has the
    highest priority, in your opinion?

       prioritization of UH-60 helicopters versus cold weather equipment

        General Navas. Sir, I think we need both. I think we need
    to modernize the aircraft, and I think we need to make sure
    that that aircraft that we put in those conditions can operate
    in those conditions, and so I think that we have--it is both.
    We need to do both, and I think the goal is to wind up with 24
    Blackhawks there. I think--and I hope my memory does not betray
    me. I can provide the information for the record, but I think
    we are well on our way.
        We have 21 out of the 24 needed, and basically we had $9.5
    million in the 1997 budget to equip those aircraft with the
    cold weather gear, and so I think we are on track with what we
    have been trying to accomplish in Alaska.
        Senator Stevens. You do not need any additional money to do
    that?

        additional funding for helicopters for the Alaska National Guard

        General Navas. Sir, I would have to check with Alaska and
    see if this $9.5 million in 1997 is what is required, or if
    there would be anything more. I do not have that information
    right now, sir. I can get it for you.
        Senator Stevens. Thank you very much.

                               state of Readiness

        Now, General Baca, you are leaving us, and as I said, we
    are sad to see that, but tell me now, as you prepare to wind
    down your tour, what do you think about the state of readiness
    of the Guard?
        General Baca. Senator, I will tell you, based on the
    resources we have received, the readiness of the Guard is
    outstanding, but as you know, readiness is a matter of
    resources, and as our resources have been dwindling, as they
    have been going down, particularly on the Army side you see the
    contrast between the Air and the Army, where all the Air
    National Guard units are resourced to be at C2 level or better.
        And where you are lacking the resources in the Guard, it is
    amazing to me as I go out and travel around the world, and
    travel in the States, at the high level of readiness that the
    Army National Guard has been able to maintain, in spite of its
    lack of resources.
        But I am afraid and I am concerned, Senator, and that is
    why I would see the $634 million as our top priority. I am
    concerned that as our resources continue to dwindle, that we
    will not be able to maintain that high state of readiness that
    we have been able to maintain, and for all the reasons that
    General Navas articulated.
        And also to point out to you, Senator, that as I go out to
    these units, it is the lower priority units, the ones that are
    not being funded, that are performing most of the missions out
    there, many of the divisional units. I just came from Croatia,
    and I witnessed Charlie 3 of the 116th, a unit out of the
    Virginia National Guard, out of one of our divisions performing
    magnificently.
        But I am concerned, Senator, that if we do not address that
    shortfall, that we will not be able to maintain those high
    states of readiness.
        As I go around and I see the professional guardsmen out
    there, and they are doing a tremendous job, if you do not have
    the money to send them to schools, if you do not have the money
    to get them qualified, if you do not have the money to be able
    to have them participate in collective unit training, our
    guardsmen are going to begin to vote with their feet. They are
    going to begin to walk, and we are going to lose those high
    recruiting and retention rates that we have today, sir.

                                 Pilot turnover

        Senator Stevens. Well, that leads me to you, General
    Weaver. I was disturbed with what you said. If you have people
    waiting on the list that are coming out of the regular Air
    Force--and we have more coming out. We were told the other day
    that over two-thirds are not reenlisting in the Air Force, the
    pilots.
        General Weaver. Yes, sir.
        Senator Stevens. And many of them are going to want to
    continue to have some contact with high performance aircraft.
    That means you. We have empty billets in the Air Force, but you
    do not have enough billets for them in the Air National Guard.
        General Weaver. Right now I have got about a 400-pilot
    shortfall, but that is just a normal turnover out of our total
    3,500 pilots authorized.
        Senator Stevens. But General, respectfully now, it is not a
    normal turnover. The normal reenlistment rate would be in the
    seventies, and it is down to 29 percent last quarter. It is not
    a normal turnover, and we would like to find some way to track
    those guys.
        General Weaver. I meant normal turnover for us, not for the
    Air Force. I am sorry. I misspoke.
        Senator Stevens. What are we going to do to expand those
    spots so that you can put these people back where they want to
    be and keep them ready?
        General Weaver. We are exploring with the Air Force, in
    fact, every possibility of obtaining every air crew member
    getting off of active duty, for whatever reason, bringing him
    or her into the Guard and Reserve to include--and we are
    looking at things, particularly in the Guard, of increasing the
    numbers of air crew members, increasing the air crew ratio,
    looking at some of our full-time people who want to get off
    active duty but still do not want to go to the airlines,
    looking at increasing our technicians' starting pay, looking at
    some type of bonus for them as well, looking at having the
    ability to get through the ceiling.
        If they are getting off of active duty at this time, they
    are getting off as usually senior majors. Before, they were
    getting off as captains. We are looking at trying to get relief
    in the upper grades to bring them on as well, so we are
    exploring every possibility to take that young man or woman
    getting off active duty to bring them into the Guard or
    Reserve.
        The challenges that we have, though, is that our OPTEMPO is
    starting to increase, and increase to the point where they are
    looking at Guard and Reserve maybe as not as good an option as
    they thought, but we are also trying to address that as well by
    the study we have going, the FTF, the future total force, and
    how to leverage each other, leverage the Guard, leverage the
    Reserves and the Actives together to help relieve this OPTEMPO,
    which is really driving people out.
        It is not the money. It is the quality of life that our
    active duty members are having, and it is starting to have a
    little bit of an effect also on the Guard and Reserve, and I am
    concerned about that.

                                Quality of life

        Senator Stevens. We have talked to people. I have talked to
    some from home. Our refueling wing and also the search and
    rescue group are both having deployments overseas, and at an
    increasing rate. The people we talk to, the pilots we talk to
    overseas indicate some of them have been away from home more
    than one-half the year.
        General Weaver. Yes, sir.
        Senator Stevens. That is not conducive to reenlistment, and
    it is not conducive to staying with your outfit, either.
        Now, somehow or another those slots have to be expanded,
    and the one area that they are getting this extremely heavy
    duty in terms of these containment missions in Bosnia and in
    Iraq and Korea, it is the pilots that are flying night and day
    the circles and squares, and that drives them nuts, and they
    quit. If you give them the same job once they come out, they
    are not going to stay with you, either.
        General Weaver. That is correct, sir.
        Senator Stevens. Have you got a study that is active?
        General Weaver. Sir, we are really aggressively pursuing
    this, because there is a window of opportunity, and it is going
    to increase in a way that, with the airlines even hiring more,
    and there is not going to be any slowdown in the airline
    hiring, and they prefer military pilots.
        We need to capitalize on this draw, looking at increasing
    the crew ratio of our aircraft, of both tankers, airlift, and
    fighters. That will drive a bill. How much of a bill, and can
    we pay that bill? We are looking at that corporately as well.
        Senator Stevens. Let me make a suggestion to you, that you
    look at trying to bring some of these guys back on. They are
    majors and above, most of them, I understand.
        General Weaver. Yes, sir.
        Senator Stevens. Bring them back on in terms of a lower
    grade as far as their participation in your structure, but
    maintain that grade for purposes of their retirement. Have you
    done that?
        General Weaver. No, sir; we have not, but we can look at
    that.
        Senator Stevens. We would like to find some way to keep
    those people proficient. They are the most proficient, and I
    would urge you to let us know, and give us some kind of an
    idea, moneywise, what we are talking about. We want to help
    with that.
        That is probably--of all our hearings we have had so far,
    the decline in the reenlistment of pilots across the services,
    but particularly the Air Force, is the greatest. Have you had a
    decline in pilot retention?

                      Army National guard pilot retention

        General Navas. Not really, sir. As a matter of fact the
    Army is experiencing that there is a shortfall of AH-64
    aviators in the Army, and we are working very close with the
    Army Office of Personnel to put some Army Guard AH-64's--this
    is the Apache helicopter pilots--on short tours of active duty
    to alleviate this condition in Korea, and we are working that
    very closely, so there is that.
        We have still not experienced that in the Army Guard yet.
        Senator Stevens. I have a series of other questions I would
    like to submit. I am preoccupied by the pilot problem. We do
    want to see if we can find some way to deal with it, and I
    would urge you to give us your ideas.
        Do you have any last questions, Senator Cochran?
        Senator Cochran. Mr. Chairman, yes, I do. Following the
    lead of Senator Leahy, I do have a couple of parochial issues
    to raise with the panel.
        Senator Stevens. They are not unknown here.
        Senator Cochran. I did not think you would object.
        The C-17's at the airlift wing in Jackson, MS, are
    scheduled to be deployed and fielded there. I think that is the
    first Air Guard unit in the Nation that will actually have C-
    17's. I wonder if that program for deployment and fielding
    those is still in place, and what is the timetable?
        General Weaver. Absolutely, and I can give you the exact
    timetable for the record, but we are looking at the beginning
    the airplanes at about 2003 or 2004 timeframe. We are looking
    at training beginning that same time as well.
        We are looking at exploring possibilities of a possible
    simulator, as well, for Jackson, because the way of training
    for our big airplane drivers now is how the airlines have been
    doing successfully for many years. That is by putting air crew
    members in simulators to help cut down on the wear and tear of
    the airplanes, and really it is a cost-effective way of doing
    business, and the program for Jackson is on track, sir.
        Senator Cochran. Is there any need for lead time, military
    construction or preparation for that event? I hope you would
    point that out and what the expected dates for that would be,
    and the amounts of funding necessary.
        General Weaver. We are working that very closely with
    General Cross, who is a supporter of this, and we look good
    right now, sir.
        [The information follows:]

                             C-17's in Jackson, MS

        The Air National Guard is the first Reserve Component Force
    to receive the Air Force's newest strategic airlifter, the C-17
    Globemaster III. Preparations are well under way to receive the
    C-17 at Thompson Field, Jackson, Mississippi. The following
    Military Construction projects are planned and included in the
    Future Years Defense Plan to support the C-17 beddown at
    Jackson, Mississippi:

                            [In millions of dollars]

                                                                     Program
            Fiscal year/Project                                       Amount

    2001--C-17 Corrosion Control Hangar/Shops.........................  10.0
    2002--C-17 Squadron Operations Facility...........................   3.5
    2002--C-17 Upgrade Hangar and Shops...............................   8.0
    2003--C-17 Upgrade Fuel Cell and Shops............................   4.9
    2003--C-17 Upgrade Short Field Runway.............................   2.7

        Senator Cochran. Another program that is important in our
    State is the expansion of the gunnery range at Camp Shelby. We
    have a combat brigade, as you know, based in Mississippi, which
    was activated during the Persian Gulf Desert Storm/Desert
    Shield timeframe, and we are interested in doing what we need
    to do to make sure that that schedule is met.
        I note the environmental impact statement was recently
    completed, and if you could provide us for the record the
    expected requirements for funding to meet those schedules, we
    would appreciate that very much. As far as you know, is that
    still on track?

                   funding for Camp Shelby, MS, gunnery range

        General Navas. Sir, I do not have the exact information. I
    know there was an environmental issue there, and also that that
    was in the program, but I can give you the specific details of
    that, but that is a high priority, highly critical range that
    we need in Shelby, since that is basically the home of the
    155th Separate Brigade.

                               Retrograde program

        Senator Cochran. I notice, General Baca, in your statement
    you talk about your retrograde refitting and repairing
    equipment out of the European theater, where it has been
    excessed there, and you are able to, in a cost-efficient way,
    provide the Army National Guard with equipment that is
    refurbished. The Kansas and Mississippi Army National Guards
    were awarded a bid for operation of this rebuilding program.
        Could you bring us up to date for the record, or if you
    have information on it now, what the status of that program is,
    and what the requirements for any funding in connection with it
    would be?
        General Baca. Sir, I can give you all of the details for
    the record.
        [The information follows:]

        Following the Desert Shield/Desert Storm conflict, the Army
    National Guard (ARNG) opened nine sites to repair 5,571 pieces
    of equipment that were used in the operation. This program was
    so successful the ARNG was approached by Headquarters
    Department of the Army (HQDA) in 1993 with a request to
    undertake the repair of equipment left in Europe when the large
    draw down of personnel occurred. The ARNG developed a business
    plan and projected a fully burdened labor rate of $34 per hour.
    The plan was approved by HQDA and seven sites were opened which
    subsequently received 8,876 pieces of equipment valued at $2.6
    billion. The ARNG partnered with the States to repair and
    distribute the equipment. The majority of the individuals
    employed were members of the ARNG. This mission provided
    valuable training to 475 individuals and also acted as
    tremendous recruiting and retention tool. Based on experience
    gained in Desert Shield/Desert Storm and later the Retrograde
    Europe (RETROEUR) programs, the ARNG decided to leverage its
    capability of producing a superior product at a reduced cost.
    The first program implemented is the remanufacturing of 2\1/2\
    ton tactical trucks in Kansas and Mississippi. The level of
    maintenance required to remanufacture 2\1/2\ ton trucks is
    lower than that performed on equipment returning from Europe
    and it is well within the capabilities of the ARNG. The ARNG,
    in this program, will benefit from the training of soldiers in
    their Military Occupation Specialties (MOS) with additional
    benefit to the ARNG's recruiting and retention effort. The ARNG
    has already purchased 20 kits (which includes all the parts
    required in remanufacturing a truck) to be used in the
    validation of the remanufacturing process. When the sites go
    into production, parts will be obtained through commercial
    sources and contracts. Two universities have been contracted to
    conduct the validation process and when the process is complete
    the sites will be ISO 9000 qualified.
        The ARNG is utilizing National Guard and Reserve Equipment
    Appropriation (NGREA) funding to support the remanufacturing
    program consistent with congressional guidance. The funding
    needed to support the program is a minimum of $30 million per
    year. This funding will allow over 550 trucks to be produced
    per year and will substantially increase the readiness of our
    units.

        General Baca. Let me mention, that was one of the real
    success stories of our retrograde. All of our retrograde
    equipment from Europe, we had several sites in addition to
    Kansas and Mississippi.
        We had a total of five sites, I believe, throughout the
    United States that repaired that equipment and put it back in
    service, not only for the National Guard but for the total
    force, extremely economic way of doing it, probably about one-
    third the cost that it could have been done any place else,
    very efficient and very effective, and I think Army Materiel
    Command [AMC], Gen. Johnny Wilson would reinforce what I am
    saying now, that it was an effective program, and I see that
    that program can mature and it can build, and it can go on to
    other type maintenance activities, other than just retro units.

                          Weapons of mass destruction

        Senator Cochran. There is a piece in the Washington Post
    this morning about Secretary Cohen's announcement that he is
    going to have some 20--well, 10 new emergency teams to help
    domestic agencies respond to attacks with chemical and
    biological weapons, and he says in the press release, which we
    have a copy of dated March 17, that there will be 22 full-time
    National Guard personnel in each unit.
        I think they are called rapid assessment and initial
    detection elements, 10 rapid assessment and initial detection
    elements.
        I assume there will have to be some training in regard to
    that, and some funding that would be available. Apparently,
    about $49 million being requested in this budget relating to
    terrorist response programs for weapons of mass destruction
    reaction teams and the like. Is this amount sufficient to deal
    with this new program, or do we need to add funds to that
    account to make sure that you have the resources to meet this
    new challenge?
        General Baca. Senator, first let me state that, as you
    know, the national defense panel identified that as one of our
    threats, the asymmetrical threats going into the 21st century,
    one that is tailor-made for the National Guard, because we
    already do that kind of response in our normal mission, and as
    a constitutional role of the National Guard.
        The 10 teams that Secretary Cohen was talking about is the
    initial test, and they are setting up by the 10 FEMA regions,
    but eventually we would want a team in every State in the
    Nation.
        I believe the teams, the requirement for the teams
    themselves, the funding requirements that are in this budget
    are about $19.9 million of the $49.2 million that have been
    requested. That is what is going to be required now to organize
    and to establish these first teams.

                              Counterdrug mission

        Senator Cochran. We already have the Mississippi National
    Guard involved in counterdrug training. There is an academy at
    Meridian, MS, which I have toured and am confident that they
    are doing a good job. They have graduated over 9,000 police
    officers and personnel from a four-State area who have come
    there for training.
        And I point that out because I know there is a request in
    this budget for continuation of that program, but I am advised
    that the budget request may be underfunded by over $2 million.
    Could you provide for the record what the needs are to continue
    the counterdrug training academy at Meridian, and whether or
    not this new weapons of mass destruction assignment could be
    considered for inclusion in that program, particularly if you
    are going to be integrated with FEMA personnel and local law
    enforcement officials. It sounds to me like this may be a model
    for including a training site for that purpose at that
    location.
        General Baca. Senator, we are in the midst now of doing a
    study to determine what the requirements are going to be, and I
    can assure you that training is going to be one of the top
    requirements. We have got already your facility and the one in
    Florida and the one in California that I am sure will play an
    increasing role in the training in weapons of mass destruction
    [WMD], and so I will provide you that information for the
    record.
        [The information follows:]

        In fiscal year 1998, the Regional Counterdrug Training
    Academy (RCTA) received $2.2 million of the Presidents Budget
    and $0.9 million in Congressional plus-ups for a total budget
    of $3.1 million. The RCTA taught 150 courses reaching an
    audience of 2,200 students. In fiscal year 1999 their funding
    is at $2.2 million, which will result in a significant decrease
    in the amount of law enforcement officers they will be able to
    train. In order to train the maximum amount of law enforcement
    officers their facilities would allow (backlog of 3,863) the
    school would require an additional $2.5 million for a total
    fiscal year 1999 budget of $4.7 million.

        Senator Cochran. Thank you, General. Thank you, Mr.
    Chairman.
        Senator Stevens. Thank you, Generals, for what you are
    doing for the country and leading the Guard units. We
    appreciate you coming, and look forward to being with you, and
    General Baca. We look forward to seeing you before you step
    down from your position.
        General Baca. Senator, if I may just say a word here. I did
    not mean to indicate that by any means I am a lame duck. I have
    got 4 more months to go, and I am going to give it all I have
    got for the next 4\1/2\ months, but Senator, let me just say,
    now that I have this opportunity and this forum, we mentioned
    about the fact that I traveled with you to Alaska, and I was
    glad that I did that early on.
        And I gained a tremendous amount of experience with you
    actually going to visit--you know, we jokingly talk about the
    salmon fishing, but I will tell you I have never worked any
    harder than I did on the trips that I went with you, Senator,
    and you accompanied me to every location, even the remotest
    places, and your concern for your Guard units and your concern
    for your State, but more than that, your concern for all of
    national defense has served as an inspiration to me during the
    last 3\1/2\ years.
        And Senator, I will tell you that it has been an honor and
    a privilege to work with you, and I just wanted to say that
    publicly.
        Senator Stevens. You are very kind. We appreciate that.

                            Youth Challenge Program

    STATEMENT OF MAJ. GEN. JAKE LESTENKOF, ADJUTANT GENERAL
                OF ALASKA
    ACCOMPANIED BY LT. COL. FRANCIS B. WILLIAMS, DIRECTOR, GEORGIA YOUTH
                CHALLENGE ACADEMY

        Senator Stevens. Let me now turn, gentlemen, to this other
    panel. We thank you very much. We would excuse you now. We are
    going to hear from several witnesses who will discuss the Youth
    Challenge Program.
        General Baca, General Weaver, General Navas, we have with
    us today Maj. Gen. Jake Lestenkof, who is the Adjutant General
    of Alaska, and Lt. Col. Francis B. Williams, the Director of
    the Georgia Youth Challenge Academy.
        They are accompanied by Tiffany Nicole Brown, a student
    from the Georgia Youth Challenge Academy, Joshua Bryson Phagan,
    a student at the Georgia Youth Challenge Academy, and Alex J.
    Sparra, a sophomore at the Citadel, who is a graduate of the
    Georgia Youth Challenge Academy.
        Let me ask you all to come up here and join General
    Lestenkof, if you will. We want to welcome you here, and to
    give you an opportunity to make statements. There may be other
    Senators coming later who are interested in your program.
        General Lestenkof, I welcome you here as a fellow Alaskan,
    and also remember so well the visit that you arranged for me to
    our Youth Challenge Program in Alaska and the wonderful reports
    we are having concerning that program. So let me ask you to
    proceed with your statement, and if you have any opening
    statement with regard to this program, Senator Cochran.
        Senator Cochran. Thank you. I am very happy to have an
    opportunity to hear the testimony of these witnesses. It is an
    interesting program, and I think it is a very worthwhile
    program, and I am confident their testimony will bear that out.
        Senator Stevens. Thank you for coming. I know it is a
    different experience for you. It is nice to have you here.
        General Lestenkof. Thank you very much, Mr. Chairman. Thank
    you for inviting me to appear representing the National Guard
    and the States to talk about our Youth Challenge Program.
        I have submitted written testimony for the record, but
    before beginning my remarks, I know you have introduced Colonel
    Williams, who is the Director of the program down in Georgia. I
    will ask him again to introduce the students and the cadets
    that are here today. Probably my remarks will be certainly
    overshadowed by the comments that the youngsters will bring to
    the committee, but Colonel Williams, would you introduce them
    once more?
        Colonel Williams. Thank you, General. Sir, today I have
    with me Joshua Phagan from the present class at Youth Challenge
    in the Georgia program. I have Alex Sparra, who graduated 2
    years ago from the Georgia program class 6. He is currently
    enrolled at the Citadel in South Carolina. I have Ms. Tiffany
    Brown, who is also in the current class the Georgia program.

                             youth programs support

        General Lestenkof. Thank you, Frank.
        Let me begin with my prepared remarks. I am here to speak
    today on behalf of the National Guard sponsored youth programs,
    the Challenge and the Youth Conservation Corps for fiscal year
    1999 funding. Hereafter, during the remainder of my testimony I
    will refer to both programs as the Challenge Program.
        The National Guard provides the oversight and support for
    Challenge. When you consider that the Guard is located in over
    3,400 communities across America, you understand our wide
    reach. It fits the civil support mission that most Americans
    are familiar with, fulfilling the State mission of the Guard.
        The National Guard has the required infrastructure in place
    to support such a program. We also have the availability of
    trained people in the areas of organization, planning,
    execution, self-discipline, training, and especially
    leadership.
        The National Guard and the Challenge are the natural
    partnership between hometown America and the military. We are
    on Main Street. The lights are on and someone is home to take a
    hand with helping America's youth at risk.
        We provide a bridge between the military and our youth at
    risk with the Challenge programs. Years ago, judges would
    adjudicate at-risk youth to military service. Frankly, many
    young people simply needed the structure, the discipline, and a
    caring environment to change failure into success. Those days,
    like the military draft, are in the past. However, thanks to
    Challenge we are able to provide the same qualities of
    structure, discipline, and a caring military environment for a
    new generation.
        At its core, the Challenge is a preventative rather than a
    remedial program. It is based on eight prime components that
    support the development of the whole person in terms of mind,
    body, and the personal values. They include leadership,
    fellowship, community service, job skills, academic excellence,
    responsible citizenship, life-coping skills, health, education,
    and physical training.
        Emphasis on self-discipline, self-esteem, and the
    development of healthy lifestyles are the bedrock of the
    success of these young men and women's experience; 91 percent
    of our Challenge members from our last recent class graduated.
    Now, that is higher than the national high school average. This
    is very significant, because 100 percent of our graduates were
    already dropouts, or expellees from traditional school systems.
        Over one-fourth of our young people in America are dropping
    out from our traditional secondary schools. These
    disenfranchised and disillusioned youngsters are at a high risk
    of turning to a life of drugs and crime. We must believe that
    these young people can be saved. The Challenge Program is
    turning high-risk young Americans who are statistically headed
    for a dismal future into self-confident, contributing citizens
    of our country, our States, and our communities.
        Let us be clear with one another on behalf of these
    children, their families, and the future of America. The young
    people that come to us are doing their part. We, the National
    Guard, are striving to do ours, and America needs your
    continued and ardent support for these programs and we
    appreciate the support of you and the committee in the past.
        Thank you very much.
        Senator Stevens. Well, General, let me tell you, it is very
    important that you come here today, because in the 1998 bill we
    are operating under now you have 15 programs in the Guard, and
    they cost the taxpayers about $40 million. The 1999 budget
    request before us is for $25 million, which would require us to
    reduce the number of programs underway.
        We have requests now for additional programs of 38 in total
    so far. I assume eventually we would have 50 plus the
    territories, but it would cost $82 million to fund the pending
    request for the program.
        I am really delighted you have taken the opportunity to
    come, and I would like to give an opportunity to Colonel
    Williams and to the students here to make statements, if you
    would like to do so.
        Colonel Williams.

                           success of youth programs

        Colonel Williams. Sir, I will tell you that I was sent to
    Challenge as an assignment. I did not believe in it. I did not
    think we really needed to be going there. I did not know what
    at-risk youth was. I told my General we did not have a dog in
    that fight, that we needed to be training soldiers and needed
    to be training killers and maintaining our equipment, and so I
    did it with reluctance.
        I did not really know what the problem was in the United
    States. I did not know what the Georgia problem was. I did not
    really know anything about it. My background is in agriculture,
    and so I am not a teacher, and I am not an educator, and I have
    been a guardsmen.
        But the first class, I found out real quickly what it was
    all about. We do have a place. We do have a job there. It is
    turning young folks around, and it is working. It is making a
    tremendous difference in their lives.
        It is making guardsmen in their hometowns heroes by
    identifying these youth all over the State and sending them
    down and getting them back on track, and it is having results
    more than I ever expected of the program. I never expected the
    results we are getting. I am a believer now.
        Senator Stevens. Well, I had similar comments when I was
    with the General at the school I went to visit. The people
    really had become believers.
        Let me tell you young people out there, there is hardly a
    family in the country that has not had experience with problems
    of trying to keep our young people in school, and this is a
    very interesting program. You bring us some actual experience
    now, so we want you to tell Senator Cochran and me what you
    have on your mind and what you think we ought to do with this
    program.
        Let us start with you, Mr. Phagan.
    STATEMENT OF JOSHUA BRYSON PHAGAN, STUDENT, GEORGIA

        Mr. Phagan. I am kind of nervous right now.
        Senator Stevens. Don't worry, we put on our pants one leg
    at a time, just like everybody else. [Laughter.]
        Mr. Phagan. Without this Challenge Program I know I would
    be in a world of trouble, or I would not even be in this world
    right now. Before I came in here I was on the streets. I was
    selling drugs. I was doing a lot of drugs. I was involved with
    a lot of gang activity. I knew I needed to change, and I had
    friends who have come through the Challenge Program and it
    really helped them out, and I wanted to be like that.

                               prepared statement

        It is a good program. It is a real good program. I am
    getting my general education diploma [GED]. I am getting my CDL
    license, and I am getting my high school diploma, and I am now
    drug free and tobacco free, and it is a real good program.
        I mean, I do not want to know where I would be without it.
        [The statement follows:]

                   Prepared Statement of Joshua Bryson Phagan

        My name is Joshua Phagan. I was born in Macon, Georgia, on
    March 9, 1980. I attended John H. Heard elementary school and
    was a decent student. After elementary school, I attended
    Ballard Hudson middle school, and that is when my life started
    to go downhill. I started using drugs really heavily. I was
    smoking marijuana, snorting cocaine, using LSD, and taking
    pills. I moved to Forsyth, Georgia, in 1993 and attended Monroe
    County Middle School where the drug use only got worse and I
    became involved with gang activity and violent engagements
    using deadly weapons. In 1994, I attended Mary Persons High
    School where the downhill slope of my life became a 90-degree
    angle straight down. I knew that it was time for a change, but
    I couldn't do it by myself. That is when I found out about
    Youth Challenge Academy and all its benefits. At first, my
    parents didn't like the idea of it and just told me to stay in
    school, but I couldn't because I was constantly getting
    suspended and skipping school so I could get high. After they
    found out more and more about the program, they began to like
    it more and more. This program is what I've been looking for to
    turn me completely around and get away from the wrong crowd
    that I have been looking to get away from for so long. I'm a
    100 percent drug-free Cadet with a GED and hopefully a high
    school diploma and commercial driver's license.
        After I graduate, I plan to go to the military and go to
    college to get a degree in business and start my own business.
    All this I know I can achieve, because of Youth Challenge.
    Without Youth Challenge, I would most likely be dead or in
    prison. I now realize that five months is worth giving up to
    better the rest of my life.

        Senator Stevens. Thank you very much. We are delighted you
    are here today. How far are you from finishing the program?
        Mr. Phagan. We are in the 7th week of a 22-week program.
        Senator Stevens. You have made marvelous progress.
        Let me turn to the young lady first.
    STATEMENT OF TIFFANY NICOLE BROWN, STUDENT, GEORGIA

        Ms. Brown. My background, I grew up in Savannah, and I went
    to school and I dropped out of school, maybe just because of
    the environment, wanting to hang out, and I remember it was
    like, I was not involved in any gang activity, or had any
    involvement on drugs or anything, but the program is ultimately
    magnificent, and it just helps us a lot, allows us to get ready
    to work to go in our jobs in the military, or college, or
    whatever it is that we need to do to help us tremendously.
        And I see a lot of people coming in who really need help,
    and it has helped them. Basically, it is really great and it
    really helps the community and all the children.
        [The statement follows:]

                   Prepared Statement of Tiffany Nicole Brown

        I'm Tiffany Brown, from Savannah, Georgia. I'm a 17 year
    old cadet at Georgia Youth Challenge Academy. Youth Challenge
    has been an inspiration to many adolescents. When I came to
    Youth Challenge I was totally amazed at what was offered.
    Previous to engaging in this challenge, I had always self-
    directed and determined to pave my own way to success. As an
    outgoing and versatile youth I was given all opportunities to
    excel. I had the very best of a family who always encouraged
    me. I feel blessed because to me my life so far has been a
    unique experience. Throughout my life I have always worked
    diligently at whatever I wanted. Truly I am not merely half of
    the way there, but through Christ he will lead me to success.
        While growing up in this ever agonizing but peaceful
    decade, I attended Sophrona Tompkins Middle School and Alfred
    Ely Beach High School. I participated in numerous extra-
    curricular activities. I've always been very active. At the age
    of 12 I graduated from modeling school. In 1995 I represented
    Savannah in the Miss Georgia Teen Pageant. In 1996-97 I also
    represented Savannah through the Professionals Reach-Out
    Program as Miss Silhouette--while having my own component
    called personal development and etiquette. On several occasions
    I've been the community's top teen. During my sophomore year of
    high school I attended cosmetology school and graduated. I
    always think ahead, so at the earliest ages I pursued to
    prepare for my future. I have been employed in numerous
    environments and job settings such as running offices and
    programs, childcare, floristry, sales and retail, and
    cosmetology. I use everything that occurs in my life as an
    educational experience. My goal is to be as omniscient as
    possible when it comes to my career limits. I have also
    participated in various community projects. I feel that it is
    very important for me to give back to my community. It has
    given me so much, and I feel the need to be there for the
    upcoming students to help them understand the importance of
    staying in school. I am very gracious of my opportunity at
    Youth Challenge Academy.
        I have noticed that throughout my life I have had a
    different mentality and way of thinking compared to my peers. I
    could never understand why others didn't think like me. I've
    never had any academic problems in school; I just seemed to get
    very bored by my surroundings easily. I need an ever-changing
    environment to keep my mind healthily stimulated. I always felt
    that I didn't belong, I was odd or different, especially in a
    high school setting where I was allowed only to express a
    limited amount of my capabilities and creativity. I felt
    trapped and no one could ever understand me. I feel it is so
    important to be able to develop your own identity and
    personality. I wanted to loose whatever this feeling was, be
    myself, and go to all extraordinares--the path which I am
    engraving now. I drifted away from high school and found Y.C.A.
    Y.C.A. was not what I was looking for to fill my personal
    needs, but it took my interest and gave a positive outlook
    toward my future. It keeps my mind busy and I always look
    forward to new adventures. The experience turns out to be
    phenomenal. This program offers all skills that adolescents
    need to prepare for the future. From a High School Diploma,
    college courses, counseling, counselor life and work skills--
    which physically aligns us for jobs, college, and military.
    They offer all types of workshops, extra-curricular activities,
    and a few trades, which is more than you could ever get in a
    traditional high school. We're involved in an array of
    community service projects, not to mention the military
    structure which gives us a disciplined and ordered atmosphere,
    as well as being able to learn how to interrelate with people
    of diverse backgrounds that prepares for living in this multi-
    cultural society. Being that this is a five-month program with
    minimal contact with our family, friends, previous environment
    it makes us strong and ready for survival. Youth Challenge
    molds us mentally, physically, and spiritually. We have
    numerous opportunities to unleash the spiritual side of us. The
    Cadre, counselors, teachers, and staff push us to endure and
    strive for the best. They are ever-caring and never give up on
    us. Neither do our peers. We live and work together as a team.
    It is exactly a ``challenge'' as said. Y.C.A is dynamic and
    greatly appreciated. Marvelous. No words could express how I
    feel about the program, the importance of it, and how many
    people it has helped. Y.C.A. has graduated 1,399 cadets. What
    would be done without Y.C.A.?
        Often we as young adults don't make the correct choices,
    but I feel that my experience was God sent. I want to find a
    way to be able to reach out more to today's youth. Helping to
    deal with some of the cadets' emotional issues and struggles
    while here at Youth Challenge gives me experience towards a
    possible future profession. Through the traits of different
    people I learn how to compromise methods of making them feel
    better or finding ways to help solve their problems. I have a
    strong desire to help others. Early while growing up I always
    wanted to pursue the career of a psychologist, social worker,
    or counselor. However over the years it has changed and now
    varies. After completing my challenge, I plan to join the Air
    Force Reserves. From there I plan to attend various colleges
    because I have a broad amount of interests which includes
    ministry. I have a purpose that I will fulfill. I am thankful
    that I have always been self-driven and motivated. We as young
    adults need the opportunity to spread our wings. Youth
    challenge does just that. It gives us hope and faith that no
    one else would. So I thank God for Y.C.A., my life,
    experiences, and accomplishments. Truly it is not me, but he
    who is within me. God Bless All.

        Senator Stevens. Are you going to be able to get your GED?
        Ms. Brown. Yes; I have already attained that, and I am
    about to take some college classes, and I plan to go into the
    Air Force Reserve and then on to college.
        Senator Stevens. That is wonderful. How far had you gone
    before you dropped out of school?
        Ms. Brown. I was in the middle of my junior year.
        Senator Stevens. Well, you have got a great opportunity,
    and I congratulate you for following up and wish you the best
    success.
        Ms. Brown. Yes; it has really helped me get back on track.
        Senator Stevens. Very good.
        Mr. Sparra, you are at the Citadel now, right?
    STATEMENT OF ALEX J. SPARRA, SOPHOMORE, THE CITADEL,
                GRADUATE, GEORGIA YOUTH CHALLENGE ACADEMY

        Mr. Sparra. Yes, sir.
        Senator Stevens. Tell us about your experience. How did you
    get into the Challenge Program?
        Mr. Sparra. Well, sir, when I was 16 years old I was having
    a lot of trouble in high school, skipping school all the time.
    I was cutting classes, getting bad grades. I was in my second
    sophomore year in high school, and I was pretty much doing the
    same thing I did during the first time I was a sophomore, just
    messing around and basically wasting time, and wasting my life
    away.
        My mother was going crazy. She saw her son just wasting
    away, very concerned. I think it was tearing her apart, and
    somehow she talked to somebody and thank goodness they told her
    about Youth Challenge, and she came to me one day and she said,
    this is where it ends. You are going to do one of a few things.
    You are either going to drop out of high school and get a job
    and go to work, or you are going to go to high school and start
    getting good grades and graduate, and do whatever, but you are
    not just going to be sitting around at home skipping school,
    and I heard about this military program. I want you to go to
    boot camp for 5 months and get a GED.
        When I heard that, I was completely turned off and said, no
    way. I knew that I wanted to go to college. I did not know
    where, I did not know how. If I had dropped out of high school
    I could not have joined the military. I could not have gone to
    college. I had no skills. Basically I had no work ethic, no
    self-discipline. I was pretty much useless.
        But my mom said, please, just come speak to this recruiter,
    listen to what he has to say, and find out about this military
    thing. We had never heard of it, did not know what it was, and
    so I went just for my mom, and when I heard about Youth
    Challenge I immediately fell in love with the program. I knew
    this was what I wanted to do.
        I saw people running around in battle dress uniforms
    [BEU's] doing physical training [PT], going to GED classes. It
    looked like it was a lot more involved than what a regular high
    school was. I was already going to drop out of high school. I
    dropped out. I applied to the program. I got accepted. That is
    probably where my life started to turn around right there.
        I went down to Fort Stewart. I did the 5-month residential
    phase. It was probably one of the longest 5 months of my life.
    I had never been away from home before. I was scared. I was
    with a bunch of people that I did not know. I was getting
    dropped for pushups all the time, getting up at 5 o'clock in
    the morning doing PT. It was like my whole life was turned
    upside down.
        I worked on my GED, I got my GED, I had the opportunity to
    take some college courses at Savannah Tech, and started to get
    things moving and started to get kind of motivated. I liked the
    way my life was starting to go.
        I started to become productive. I was not sleeping all day.
    My mom was proud of me. I was finally doing something. I knew I
    wanted to go to college. Toward the end of the program I
    decided that the military life had kind of worked out for me
    and got me on track, and so when it came time to think about
    college I applied to the Citadel, and luckily I was accepted,
    and here I am today, sir, just to tell you about how great the
    program is.
        Senator Stevens. You have been through 1 year already at
    the Citadel?
        Mr. Sparra. Yes, sir.
        Senator Stevens. How did you work out? What kind of grades
    did you get?
        Mr. Sparra. Academically it was very hard for me. My first
    year I did not do too well. I think my main problem was study
    habits, because I did not learn that. I did not learn how to
    sit down and make myself study.
        Surprisingly, though, all my classmates who had graduated
    from high school, a great deal of them did not have good study
    habits, either, and so when it came to grades I was not at the
    bottom of the barrel, but I was not at the top of my class,
    either. I was right in the middle.
        This year I am doing pretty well, though. I am really
    pleased with my grades. I know how to plan and when I need to
    study and what I need to do, and I am loving it.

                        alternative structure education

        Senator Stevens. Good. Very good. Well, you are a
    testimony, the three of you, to the foresightedness of the
    people in the Guard. You started this program, and we who have
    been familiar with it from the beginning have wanted to expand
    it.
        I have a personal reason to be interested in it, as Jake
    knows. I wish there had been one available for one of my kin
    who got a little bit out of kilter, as you have in the past,
    but I do think that this is the kind of program that needs more
    advertising, and thank you for coming.
        I see one behind you. Ms. Powell, are you part of the
    program, too?
        Ms. Powell. I am a staff member, sir. I am the one that
    wakes them in the morning. [Laughter.]
        Senator Stevens. Senator Cochran, do you have any
    questions?
        Senator Cochran. Thank you, Mr. Chairman. The program I
    think in our State has been one of great success as well.
    Mississippi is one of 20 States that has an active program, and
    there are about that many that would like to have the program,
    but because of funding shortfalls are not able to. In
    Mississippi I am told the legislature has provided additional
    funds to have extra classes, and that they have an annual
    enrollment of about 400 students.
        And they have just considered legislation that would
    increase that to 800. So, the States are coming up with money
    and using this model. It is based at Camp Shelby, with the
    National Guard training facility in Hattiesburg as the site for
    this. So it has been a great success, I am told, in our State
    as well.
        I congratulate those of you who are involved as students,
    staff, administrators of the program. You have really done a
    great job, all of you have, and you can probably take a great
    deal of pride in leading the way for the whole country.
        Senator Stevens. I am going to yield to Senator Bumpers in
    a moment, but Colonel Williams, the thought strikes my mind
    that maybe you ought to also be sort of indoctrinating some of
    the people from the high schools in each State, the people who
    are teachers, to come and participate to get some ideas about
    maybe having classes, or having some alternative structure of
    education for people like this who get bored with the existing
    concepts of education and who drop out.
        We have known other dropouts. One of them started the
    largest manufacturing company in the world, as you know, but
    they all do not have that stimulus.
        Is there any way you could integrate into your program some
    kind of an adjunct teacher so that they could take some of
    these high school teachers that could get some experience in
    how to deal with young people like this who want a different
    opportunity?
        Colonel Williams. Sir, I have been to a couple of the local
    schools around there and worked some with their alternative
    school people. I have also worked with Georgia Southern and had
    interns come down and work, and so Georgia Southern University
    is sending students down to look and see from time to time.
        Senator Stevens. That is very good. I think that would be a
    good cross-pollenization with the existing school structure.
        Senator Bumpers.
        Senator Bumpers. Mr. Chairman, I just simply want to say I
    got in on the tail end of these youngsters' testimony, and I
    came here really to grill General Baca, who I understand
    probably heard I was coming and left. [Laughter.]
        Senator Stevens. No; he is right back there. He is waiting
    for you. But he is going to leave now, now that he knows what
    you want. [Laughter.]
        Senator Bumpers. But I also want to state that Arkansas has
    a Youth Challenge Program and we are very proud of it. It has
    been very successful.
        But Colonel, let me ask you this question. Are you limited
    under your present budget on how many youths you can take?
        Colonel Williams. Yes, sir; I am limited. The funding was
    for 180 students.
        Senator Bumpers. Nationwide?
        Colonel Williams. For my program. For my program I was
    limited, and I am funded by the number of students that I
    carry.
        Senator Bumpers. How many students attend the Challenge
    Program now, do you know?
        Colonel Williams. Nationwide I do not know, sir.
        Senator Bumpers. I am told by staff it is 3,566. Is that
    correct?
        General Lestenkof. I am told, Senator, that the number is
    3,000 nationwide within the Challenge Program.
        Senator Bumpers. 2,000?
        General Lestenkof. 3,000.

                         criteria on accepting students

        Senator Bumpers. This was the target enrollment, 3,566.
    What is the criteria, if I have a wayward youngster and I would
    like to get him in the program, and I brought him to you, and
    he has been having problems with drugs, maybe, petty thefts,
    that sort of thing. What is the criteria on whether you accept
    somebody or do not accept somebody?
        Colonel Williams. The criteria, sir, is they have to be
    between 16 and 18 years old and have to have dropped out of
    high school. They have to be drug free, and what that means is,
    on day one I give them a drug test and it comes back negative.
        Senator Bumpers. Or you do not take him?
        Colonel Williams. I do not take him if it comes back hot,
    no, sir.
        Senator Bumpers. Then how did you get in? You said you were
    high most of the time.
        Mr. Phagan. Well, I wanted to get into the program, and so
    I stopped.
        Senator Bumpers. How long had you been drug free when you
    applied?
        Mr. Phagan. Two or three months.
        Senator Bumpers. Two or three months, and how long have you
    been in the program?
        Mr. Phagan. Eight weeks.
        Senator Bumpers. How long is the program?
        Mr. Phagan. Twenty-two weeks, sir.
        Senator Bumpers. Twenty-two?
        Mr. Phagan. Yes, sir.
        Senator Bumpers. And you are doing well in the program?
        Mr. Phagan. Yes, sir; I have already got my GED.
        Senator Bumpers. What do you want to do when you finish?
        Mr. Phagan. I want to go to college and into the military.
        General Lestenkof. Senator, just let me add that in
    watching this program for a number of years, probably the
    bottom line on any youngster coming into the program is that
    they must want to attend the program. We are not going to be
    dragging them into the program.
        If they are personally interested in attending and
    participating, they will make a success of this thing, because
    we have had people who were somewhat unsure about attending the
    program that we lose in the early stages of the program, so
    there has to be that personal motivation.
        Senator Bumpers. How many youngsters are eligible to get in
    and cannot get in because the rolls are full?
        General Lestenkof. It is probably running about 12 to 15
    percent in Alaska, in my State, and that is the State I am
    familiar with.
        We estimate that----
        Senator Bumpers. General, just a moment. What is it?
        Senator Stevens. Explain that statistic to him, Jake.
        General Lestenkof. The numbers, that would probably be
    about 30 to 40 that we would not take on a regular class.
        Senator Bumpers. That would be eligible, except you are
    full?
        General Lestenkof. That would be eligible that we are not
    able to afford.
        Senator Stevens. How many do you take, Jake?
        General Lestenkof. We take 120 at the beginning of the
    class.
        Senator Bumpers. And that is the most you can take?
        General Lestenkof. Yes.
        Senator Bumpers. And you have 30 more that would be
    eligible?
        General Lestenkof. We have 30 to 40 that would be eligible.
        Senator Bumpers. Why on Earth is the administration asking
    for a cut in the funds for this program, or are you the wrong
    person to ask?
        General Lestenkof. I am the wrong person to ask. We
    estimate in our State that this year we will have about 3,000
    dropping out of our regular high school programs, so we are
    looking at an audience of about 3,000 each year that could be
    prime candidates for the program in Alaska alone.
        Senator Stevens. You only have one in Alaska, right?
        General Lestenkof. We just have one program in Alaska. Each
    State has one program.
        Senator Bumpers. Mr. Chairman, has anybody testified on why
    they are cutting these funds, why they have asked for a cut?
        Senator Stevens. Well, the fellow is not here. He lives at
    1600 Pennsylvania Avenue.
        Senator Bumpers. Well, I can handle him. [Laughter.]
        Senator Stevens. That is why we are glad you are here, sir.
    [Laughter.]
        Colonel Williams. Sir, if I could, last year Georgia had
    31,000 dropouts.
        Senator Bumpers. Pardon?
        Colonel Williams. Last year Georgia had 31,000 drop out of
    high school last year alone, and I quit advertising for
    students for my program because I get two to three times the
    number of applicants that I can take, and so I have a State
    selection committee made up of citizens of Georgia that come in
    and pick my students out of all the applications we go through,
    so there are many, many people that are qualified there that do
    not get selected just because there are too many.
        Senator Stevens. If you would yield for just one question
    there, how many of these people as they graduate want to go out
    into the military?
        Colonel Williams. Sir, I am running about 16 percent now,
    16 to 20 percent, depending on the class. The ones that go in
    do really well.
        Senator Bumpers. Mr. Chairman, I do not want to pursue this
    any further, except to say just based on the limited knowledge
    I have, and the fact that I know they love the program in my
    State, but we are 1 of only 20 States, and I think there are
    more States who want to join, and with a program with a track
    record like this has it would be unforgivable not to increase
    the funds, instead of cutting funds.
        This committee has something to say about whether these
    funds are going to be cut or not, or whether something is going
    to be added or not, and unless there is a lot I do not know
    about the program, I think it would be the height of folly not
    to allow these other States to enter the program and not to
    provide the funds for them to do it, and to provide the funds
    for you to be able to take everybody that applies that is
    eligible.
        This is precisely what we talk about on the Senate floor,
    and hold our hands over our hearts while we are doing it, and
    then come in here and the thought of cutting this program is
    the height of absurdity.
        Senator Stevens. Senator, we are expanding as rapidly as we
    can. It is, as the Colonel indicates, an adjunct to the Guard
    functions, and their task right now is to be able to prepare
    people in uniform to fill in for the reduction in the regular
    Army and Air Force, and this--we cannot let this divert funds
    from the Guard's ongoing increasing burden in the military
    structure.
        But we do want to increase them, and the difficulty is,
    these are military funds going into education, I hope you
    realize, and what we have to do is to pace it so we can
    increase it and expand it, and do it without depriving the
    Guard of the people to do the function that they must do to
    assist the regular services.
        Senator Bumpers. Well, Mr. Chairman, it seems to me the
    next observation ought to be how many of these youngsters go
    into the military when they finish the program.
        Senator Stevens. That is why I just asked the question. He
    said 17 percent.
        Senator Bumpers. Well, that is not as high as it probably
    ought to be, but that is high enough to maintain the program,
    and the thing about it is, presumably you do not have any idea
    of how many of these youngsters get in trouble after they leave
    the program, do you?
        Colonel Williams. I lose about 6 percent of the ones that
    go through.
        Senator Bumpers. During the time they are in school,
    though?
        Colonel Williams. No, sir; when they finish there is about
    6 percent recidivism, go get in some kind of trouble and go
    back and get on drugs.
        Senator Bumpers. Well, hell, the public education system
    cannot boast of that.
        Colonel Williams. No, sir.
        Senator Stevens. Jake, how many people enlist from your
    program in Alaska?
        General Lestenkof. We are running today I think about 10
    percent, and this is for the Active service and for the Reserve
    components, the Air Guard, Army Guard, and Reserve.
        Senator Stevens. But that is not really a total figure,
    because some of them might do what Mr. Sparra is doing and
    going on to college with the hope of going later. Didn't you
    say you wanted to go into the military?
        Mr. Sparra. Yes, sir; but right now I am also in the South
    Carolina State Guard.
        Senator Stevens. You are in the Guard already?
        Mr. Sparra. Yes, sir; I am enlisted.
        General Lestenkof. In Alaska we are running--about 93
    percent of our graduates are in the service, or in jobs, or
    back in school, either college or back in their own high
    schools to finish, and so that is a pretty high rate.
        Senator Stevens. We ought to be able to track them to see
    how many after they go to high school or college end up in the
    military. I do think it is an excellent way to give young
    people an opportunity to see what the military is all about.
        Do you have any other questions, Senator?
        Senator Bumpers. I do not. Thank you, Mr. Chairman.
        Senator Stevens. Well, let me tell you again, we are really
    grateful to you for coming.
        Were you serious about wanting General Baca to come back
    up?
        Senator Bumpers. Yes; I just had one question.
        Senator Stevens. General Baca is always a volunteer. If you
    young people would stay, our photographer would like to get a
    photograph of you while you are here.
        May I ask you, then, to go back to your seats and let
    General Baca come back forward.
        Senator Bumpers. My question, General Baca, is, I am again
    dismayed, dumbfounded, and really upset about the fact we are
    building hardly any National Guard armories. Benton, AR, has
    been on the list since before I was born. It is still not on
    the Pentagon's list for replacement, and as I understand it
    there are only four armories in the Guard budget, is that
    correct?
        General Baca. Senator, I do not know the exact number, but
    I think that is about right. I can give you the number for the
    record.
        [The information follows:]

             Details of Armories in the Army National Guard Budget

        There are presently four armories and/or readiness centers
    scheduled for replacement or expansion in the fiscal year 1999
    Budget. The locations are Gowen Field, Idaho, Bismarck, North
    Dakota, Powhatan, Virginia, and Camp Dawson (Kingwood), West
    Virginia. The armory at Benton, Arkansas, is in the Future
    Years Defense Plan for fiscal year 2002.

        Senator Bumpers. I am not going to go through all the
    statistics about how many armories we have and how many of them
    are in a sad state of repair or ought to be replaced, but how
    in the name of all that is good can we keep going, not doing
    any better by the Guard armories than we are doing?
        General Baca. Senator, I could not agree with you more. I
    think it is an issue that we need to address. We need the--
    armory is a misnomer, really. It is more now--it is a training
    facility for the units. The units need the adequate facilities
    to train.
        I can tell you also, Senator, that as you know in your
    communities as a citizen, Senator, it is a center for the
    activity of all the citizenry, and we need to address the
    problem. I agree with what you are saying.
        Senator Bumpers. Well, I do not know whether this committee
    is going to undertake to add to the list or put any more money
    into the program.
        You know, like everything else, I suppose we are up against
    budget caps just like everybody else is, but as I say, I just
    think this is penny-wise and pound-foolish, not to keep our
    infrastructure up for what I consider a very important element,
    and that is the Guard.

                         additional committee questions

        Well, I had questions of the Air Force, the Guard Air Force
    too.
        General Baca. Senator, we would be happy to provide you all
    your answers for the record.
        Senator Bumpers. We will submit several questions for the
    record, General Baca, and if you can get back to us at the
    earliest possible time, if you would share your answers with
    the other members of the committee.
        [The following questions were not asked at the hearing, but
    were submitted to the Bureau for response subsequent to the
    hearing:]
              Questions Submitted to Maj. Gen. Paul A. Weaver, Jr.
                  Questions Submitted by Senator Byron Dorgan
                                      f-16
        Question. There is a need to upgrade the aircraft being flown by
    the 119th Fighter Wing, now flying the F-16A. Are there plans to
    upgrade the 119th Fighter Wing to the F-16C?
        Answer. There are various force structure options under discussion
    between the Air Staff and the Air National Guard staff. Some of those
    options do include upgrading the 119th Fighter Wing from the F-16A to
    the F-16C.
        Question. What would be the ultimate result of such an upgrade, as
    to mission, number of aircraft, and cost?
        Answer. The various options under consideration include leaving the
    unit in the Air Defense mission or converting to the General Purpose
    mission. The number of aircraft assigned to the unit and the cost, will
    be consistent with other units assigned to the same mission.
        Question. Are there any F-16C's available for the 119th Fighter
    Wing or other Air National Guard Units in the foreseeable future?
        Answer. The availability of F-16C aircraft is dependent upon the
    force structure options exercised by the Total Force. As the Air Force
    is currently not buying new F-16's, any F-16C's that flow to the 119th
    Fighter Wing and other units will come out of the existing force
    structure.
        Question. Without an upgrade, how many hours are left on the
    present F-16A's
        Answer. The age of the F-16A ranges from a low of approximately
    2,500 hours to a high of approximately 4,250 hours. The fleet average
    age is approximately 3,768 hours. Remaining service life of these
    aircraft is difficult to determine, since hours alone is not a good
    measure. Current service life projections predict that the F-16A will
    be able to safely operate for several more years.
        Question. Has the possibility of a ``mid-life update'' of F-16A's
    been explored?
        Answer. Yes, the mid-life update program for the F-16A has been
    explored.
        Question. What would the cost of this update be as compared to the
    purchase of new aircraft?
        Answer. The cost of the mid-life update varies dependent upon the
    service life extension option selected. In general, the cost is
    approximately one-half the cost of a new aircraft, although the
    amortized cost is the same (approximately $3.2 million/year). The main
    difference is that, at best, the mid-life update is a 16 year aircraft,
    while a new aircraft is a 32 year aircraft. These figures are based on
    using the aircraft at the rate of 250 hours per year.
        Question. What capabilities would be lacking in such upgraded F-
    16A's as compared to F-16C's?
        Answer. The mid-life update provides Block 50 compatible avionics.
    However, the airframe is still an F-16A airframe, with all of the
    associated weight limitations. Therefore, the limitations is not
    avionics, but airframe load bearing capacity.
        Question. What are the drawbacks of this program as compared to the
    purchase of new aircraft for the active Air Force and the cascade of
    used F-16C's to the Air Guard?
        Answer. If the F-16A was to have the mid-life update accomplished,
    the only aircraft modified in this configuration would be those in the
    Air National Guard (ANG). This provides some unique logistics issues
    that separate the ANG from the rest of the Total Force. Additional
    operational concerns would also have to be addressed in order to fully
    integrate these platforms with the Total Force. There are workaround
    solutions to both of these issues; however the optimum solution would
    be to migrate F-16C models to the ANG.

                              subcommittee recess

        Senator Bumpers. Thank you very much, Mr. Chairman. That is
    all I wanted to pillory General Baca about.
        Senator Stevens. Is he entitled to another Purple Heart?
    [Laughter.]
        Thank you very much, gentlemen.
        Senator Bumpers. Unhappily, he agrees with me but cannot do
    anything about it.
        Senator Stevens. I guess he is ready for retirement.
    [Laughter.]
        Thank you very much. We are going to be in recess until
    March 19, this Thursday, that is tomorrow, to hear testimony on
    intelligence programs for this subcommittee.
        Thank you all very much.
        [Whereupon, at 11:50 a.m., Wednesday, March 18, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 1999

                                  ----------

                            WEDNESDAY, APRIL 1, 1998

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:09 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Ted Stevens (chairman) presiding.
        Present: Senators Stevens, Shelby, and Inouye.

                             DEPARTMENT OF DEFENSE

                                Surgeon Generals

    STATEMENT OF LT. GEN. RONALD R. BLANCK, SURGEON
                GENERAL, U.S. ARMY

                     OPENING STATEMENT OF HON. TED STEVENS

        Senator Stevens. Gentlemen, we apologize. We had the markup
    session on the tobacco legislation, and we told them we had
    other medical problems over here to deal with so we could come
    over here. So, my friend and I are here and we are happy to
    have a chance to visit with you about the future of our health
    problems.
        It is a pleasure once again to welcome you, General Blanck,
    as the Surgeon General; Vice Admiral Koenig, the Surgeon
    General of the Navy; and General Roadman as Surgeon General of
    the Air Force.
        We have some very significant challenges in the Department
    of Defense and medical readiness is one of them. We do have to
    have the ability to care for the Active Force and to keep the
    commitments we have made to those who have been in the force. I
    hope that we will have the chance here to discuss a lot of the
    issues that we have tried to deal with in the past.
        I am going to ask my colleague if he has a statement.

                       STATEMENT OF HON. DANIEL K. INOUYE

        Senator Inouye. Thank you very much. I would like to take
    this opportunity to acknowledge Vice Admiral Koenig. I believe
    this is the last time he will be appearing here. I wish to
    thank you for your enduring support over the past 4 years and
    wish you much success in future endeavors.
        Mr. Chairman, I have had several opportunities to visit
    military medical facilities over the past several months, and I
    found care delivery to be excellent, which reinforces my belief
    that our military health care is far superior than that of
    other countries. We provide high quality care because our
    service members and their families deserve the best.
        One of the most important aspects of the high quality of
    military medicine is the access to care provided to our
    beneficiaries. Although the overall size of our military forces
    and number of treatment facilities has declined, the number of
    eligible beneficiaries has increased. This increase is due to
    two important factors.
        First, the average family size of our junior enlisted
    members has increased. Statistics now show that approximately
    65 percent of our forces now have family members eligible for
    health care.
        The second factor I believe is the excellent retention
    which has increased the number of service members who remain on
    active duty through retirement.
        During visits to my home State, many current and former
    members of the military frequently ask about the future of
    military health care and they express confusion and concern
    about the options available and why changes such as TRICARE
    were necessary. They are particularly apprehensive about the
    changes to the availability of quality services to their family
    members. I can say with confidence that the ready access to
    quality health care, wherever military members are living, is
    always of paramount concern to them.
        Today, as we address many of the issues facing our military
    health system, I would like to focus on military medical
    readiness, provision of health care services to our
    beneficiaries, new technology initiatives, and the President's
    fiscal year 1999 budgetary request. So, I look forward to the
    testimony this morning.
        I would like to join my chairman in welcoming General
    Blanck. He has been a good friend for many, many years. And
    also General Roadman. Welcome, sir.
        I would like to also announce, in case you have not heard,
    the State of Hawaii and Tripler Medical Center has had a new
    addition, the highest ranking nurse to be Commander in Chief of
    the facility. So, congratulations to all of you. We finally
    crossed the border here. The next one is three stars.
    [Laughter.]
        Senator Stevens. Gentlemen, I have recently had some
    information from one of you that in the Washington, DC, area,
    because of the innovative way that we have handled
    consolidation of functions at military hospitals, we have
    actually been able to hold inflation in terms of the cost of
    the services you provide here down to approximately 1 percent,
    compared to the 7 to 12 percent of medical systems generally.
    You are to be congratulated. I hope other people are listening
    to what you are going to tell us because I think that reports
    are very good in terms of the innovative way and the approach
    to the job you have to provide better care and holding down the
    costs we have.
        So, let me first start with you, General Blanck.

                     statement of lt. gen. ronald r. blanck

        General Blanck. Thank you, Mr. Chairman, distinguished
    members. I appreciate the opportunity to appear with my
    colleagues.
        I will keep my remarks brief and ask that my testimony, of
    course, in its entirety be part of the record.
        The Army Medical Department, along with our sister
    services, is looking at how we can shape our total medical
    force as we prepare for all of the eventualities and as we
    respond to the ever-increasing need for health care,
    particularly of not only our active duty and family members but
    also our retirees and their family members of all ages.
        We are shaping, Mr. Chairman and distinguished members, by
    such things as the consolidations that you referred to. Here in
    the National Capital area there have been functional
    consolidations between National Naval Medical Center and Walter
    Reed Army Medical Center, as well as Malcolm Grow Air Force
    Medical Center. We have combined most of our graduate education
    programs and actually have centers that do one specific thing
    at just one, not all, of those medical centers, so that we have
    avoided duplication.
        The same thing is happening throughout this country, and I
    would also mention similar consolidation efforts in San Antonio
    between Wilford Hall Air Force Medical Center and Brooke Army
    Medical Center. This is one example, at least, of how we are
    managing to continue to provide ever-increasing quality of care
    with much more accessible care, making it more accessible and
    at the same time holding costs down to a minimum. It is care of
    value and I think of great value to this Nation.
        We do have serious problems within the shaping,
    particularly in our Reserve components where, for the Army at
    least, I have serious shortages in physicians, dental officers,
    and physicians' assistants. Some of those problems are
    occurring in the Active Force, but far less so. The Reserve
    force is of great concern to me, and we have certain
    initiatives in place to improve recruitment and increase
    retention.
        We have, as noted, moved to corps in material commands with
    General Adams taking the command of Tripler Army Medical
    Center. This first 99 command board that considered all corps
    will be announced shortly and I suspect there will be members
    of the Nurse Corps and the Medical Service Corps as well as the
    Medical Corps on that list.
        Finally, we are also shaping with innovative technologies,
    a variety of kinds of information technologies. Telemedicine in
    particular has played a key role and we are doing that through
    the AKAMAI project with Hawaii and Alaska and using it many,
    many places including today in Bosnia and in Kuwait, Bahrain,
    the whole gulf area.
        We are preparing our force for all the eventualities in a
    variety of ways. We are applying the protection of anthrax
    vaccine, and those immunizations are going on as we speak, all
    captured in an immunization tracking system so we know who got
    them.
        We are preparing with such evacuation platforms as the UH-
    60Q, and I appreciate the support that you individually and
    this committee have provided to let us have our first eight of
    these evacuation platforms.
        Of course, we are into health promotion through not only
    all of the education programs but such technologies as the
    electron beam computerized tomography that you have been very
    supportive in and that we now have at Walter Reed and some
    other places within the system. Of course, we are moving to
    develop the generation after that--the volume angio-CT.
        We have the chemical/biologic response teams standing up at
    our medical centers, and we really are trying to look at all of
    the kinds of scenarios to which we might be called upon to
    respond.
        Response. We are doing that in Bosnia. We are doing it in
    the gulf. We are doing it with partnering with such groups as
    the Center of Excellence in disaster management and
    humanitarian assistance, in Honolulu with the university there.
        We are implementing TRICARE throughout, and as of the end
    of this spring, May 1, we will actually have contracts in all
    of the areas in TRICARE, the last being the Northeast, here in
    the National Capital area up through Maine.
        Part of this responding is, of course, to try to provide
    better access to care to those retirees and family members 65
    and over through Medicare subvention, through other initiatives
    of partnering with Medicare health maintenance organizations.
    We are working closely with not only you, but with our
    constituency organizations, our beneficiary organizations, to
    try to come up with innovative ways to provide that care.

                               prepared statement

        I look forward to your questions, and again thank you for
    the opportunity to appear before you.
        Senator Stevens. Yes, sir.
        [The statement follows:]
                Prepared Statement of Lt. Gen. Ronald R. Blanck
                                  introduction
        Mr. Chairman and members of the Committee, I am Lieutenant General
    Ronald R. Blanck, The Army Surgeon General. It is a privilege for me to
    address this committee. This morning I would like to provide you with a
    picture of the Army Medical Department. Through this picture you will
    see an Army Medical Department fully integrated not only on any future
    field of battle, but in garrison as well, taking care of all our
    soldiers, retired and active--and their family members. I will provide
    this picture in the context of the three Army Imperatives--Shaping the
    Force, Preparing the Force, and Responding to the Needs of our Army and
    the Nation. In so doing, I will highlight the issues and challenges
    that Army Medicine faces today and into the future. Next, as I know
    this is an area of intense concern for the Committee, I will focus some
    comments on current issues in telemedicine and TRICARE and its ongoing
    implementation. Further, I will highlight areas where the Army Medical
    Department is working in close cooperation with our sister service
    medical departments to gain efficiencies. Finally, I will take a few
    moments to complete the picture by sharing with you some ``Good News''
    stories from within the Command. At the conclusion of my testimony, I
    believe you will agree, today's Army Medical Department is more
    flexible and better prepared to meet all our diverse missions than ever
    before. I thank you for your continued support of our efforts to
    provide the finest quality of medical support to America's Army.
                 current status of the army medical department
        The Army Medical Department continues to respond with creativity
    and energy to the challenges of health care in a rapidly changing
    environment. Since the end of the Cold War, the Army Medical Department
    has reduced by about 20 percent in officers and about 40 percent in
    enlisted soldiers. In 1990, we had 168 field hospitals--active and
    reserve--that number has dropped to 52 and will continue to fall. In
    the same timeframe, the Army Medical Department began with 10 Medical
    Centers and 28 Medical Department Activities--Community Hospitals--our
    inpatient facilities, and has reduced to 8 Medical Centers, 18
    Community Hospitals, and a host of large outpatient Medical Clinics.
        Even as we reduce our numbers, we are deploying all over the world
    more than we have in recent years. These deployments are not typically
    for combat, but rather for humanitarian assistance and stability and
    support operations. Medical personnel are finding that on these
    missions they are typically providing preventive medicine expertise and
    disease and environmental surveillance. All the while, we must maintain
    day-to-day health care for soldiers, retired soldiers and their
    families.
        Army leadership has articulated three imperatives as we approach
    the challenges of the 21st Century. We in the medical department must
    align ourselves with the rest of the Army to shape our forces to meet
    the needs of a changing world; we must also prepare our forces by
    staffing, equipping and training them to successfully complete all
    missions they may be called upon to perform; and we must respond to the
    needs of the Army and the Nation. Let's look at the Army Medical
    Department's current priorities, as they relate to these imperatives:
    Shape
        Drawdown.--The Army Medical Department has been a full participant
    in the drawdown of the total Army Force. Reductions of 37.6 percent in
    the active Army Force have been mirrored by a drawdown of 34 percent in
    the Medical Department's military strength. We will continue to shape
    our force utilizing all of the Congressionally provided tools, striving
    to meet the allocated military endstrength in fiscal year 1999. These
    tools (Expanded Selective Early Retirement Authority, the Variable
    Separation Incentive Programs and the Variable Early Release and
    Retirement Program) have been applied selectively to the various
    competitive categories which comprise the Army Medical Department. The
    overriding consideration during this entire period has been to insure
    the correct specialty mix has been maintained to sustain the readiness
    of the Army Medical Department to accomplish its multifaceted mission.
        Leadership Development Opportunity.--Historically, senior
    leadership positions and commands within the Army Medical Department
    (AMEDD) have been corps specific. As an example, Medical Treatment
    Facilities have been commanded by officers of the Medical Corps (MC)
    and non-deployed TOE medical units have been commanded by Medical
    Service Corps (MS) officers. Dental and Veterinary units have been
    commanded by Dental Corps and Veterinary Corps Officers respectively.
    As a result there have been few corps immaterial senior leadership or
    command opportunities for AMEDD officers. This policy has limited the
    AMEDD's ability to select the best-qualified officer for senior
    leadership positions.
        In January 1997 the Secretary of the Army approved the Surgeon
    General's request to change Army regulations which had restricted
    command of Medical Treatment Facilities. In general veterinary, dental,
    aviation, garrison and logistics commands will remain corps specific.
    Virtually all other commands will be AMEDD corps immaterial. The
    implementation of corps immaterial commands within the AMEDD will be
    phased in over the next few years. The fiscal year 1998 DA Command
    Designated Position List (CDPL) selection boards held in November 1997
    for Lieutenant Colonel and January 1998 for Colonel was the first
    opportunity for AMEDD officers to compete for commands designated corps
    immaterial. Results of these boards are expected to be released in
    April/May 1998 for commands opening in the Summer of 1999. In addition,
    the Army Medical Department has identified and opened appropriate non-
    command senior leadership positions to the best-qualified officers of
    each AMEDD Corps.
        Reserve Component Staffing.--The Army depends heavily on its
    Reserve Component for medical support. About 70 percent of the Army's
    medical forces are in the Army Reserve--representing approximately 273
    medical units. Several efforts over the past several years have
    improved some aspects of reserve readiness. For example, Medical
    Command and Reserve Command signed a Memorandum of Understanding that
    allowed closer interaction and support between reserve and active duty
    assets. Medical Command has also established Regional Medical Commands
    that are responsible for active/reserve integration in their respective
    geographical areas.
        Although these efforts have been successful in meeting their major
    objectives, we continue to have serious problems in other areas, most
    notably acute shortages of physicians and dentists in many reserve
    units. With a loss rate higher than our gains every year since Desert
    Storm, the current recruiting incentives are obviously not meeting the
    objectives of the force.
        It is a very complex set of challenges but we have already begun
    working on the following partial remedies: (1) increased emphasis with
    Recruiting Command on manpower needs, and (2) individualized efforts to
    convince physicians and dentists leaving active duty to join reserve
    units.
        Neither of these efforts alone will solve the problem, but if we do
    a good job in both areas, along with on-going restructuring, we can
    make significant inroads in eliminating the shortages.
        Dental Officer Shortages.--We continue to have concern regarding
    the recruitment and retention of dental officers in the Army Dental
    Corps. Our budgeted end strength for dental officers is 1,169, and on
    the 31st of January 1998 this year, we had 1,018 in the Dental Corps,
    indicating that we are 13 percent understrength. We have not been able
    to meet our accession goals for the past 13 years. Additionally, the
    Dental Corps is an aging force. As of February 23, 1998, 17 percent of
    Dental Corps officers are retirement eligible and an additional 43
    percent of current Dental Corps officers will be retirement eligible
    within 5 years.
        In response to this, Congress enacted a pay increase for both
    junior and senior officers, and an accession bonus and loan repayment
    program to enhance the recruiting of new officers. The National Defense
    Authorization Act of 1998 also provides for a Multiyear Retention Bonus
    for all specialists.
        We are working to maintain the number of Health Professions
    Scholarship Program scholarships in dentistry and to obtain funding for
    specialists under the Multiyear Retention Bonus. We will continue to
    work in this area and monitor progress.
        Physician Assistant Shortages.--Since 1992, the number of Physician
    Assistants leaving the Army has exceeded the number of accessions. This
    has resulted in insufficient numbers of Army Physician Assistants,
    hindering the provision of Army healthcare. There are a number of
    reasons for this problem and we are looking at several potential
    solutions. The solutions range from loan repayment for Physician
    Assistant School and recruitment bonuses to expanding the Green to Gold
    program and increasing the number of Physician Assistant Training
    seats. This problem is receiving a great deal of attention and I am
    confident we will overcome this critical shortage.
        Consolidate Regions.--The Army Medical Department needs to align
    its organizations better in two ways. First, we will position ourselves
    around the deployable corps--XVIII Airborne Corps, III Corps and I
    Corps--by really focusing on the needs of each of the warfighting
    Commanders in Chief. Also, we need to align ourselves and link
    ourselves better with TRICARE lead agents. They are increasingly
    important organizations for coordinating health care throughout the
    Army, Navy and Air Force, and to a certain extent the Public Health
    Service, in order to oversee managed-care support contracts.
        The Southwest Regional Medical Command consolidated with Great
    Plains Regional Medical Command last fall. The expanded Great Plains
    Regional Medical Command supports III Corps, and will focus on Southern
    Command. The Pacific Regional Medical Command and the Western Regional
    Medical Command have signed a Memorandum of Understanding defining
    their peacetime/wartime support of I Corps and Pacific Command,
    particularly with regard to crossed lines of authority in Alaska. The
    North Atlantic Regional Medical Command and the Southeast Regional
    Medical Command are developing a Memorandum of Understanding as to how
    they will both support 18th Airborne Corps and share resources.
    Southeast Regional Medical Command will focus on Central Command and
    North Atlantic Regional Medical Command will align with the Europe
    Regional Medical Command to focus on European Command. These alignments
    should clarify regional responsibility and facilitate and improve
    habitual training and support relationships.
        Integration of Field Units into Fixed Facilities.--The Army needs a
    certain number of rapidly deployable field hospitals that are fully
    staffed--except for professional fillers--and able to deploy within 10
    days. Other deployable hospitals, however, may be given ``Caretaker''
    status, with most personnel working day-to-day at fixed military
    hospitals. This helps maintain clinical skills and makes the best use
    of personnel to meet the daily demand for health care. Each Caretaker
    Hospital, with the staff working in the fixed facility, provides
    approximately $24 million worth of health care per year and is able to
    deploy in 10 and 30 days. Reserve personnel will mobilize to staff the
    fixed hospital when its active personnel deploy with their Caretaker
    Hospital. TRICARE support contracts also provide for increasing the
    level of care/number of providers available during mobilization.
        Army Medical Command/Office of the Surgeon General One Staff.--Last
    year we reduced duplication between the U.S. Army Medical Command
    Headquarters staff located mainly in San Antonio, Texas, and the Office
    of the Surgeon General staff located in the National Capital Area. This
    was not a downsizing exercise but a measure to improve performance by
    further flattening the organization and reducing duplication. It
    follows the dual-hatting of the Surgeon General as Commander of the
    U.S. Army Medical Command. The Deputy Surgeon General became the U.S.
    Army Medical Command's Chief of Staff. Three brigadier generals serve
    as Assistant Surgeons General in addition to having functional areas of
    responsibility within the Medical Command. Modern communication
    technology allows leaders in one location to communicate efficiently
    with their staff in another location.
        Medical Reengineering Initiative.--The Medical Reengineering
    Initiative is the outcome of a process that examined the ten functional
    areas of Combat Health Support to ensure their relevance to future
    operations. It provides for a single, modular hospital and better
    command and control, with treatment teams and streamlined support
    elements. Potential manpower reductions generated as a result of MRI
    will be garnered as savings under the Quadrennial Defense Review (QDR)
    and the Total Army Analysis Processes.
        The Army Medical Department is an integral part of the Army, and as
    the Army reduces, so must its medical support. As a result of the QDR
    decision to reduce the Army from 495,000 to 480,000, the MEDCOM will be
    reducing by about 800 military spaces. Some of this directed reduction
    will impact on health care providers and ancillary support. Although it
    is still assessing how best to execute its share of the QDR decrement,
    MEDCOM intends to premise its reduction on changes in workload and
    population served as much as possible. Critical to this analysis will
    be the protection of MEDCOM's core competency as a readiness focused
    health care enterprise.
        Army Medical Department Information Reengineering.--A special study
    group called Task Force Mercury analyzed information management and
    information technology in the Army Medical Department, in order to best
    harness this critical resource. They delivered 27 recommendations for
    business-process changes pertaining to doctrine, training, leader
    development, organization, materiel and soldiers. Outcomes and
    efficiencies realized through these efforts include consolidation of
    seven organizations into one organization accountable for acquisition
    and support of information products, elimination of duplication across
    the organizations, and improved delineation of roles and
    responsibilities. Additionally, we are leveraging existing staff to
    address information requirements for both fixed and field operations.
    Customer support is now deployed far forward. Training of information
    management skills is now incorporated throughout all Army Medical
    Department curricula. A process for prioritization of business
    requirements has been established which will ultimately improve
    mechanisms for prioritization of corporate investments in information
    technology. These and other business process changes are anticipated to
    significantly improve the Army Medical Department's ability to exploit
    information and information technology across the full spectrum of
    operations.
        Reinvention.--As evidence of the Army Medical Department's
    commitment to reshape and reinvent itself, the U.S. Army Medical
    Command requested and obtained designation as a Reinvention Center.
    Reinvention Centers and Laboratories are designated to lead the way and
    set the pace of change by experimenting with new processes and new ways
    of doing business. Although the Army Medical Department has been
    leading change for years, this designation affirms our commitment to
    innovation and making smart business decisions. In addition to the
    command's designation as a Reinvention Center, five subordinate units
    have been designated as reinvention laboratories (the U.S. Army Health
    Care System Support Activity, U.S. Army Medical Research and Materiel
    Command, U.S. Army Center for Health Promotion and Prevention Medicine,
    the U.S. Army Medical Department Activity at Fort Knox, Kentucky, and
    the U.S. Army Dental Command).
    Prepare
        Readiness Training.--Phased implementation of new standards to
    train all medical soldiers for combat support began October 1. These
    are not intended to revolutionize the substance of training, but rather
    to ensure wider understanding of requirements and greater consistency
    in implementation. The eight requirements are survival skills, weapons
    training--for selected personnel--collective training, competency-based
    orientation, Deployable Medical Systems training, job-specific medical
    training, job-specific readiness training and a briefing on Medical
    Force Doctrine. A database in the Medical Occupational Data System will
    track these requirements.
        Battlefield Evacuation.--Of critical importance to me is evacuating
    wounded soldiers from the battlefield to medical treatment facilities.
    Several initiatives, if successfully implemented, will upgrade our
    capabilities for this vital mission:
        The Air Force has agreed to support evacuation from forward
    hospitals to the rear, using C-130 transport aircraft as High Capacity
    Air Ambulances. Joint doctrine has been developed and will be included
    as a chapter in Field Manual 8-10-6.
        In fiscal year 1996 and fiscal year 1997, Congress funded the
    modification of eight UH-60's to the UH-60Q air ambulance
    configuration. The cost of this modification is $2 million per airframe
    and allows for sophisticated medical treatment during evacuation. The
    UH-60Q provides advanced trauma management, enhanced navigation,
    communication and digitization on the battlefield. This enhancement
    gives the pilot situational awareness of his location and the enemies,
    and the capability to obtain and forward patient status information,
    beyond vital signs, to the receiving medical unit.
        The Army POM has program funding for procurement of 117 UH-60Q's to
    begin in fiscal year 2002 in support of our Force Package 1
    requirements. The Army procurement plan continues well into the out
    years until all UH60Q's have been procured through Force Package IV,
    giving the Army a total of 357 UH-60Q's for battlefield evacuation.
        Until funding is available to purchase the remaining UH-60Q's, the
    Army is required to procure medical conversion kits necessary to
    convert the standard UH-60A to a UH-60A aeromedical evacuation
    platform. Although the conversion kit does not provide the
    sophisticated medical evacuation capabilities of the UH-60Q, it does
    satisfy the interim requirement to provide for patient evacuation on
    the battlefield.
        A prototype of the new Armored Medical Treatment Vehicle performed
    magnificently during the Advanced Warfighting Experiment at Fort Irwin,
    CA, last spring. The Training and Doctrine Command has validated the
    Armored Medical Treatment Vehicle requirement. We are working on a plan
    that would allow us to begin procurement of the Armored Medical
    Treatment Vehicle beginning in fiscal year 2000.
        TDA Specialty Response Teams.--When Korean Air Flight 801 crashed
    in Guam last August, Tripler Army Medical Center had a critical care
    team in the air within hours to assist the Navy hospital in Guam.
    Shortly after, the Institute of Surgical Research at Brooke Army
    Medical Center had two teams of burn specialists flying to the site to
    provide care to casualties. We intend to form similar teams with
    special skills in trauma/critical care, chemical and biological
    casualties, stress management, telemedicine, and preventive medicine
    and disease surveillance. The teams will give us the capability to get
    two to four highly skilled care providers to a remote site rapidly,
    while larger support forces are mobilizing. These teams, primarily
    based in the Continental United States, are designed to respond to
    regional needs, often civilian, and are not designed to replace field
    units.
        Technology.--We are enthusiastically incorporating advanced
    technology into the way we provide world-class care to our patients. I
    will defer my comments on technology and telemedicine here so that I
    may focus more on it in a few moments.
        Soldier Medical Readiness.--The Medical Protection System, a
    medical Occupational Data System application, has been identified as
    the system to record, report and archive soldier and unit readiness.
    Implementation of the system is ongoing with immunization tracking
    being the first module to be completed.
    Respond
        This last imperative is where the medical department differs
    somewhat from the Army's line units, for we must not only respond to
    the call to battle in far-off lands, but we must also respond to the
    daily demand for high-quality, cost-efficient health care for soldiers,
    families and retirees.
        Operation Joint Guard.--Army medical personnel are doing a
    magnificent job in Bosnia and Hungary supporting Operation Joint Guard.
    Their good work and aggressive health promotion have resulted in low
    rates of illness and injury. One particularly creative approach was the
    production of decks of playing cards that also contain tips to help
    troops avoid cold injuries, rodent and tick-borne diseases, and other
    preventable illnesses and injuries.
        Also in place in Bosnia, the U.S. Army Center operates a highly
    successful disease surveillance program for Health Promotion and
    Preventive Medicine. The ability to collect and analyze, in theater,
    information on disease and injury occurrence will permit early
    identification of threats to the health of the force and enable the
    timely use of preventive measures.
        We are learning how to use telemedicine more effectively. While
    visiting a Battalion Aid Station in Bosnia, I was impressed to see a
    physician assistant speak to an emergency room physician in Landstuhl,
    Germany, using a satellite connection. It was simple, relatively
    inexpensive, portable and effective.
        TRICARE.--TRICARE is the Department of Defense response to the
    Congressional mandate to develop a health care delivery system using
    the concepts of managed care while maintaining readiness, containing
    costs, and improving access to health care. TRICARE is an umbrella
    program bringing together the capabilities of the individual military
    Services, CHAMPUS, and civilian contractor preferred provider networks.
    I will speak much more about TRICARE in a few minutes.
        Health Promotion.--One of the tenets of Managed Care directs that
    care is provided by the most medically appropriate, qualified provider
    to each patient at the right time and at the right place. In an ideal,
    efficient managed-care program, the appropriate level of care may well
    be lifestyle counseling and behavior modification to keep the
    beneficiary healthy to begin with, rather than waiting to cure an
    illness that could have been avoided. Again, I will focus more on this
    issue later.
        Ambulatory Data System.--This new automation system captures
    diagnosis and procedure information on outpatient visits. The capturing
    of this more detailed clinical information is critical for decision
    making and to support our new costing methodology.
        Clinical Pathway Implementation.--Variation is the enemy of
    quality. Clinical practice guidelines and clinical pathways are road
    maps used to reduce unwanted variation and to maximize the quality of
    care rendered. The use of clinical practice guidelines, the adaptation
    of locally specific clinical pathways, and the sharing of information
    will enable us to achieve our overall goals of improving clinical
    outcomes, conserving resources, and improving patient satisfaction.
        A database has been developed to track clinical pathways at Army
    Medical Treatment Facilities. Our Medical Treatment Facilities are now
    using 103 more clinical pathways than they were a year ago.
        More information about the issues discussed here can be reached
    through our new Army Medicine Web Site: http://
    www.armymedicine.army.mil.
        We have to learn to manage change to our greatest advantage. The
    best way we can manage constant change is to be intellectually flexible
    while retaining an unchanging set of core values and functions.
        The core values of the Army Medical Department are: Loyalty, Duty,
    Respect, Selfless-service, Honor, Integrity, Personal Courage,
    Commitment, Competency, Candor, and Compassion with absolute patient
    focus. Our three core functions are: Project a Healthy and Protected
    Force; deploy the Medical Force; and manage the Health Care of the
    Soldier, the Soldier's Family, and the Military Alumni Family.
        If we can keep these values and functions as nonnegotiable
    guidelines, we will be able to adapt to the changes on the horizon. As
    long as we use our core values to guide changes to our core functions,
    we will be a wiser and more efficient organization than we have ever
    been in our 222-year history.
                                  telemedicine
        This morning I would like to outline to you the overall vision and
    goals of telemedicine, the lessons we have learned from our
    experiences, the present status of Army Telemedicine in the field and
    in our military training facilities, and the leading edge research in
    this area.
        Telemedicine and the Goals of Telemedicine.--Telemedicine is the
    use of information management and technologies to provide healthcare
    across time and distance. The technologies involve the use of
    telecommunications that pass the information from one health care
    delivery site to another or between a clinician and a patient.
    Telemedicine information can be transmitted by telephone, faxes,
    videoteleconferencing (VTC), or personal computers using various forms
    of telecommunications including the Internet.
        The goals of telemedicine are to improve the efficiency of the
    delivery of health care, improve access, improve the quality of care,
    and reduce costs. The recipients of the benefits of these telemedicine
    efforts are the active duty forces, their dependents, and the retirees.
        Lessons Learned in Telemedicine.--The military has accrued
    experience in telemedicine both in the field and in the military
    treatment facilities. Some of the early uses of telemedicine included
    high-end videoteleconferencing (VTC) equipment with the use of high
    bandwidth. Often the equipment was very bulky, difficult to use by the
    average health care provider, very expensive, and difficult to
    implement in the day to day routine of a provider. The past several
    years have shown significant improvements in telemedicine technologies,
    such that VTC equipment can run at the desktop, is easier to use, is
    less expensive, and effective applications can be implemented without
    the necessity of the high bandwidth.
        Although real time video teleconferencing is sometimes necessary to
    make diagnoses, a great deal of telemedicine in the Army today is being
    done by store-and-forward technology. Store-and-forward is the capture
    of still images or video clips as digital files and transmission of
    these files. Transmission can be via the internet, telephone lines or
    by satellite. Relatively low transmission rates can be employed
    effectively with the store-and-forward approach. The store-and-forward
    approach allows for the use of easy to use equipment (PC and video
    camera) which is readily available at minimal cost. The use of this
    simple technology is illustrated in various places in the Army in our
    deployed units, such as in Bosnia, and in the fixed military
    facilities. Walter Reed Army Medical Center and Tripler Army Medical
    Center have used web based store-and-forward technology to perform
    teledermatology in a wide area network with considerable success and
    have produced improvements in health care delivery.
        The United States Army continues to be a leader in the deployment
    of operational telemedicine programs at fixed military treatment
    facilities. There are at least 54 operational telemedicine programs in
    our six regional Army medical commands. The majority of the
    telemedicine applications are associated with teleradiology,
    telepathology, teledermatology, and telepsychiatry. Telemedicine
    applications that fit well into the daily routine of a health care
    provider and produce an improvement in the healthcare delivery process
    will have great potential to be accepted by the provider. Teleradiology
    and telepathology are excellent examples. Teleradiology leverages the
    technology to improve access, to improve the turnaround time to make a
    diagnosis and thus improve quality and reduce cost. In Europe, the
    introduction of teleradiology reduced the average read time from two
    weeks to several days with an improvement in diagnosis. The Armed
    Forces Institute of Pathology has been conducting telepathology for the
    past several years. Last year pathologists there read 325 cases with
    average turnaround time of 24 hours from overseas and 4 hours within
    the United States.
        Home healthcare is being supported by telemedicine in the South
    East Regional Medical Command. This service is being provided to
    patients who have severe heart failure and lung disease. Telemedicine
    allows them to have easier and more effective interactions with their
    health care providers without traveling to the hospital. In our Great
    Plains Region, abnormal physiological monitor tracings of neonates in
    the intensive care unit in the Army Hospital at Ft. Hood (Darnall) are
    transmitted electronically to Brooke Army Medical Center. This
    capability ensures timely care and intervention for sick neonates.
        The AMEDD is also a leader in telemedicine research. The Personal
    Information Carrier (PIC) will enable medical data to be stored and
    transported with the patient. A soldier's medical history and
    predeployment medical status will be recorded on the PIC. Medical
    interventions in theater will be recorded on the PIC and will be
    available to other health care personnel when the soldier receives care
    at other locations. The information will be able to be read and written
    to by computer systems where the patient receives care and the data
    will be made available for medical surveillance and analysis. The AMEDD
    is working with the other services to develop the PIC and deploy it in
    the near future. The PIC will eventually be used to capture any of the
    data in the computerized medical record, to include digital images,
    plus information on occupational exposure and the location of the
    soldier.
        The AMEDD is also conducting research on the warfighter
    physiological status monitor, a potential subsystem of the Force 21
    Land Warrior. A lightweight, modular device (wrist mounted unit) with
    physiological sensors and processors will provide dynamic assessment of
    the soldier's medical status. Real time data about the soldier's level
    of fatigue, stress, and sleep deprivation will be captured. Immediate
    casualty notification upon detection of trauma, and incapacitation,
    will be transmitted to first responders. This capability will assist in
    the far-forward, first responder medic's triage of injured soldiers.
        The military has continued to be the leader in telemedicine and is
    working closely with the civilian health care organizations to share
    our knowledge and experience with them. We will continue to invest in
    the development and deployment of cost effective telemedicine
    capabilities.
                                    tricare
        This morning I would like to provide you with the Army Medical
    Department's assessment of the TRICARE program. My overview will
    address how the TRICARE program supports the Army Medical Department's
    strategic goal of managing the health care given to our soldiers, their
    family members and our extended military alumni family. Through this
    overview you will receive an assessment of the progress occurring with
    the implementation of the TRICARE program, the challenges actively
    being worked, and the efforts ongoing to ensure the long-term success
    of the TRICARE program.
        As I present my comments please consider that the TRICARE program
    is a significant paradigm shift from how the Army Medical Department
    conducted business just a few years ago. For the TRICARE program to
    fully succeed every beneficiary must know how to access health care in
    this new managed care environment. Furthermore, every member of the
    Army Medical Department must understand their specific role so that
    cost effective quality care is provided at all time.
        As managed care continues to evolve in the private sector, we too
    are constantly working toward improving the Department of Defense
    managed care program, known as TRICARE. I anticipate we shall not see
    the full benefit of this program, both in terms of producing healthier
    military beneficiaries and generating further cost savings to our
    taxpayers, until this program is allowed to mature over the next
    several years.
        In 1994, an ambitious schedule was embarked on to stand up, nation
    wide, seven managed care support contracts in a span of four years. The
    Army Medical Department was given the honor of being the first Lead
    Agent to oversee the operation of a regional civilian managed care
    support contract. The first contract became operational in the delivery
    of health care services by March 1995. This occurred in the
    Northwestern United States. This first hand experience resulted in the
    development of over a hundred lessons learned, several of which were
    incorporated into the managed care support contracts that followed.
        Since the first contract, four separate managed care support
    contracts became operational within a two-year time frame. Again, the
    Army Medical Department, represented by three Lead Agents, is playing
    an integral role to the success of these contracts. The last two
    remaining contracts are scheduled to become operational in the Ohio
    Valley, the Northeast and the Mid Atlantic States in the near future,
    pending resolution of the ongoing protests. I anticipate that once
    these contracts are implemented across the nation, the understanding
    and acceptance of managed care principles by our military beneficiaries
    will improve.
        While the full impact of the TRICARE program is not yet realized,
    positive accomplishments are occurring in the Army Medical Department's
    military treatment facilities.
    Health Promotion
        One such achievement is the emphasis the TRICARE program places on
    health promotion.
        The Army Medical Department is aggressively pushing real health
    promotion and preventive measures such as education, behavior changes,
    and early disease detection. The U.S. Army Center for Health Promotion
    and Preventive Medicine has developed a plan to implement a structured
    and consistent health promotion program, integrated with TRICARE,
    throughout the Medical Command.
        While investment in health promotion efforts are difficult to
    measure, five or ten years from now, there will be a payback in terms
    not only of resources saved, but more importantly, in terms of
    healthier patients who are more productive.
    Utilization Management
        The TRICARE program also places added emphasis on Utilization
    Management. This is another area of improvement for the Army Medical
    Department. Utilization Management assists us in ensuring that the
    appropriate amount of required medical interventions are provided
    without sacrificing the quality of that care. As resources decline, we
    must strive to minimize the provision of unneeded or inappropriate
    medical services. Since 1994, we have accomplished decreases in both
    our admission and bed day rates. While continued improvement in this
    area is needed, these changes have allowed several of our facilities to
    redirect their freed up resources to other needed health care services.
        The focus on Utilization Management is becoming so wide spread that
    it has even reached areas in the Northeast that have not yet
    implemented the TRICARE program. The North Atlantic Regional Medical
    Command, which represents thirteen medical treatment facilities in the
    Mid Atlantic and Northeast, reported for fiscal year 1997 decreases in
    Bed Day and Disposition rates of 20 percent and 21 percent
    respectively. At the same time they moved out with numerous new
    initiatives in such areas as, demand management, disease management,
    and outpatient levels of care. Specific initiatives include new, Advice
    Nurse Services; Health Promotion and Wellness Centers; formal discharge
    planning programs; disease-specific patient education programs, to name
    a few.
        The efforts in Utilization Management allowed the military
    treatment facilities in the North Atlantic Regional Medical Command to
    either consolidate or close twenty-one unneeded patient care areas.
    This Regional Medical Command is now focusing its attention on ensuring
    all memorandums of agreement between the new managed care support
    contractor and the individual military treatment facilities compliment
    the utilization management efforts already ongoing.
    Performance Measurement
        With the TRICARE Program came the need for a more structured
    approach to measure the performance of our military treatment
    facilities. To meet this need, the Office of the Assistant Secretary of
    Defense for Health Affairs developed the Military Health System
    Performance report card. This report card strives to mirror the Health
    Plan Employer Data and Information Set that is used by private sector
    employers to measure the performance of their commercial health plans.
    The Military Health System Performance report card is a standardized
    instrument, which examines five areas. These are access, quality,
    utilization, health behavior and health status. The Military Health
    System Performance report card results are derived from patient surveys
    and from automated data collection systems.
        The Military Health System Performance report card is a valuable
    tool that allows the Army Medical Department leadership to see how well
    our military treatment facilities are performing in meeting the needs
    of our beneficiary population. This standardized information is
    critical as it provides my commanders the ability to identify
    weaknesses that require corrective action. The outcome from these
    corrective actions is improvement in the delivery of health care to our
    beneficiaries.
        Recent surveys indicate that while there is gradual improvement
    across the Army Medical Department's military treatment facilities,
    continued work is still needed in specific areas. Customer
    satisfaction, in particular, is and will continue to be one of my
    priorities. It is important to provide quality care, which we do, but
    it is just as important that our customers perceive that they are
    receiving high-quality and compassionate care. While the TRICARE
    program has experienced some start-up glitches available survey data
    show it is working. Beneficiary satisfaction surveys show a large
    majority of customers are satisfied in those regions where the TRICARE
    program is already implemented. Department of Defense surveys show that
    almost 9 out of every 10 TRICARE enrollees will reenroll when the time
    comes. Despite this good news, there is much more work to do. While
    customer satisfaction with Army military treatment facilities improves,
    additional work must occur to raise the satisfaction levels for every
    beneficiary served.
    Hospitality Training
        Another initiative under development is a plan to implement
    hospitality training throughout the Army Medical Command. The intent of
    this initiative is to improve the customer relation skills of all
    health care and administration staff throughout the Army Medical
    Department. This skill is critical due to the financial incentives
    inherent in enrollment based capitation funding that our military
    treatment facilities are operating under. Exceptional customer service
    will result in satisfied beneficiaries who will be more inclined to
    enroll in the TRICARE program at our military treatment facilities.
    Along with each enrollment come the funds to keep that ``customer''
    healthy.
    Access to Care
        With the TRICARE Program came, for the first time, system wide
    access standards to military health care. While these standards
    specifically apply to TRICARE Prime enrollees, all Army military
    treatment facilities are striving to meet these standards for every
    beneficiary they see.
        Access to military health care has historically been a problem area
    for the Army Medical Department. Beneficiary satisfaction surveys show
    that over 70 percent of those surveyed are satisfied with their access
    to appointments and appointment waiting time in our military treatment
    facilities. Still this means a sizable number of our beneficiaries are
    not satisfied with their level of access to care.
        To improve these access problems several Army military treatment
    facilities have completed or are pursuing restructuring initiatives.
    The goal of these initiatives is to improve their capability to receive
    primary care patients by increasing their primary care access portals.
    Darnall Army Community Hospital at Fort Hood, Texas, which historically
    receives low ratings in access, is one such example of a facility that
    restructured its primary care delivery system. We are now beginning to
    see positive results from these initiatives.
        The Army is also aggressively working to improve access to tertiary
    health care services.
    TRICARE Provider Networks
        The TRICARE program has improved beneficiary access in another
    important way. With the downsizing of the direct care system our
    overall capabilities have diminished. Despite this fact, we are able to
    offer our TRICARE enrollees the full spectrum of health care covered
    under the TRICARE benefit. The reason we can provide this benefit is
    because of our managed care support contractors' provider networks.
    These provider networks augment the capabilities in our military
    treatment facilities and give our beneficiaries the access to care they
    need, when they need it.
        The leadership within our Lead Agents and military treatment
    facilities know the health care needs of their beneficiaries and their
    capabilities to meet that need within their direct care facilities. In
    cooperation with the respective managed care support contractors the
    demand for services that cannot be met within our military facilities
    is provided to them. They use this information to determine the size
    and composition of their provider networks.
    TRICARE Challenges
        Despite the benefits the TRICARE program offers to our
    beneficiaries, there are still challenges that must be met and
    conquered. As I mentioned in my introduction, the TRICARE program is an
    evolving program that was implemented on a very aggressive timeline.
    Because of the speed with which the TRICARE program was implemented
    there are misunderstandings with the intent of the program and how it
    operates.
    Program Education
        One of the most significant challenges the Army Medical Department
    faces is educating all our customers, both internal and external on the
    TRICARE program. Our customers need to understand this program was
    developed to retain their choice of benefit plan, whether it be TRICARE
    Prime, Extra, or Standard and to also minimize their out-of-pocket
    costs.
        Some see the TRICARE program simply as the erosion of their
    military health care benefits. Those who believe this fail to see the
    true goal of the program. These skeptics fail to realize the larger out
    of pocket costs our beneficiaries would now be experiencing if TRICARE
    never came into being.
        Under such a scenario, many would find themselves with limited or
    no access to our remaining military treatment facilities. Their only
    option would be for them to use the traditional indemnity plan, known
    as CHAMPUS. While this option gives them greater freedom of choice,
    that choice would come at a far greater out of pocket cost than offered
    under TRICARE Prime and would not allow for significant consumer
    advantages available under TRICARE PRIME such as enhanced access,
    health and wellness benefits, and professional medical oversight by a
    personal Primary Care Manager.
        Educating all customers of the benefits of the TRICARE program is
    paramount to its success. The education effort must be three pronged to
    be effective. Our educational efforts must focus on all beneficiaries,
    the Army leadership, and everyone working within the Army Medical
    Department.
        Helping beneficiaries understand how TRICARE changes their health-
    care system is one of our priorities. The Army Medical Department is
    actively marketing TRICARE and working with Major Army Commands, as
    well as beneficiary organizations, to make sure that we are providing
    accurate information about TRICARE. We are incorporating TRICARE
    information classes into training school curriculum where appropriate.
    Videotapes, displays, pamphlets and briefings are also being presented.
        Our beneficiaries must understand that we aren't limiting their
    ability to access care, but expanding the choices available to them. If
    continuity of care and cost is paramount to them, then enrolling in
    TRICARE Prime in most cases is their best option. Those beneficiaries
    who want greater freedom of choice than TRICARE Prime, but still are
    somewhat concerned with costs, might be more satisfied with the TRICARE
    Extra option. If freedom of choice is their major determinant,
    regardless of the cost, then TRICARE Standard is the option they should
    choose.
        The Army leadership must continue to work with the Army Medical
    Department in getting the message out about the TRICARE program to all
    the troops, their families, and our retirees. Waiting until a
    beneficiary takes ill and needs medical attention to learn about the
    program is too late. That is like asking a Battalion Commander to go
    into battle without an operations order. Both situations are probably
    doomed to failure.
        Last, each and every individual, civilian and military, working in
    our military treatment facilities must fully understand the TRICARE
    program. These individuals are our ambassadors for the program. These
    individuals are closest to our patients and beneficiaries and can
    provide them with the needed advice to make an informed choice about
    which TRICARE option can best meet their specific healthcare needs.
        My staff is redoubling its efforts, in cooperation with the
    assistance of the Office of the Assistant Secretary of Defense, to
    ensure all our ``customers'' are well informed about the TRICARE
    program.
    Command and Control of Managed Care Support Contractors
        The TRICARE program brings with it unique challenges in command and
    control of the managed care support contractors. Within the Army
    Medical Department, command and control remains strong, while the
    process with the managed care support contractor is less direct.
    Designated contract officers are the direct link to our managed care
    support contractors. To accomplish changes within the managed care
    support contracts my staff must diligently work through their
    respective Department of Defense Lead Agent. This situation can reduce
    the responsiveness of needed corrective actions.
        To offset this situation my staff and regional medical commands are
    developing closer ties with their respective lead agents to ensure
    issues requiring immediate action are taken without delay.
    Enrollment
        Accounting for TRICARE Prime enrollments, to include active duty
    personnel, takes on added financial importance in future years. In
    fiscal year 1999, the Prime enrollment numbers reported in the Defense
    Eligibility Enrollment System will be used for the distribution of
    Direct Health Program funds to our medical treatment facilities on a
    capitated basis. Efforts are underway to ensure our automated systems
    accurately capture Prime enrollment numbers.
    Financial Accountability
        With the TRICARE program came a more appropriate method of
    allocating funds to maintain the health of our beneficiaries. This new
    system is called enrollment-based capitation. The essence of this
    funding methodology mirrors the per member per month funding
    methodology prevalent in the private commercial sector. Just as the
    TRICARE program was a significant paradigm shift from our previous way
    of doing business, so is enrollment based capitation.
        Enrollment based capitation provides a set amount of funds based on
    the age and gender for each beneficiary who enrolls in TRICARE Prime at
    a military treatment facility. Regardless of the health care services
    the enrollee uses, with rare exceptions, no further reimbursement is
    provided to that military treatment facility. The focus of the medical
    staff is to keep the enrollee healthy and prevent the occurrence of
    long term and chronic conditions.
        Prior to enrollment based capitation, defense health program funds
    were allocated based on the workload generated at each military
    treatment facility. As more services were provided, more funds were
    allocated. Obviously, such a funding method provides little incentive
    to improve the health status of our beneficiaries.
        This year is the transition year for all military treatment
    facilities to convert over to enrollment based capitation. The
    Corporate Executive Information System will also provide key reports to
    our facilities so they can succeed in this environment. Enrollment
    Based Capitation training has also been provided to our staff.
        The new Ambulatory Data System also captures diagnosis and
    procedure information on outpatient visits. The capturing of this more
    detailed clinical information is critical for decision making and will
    also support our new costing methodology.
        While I am confident that this new funding methodology is
    necessary, I expect some future adjustments and refinements to occur as
    this funding methodology is fully implemented in fiscal year 1999.
    The Future of TRICARE
        The future of TRICARE is bright, but not without further changes.
    As you are well aware, refinements to this program are occurring. The
    Medicare Subvention Demonstration will be tested over the next three
    years. We are also in the process of providing TRICARE Prime to those
    active duty service members who are assigned to geographically remote
    areas. Efforts are also ongoing to craft the next generation of
    performance based TRICARE managed care support contracts that focus
    heavily on improving beneficiary satisfaction. All these changes are
    aimed at improving the TRICARE program and making the TRICARE benefit
    universal to all eligible military beneficiaries.
    Medicare Subvention
        We have a moral obligation to allow all military retirees who wish
    to stay in the military health system that option. The Medicare
    Subvention demonstration that was approved by Congress last August
    gives the Department of Defense the opportunity to offer the TRICARE
    benefit option to our military retirees under TRICARE Senior plan.
        The Medicare Subvention Demonstration allows beneficiaries age 65
    and older to participate in TRICARE Prime at selected sites. With this
    demonstration we are attempting to provide the services required by the
    Health Care Financing Administration for an At-Risk Health Maintenance
    Organization that is more cost effective than the private sector. If
    successful, the potential to expand the TRICARE Senior program to all
    military retirees will improve.
        Subject to the approval of our site applications from the Health
    Care Financing Administration, the Medicare Subvention Demonstration is
    projected to begin this summer. The Army Medical Department has four
    military treatment facilities participating in this demonstration. The
    four Army facilities are, Madigan Army Medical Center at Tacoma,
    Washington, Brooke Army Medical Center, San Antonio, Texas, Reynolds
    Army Community Hospital at Fort Sill, Oklahoma, and Evans Army
    Community Hospital at Colorado Spring, Colorado. Preparations are
    already underway to provide this expanded TRICARE benefit option to
    those military retirees selected to participate.
    TRICARE Prime Remote
        The TRICARE program has not completely fulfilled its pledge of
    providing a uniform benefit to all eligible beneficiaries. Service
    members stationed in geographical separated units are not always
    afforded the full benefits of the TRICARE Prime benefit. The goal of
    the TRICARE Prime Remote initiative is to rectify this situation.
        The TRICARE Prime Remote option provides active duty service
    members and their families assigned to Geographic Separated Units
    access to TRICARE Prime through the regional TRICARE Managed Care
    Support--MCS--contractor network. The contractor assigns active duty
    service members, and their family members who choose to enroll, to
    civilian network primary care managers. Active duty service members and
    their family members are eligible for the TRICARE Prime Remote Program
    if they live and work greater than 50 miles from a military treatment
    facility.
        The difficulty in providing these service members the full TRICARE
    Prime benefit dealt with the need to ensure medical oversight for any
    care rendered to them and the funding stream to pay for their care.
    Adjustments have been made to realign the supplemental care funds to
    care for these soldiers to our managed care support contractors and the
    establishment of a medical management oversight operation is being
    implemented.
        Once fully operational, all service members and their family
    members will be afforded the opportunity to participate in the TRICARE
    Prime Remote option if they choose.
    TRICARE 3.0
        As we speak, work is going on with the managed care support
    contracts for the year 2000. I am optimistic that many of the
    challenges identified with the first generation of contracts will be
    eliminated.
        First, this next generation of contracts will be performance based
    versus the prescriptive requirements that exist in our current
    contracts. By being performance based, contractors will have more
    flexibility to propose civilian best practices in their bids. This
    means our beneficiaries will be afforded in the next TRICARE contracts
    the most effective clinical and administrative processes known to date.
        I am extremely pleased with the heavy focus the TRICARE 3.0
    contract places on improving beneficiary satisfaction. Built in
    financial incentives will ensure future managed care support
    contractors strive at all times to improve the satisfaction of their
    customers. This will be measured by Department of Defense approved
    beneficiary satisfaction surveys.
        I am also optimistic that the new financial mechanisms planned for
    in the TRICARE 3.0 contracts will be fully integrated with the
    enrollment based capitation methodology that our military treatment
    facilities will be working under. I anticipate major improvements in
    the ability of our local commanders to accurately determine the impact
    of their healthcare resource decisions real time. Unfortunately with
    the existing managed care contracts the lag time to identify the
    financial impact of local health care decisions is problematic.
        I am confident that many of the shortcomings identified in the
    first managed care support contracts will be rectified. My staff will
    accomplish an extensive review of the TRICARE 3.0 requirements to
    ensure existing shortcomings with our existing contracts are
    eliminated.
        The world is constantly changing, and so is health care in our
    nation. The TRICARE program is part of the evolution of our military
    health system. As the Army and the Army Medical Department changes with
    the incorporation of TRICARE, we will continue to focus on our core
    value of managing the health of every eligible military beneficiary so
    they receive the right level of care at the right time and in the right
    place.
        I ask for your continued support of the TRICARE program as it
    offers us the best way to provide quality care to our beneficiaries.
    With TRICARE we can maintain our position as a world class system
    capable of continuing Army Medicine's proud tradition of ``Caring
    Beyond the Call of Duty.''
        army medical department cooperation with sister service medical
                                  departments
        The Army Medical Department has, and continues to, cooperate with
    the Air Force and Navy Medical Departments to leverage assets to
    conduct enhanced operations where possible. Sharing resources and
    delineating specific responsibilities among the services to eliminate
    redundancies and bolster efficient application of resources has been a
    key tool in our strategy to cope with reduced program funding. The
    Department of Defense has already initiation Service Executive Agents--
    EA--for common functions which cross service lines. EA's have a Tri-
    Service responsibility for very specific programs. Examples of EA's
    where the Army has the lead include but are not limited to: Armed Force
    Institute of Pathology; Armed Forces Medical Library; Clinical
    Executive Information Systems; and Armed Forces Epidemiology Board.
        Cooperation among the services has taken on many faces. Clinical,
    ancillary, and administrative services, as well as, personnel,
    facilities, and educational programs are among the areas where we are
    also reducing redundancies. This cooperation reaches wide across all
    three Services. There are several examples where the Service's
    synergistic efforts have produced a superior product:
      --A prime example of inter-service cooperation exists in Colorado
            Springs. Through a combined executive council, Evans Army
            Community Hospital, the 10th Medical Group (United States Air
            Force Academy Hospital), and the 21st Medical Group (Peterson
            Air Force Base Outpatient Clinic) have developed a seamless
            healthcare delivery system. They instituted a number of
            consolidations, shared services, and joint alliances covering
            key healthcare disciplines among the three medical treatment
            facilities.
      --A Tri-Service group representing Walson Air Force Medical Facility,
            Patterson Army Health Clinic, and Navy Branch Medical Clinics
            at Lakehurst, Earl, and Willow Grove developed a tentative plan
            which serves as a consistent, consensual structure for the
            Delaware Valley Primary Care System. This initiative is a right
            step toward a consolidated, coordinated, and collaborative Tri-
            Service, multidisciplinary Managed Health Care Delivery System.
        At other locations, one service is the predominant provider of
    health care with sister Service assistance in very specific ways:
      --The 62nd Medical Group (USAF), McChord Air Force Base, serves as a
            Primary Care Clinic of Madigan Army Medical Center. Through
            this cooperative agreement, automated referral processes have
            been standardized, redundancies eliminated and efficiencies
            maximized.
      --The staff at Darnall Army Community Hospital at Fort Hood, Texas,
            as in many other facilities, is augmented with Air Force staff.
            At Darnall, Air Force physicians assigned to the facility to
            perform plastic surgery and pulmonology. Additional
            arrangements with Air Force physicians at Wilford Hall, Air
            Force Medical Center, in San Antonio, Texas, allows vascular
            and perinatology cases to be resolved more easily within the
            Military Health Service.
      --Recognizing the Tri-Service nature of Tripler Army Medical Center,
            the Commander has assigned a Navy Captain as the Deputy
            Commander for Clinical Services. Several Navy and Air Force
            physicians serve on Tripler's staff, with some serving in
            clinical leadership roles.
        Another way the Army reduces redundancy is by eliminating the
    competition for market share for a particular service.
      --Walter Reed Army Medical Center has agreed not to provide
            obstetrics and gynecology service. These patients are seen at
            National Naval Medical Center. Similarly, National Naval
            Medical Center does not offer adult inpatient psychiatric care.
            Walter Reed provides this service in the National Capital
            Region for all three service.
        Ancillary care, administrative services, and education are all
    areas that are currently being explored for more focused Tri-Service
    cooperation. Wherever you find sister Service facilities operating in
    close proximity you will invariably see cooperation in ancillary
    services. This includes expanding current contracts to include Tri-
    Service beneficiaries to leverage volume discounts.
      --Madigan Army Medical Center has a commercial laboratory contract
            which naval medical treatment facilities are now utilizing.
            Thus, lowering the per unit cost per procedure.
      --Administrative services run the gamut from sharing tumor board
            registry to utilizing one central appointment office to make
            appointments for Tri-Service medical facilities within a
            certain geographic region.
      --Within certain regions, Services share Graduate Medical Education
            offices, while other regions simply offer other Services seats
            in their residency programs.
        We have adopted an approach of cooperation as one that is fiscally
    sound and produces demonstrated efficiencies. Not addressed here is the
    myriad of ways that the Department of Defense shares resources with the
    Veterans Administration and the cooperation that exists with other
    state and local organizations.
                               good news stories
        Finally, I would like to leave you with just a few of the many
    vignettes across the Command that highlight the diversity and successes
    of Army Medical Department missions. Just last month an Ohio infant
    suffering from botulism recovered rapidly after receiving an antitoxin
    developed by the U.S. Army Medical Research Institute of Infectious
    Disease. According to officials at Children's Hospital in Columbus, the
    4 day old baby girl was admitted to the hospital and placed on a
    ventilator. Analysis of a stool sample confirmed the presence of
    botulinum toxin. On Friday, January 9th, the U.S. Army Medical Materiel
    and Development Activity received a call from the California Department
    of Health Services, Infant Botulism Research Prevention Program,
    inquiring about using an Army Investigational New Drug product to treat
    a suspected case of infant botulism in Ohio. The U.S. Army Medical
    Research Institute of Infectious Diseases medical monitor for the
    Army's emergency treatment protocol was contacted and quickly consulted
    with the attending physician at Children's Hospital. After notifying
    the Food and Drug Administration, the U.S. Army Medical Research
    Institute of Infectious Diseases arranged an overnight shipment of the
    Botulism Antitoxin. The first dose was administered at 1:00 p.m.
    Eastern Standard Time on Saturday. All regulatory procedures were
    followed. On Sunday, January 11th--about eight hours after the second
    dose--the infant showed the first clinical signs of improvement,
    beginning to move about and trying to breathe on her own. A couple of
    weeks ago the child was discharged from the hospital and on her way to
    recovery.
        This past fall, the American College of Surgeons reviewed and
    verified that Brooke Army Medical Center met its criteria as an Adult
    Level One Trauma Center. Subsequently, Brooke Army Medical Center was
    designated as an Adult Level One Trauma Center in the State of Texas
    trauma system. Brooke Army Medical Center is now the first and only
    designated Trauma Center in the Army Medical Department.
        Southeast Regional Medical Command's TRICARE Region Three has
    established a comprehensive, multi-level Breast Cancer Prevention,
    Detection, Education and Training Program. By using telecommunication
    technologies beneficiaries and providers across the Region have access
    to the latest information on breast cancer care--from their homes,
    their health care facility, the workplace and in the communities. A
    regional telecommunication network will be established, linking
    patients and providers throughout the region with the Breast Cancer
    Awareness and Solutions Center. Patients and providers can access the
    educational programs through interactive kiosks at the medical
    treatment facilities or through the World Wide Web via personal
    computers at the work site or in their homes.
        In June 1997, the Chief of Staff, U.S. European Command, LTG David
    L. Benton, III presented the U.S. Army Medical Materiel Center--Europe
    with the National Partnership for Reinventing Government Hammer Award.
    The Hammer Award is Vice President Al Gore's special recognition to
    teams who have made significant contributions in support of the
    President's National Performance Review principles. Those principles
    are: putting customers first, cutting red tape, empowering employees
    and getting back to basics. The award recognizes new standards of
    excellence achieved by teams helping to reinvent government. To win the
    award, U.S. Army Medical Materiel Center--Europe, reengineered itself
    and the medical logistics system in the U.S. European Command area of
    operations. Medical materiel inventories were reduced throughout the
    theater while order-ship times improved from weeks to days. The U.S.
    Army Medical Materiel Center--Europe was the first, and here to date,
    only Department of Defense organization in Europe to be so recognized.
        I would like to take a moment to describe a very innovative program
    called the AIM HI--Animals in the Military Helping Individuals--Service
    Dog Training Center established at Fort Knox, Kentucky. The first of
    its kind, this unique program teaches inmates of the Fort Knox Regional
    Corrections Facility to train select stray and donated animals to
    assist physically disabled Exceptional Family Members and Veterans.
    Through the combined efforts of the Army Medical Command, Veterinary
    Command, and Fort Knox, this is the only Center that provides service
    dogs for the military community. This program has several goals and
    yields various benefits. Service dogs provide greater independence for
    recipients by retrieving and carrying items, turning on and off lights,
    pulling wheelchairs, alerting to certain sounds--literally opening
    doors for our people in need of assistance. This program benefits all
    involved, patients receive the assistance they so desperately need,
    inmates learn a trade, stray animals are saved from euthanasia, and
    medical expenses are reduced. Currently, there are eight inmates and
    fifteen dogs in various stages of training development. The center
    plans to graduate ten service dogs every six months.
        The world is constantly changing, as the Army and the Army Medical
    Department changes too, we will continue to focus on our core values
    and functions. We will maintain our position as a world class system
    capable of continuing Army Medicine's proud tradition of ``Caring
    Beyond the Call of Duty.''
        Once again, I appreciate the opportunity to appear before the
    Committee and shall be happy to answer any questions you may have.
    STATEMENT OF VICE ADM. HAROLD KOENIG, MEDICAL CORPS,
                SURGEON GENERAL, U.S. NAVY
        Senator Stevens. Admiral.
        Admiral Koenig. Mr. Chairman, Senator Inouye, thank you for
    the opportunity to meet and speak with you this morning.
    General Roadman, General Blanck, and I work so closely
    together, that I will try and not repeat anything he already
    said.
        I would ask that my full testimony be made a part of the
    record.
        Senator Stevens. All of your statements have already been
    put in the record.
        Admiral Koenig. I only want to cover four points very
    quickly.

                                   Readiness

        First of all, in Navy medicine we recognize that readiness
    is our primary mission. That is what we are here for and that
    is what we do. To be able to do this, we have to be able to
    recruit, train, and retain capable, talented, and dedicated
    people.
        We have learned, and we are progressing in the Navy, to
    totally integrate our Reserve and active components and treat
    them essentially as one. A good example of that is in June and
    July of this year the hospital ship U.S.N.S. Comfort will
    deploy to the Baltic region and at least 10 percent of that
    crew will be from the Reserve component and a significant
    number of Reserve personnel will backfill at the National Naval
    Medical Center [NNMC] Bethesda to continue services at that
    institution during that deployment. This I think will
    significantly increase the readiness of our people and
    demonstrate that we can operate in this fashion.

                                  Telemedicine

        The second point I want to talk about is telemedicine. Over
    the last 3 years we have made tremendous strides in learning
    how to use this technology. I am extremely proud of our
    accomplishments, and at the urging of one of your staff
    members, we put together a 15-minute video that has been
    distributed to them. I hope you will have time to take a quick
    look at it. I think we have had some tremendous
    accomplishments.
        We have learned to bring this technology to our sailors and
    marines wherever they serve on board ships and in very remote
    locations. As you know, the U.S.S. George Washington is in the
    final days of returning from a 6-month deployment to the
    Persian Gulf. During that time we accomplished 60 electronic
    medical consultations. We processed nearly 900 digital
    radiologic procedures. The combination of these technologies
    resulted in avoiding 20 medevacs. We estimate the savings just
    for transportation of these 20 medevacs to be approximately
    $90,000. In addition, we think we have saved $50,000 in what
    would have been purchased medical services by treating patients
    aboard the ship that otherwise would have had to be evacuated,
    and we saved in excess of 300 man-days. The bottom line is what
    we saved in taking care of these people in place more than paid
    for all the hardware and all the communications costs.
        We are learning to use telemedicine in our local and remote
    shore-based facilities. I think one of the most unique uses of
    our new technology is some of our hospitals are now taking
    pictures of new babies and e-mailing them to the ships so their
    dads can see mom and baby and see that everything is OK.
        One of the most innovative uses I have seen is a couple of
    our hospitals have actually enabled people to refill
    prescriptions over the Internet. That is much easier than
    taking an empty pill bottle to a pharmacy and even easier than
    doing it over the telephone. It is really simple for them. We
    hope that in the near future some of our facilities will start
    enabling patients to make appointments over the Internet. That
    will really save a lot of time for them.

                                    TRICARE

        The third area I want to talk about briefly is TRICARE. One
    of the things we have learned is that we have to be more than
    an expert, an advisor on TRICARE. We have to become ambassadors
    of TRICARE. We have to take TRICARE to the people. We have to
    listen to the people. The people will tell us what is wrong.
    They will tell us what the issues are. Then we can work the
    issues and reengineer TRICARE so it fits their needs.
        The major issues with which we have dealt during the last
    year have been issues of portability, how to take care of
    isolated sailors and marines and airmen, soldiers, who are in
    isolated areas away from military treatment facilities. I think
    we have made good progress on that.
        The issues of balanced billing have come under control.
        The modification of the enrollment process so people can
    immediately enroll on a continuous basis and even what we call
    split enrollment, which means if one family member is in one
    region and one is in another, they do not have to pay twice. We
    have worked all those issues out.
        We are now working to improve and simplify the educational
    materials.
        But if I was asked if there was one thing that we could do
    that would make TRICARE substantially better, I would say to
    you that it would be to allow us to automatically enroll active
    duty family members who live within the catchment area of a
    military treatment facility, rather than make them go through
    all the labor of trying to understand all these details.
        Senator Stevens. Say that again, will you?
        Admiral Koenig. Automatically enroll active duty family
    members who live within the catchment area. By that I mean
    those who live close to a military facility that can take care
    of them. Automatically enroll the active duty family members
    rather than make them go through all the labor of trying to
    sort through all the differences between TRICARE prime, TRICARE
    standard, TRICARE extra. The vast majority of our people want
    to come to us. We ought to offer them that opportunity without
    putting them through a long process.
        But if they want to do something else, they have the option
    to disenroll or allow them to stay. I would rather have TRICARE
    standard and pick my own doctor and go to my own physician.
    That would make it a lot simpler for a lot of our
    beneficiaries.
        The vast majority of the folks we deal with are very young.
    They have never had to seek health care on their own before.
    They have always been taken to it. We need to bring them into
    the system and then educate them as they grow into our system
    rather than try and make them learn all of this stuff right up
    front because sometimes they make horrible decisions. A
    horrible decision to me is not to elect TRICARE prime. The 18-
    year-old Marine corporal with a 17-year-old wife and a baby--
    the most viable economic option for that couple is TRICARE
    prime. If they elect TRICARE standard, they are going to be in
    economic chaos as soon as that baby gets sick the first time.
    That is why I think we need to work on that, and I will be
    happy to give you a lot more information on that. I know my
    colleagues all share this feeling.
        The other area in TRICARE has to do with what I consider
    the disenfranchisement of our over 65 beneficiary population.
    We have simply got to address that issue. We very badly need
    those patients in our system to train our people and those
    people count on us for health care. They count on us for their
    entire lives. Medicare subvention but that only reaches a very
    small portion of that entire population. In the Navy, we only
    have one site, San Diego. It is not up and running yet. It
    probably will not be for several more months. So, I see it as
    only a partial fix.

                    Federal Employee Health Benefits Program

        We need to do more. There are a lot of options that are
    being talked about in this town. One of them is making people
    eligible for the Federal Employee Health Benefits Program
    [FEHBP]. I think we need to study that and study it hard, but
    we need to do it rather quickly. Putting it off for 3 or 4
    years is not going to help these World War II vets. A lot of
    them are not going to be around 3 or 4 years from now. We need
    to solve the senior problem now.
        One of the ways I think we could do this and do it well and
    do it quickly and for a lot less money would be to expand the
    pharmacy benefit, what we call our base realignment and closure
    [BRAC] mail order pharmacy benefit, to all of our seniors. With
    that, they will have Medicare A, Medicare B, and a reasonable
    pharmacy benefit. If you do the math on this, if we charge them
    $8 for a prescription, which is what we charge them today, and
    they are on five medicines chronically, it costs them 44 cents
    a day. That is four cigarettes. Most of our people can probably
    afford that.
        I think we need to look hard at that because we have a huge
    beneficiary population aging quickly and they need our help and
    they have been counting on it all their lives, and when they
    need it the most, it looks like it is not going to be there. I
    think that is a lot of the confusion that the Senator has
    identified during his visits. That anxiety is not just for
    those who are already over 65. It is for those of us who are
    approaching it. We see that coming too.

                             Women's health studies

        The last area I want to talk about just briefly with you is
    the area of women's health. In the Navy, we have created a
    women's health strategic planning group. When you ask for it,
    you get it. And, boy, have they come to me with issues. Right
    now I have 21 unfunded, badly needed studies that need to be
    done in the area of women's health. I am a pediatrician by
    training. One of the things I learned in pediatrics is that
    children are not little adults. They are different. Women are
    not little men. They are different.
        We need to do these studies. We are trying to incorporate
    women very rapidly in the Armed Forces of the United States.
    They represent nearly 15 percent of our total force right now,
    and we know precious little about what we really need to know
    to be able to incorporate them into our service. We simply
    cannot translate medical practices for men to women. They are
    different. So, we need to be able to do this research. As of
    today, there are no targeted funds for research in women's
    health in the Armed Forces. We need to get on with that.

                               prepared statement

        Finally, my retirement. Senator Inouye mentioned it. I will
    be retiring on June 30, 40 years to the day from when I came
    in.
        Thank you very much.
        [The statement follows:]
                 Prepared Statement of Vice Adm. Harold Koenig
                                  introduction
        Mr. Chairman, thank you for the opportunity to share Navy
    Medicine's 1997 accomplishments and plans for the future.
        This has been an exciting year in Navy Medicine. On August 6, 1997,
    Navy doctors announced a breakthrough in organ transplantation. CAPT
    Dave Harlan and LCDR Allan Kirk, from the Naval Medical Research
    Institute in Bethesda, Maryland, were the first to successfully
    demonstrate a new medical therapy that appears to prevent the rejection
    of mismatched transplanted organs. That same day Navy medical personnel
    in Guam responded to the tragic crash of Korean Air Lines flight 801
    which hit a hillside on approach to Guam International Airport with 254
    passengers and crew aboard. Medical personnel from Naval Hospital Guam,
    and personnel from Naval units throughout the island responded and
    played a key role in saving lives. Of the 32 survivors of this tragedy,
    19 were cared for in the Naval Hospital, many requiring intensive
    trauma care and emergency surgery.
        This single day exemplifies the essence of Navy Medicine; the
    talented, professional healthcare providers ready to forge the future
    of medicine while responding in a moment's notice when our nation
    calls.
        As I have said many times, Navy Medicine's primary mission is
    readiness. We meet our mission by ensuring our Sailors and Marines are
    fit and healthy. Navy Medicine, like civilian medicine, is making the
    transition from curative to preventive health care. As such, readiness
    means keeping our Sailors and Marines where they belong; healthy and on
    their jobs.
        Navy Medicine's reach extends to remote areas of the world, aboard
    ships and submarines and in the air. Our Sailors and Marines depend
    heavily on Navy Medicine to meet their health and fitness needs
    wherever their missions require them to serve. This past year medical
    personnel deployed to serve around the world, from Haiti with the
    United Nations peacekeeping force to South America assisting with drug
    interdiction operations. In addition, Navy medical personnel were in
    Guam, Southeast Asia, Saudi Arabia, Africa, and Indonesia, providing
    medical assistance, training, humanitarian relief, and health services
    in the furtherance of national interests. Our medical personnel also
    worked in unison with Air Force and Army medical personnel providing
    superb cross-service support. We continue to look for opportunities to
    increase Tri-Service programs.
        Navy Medicine's customer service focus is changing the culture of
    our system to one in which our products are judged by how well we
    satisfy our customers. I have made this a top priority in Navy
    Medicine. It's an ongoing effort, one we will continue to refine in the
    coming years.
        To help us better care for our customers, the men and women of Navy
    Medicine are developing innovative ways to keep our Sailors and Marines
    healthy, fit and on the job. We've had many successes in this area and
    as a result have made changes in the way we do business. These
    innovative changes are a result of Navy Medicine's focus on four goals:
    (1) taking health care to the deckplates; (2) moving information, not
    people; (3) making TRICARE work; and (4) re-engineering our business
    practices.
                      taking health care to the deckplates
        When I visit our men and women at Navy and Marine Corps bases
    around the world, I see many examples of health care at the deckplates.
    This means taking care of Sailors and Marines as close to their unit as
    possible so we can keep them on their jobs. It means providing care in
    mobile vans at pierside, in aviation squadrons, at base gyms, in
    barracks and in the operational field environment.
        I see Navy sports medicine specialists taking health care to the
    field, resulting in timely health care and injury prevention. At Marine
    Corps Base Camp Pendleton, the Naval Hospital created a Sports Medicine
    and Reconditioning Therapy, or SMART, clinic which is located right on
    site where Marine recruits are training. Recruits and staff alike
    applaud this arrangement because it saves recruits a 42-mile round trip
    to the base hospital and reduces lost training time. In addition, the
    SMART clinics have been very successful in reducing injuries and
    decreasing rehabilitation time. At Marine Corps Base Camp Lejeune,
    North Carolina, our Naval Hospital has established injury prevention
    and rehabilitation services at the base gym where providers work with
    Marines to ensure safe exercise protocols.
        Our Dental officers, too, are taking care directly to our Sailors
    and Marines onboard ships. Dental readiness is particularly important
    when ships are deploying because dental facilities are more limited at
    sea. To this end, we have set the goal for dental readiness of our
    active duty forces at 95 percent and ensure everyone onboard receive
    annual dental care, with special emphasis extended before deployments.
    The Dental center is living up to its slogan of ``Fit to bite, fit to
    fight.''
        Deployment of our Medical Corps specialists on aircraft carriers
    has proven extremely successful. Last year, at the request of the
    fleet, a clinical psychologist was deployed with the U.S.S. Kitty Hawk
    and a physical therapist with the U.S.S. Enterprise. Availability of
    professionals during the carriers' deployments demonstrated a
    substantial return on investment towards keeping Sailors and Marines on
    the ship and on the job. Additional deployments have confirmed the
    results and Navy Medicine manpower specialists are currently working
    with Pentagon officials to implement pre-deployment placement of
    clinical experts on all twelve aircraft carriers over the next four
    years.
        Coordinating medical care for our deployed Sailors and Marines
    requires concurrent efforts by multiple people. The staff at our Naval
    Station Branch Medical Clinic in San Diego, California have done just
    that. The clinic has a fleet liaison program to coordinate with the 61
    ships homeported in San Diego ensuring the crews' medical needs are
    met. Instead of waiting for the phone to ring, the fleet coordinator
    anticipates the needs of incoming ships' personnel. Medical personnel
    on deployed ships are contacted a month before their arrival in San
    Diego and met by the fleet coordinator upon arrival, with appropriate
    medical appointments already scheduled. Not only does this help keep
    our Sailors on the job, but our customers are much happier with this
    personalized service.
                          move information, not people
        Along with taking health care to the deckplates, Navy Medicine is
    using technology to move information, not people, as we meet our
    readiness mission. I was very gratified during my visits this year to
    such remote locations as Diego Garcia in the Indian Ocean and to
    Guantanamo Bay, Cuba to see our medical personnel using technology to
    store and transmit medical information. Over the years, we became
    pretty good at moving people to Medical Treatment Facilities. We
    utilize an extensive medevac system that is complex to use, expensive
    to operate and takes our Sailors and Marines away from their workplace.
    As we move forward in the information age, using technology to move
    information rather than people has become part of our day to day life.
        This effort has resulted in tremendous strides in learning ways to
    employ telemedicine and technology to our advantage. My favorite ``good
    news'' story concerns my specialty, Pediatrics. In Rota Spain, a two-
    year old's complicated case of pneumonia was managed using telemedicine
    techniques. The pediatrician in Rota was able to ``electronically''
    consult with specialists at National Naval Medical Center Bethesda,
    Maryland, to determine the best treatment plan for the patient. In
    addition to improved quality, the use of telemedicine prevented a
    costly stateside medevac for this patient and his family.
        Navy Medicine is also using technology to improve pharmacy
    services. At Naval Hospital Bremerton, Washington, a pharmacy
    technician, while revising the command's homepage, asked why couldn't
    they have a pharmacy refill request page on the Internet. He created
    one, and now their customers have an additional avenue to obtain
    pharmacy refills. Naval Hospital Sigonella, Sicily, is our second
    hospital to offer Internet refills, and we expect to offer this service
    at additional facilities in the next year.
        Navy Medicine is using training exercises to incorporate technology
    into the operational environment. Kernel Blitz 97 (KB97), held off the
    coast of southern California in June, is an example. The medical
    portion of KB97 was designed to evaluate training methods used to
    prepare for our wartime mission, improve medical readiness, get the
    hospital ship U.S.N.S. Mercy underway with the fleet, stand up a
    Reserve fleet hospital and test the augmentee manning of the amphibious
    ships.
        Data on Personal Information Carrier (PIC) was used by the U.S.N.S.
    Mercy, U.S.S. Tarawa, Fleet Hospital Operations Training Command, and
    the Surgical Unit ashore. PIC is the generic term used to describe any
    self-contained computer technology with personal data carried on an
    individual, resulting in all vital patient data being readily
    accessible to the medical team. During Kernel Blitz, a commercially
    available version of PIC, the Multi-technology Automated Reader Card
    (MARC), was used. The MARC contained patient information and algorithms
    for all casualty management, a record of clinical care, and required
    time for administering patient care treatment steps. The Military
    Health System (MHS) plans on deploying PIC technology to support active
    duty forces in the operational environment during fiscal year 1999.
        We even have an on-line mentor program, known as the ``Virtual
    Naval Hospital.'' The ``Virtual Naval Hospital'' is a digital health
    sciences library designed to provide naval health care providers access
    to current, authoritative medical information. It assists providers by
    providing information on about eighty of the most common medical
    problems at sea, common medical procedure descriptions, and the General
    Medical Officer Manual; thereby, improving quality of care. It also has
    a section for patients, where they can access information on first aid,
    consumer health products and twenty-five health topics on preventive
    medicine.
        Technology has been applied to innovations that are great morale
    boosters for our people. The Telemedicine system operates on the same
    protocols as the existing site televideo conferencing systems
    throughout the Navy. Then when the system is not being used for
    medicine, it is a Quality of Life enhancement for the crew to
    communicate with loved ones ashore. The Naval Hospital Naples, Italy,
    staff created a program where pictures of newborn babies are digitized
    and can be forwarded through the e-mail system to the baby's father at
    sea or grandparents in the United States. With our Naples-based
    families being so far from their loved ones, this is a great way to
    help them share news of the arrival with their loved ones back home.
    Some Navy ships also have used Video TeleConferencing (VTC) to connect
    with our hospitals, allowing mom to talk to dad and letting him see the
    ``new arrival'' while he is deployed at sea.
        Our ships are benefiting from, and making good use of,
    telemedicine. The medical department of the aircraft carrier U.S.S.
    George Washington has teamed up with the Telemedicine Department of the
    National Naval Medical Center in Bethesda, Maryland, creating the most
    advanced treatment facility in the fleet. Telemedicine enhancements
    proved very effective during the ship's latest deployment. Utilizing
    technology once exclusive to a fixed Medical Treatment Facility, the
    George Washington performed 39 ``electronic'' consultations with
    stateside medical specialists; 200 digital radiology procedures; and
    prevented six medevacs, saving over $26,000.
        In the past, when faced with mental health issues at sea, the
    patient was often medevaced off the ship. During the first three weeks
    of the George Washington's deployment, medical staff performed five
    mental health exams using VTC. Shipboard medical staff transmitted the
    patient's mood, body language and response to questions to the
    hospital-based psychiatrist. Combining the VTC with the clinical
    history, the psychiatrists assessed the patient and recommended a
    course of treatment. Navy Medicine is working to make virtual mental
    health specialty care at sea a routine service.
        On another occasion, the George Washington needed a radiologist to
    monitor a live ultrasound study. The patient had typical symptoms of
    acute gallbladder disease, but the physician was having difficulty
    confirming the findings and requested a specialist's help. Through VTC,
    the radiologist offered a differential diagnosis and clarified the
    imaging artifacts.
        Needing an ophthalmologist, the George Washington again turned to
    telemedicine. They had a patient with an injured cornea complaining of
    vision loss upon waking. Within seven minutes of the original request,
    an ophthalmologist was examining the patient on the ship from over
    5,000 miles away via satellite. This turned out to be a two-fold
    success story. The patient stayed on the ship knowing that he had
    received the best possible care; and, an unnecessary medical evacuation
    was avoided. As a result of this innovative technology, the sailor was
    treated aboard ship and returned to duty within 48 hours of initial
    evaluation in sick call.
        Telemedicine is not only effective on board ship, but has direct
    applications at our shore-based regional and remote medical facilities.
    Our health care providers at Naval Medical Clinic Annapolis, Branch
    Medical Clinics at Arlington Annex; Dahlgren, Virginia; and, Sugar
    Grove, West Virginia have used telemedicine for assistance in
    expediting care in the National Capital Area. Remote locations such as
    Naval Hospital Rota, Spain and McMurdo Station, Antarctica have also
    utilized telemedicine services provided by the Telemedicine
    Consultation Center in Bethesda. Expediting care for a complicated case
    of bacterial pneumonia in a two year old child; routine healthcare in
    evaluating Naval Academy midshipmen for history of nasal and sinus
    pathology; consultative follow-up and treatment of new and pre-existing
    skin lesions and pathology in the oral cavity; as well as cardiology
    support to the Independent Duty Corpsman for urgent care management of
    chest pain have all been demonstrated this past year. Telemedicine's
    potential as a time saving device in the day to day operations of Navy
    Medicine is readily apparent; along with its expanding capability to
    improve the overall quality of care rendered to our beneficiaries in
    remote areas.
                              making tricare work
        Our third goal is ``making TRICARE work.'' Implementation of
    TRICARE is near completion, all contracts have been awarded and all
    regions are scheduled to be operational in the near future. With
    implementation complete, we will be able to meet our readiness mission
    while providing our beneficiaries choice, guaranteed access, and
    quality health care at the lowest out of pocket cost possible.
        TRICARE is a profound and fundamental change in the way we provide
    health care services and, as with any change, is unsettling for our
    beneficiaries. The Services are working together to address key
    concerns of our customers: portability; improving access to care for
    geographically separated units; solving balance billing concerns; and,
    claims processing in order to make the system more customer-focused and
    user friendly. To further reduce confusion, Active Duty Family Members,
    who live within an MTF's catchment area, should be automatically
    enrolled in TRICARE Prime, unless they choose another option.
        In addition, the Under Secretary of the Navy has appointed a task
    force headed by the Navy's Deputy Surgeon General to develop strategies
    for identifying educational techniques to simplify TRICARE and improve
    understanding. The task force is comprised of medical, line personnel
    and family members from the Navy and Marine Corps, who are actively
    exploring educational instruments, materials and methodologies for
    improving understanding of TRICARE.
        Navy Medicine sees TRICARE education as a continuum throughout an
    active duty member's career. We plan on developing separate briefs
    targeted to the recruits in Navy and Marine Corps boot camp, when an
    individual reports to the first duty station, upon getting married, and
    when a couple has their first child. In addition, Navy Medicine is
    developing an information card for our active duty members outlining
    the procedures to use when seeking medical care outside of their normal
    duty station. We are also investigating methods to telemarket TRICARE
    through the Internet, and recommending the development of a national
    TRICARE hotline number to provide universal access to TRICARE
    information.
        In July 1997, Navy Medicine initiated a TRICARE Customer Advocacy
    Demonstration Program. The intent of the project was to provide a
    location outside of the medical facility where beneficiaries could go
    to receive assistance in understanding TRICARE and problem solving. The
    base and medical facility commanding officers determined the actual
    location. Demonstration sites were opened in Bangor, Washington; Corpus
    Christi, Texas; Camp Pendleton, California; Jacksonville, Florida and
    Yuma, Arizona. Preliminary data demonstrates a very favorable customer
    response to this outreach effort. We are currently collecting data from
    the six-month demonstration project to evaluate possible expansion to
    other sites.
        Navy Medicine is also playing a leading role in the development of
    TRICARE Prime Remote. TRICARE Prime Remote will involve the provision
    of care through a network of civilian primary care managers to Active
    Duty Service Members and their families living 50 miles or
    approximately one hour of driving time from a comprehensive Military
    Medical Treatment Facility. As Executive Agent for this program, Navy
    Medicine will support the development of a management process to
    oversee the health care of all members participating in this
    initiative. We are pleased with the potential of this initiative and
    expect it to improve health care access, uniformity of care, and
    quality of life; reduce time traveling to an MTF; and, decrease out-of-
    pocket expenses for our Service-members and their families.
        In this process of restructuring our health care system, we are
    ever mindful we must not disenfranchise our Medicare-eligible
    beneficiaries. They remain our most loyal customers in military
    medicine. DOD believes the military can provide Medicare-eligibles
    health care at a lower cost than commercial at-risk HMO's and expressed
    the need to transfer Medicare Trust fund dollars to DOD (Medicare
    subvention) during the past decade. Landmark legislation passed in 1997
    authorizes a 3-year demonstration of Medicare subvention. Titled
    TRICARE Senior, the demonstration project is authorized to be conducted
    at six military sites and will permit a specified number of our
    Medicare-eligibles to enroll in TRICARE Senior. Naval Medical Center,
    San Diego, California is the Navy's demonstration site. Following the
    MTF's application and acceptance into the Medicare program; a
    prescribed number of military retirees will be able to enroll into the
    TRICARE Senior Program. The target enrollment period is slated to begin
    this summer, with healthcare delivery beginning 60 days later. Navy
    Medicine is very excited about this new venture; and if successful,
    look forward to permanent legislation.
        We realize Medicare Subvention is only a partial fix to resolving
    the ``Broken Promise'' of lifetime care for our retirees. Over half of
    Medicare-eligibles do not live near an MTF and are not likely to enroll
    in TRICARE Senior. Retiree groups are urging other alternatives to
    Medicare subvention for our retirees 65 and over. Presently, the Center
    for Naval Analyses (CNA) is conducting a study to improve options for
    access to care in the Military Health System (MHS) for these
    beneficiaries. This study is focusing on the possibility of offering
    the Federal Employees Health Benefits Program (FEHBP) as an alternative
    for those 65 and over. The other part of the CNA study will evaluate
    the feasibility of expanding the mail order pharmacy program to all
    Medicare-eligible beneficiaries, vice the current policy of providing
    this benefit only for residents of Base Realignment and Closure
    Commission (BRAC) sites. We expect to have CNA's report later this
    year.
        The FEHBP option, known as FEHBP-65, is the most comprehensive and
    enthusiastically supported by the various retiree groups. Presently not
    available to the military, FEHBP is a collection of health plans
    offered to federal civilian employees and retirees. FEHBP is paid for
    through monthly premiums, with the federal government subsidizing up to
    72 percent of the premium. While we appreciate the merits of this
    system and its potential to ensure full health care coverage of our
    Medicare-eligible beneficiaries, Navy Medicine advocates the continued
    review and assessment of the cost and benefits of both FEHBP-65 and
    other alternatives to increase MTF access for our Medicare-eligibles.
                customer focused business process re-engineering
        Navy Medicine continues to improve readiness by re-engineering our
    business practices. We are continually looking for new ways to do an
    even better job of keeping our Sailors and Marines healthy and on the
    job.
        Recently the quality of Military Medicine has been called into
    question by various media reports. In response, Navy Medicine is
    working closely with the Office of the Assistant Secretary of Defense
    (Health Affairs) to reevaluate our system and processes. Be assured,
    Navy Medicine is strongly dedicated to providing the highest quality of
    care to all our beneficiaries and has taken specific actions aimed at
    refining and monitoring health care. We continue to participate in the
    Joint Commission on Accreditation of Healthcare Organizations
    accreditation process and are developing initiatives to improve our
    surgical procedures and clinical practices. Resolution of pending
    malpractice and adverse action cases with the National Practitioner
    Data Bank is aggressively being pursued. We are ensuring all Navy
    health care providers possess a valid unrestricted license. Navy
    providers with special Oklahoma licenses practice medicine under plans
    of supervision; none is practicing independently. To assist
    beneficiaries to make informed decisions on health care, a ``report
    card'' for each MTF is being created providing ``on line'' quality and
    consumer information; and, the feasibility of a shared decision making
    process between patients and providers regarding treatment plans and
    priorities is being studied. Finally, improved support to our providers
    is being enhanced through application of various automation tools and
    Internet services designed to produce the best possible outcome for all
    our patients.
        In today's environment of scarce resources, Navy Medicine is very
    involved in several initiatives to collaborate and consolidate assets
    with other Services. Within the National Capitol Region, the National
    Naval Medical Center, Walter Reed Army Medical Center and Malcolm Grow
    Air Force Base Hospital have created Tri-Service psychiatry, pediatric,
    neurosurgery, neurology, neonatal intensive care, obstetrics, and
    substance abuse units. Not only are patients from all three Services
    routinely admitted to these units, but the units are made up of Army,
    Navy and Air Force clinical staff. Top administrative roles are also
    taking on a Tri-Service flavor. The Executive Officer at Naval Hospital
    Charleston, South Carolina is an Air Force Officer, while the Deputy
    Commander at Tripler Army Medical Center in Hawaii is a Navy physician.
    The Interservice Training Review Organization continues to move forward
    with the consolidation of training programs to ensure maximum
    utilization of our training dollars. To date 33 programs are currently
    consolidated or under consideration for consolidation including
    Physician Assistant, BioMedical Repairman, Nuclear Medicine,
    Cardiopulmonary and Hemodialysis technology.
        Navy Medicine is an active member of the Joint Department of
    Defense (DOD)/Veterans Affairs (VA) Executive Council. This council is
    developing several initiatives designed to promote cost-effective use
    of federal health care resources by minimizing duplication and underuse
    while benefiting both VA and DOD. Navy Medicine currently has over 100
    facility-level Navy/VA agreements in effect including major medical and
    surgical services, laundry, blood, and laboratory services. Development
    of a DOD/VA formulary; joint development, assessment, insertion and use
    of telemedicine; and, integration of VA Networks and TRICARE Lead
    Agents offering more healthcare options to our beneficiaries are a few
    of the other exciting initiatives currently underway.
        Navy Medicine is strongly committed to maintaining a quality
    Graduate Medical Education (GME) program. Our training programs ensure
    Navy providers are exposed to clinical experiences required to become
    skilled practitioners. GME Tri-Service cooperation is becoming more of
    a factor in ensuring the success of these programs. All three Services
    are now required to fill GME slots available in the other Services
    before out-service training is authorized.
        Recruitment and retention of quality military physicians and
    dentists remains a priority. Within the physician community, surgical
    specialties continue to be the most difficult to recruit and retain and
    we currently have shortfalls in family practitioners, general and
    orthopedic surgeons. Physician specialty shortages are being addressed
    through the Financial Assistance Program which provides recruiting
    incentives for civilian physicians already trained in undermanned
    specialties and the Navy Active Duty Delay for Specialists program
    which allows graduating scholarship students to defer their active duty
    obligation until completion of their civilian residency. End strength
    shortfalls persist for our Navy dentists. In fiscal year 1998,
    legislation was passed to increase special pays for Dental Corps
    officers. These improvements, as well as increases in the number of
    Armed Forces Health Professions scholarships are expected to balance
    and stabilize the force structure of Navy Dentistry by fiscal year
    2000.
        To better meet the health care needs of our female Sailors,
    Marines, family members and retirees, Navy Medicine is taking some bold
    new steps in the area of women's health. As assignments for active duty
    women have expanded, so have the challenges and opportunities to re-
    evaluate Navy Medicine initiatives ensuring women are able to access
    the care they need. We have created a Women's Health Strategic Planning
    Group as part of a demonstration project addressing active duty women's
    health issues, including family planning, pregnancy counseling, breast
    care, parenting issues, sexually transmitted diseases and other women's
    health concerns. We want to create a comfortable, supportive and
    private environment for active duty women that will enable them to
    express their health care needs and concerns.
        Our reengineering efforts are reaching all facets of Navy Medicine.
    The Navy's overseas research labs in Jakarta, Indonesia; Lima, Peru;
    and Cairo, Egypt, are vital to keeping our Sailors and Marines healthy
    when they visit foreign lands. Before our ships make foreign port
    visits or when they conduct military operational missions or exercise
    overseas, these labs ensure commands are fully aware of any potential
    health risks they will face not normally encountered within the United
    States. These labs also interact extensively with their host countries,
    fostering good will with the United States.
        Navy research labs occasionally play an important role outside
    their normal duties. When a suspicious package was discovered at B'Nai
    B'rith Headquarters in downtown Washington, D.C. this past April,
    scientists at the Naval Medical Research Institute (NMRI) in Bethesda,
    Maryland were called upon to assist the community. A letter
    accompanying the package claimed dangerous biological agents were
    present in the petri dish found inside the package. The FBI requested
    NMRI run tests on the dish and the gelatin-like substance also found in
    the package. Working through the weekend, NMRI personnel found no
    disease causing organisms, other than common environmental bacteria.
    Their hard work saved the day and the FBI's Assistant Director
    complimented the Navy for its prompt and efficient work in the
    incident.
                                   conclusion
        In closing, I would like to reemphasize Navy Medicine's commitment
    to providing quality, cost effective health care to those entrusted to
    our care, be they in our hospitals, on foreign shores, at sea, or in
    harm's way. The beginning of the twenty-first century will continue to
    provide us new challenges and opportunities. Navy Medicine is
    responding to these challenges by emphasizing and building a state-of-
    the-art health care system and ensuring that the health and fitness of
    our Navy-Marine Corps team remains at the highest level.
        On a more personal note, I will be retiring on June 30, 1998, 40
    years to the day I took the oath as a Midshipman at the Naval Academy.
    It has been an exciting, challenging forty years. I would like to thank
    you for your outstanding support of Navy Medicine over the years. It
    has been an honor to share Navy Medicine's successes with you.

        Senator Stevens. Thank you very much. Do not worry about
    that 65. Dan and I can tell you about that. [Laughter.]
        Senator Inouye. That is a long time ago. [Laughter.]
        Senator Stevens. That is what Senator Thurmond said the
    other day. Someone said, oh, to be 70 again. He said, what do
    you mean? Oh, to be 80 again. [Laughter.]
        General Roadman.
    STATEMENT OF LT. GEN. CHARLES H. ROADMAN II, SURGEON
                GENERAL, U.S. AIR FORCE

                               Air Force overview

        General Roadman. Mr. Chairman, Senator Inouye, thank you
    for having us here.
        I think if you listen to what Ron and Harold have talked
    about, it is really that we are trying to reshape our system as
    we find requirements to do business differently. You cannot get
    to a 1-percent increase in inflation vis-a-vis 7 unless you do
    the job differently.
        All of us are really approaching it in five categories. One
    is readiness, which is clearly our main business.
        The second is TRICARE and learning the techniques of how
    you get the best bang for the buck, for the dollars, and give
    great service, to look at the infrastructure that we currently
    have and draw the inefficiencies out of that, which, Mr.
    Chairman, you mentioned, while focusing on building healthy
    communities. Part of what we all worry about are some of the
    behaviors that we have in the first half of our life and then
    try to have the medics pull us out of the fire in the second
    half of our life. We need to get well into prevention, in order
    to be able to deliver the quality care that we need.
        I would like to address readiness first. We all see that
    there is a changing threat environment. The Air Force is
    currently working on and has fielded the first operational
    chemically hardened ATH, air transportable hospital. The entire
    program should be up, fully funded, and ready to go by
    September, the year 2000.
        As we talk about telemedicine, telemedicine is not just
    images and consults. It is also getting the right information
    to the right provider at the right time to be able to make
    decisions in individual cases as well as populations because
    our job is to have a fit fighting force ready to support combat
    arms.
        We are currently fielding now in a program called Desert
    Care, part of the DOD surveillance program, the ability to
    track symptoms and diagnoses real-time on web technology so
    that we can see what is occurring within our population. As a
    matter of fact, about 2 months ago within 1 day we diagnosed an
    outbreak of food-borne illness, salmonella, and were able to,
    within 1 day, then go back and track that to the food source
    rather than having it become rampant within the community. So,
    that is telemedicine as well. It is informationalization of the
    system.
        As the theater becomes more mobile, less in the world war
    III mindset, we also are looking at aeromedical evacuation and
    care in the air. Care in the air is the ability to transport
    more critical patients than we had previously transported. It
    requires retraining and repurchasing of equipment because the
    intervention in the air requires the ability to be able to make
    diagnoses in the air, and that is different from what we used
    to do. So, we are reshaping that airevac capability.
        We also are very well aware that, as we look at the end
    game, which looks more like a militia nation than a large
    standing force that we have had in the past, we recognize the
    requirement to put the Guard and Reserve on equal status with
    the active as we field a total force team. We have been very
    successful in a project called Mirror Force in trying to settle
    some of the cultural issues that really separate us and have
    separated us for years.
        Just last Monday we had the great opportunity to bid
    farewell to a Reserve unit that was actually going to Al Kharj
    replacing an active unit at an air transportable hospital. So,
    we are seeing that integration that is absolutely critical.
        As we talk about TRICARE, I think many people do not
    understand that TRICARE is a strategy. It is not just a
    benefits package. But as the Active Force becomes smaller, we
    have to be outsourcing and privatizing a lot of care that we
    did not do in the past. TRICARE is the DOD's approach to
    support the warfighters and their families.
        I would add to Harold's statement. Automatic enrollment is
    a critical issue, but I will tell you the annual reenrollment
    is another issue that forces people to jump through a hoop to
    maintain their care. So, the legislation probably needs to, as
    we work that text for you, add the reenrollment.
        I would like to foot-stomp the issue of the promise. I
    believe that we recruited and retained, ever since 1973 when we
    went to an All-Volunteer Force, based on the promise of health
    care for life. I see us backing away from that. I believe that
    we have a promise that we must step up to, and I also believe
    that the expansion of the national mail order pharmacy is the
    first step in doing that, as well as testing other
    alternatives.
        In addition to that, we are reshaping our health care
    delivery system with sharing agreements with folks like the VA.
    The Air Force currently has about 119 sharing agreements, and
    Senator Cleland is doing an evaluation of the interface between
    DOD and the VA. I was talking to Congressman Sonny Montgomery
    and he said one of the real positive things is how much we, as
    the three services, have already done in trying to get better
    synergy in Federal medicine. As a matter of fact, we have two
    joint ventures that are currently working. And, Mr. Chairman,
    as you know, Elmendorf Hospital will be opening in October of
    this year which is both joint Air Force and VA.
        In addition, in New Mexico we have got the Gerald Champion
    Hospital which is an alliance with a commercial venture, trying
    to look for synergy of how to do our business better.
        All of these are win-win propositions for the Government in
    our quest to be a steward for the dollar, for the local
    community, and for our patients.
        Recruiting, I think, is an issue. As Ron talked about, the
    Reserve issue for us is not a big problem. The only corps I am
    particularly concerned about is in the Dental Corps where we
    are having some retention and some recruitment problems. We are
    transferring HPSP scholarships to dentists as well as the
    bonuses that you all have supported in the past.
        As we look at the acquisition for most of our physicians,
    USUHS is a critical issue for us. It gives us a cadre of strong
    military physicians that stay with us for a long time, and it
    is not just physicians as we have the graduate school of
    nursing giving us a strong cadre of nursing skills as well.
        We, as well as the other services, are looking at
    developing initiatives to develop leaders. As you know, all of
    our flags are now no longer corps specific and so all
    competition for all flags is all corps.
        In order to do that, we have got to increase the
    experiential level of corps that previously have been at a
    disadvantage. As a matter of fact, over the past 2 years we
    have increased from 35 percent to 55 percent of nonphysicians
    as commanders. So, we are seeing that experiential level rise
    because you cannot go from the bedside or the chairside and
    directly into a large system leadership. It is a graduated
    phenomenon.

                               prepared statement

        As you recognize, the environment is changing at the speed
    of heat, and we have got to change our system along with it. We
    think that our past performance over the past 3 years has
    reflected that. We are looking forward to a bright future and
    we thank you for all your continued support in the past and
    what you are doing in the future. Thank you.
        [The statement follows:]
              Prepared Statement of Lt. Gen. Charles H. Roadman II
        Mister Chairman and members of the committee, thank you for this
    opportunity to address the goals and accomplishments of the Air Force
    Medical Service (AFMS) in realizing our vision for the future. We
    achieved significant progress this year in our strategic plan to
    enhance high quality of life standards for the men and women of the Air
    Force, their families, and retired members. We use the Parthenon to
    illustrate our strategy, which is based on four pillars: medical
    readiness, deploying TRICARE, rightsizing, and building healthy
    communities, with customer service as the capstone.
                        reengineering medical readiness
        This past year has been a banner year for our primary mission,
    medical readiness, as we continued to reengineer our major programs.
    Reengineering goals include ensuring rapid response to support theater
    commanders, institutionalizing evacuation of the stabilized casualty,
    and aggressively enhancing Total Force partnership. We've made dramatic
    strides in achieving these goals under the medical readiness pillar.
        The AFMS introduced new medical technologies and strategies to
    maintain a high level of readiness with a smaller, more mobile medical
    ``footprint.'' For example, the old contingency hospitals, designed for
    large-scale conflicts during the Cold War era, were large, costly and
    immobile. In July 1997, active, Guard and Reserve personnel worked
    together to reengineer the contingency hospital into the new Air Force
    theater hospital. Because the theater hospital is based on the
    modularly deployable air transportable hospital (ATH), it is more
    responsive to theater commanders' needs for both flexibility and larger
    inpatient facilities.
        Contingency support for theater commanders.--Air Force medics
    provided support to contingency and humanitarian operations this year
    in locations such as Southwest Asia, Croatia, Africa, Central and South
    America, and the Pacific Rim. Highlights included manning our prototype
    chemically hardened ATH at Prince Sultan Air Base, Saudi Arabia, and a
    10-bed ATH in support of U.S. humanitarian operations in Haiti.
        In addition, the AFMS provided crucial force protection services to
    deployed troops, such as stress counseling before, during and after
    deployments, and epidemiological surveillance and education in-theater
    to prevent disease. Certainly, immunizations are an important part of
    our epidemiology program. As such, we support the DOD initiative to
    immunize our airmen against anthrax, a highly lethal disease. We know
    that our deployed troops face a validated biological warfare threat of
    anthrax and are confident in the safe and effective FDA-approved
    vaccination. In addition, the Air Force anthrax vaccination
    implementation plan ensures accurate tracking of all personnel who
    receive the vaccine. Our force protection measures also mandate a
    response to chemical warfare threats. We anticipate initial operating
    capability of our tested and fully functional chemically hardened ATH
    (CHATH) in August 1998, with full operational capability of all CHATH's
    scheduled for September 2000.
        Institutionalizing evacuation of the stabilized casualty.--
    Throughout contingency and humanitarian operations, Air Force
    aeromedical evacuation (AE) flight crews and critical care air
    transport teams (CCATT's) provided in-flight care to quickly move
    stable and stabilized patients. Moving stabilized patients, defined as
    airway-secured, hemorrhage-controlled, shock-controlled, and fracture-
    stabilized, represents a change in DOD doctrine to support the reduced
    forward medical footprint. The CCATT, which adds an intensive care
    capability to routine medical flight crews, provides high quality
    enroute care without draining staff and equipment from theater
    commanders. CCATT's are operating out of Wilford Hall Medical Center in
    San Antonio, Texas, and Keesler Medical Center in Biloxi, Miss. With
    the initiation of a certified CCATT course in October 1997, the Air
    Force began training 106 teams per year at Brooks Air Force Base in San
    Antonio.
        In further support of the Air Force's unique ``care in the air''
    mission, we continue to pursue the insertion of telemedicine into the
    aeromedical environment. We completed the Phase I Proof of Concept
    Demonstration in September 1997, having flown nine missions within U.S.
    Air Forces, Europe, on three aircraft--the C-9, C-141 and C-130--for a
    total of 70.6 hours. In this demonstration, we used commercial off-the-
    shelf computer systems and applications in addition to existing
    airframe communication systems, and were able to validate use of e-mail
    and ``chat'' to and from the aircraft to ground AE command and control
    elements. We are now working toward our Phase II Proof of Concept
    Demonstration in the Pacific Air Forces theater.
        Ensuring Total Force partnership.--The AFMS goal to change and
    sustain the Total Force culture was formally established with the
    implementation of the Mirror Force strategy. The Mirror Force Strategic
    Plan provides a blueprint to organize, train, and equip our medics as
    one seamless team, with no distinction between active duty, Guard, or
    Reserve. The Mirror Force concept has been incorporated into all
    aspects of readiness efforts. All integrated product teams,
    conferences, training activities, operating instructions, and
    deployable medical teams now stress active and reserve component
    participation.
        As more operational missions transfer to the Guard and Reserve in
    the future, Mirror Force will ensure one standard: the AFMS standard.
    To prepare for these combat support missions, reserve component medical
    forces will be taking on some traditionally active duty missions in the
    near future. For example, beginning this summer, the Air Force Reserve
    Command and Air National Guard will deploy ATH units to support
    Operation Southern Watch at Prince Sultan Air Base, Saudi Arabia. The
    Eskan Village Clinic in Riyadh will see similar rotations by reserve
    component units in the summer of 1999. Medical readiness personnel from
    the Air Force Reserve Command and Air National Guard will serve
    rotations in the Joint Task Force-Southwest Asia theater planner
    position. These deployments clearly demonstrate Mirror Force in action.
        What we witnessed in 1997 was a major transition from the past. By
    the Year 2000, we will have a reengineered, deployable medical force
    that is more flexible and modular to support theater commanders and is
    capable of supporting evacuation of the stabilized casualty.
               deploying tricare: better access and more choices
        The ``Deploying TRICARE'' pillar incorporates several key aspects
    of our strategy: population-based health management, marketing,
    partnership with the civilian health care sector, and TRICARE
    infrastructure. Much of our progress can be described in terms of these
    facets.
        Population-Based Health Management.--TRICARE is designed to ensure
    patients receive the appropriate care and procedures they require. By
    deploying TRICARE as part of an overall strategy, the AFMS is able to
    optimize quality, cost, and access to care, while offering
    beneficiaries a choice of health care plan options.
        Enrollment in TRICARE Prime has been strong and well ahead of
    predictions. In fact, as of October 1997, DOD had more than 2.7 million
    Prime enrollees, to include more than 800,000 at Air Force MTF's.
    TRICARE Prime is available in nine health services regions; contracts
    have been awarded in the remaining three regions where Prime will be
    available by June 1998. A survey last year of TRICARE Prime enrollees
    found that 80 percent rated their care good to excellent and nine out
    of 10 would reenroll. Customer service for our beneficiaries is further
    enhanced through TRICARE Service Centers, Health Care Information
    Lines, and self-help information.
        As primary care managers and other members of the health care team
    work to coordinate care for our beneficiaries, we've increased
    efficiencies to control costs and improve access to primary care. We
    realigned services that were less efficient in terms of scarce dollars,
    personnel, and facilities. Inpatient services used well below capacity
    are being closed or consolidated with other services. Careful
    evaluation of emergency services resulted in closures of those used for
    mostly non-urgent care. This shifts more resources to provide routine
    and non-urgent acute care in more appropriate settings such as primary
    care clinics, promoting continuity of care for our patients. In
    addition, the limited use of emergency rooms (ER) for true emergencies
    results in a loss of skills proficiency for the ER staff. Therefore,
    local civilian ER's provide an equal or better standard of care to our
    patients. In the long term, our greatest efficiency will be realized
    from our increased emphasis on preventive services, such as health and
    wellness centers. Disease prevention saves dollars, but more
    importantly, greatly enhances the quality of life for our military
    families.
        Marketing.--The AFMS has aggressively communicated our strategy and
    vision to our military beneficiaries, Air Force leadership, and members
    of Congress. Briefings and written materials help everyone better
    understand their health plan and how best to use health services to
    meet their needs. However, continued emphasis is necessary; thus
    ongoing communication efforts are taking place as TRICARE evolves
    throughout the 12 regions.
        Partnership With the Civilian Sector.--To better serve our
    patients, we continue to forge stronger partnerships with the civilian
    health care sector. The DOD Managed Care Support Contracts bring
    services that optimize and complement those available in our military
    facilities to ensure beneficiaries can access required services through
    quality provider networks. DOD is working with contractors to tackle
    concerns that have caused beneficiaries or providers to be dissatisfied
    with the program, to include problems in claims processing. Data on how
    the contractors are doing in terms of timely, accurate processing of
    claims show continual improvement.
        TRICARE Infrastructure.--TRICARE infrastructure, such as policies
    and contracts, is improving our care to beneficiaries as well. We
    implemented fixes to many problems our beneficiaries and network
    providers helped identify. Problems such as balance billing of
    beneficiaries, multiple copayments for a single episode of care, and
    the portability of Prime enrollment will all be resolved by late Spring
    1998.
        Finally, thanks to your support, there is now legislation
    authorizing a demonstration project to give Medicare-eligible
    beneficiaries the same access to MTF's as retired TRICARE Prime
    enrollees. The Medicare demonstration will be at six sites in the
    continental United States and will last for three years. While this is
    an important first step in providing seamless care to all our
    beneficiaries, we do have two concerns.
        One concern is that a limited number of Medicare-eligible
    beneficiaries will be allowed to enroll in the initial demonstration
    project, creating some dissatisfaction among others who will not be
    able to enroll at that time. However, the value of a demonstration
    project is that it offers a trial period to learn lessons and improve
    the process before expanding the program. A second concern is that,
    following the announcement in February of the actual demonstration
    sites, we still require at least six months to implement the program
    because of extensive regulations, particularly those of the Health Care
    Financing Administration. Recognizing and planning for these concerns,
    the AFMS has taken a lead role in implementing this demonstration
    project, and we are committed to its success. In addition, we are
    working with our DOD counterparts to explore other alternatives to
    improve access to care for Medicare-eligibles.
                 rightsizing our medical facilities and forces
        With rising health care costs and reductions in the DOD budget, the
    military must maintain a health care system capable of providing high
    quality medical care within the constraints of a capitated budget.
    Therefore, the objective of our rightsizing pillar is to develop an
    overarching strategy that will optimize the overall force size while it
    ensures we have the right number of people with the right skills at the
    right place and time. Further, it makes sense to rightsize as we evolve
    from an inpatient to an outpatient environment.
        Model using best business practices.--To make the transition to a
    rightsized environment, we applied the DOD Sizing Model. This model was
    created as a joint effort by the Army, Navy, and Air Force to establish
    the optimum baseline for medical authorizations, so the services could
    still execute readiness and day-to-day overseas missions.
        In addition to this baseline, the AFMS developed several
    assumptions instrumental in deriving the current target being
    programmed into the budget. The first assumption is readiness is our
    first priority. The second assumption is quality health care for our
    beneficiaries must continue, with the goal of ensuring ``blue suit''
    (Air Force) care for blue suiters and their families. Third, we must
    also provide a mechanism for quality graduate medical education.
    Finally, it was noted that health care is a process, not a place; care
    delivered outside the MTF is acceptable when based upon appropriate
    quality, cost and service considerations.
        The rightsizing strategy, although initially directed from senior
    leadership, has been validated through a comprehensive strategic
    planning process, essentially a bottom-up review and analysis. The end
    product is a rightsizing strategy that will change how care is
    delivered in the AFMS. Programmed changes will result in fewer medical
    centers and hospitals. Inefficient small hospitals will convert to
    clinics as we move to a prevention-based system. Inpatient care at
    these clinics will shift to the civilian community.
        The changes in facilities and reduction of inpatient beds have also
    prompted us to decrease our active duty and civilian personnel,
    ``rightsizing'' the force. We focused on making sure the decreases are
    made in the appropriate medical specialties while still meeting mission
    and peacetime requirements, and ensuring personnel policies are as
    humane as possible. Military treatment facilities will determine the
    specialty mix required for their patient population.
        Two major strategies, the Integrated Forecast Board (IFB) and the
    Joint Services Graduate Medical Education Selection Board, were
    initiated to help ensure these changes are efficient, timely, and
    maintain a quality force to meet mission requirements. The IFB
    represents a major change in the way the AFMS projects training for the
    future. In the past, training requirements were identified by
    individual Corps without the benefit of integrated oversight and
    management. Due to shrinking resources, the Air Force sought to enhance
    its efficiency in forecasting medical training needs. Hence, the
    purpose and design of the IFB is to project Air Force medical personnel
    training requirements along product lines in support of changing
    mission requirements. It will determine Air Force needs for trained
    specialists in the future and then identify and prioritize training
    activities and programs that will prepare selected officers to meet
    those needs. The IFB ascertains training requirements for all
    specialties and corps, and considers various types of education
    programs including clinical residencies, fellowships, advanced academic
    degrees and non-clinical fellowships with both Air Force headquarters
    elements and private industry.
        One of the important elements of the IFB process is to identify
    needs for specialty trained physicians. The IFB is conducted in the
    spring each year, and is followed by the annual Graduate Medical
    Education (GME) Selection Board. The GME selection board chooses
    physicians for residency and fellowship training programs beginning the
    following year. Prior to 1993, the AFMS conducted its GME selection
    boards entirely by itself. Beginning in 1993, the Army, Navy, and Air
    Force began conducting joint GME selection boards. Each year, the joint
    selection board is planned, coordinated, and conducted by one of the
    military services acting as executive agent. The years since 1993 have
    shown increasing cooperation among the military services in sharing
    training capabilities. In 1997, with the Army acting as executive
    agent, approximately 100 students were selected for training in
    programs conducted by other services. The Air Force will act as the
    lead agent in 1998, and we expect to continue this selection method.
        As we forecast our personnel needs in a rightsized Air Force, we
    must consider the impact on our enlisted forces. For example, the issue
    of how to maintain skills proficiency when our facilities are
    downsizing may be critical in the future, particularly as unlicensed
    enlisted medics are unable to take those skills ``downtown.''
        One of the greatest challenges we face as we make these transitions
    is to effectively communicate our rightsizing efforts to our customers.
    Briefings and written materials are provided to the MTF's to help
    answer concerns and dispel confusion, and Congress is kept informed
    through several forums.
        The process of rightsizing our force is expected to continue
    through fiscal year 2006. It integrates both planning and programming
    efforts and will focus on innovative approaches to health care delivery
    that are cost-effective, provide continuity of care for our patients,
    and solidify prevention strategies.
           building healthy communities--intervention and prevention
        The global mission of the Air Force requires airmen who are fit,
    healthy and ready to deploy on a moment's notice. The AFMS strategic
    pillar, building healthy communities was designed to meet that demand
    as well as deliver top-quality health services for the entire Air Force
    community.
        The building blocks of our ``building healthy communities'' pillar
    include: an enterprise focus that ensures healthy, safe, ecologically
    sound work and community environments; prevention-oriented health
    service delivery system; force enhancement initiatives; and decision-
    making based on factual data analysis.
        Fact-based initiatives.--To build healthy life styles and do it in
    the most cost-effective manner, we are investing in capabilities that
    promote prevention and intervention. Put Prevention Into Practice
    (PPIP) is a strategy developed by the U.S. Department of Health and
    Human Services, which the Air Force has implemented to organize and
    guide the preventive medicine efforts of our medical providers.
        The first step in PPIP is the Health Enrollment Assessment Review
    (HEAR), which is conducted with each patient as they enroll in TRICARE
    Prime, and then is updated annually. Data from the HEAR helps us to
    identify the health status and prevention needs of our patients. This
    data is then reviewed and discussed between the provider and patient as
    a basis for clinical management and is used by major commands and the
    Air Staff to assure that resources are available to care for the
    populations assigned.
        The second element of PPIP is the Preventive Health Assessment
    (PHA), which last year replaced the periodic physical examination
    program for all active duty members. The PHA is a four-stage process
    that includes a prevention-oriented clinical screening, occupational
    examination, screening of military-unique medical requirements, and
    counseling. The PHA will help us ensure the highest rates of mission
    and mobility readiness by providing feedback to commanders on the
    health of their troops.
        Downsizing and increased operations tempo continue to challenge us,
    and we are responding with a variety of force enhancement initiatives,
    such as tobacco cessation classes and individual fitness prescriptions.
    To support these programs, we are establishing Health and Wellness
    Centers (HAWC's) at every Air Force installation. We now have HAWC's on
    53 bases and installation fitness program administrators to help
    members improve their fitness at 70 bases. Our HAWC's provide ``one-
    stop shopping'' for health promotion and fitness assessment. These
    efforts are paying off, as we are beginning to see decreases in smoking
    and increases in fitness rates in our active duty force.
        Another key aspect of building healthy communities is our
    occupational health program. Our state-of-the-art program provides for
    the anticipation, recognition, evaluation and control of physical,
    chemical and biological hazards in all Air Force workplaces. Our
    expertise has a high return on investment in terms of decreased lost
    time, reduced compensation, improved performance and greater
    productivity. Success depends on dedicated teamwork within the medical
    service and with many other segments of the Air Force.
        Air Force leadership is concerned about the ability of its members
    to cope with increasing levels of stress in the face of significant
    increases in operations tempo and force downsizing. As a result, the
    Air Force established an integrated product team (IPT) to evaluate
    suicides among active duty members and develop strategies for suicide
    prevention and intervention.
        The IPT identified numerous factors as leading causes of suicide
    service-wide. Chief among them were relationship difficulties, members
    facing adverse actions viewed as ``career ending,'' financial
    difficulties, substance abuse, and the perception that seeking help
    would have a negative impact on the individual's career. After
    evaluating this information, the team called in consultants from both
    the Air Force and public sector to develop a comprehensive approach to
    suicide prevention.
        Since the inception of the suicide prevention IPT, the suicide rate
    for active duty members has decreased by more than 30 percent. This has
    been largely due to strong senior leadership, awareness training for
    all Air Force members, training at all levels of professional military
    education, and the development of critical incident stress management
    teams at every installation. The bottom line is that successful suicide
    prevention depends on self-aid and buddy care. Everyone must lead the
    culture shift in the way prevention services are delivered and remove
    the stigmata of seeking help. I'm proud to say that a civilian
    consultant hired by DOD to evaluate the military services' suicide
    prevention programs praised the Air Force's program as one that is ``as
    advanced and enlightened as any I have heard of.''
        The Air Force established policies providing limited
    confidentiality protection to service members charged under the Uniform
    Code of Military Justice (UCMJ) and is seeking ways to broaden the
    coverage. We also greatly expanded the proactive role of mental health
    service providers. Various helping agencies in the Air Force--such as
    family services, chaplains, mental health services, substance abuse,
    and health and wellness centers--now work together to provide
    comprehensive prevention services that enhance both individual and
    organizational resilience.
        Base helping agencies are now working closely together under an
    integrated delivery system, or IDS. The new system is designed to link
    base helping agencies to address risk factors, reduce stress and
    improve the coping skills and general well-being of individuals and
    families in the Air Force community. Wing commanders received guidance
    on implementing this system for their units last fall. Commanders at
    all levels can now work closely with the various agencies to offer a
    more comprehensive range of prevention services, increase the
    protective factors and decrease the behavioral risk factors in the
    community.
        Family Advocacy is among the agencies that have shifted their focus
    from intervention to prevention. Professional family advocacy outreach
    managers at every base are providing educational and training programs,
    such as courses in parenting and couples communications.
        In summary, base agencies now work closely with each other, helping
    to integrate those services which provide direct assistance to members
    and their families. As these agencies join ranks, officials believe
    potential problems can be identified earlier and efforts taken more
    quickly to prevent tragic trends.
                       quality and customer satisfaction
        Customer satisfaction with quality care is the capstone of the AFMS
    strategic plan. The AFMS has a long tradition of providing quality
    care, but we can't rest on past success. Air Force medics rigorously
    seek out and submit to external and internal quality assurance reviews,
    many by the same professional organizations that measure the civilian
    medical industry. Regardless of the measure, Air Force medics
    consistently score as well as, and in many cases better than their
    civilian counterparts. In fact, Joint Commission on Accreditation of
    Healthcare Organizations survey scores indicate Air Force hospitals
    have outscored civilian hospitals nationwide by 5 percent during the
    past six years. In addition, 17 percent of Air Force hospitals have
    received ``accreditation with commendation,'' JCAHO's highest
    appraisal, for their outstanding services, quality patient education,
    and staff training programs. Only 12 percent of civilian hospitals have
    received this same appraisal. As an example, during a recent JCAHO
    inspection of Malcolm Grow Medical Center, Andrews AFB, MD, the
    surveyors commented: ``Your medical staff is excellent * * * better
    than any civilian hospital I've ever surveyed;'' and ``On a scale of
    one to 10, with 10 being the highest * * * patients who continually
    stopped me gave you a 10 plus * * *.''
        We're also very proud of the fact that the number of Air Force
    physicians who are board-certified compares favorably with the number
    in the civilian community (67 percent vs. 66 percent) and that we
    experience a much lower rate of malpractice claims than the civilian
    community (seven claims per 100 physicians per year for the Air Force
    vs. 14 claims per 100 physicians per year in the civilian sector).
        High marks in clinical performance are only part of the picture.
    The AFMS also measures itself by how satisfied customers are with the
    care they receive. Recent survey results show that our scores are
    higher in customer satisfaction than those of our civilian counterparts
    in terms of satisfaction with access, interpersonal relationships, and
    quality.
        As we journey toward the next millennium, our ability to support
    the Air Force and DOD depends upon our progress in each of the four
    pillars: medical readiness, deploying TRICARE, rightsizing, and
    building healthy communities, with a capstone of customer satisfaction.
    We're confident in our ability to maintain an outstanding level of
    service for the Air Force and our country for many years to come, and
    appreciate the continued support of our beneficiaries, military
    leadership, our President and the Congress.

                             Women's health studies

        Senator Stevens. I apologize. There has been a crisis come
    up about a situation developing tomorrow and I am still trying
    to solve it.
        Before I forget about it, Admiral, we certainly agree with
    you about the women's health studies. We have done our best to
    assure that the transition is totally complete now, in terms of
    the services that the women in the armed services need. To my
    knowledge, no one has ever requested money for what you just
    suggested, those studies.
        Could you give us an idea how much money would be required?
    And I assume it would have to be a joint services study, not
    just the Navy. Right? You do not need to give it to us now.
        Admiral Koenig. No; I know that.
        Senator Stevens. Give it to us for the record.
        Admiral Koenig. Yes; we are prepared to do that.
        [The information follows:]

        Current proposed Women's Health Research Studies in the Department
    of the Navy submitted by Bureau of Medicine and Surgery (BUMED), Office
    of Naval Research (ONR), Naval Health Research Center (NHRC), Center
    for Naval Analysis (CNA), and Naval Air Warfare Center (NAWC) include:
    Priority: 1
        Longitudinal Study of Pregnancy Outcomes in Navy Women Serving
    Aboard Ship and Ashore. Cooperative study with Naval Health Research
    Center designed in response to recommendations of the Standing
    Committee on Military and Civilian women in the Department of the Navy
    three year study; total funding: $1.065 million ($355,000/year).
    Priority: 2
        Development and Refinement of Interventions to Reduce Unplanned
    Pregnancy in Navy and Marine Corps Women. Two year study; total
    funding: $440,000 ($220,000/year).
    Priority: 3a
        Occupational Fitness of Active Duty Women for Sustained Operations.
    Three year study; total funding: $450,000 ($150,000/year).
    Priority: 3b
        Dynamic Strength Capability of Women in High Performance Flight
    Tasks. Three year study; total funding: $900,000 ($300,000/year).
    Priority: 4
        Gender Norming Human Factors for the Next Generation Ships and
    Equipment. Five year study; total funding: $1.5 million ($300,000/
    year).
    Priority: 5a
        Premilitary History of Sexual Assault and Active Duty
    Revictimization and Resulting Health Care Utilization. Three year
    study; total funding: $2.4 million ($800,000/year).
    Priority: 5b
        Relationship Between Active Duty Women Premilitary Maltreatment
    History and Health Care Utilization. Three year study; total funding:
    $2.4 million ($800,000/year).
    Priority: 5c
        The Relationship Between Post Traumatic Stress Disorder
    Symptomology and Occupational Performance and Attrition in Active Duty
    Women. Three year study; total funding: $2.4 million ($800,000/year).
    Priority: 6
        The Effects of Maternal Absence on Child Development, Health Care
    Utilization, and Operational Readiness. Two year study; total funding:
    $500,000 ($250,000/year).
    Priority: 7
        Pregnancy, Physical Fitness, and Force Medical Protection: A Pre
    and Post Natal Exercise Model for Active Duty Navy and Marine Corps
    Women. Two year study; total funding: $400,000 ($200,000/year).
    Priority: 8
        The Development of a Safe and Effective Exercise Curriculum to
    Reduce Musculoskeletal Injury in Navy and Marine Female Training
    Populations/Operational Communities. Two year study; total funding:
    $500,000 ($250,000/year).
    Priority: 9
        Establishment of a Registry of Birth Defects in Offspring of Active
    Duty Women. Ongoing registry; total funding: $250,000/year.
    Priority: 10
        Medical Care of American Women in OCONUS Host Nation Medical
    Systems. Cooperative study with George Mason University. Two year
    study; total funding: $180,000 ($90,000/year).
    Priority: 11a
        Self Esteem of Active Duty Navy and Marine Corps Women and
    Relationship to Medical Force Protection. Three year study; total
    funding: $450,000 ($150,000/year).
    Priority: 11b
        Shipboard Health of Active Duty Women in the Navy and Marine Corps.
    Three year study; total funding: $1.5 million ($500,000/year).
    Priority: 11c
        Health, Wellbeing, and Health Care Delivery Services Available to
    Women Aboard Ship. Three year study; total funding: $1.5 million
    ($500,000/year).
    Priority: 12
        Application and Assessment of Urine Based Screening for Chlamydia
    in Navy and Marine Corps Women. Two year study; total funding: $300,000
    ($150,000/year).
    Priority: 13
        Gender Differences in Immune Defense Mechanisms: Potential
    Application to the Management of Combat Associated Major Trauma. Three
    year study; total funding: $750,000 ($250,000/year).
    Priority: 14
        The Effectiveness of Telemedicine Consultation in Assessing
    Gynecological Disease. Three year study; total funding: $750,000
    ($250,000/year).
    Priority: 15
        The Knowledge Base of Active Duty Navy and Marine Corps Women
    Concerning Health Promotion and Disease Prevention Behaviors. One year
    study; total funding: $50,000 ($50,000/year).
    Priority: 16
        Continuation of Defense Medical Epidemiological Database
    Development. One year study; total funding: $100,000 ($100,000/year).
    Priority: 17
        Mixed Gender Value Added Tactical Decision Making Under Stress.
    Three year study; total funding: $750,000 ($250,000/year).
    Priority: 18
        Gender Comparison of Suicide Risk and Adverse Psychological
    Response Assessment in the U.S. Navy. Two year study; total funding:
    $280,000 ($140,000/year).
    Priority: 19
        Gender Differences in Response to Cold Stress. Two year study;
    total funding: $500,000 ($250,000/year).
    Priority: 20
        Female Physiological Heat Exposure Limits (PHEL). Two year study;
    total funding: $1.2 million ($600,000/year).
    Priority: 21
        Tri-Service Hospitalization Rate Comparison for Female Specific
    Disease. Two year study; total funding: $400,000 ($200,000/year).
    Priority: 22
        Anthropomorphic Measures as Indicators of Body Fat Change. One year
    study; total funding: $100,500 ($100,500/year).
    Priority: 23
        The Health Status of Repatriated Female Prisoners of War/Torture
    Survivors. One year study; total funding: $100,000 ($100,000/year).
        Proposed future studies addressing successful integration of women
    aboard submarines are: Gender difference in response to potential toxic
    atmospheric contaminants or radiation exposures that may occur during
    submarine duty; Women on submarines-health issues; Psychological
    predictors of attrition; and Psychological predictors of successful
    integration of women aboard submarines.

                          TRICARE/Medicare subvention

        Senator Stevens. You all mentioned TRICARE and Medicare
    subvention. I do have some questions about that.
        TRICARE, 12 regions in the country. We have done nine. We
    have three more to do, but it looks like every time we are just
    about ready to go ahead, we have an appeal. There has been an
    appeal in every instance, and they have been settled. But the
    problems that develop in each region seem to be comparable to
    the ones that developed prior to the new one coming on line.
        Is there not some way that you can have some kind of a
    cadre that can go and say, look, these are the problems that
    all the other nine have encountered, do not make the same
    mistakes? It would seem to me that a management structure to
    assure that the delays that the others have encountered would
    be avoided in these last three would be in order. Is that
    possible?
        Admiral Koenig. I will take that on. Yes; I think it is
    possible, and I think that we have a good chance at this time--
    it is actually two contracts to serve three regions--that this
    will not occur.
        I have personally talked to the CEO, the one that is to
    come up first on May 1, and the biggest issue has always seemed
    to be the rapidity with which they process claims. I think
    these people indicate to me that they have learned lessons by
    looking back at what the other folks have been through.
        Some of the other issues, though, that we identified in
    reference to enrollment and continuous enrollment, are issues
    that need to be fixed by the tri-service CHAMPUS office, the
    TRICARE Support Office. These are issues that we, the three
    SG's, keep asking to have fixed. These issues do not
    necessarily require legislation.
        On the issue that I did mention to you earlier about
    automatic enrollment of active duty family members who live
    within the catchment area of a facility, I suspect we are going
    to need to have some sort of legislative help to get that done
    because of the resistance that we feel at other areas.

                               TRICARE enrollment

        General Roadman. It will require a legislative change
    because the law now mandates choice and it is choice at the
    beginning rather than choice to opt out. Language is being
    written for that legislation and submitted to the Senate Armed
    Services Committee.
        General Blanck. Mr. Chairman, if I may--I am sorry. Go
    ahead.
        Senator Stevens. Be sure we get it too. We are probably
    going to have the first vehicle to deal with, if it is
    something that has to be done. We are going to be working on a
    supplemental when we get back in just 2 weeks, and I think we
    can get their concurrence to do a fix like that in a
    supplemental if you give it to us in time.
        Yes, General?
        General Blanck. Besides the slowness in the payments and
    the issues you have already heard addressed, there are two
    other major problems with TRICARE. One is being fixed and one
    is not.
        The one that is being fixed is the maximum allowable rates
    of reimbursement that were in some cases below that of
    Medicare. The rates that will make them at least as great as
    Medicare will be published in the Federal Register in the next
    month or so, and that will obviate that problem. So, no longer
    will physicians have to rely on being reimbursed at even below
    Medicare rates.
        But the second problem is that the rates really are set to
    those of Medicare which many consider to be too low. As long as
    we are linked with that, we are kind of a captive of those
    rates, and some providers, some groups just will not accept
    those rates. They do in areas that are relatively provider-rich
    where there is a lot of competition, but in areas where that is
    not true, where providers do not have to take those rates, they
    really are opting out. Now, they have to accept Medicare by
    law, but they do not have to accept CHAMPUS by law. So, there
    are some issues with that as well.
        Senator Stevens. Well, they have to accept Medicare by law
    if they take Medicare. But I have had a whole series of people
    from Alaska--I just finished visiting with a young woman doctor
    who told me she just cannot afford to do the Medicare anymore,
    and it is not what she is getting repaid, it is all of the
    forms and reports and inspections and everything else that come
    from Medicare when she gets involved in it. She is a sole
    practitioner in a rural part of Alaska, and literally she was
    in tears and she told me she just cannot do it anymore.

                              TRICARE and Medicare

        Now, you guys have a lot of clout with that Medicare bunch.
    You ought to get in there and tell them to stop this because
    with Medicare subvention and TRICARE using Medicare rates, what
    you are doing is you are leading these people into a blank
    wall, if you think retirees are going to take that option,
    because they know that the doctors that they have dealt with in
    the past are not taking Medicare patients.
        My question to you is how can we interface all these people
    now using the private sector doctors. As you mentioned,
    Admiral, that is the filler that is necessary. As we have
    reduced the number of medical facilities, you have to move some
    of them out there, do you not? But if you take Medicare rates,
    they are not going to take it. This is a horde of people we are
    pushing out in the private sector, and if this young woman is
    right, they are not going to take them.
        Have you talked to the Medicare people about this? What is
    going to happen to them? The private doctors cannot take that
    load if it is going to mean that they are swamped by all these
    Medicare reports, and they are probably going to have to give
    you reports too.
        You talk about the Internet, Admiral. Why can some of these
    things not be put into some sort of a program that these
    doctors can have someone put a report through on the Internet
    and file it and not have all this paperwork and all these
    investigations and everything else that is going on in these
    little towns of America today?
        General Blanck. My understanding is that you can do that.
    You can file electronically by the Internet.
        Admiral Koenig. Unfortunately, there are I think over 1,500
    different forms.
        Senator Stevens. That is what she said.
        Admiral Koenig. Yes; it is insane. We need a single form in
    this country that is filed for every kind of claim and it
    should require the minimum amount of information, not anything
    that anybody wants to have for their own little study.
        Senator Stevens. What is more, she told me that they give
    instructions as to how she is to perform her services. Her
    services must be performed according to this particular
    protocol or she is not going to get reimbursed. Now, that is a
    lot of baloney when you are out there operating on your own.
    She told me she would have to have a separate room in her
    office just to store the forms that she has to file if she is
    going to take Medicare.
        I am serious now because all the retirees that want to go
    off and take this other Medicare subvention are going to be
    back at you like a dirty shirt. That is all there is to it.
    They are going to come after you if it does not work, and we
    will hear from them.
        We are already hearing from retirees in terms of access,
    gentlemen. The facility has been closed. They do not know where
    to go. You talk about the young people being confused. They are
    confused. The place they got their service before--they do not
    know what their rights are. We are getting a lot more
    congressional inquiries on how do I do this than you would
    believe. I do not know about you. We have one person working on
    that now and we are a small State.
        So, I would urge you to do something about that concept of
    the Medicare program being ready to provide private sector
    service for your people.
        Admiral Koenig. I think you got three guys down here who
    are in adament agreement with you on all this.
        Senator Stevens. Well, tell us who to go to battle with. I
    will join you.
        Admiral Koenig. We can do that.
        Senator Stevens. I do not know anything about those blasted
    forms. I wondered when she told me about this protocol. She
    could not get repaid because she did not follow a particular
    approach to providing a medical service. But you all have to
    help us on that.

                                    Angio-CT

        I am taking a lot of time. You mentioned the angio-CT that
    is out there at Walter Reed. I do not have answers on this now.
    I went out to see the man who invented that, as you know, and
    went through it. I got to tell you I think the second
    generation is going to be staggering if they can achieve their
    goals.
        But beyond that, I have notified every Member of the Senate
    that they ought to get out there to Walter Reed and use that
    because that is preventive medicine. That is not a diagnostic
    tool to tell me what is wrong with me now. It is to tell me how
    to not get sick in the future. Even this first generation has a
    great deal to do with lessening the workload of your service
    hospitals if we could find some way to put them to work.
        Now, as I understand it, that is the only one we have, is
    it not?
        General Blanck. There is another one at Brooke Army Medical
    Center and I know some of the other centers use that
    technology, though they may not own it. They use it in the
    local community. There are perhaps 40 in this country total.
        Senator Stevens. Well, I wish you all would make a study of
    that and see whether it is as good as I think it is. If it is,
    I think we ought to expand the number of them that are
    available. You all have mentioned preventative medicine, and
    that is the answer to this baby boom generation is to try to
    keep them healthy so that they are not in inpatient guise.
        I hope that we can find some way to not only accelerate the
    development of the second one. The second one is the one I told
    you about which really would have battlefield implications,
    could be put in a small van, the back of a pickup, and would
    diagnose a person's injuries within 90 seconds and tell the
    corpsmen within another 90 seconds what to do to save the life
    in order that they can be put into air transport and taken to a
    field hospital. If there is, God forbid, another war, the war
    of the future will be an awful fast one, and that device is
    absolutely necessary if we can bring it about.
        But right now I really would urge you to tell us--let me
    back up. Are you making a study on this one that is at Walter
    Reed and how it has performed?
        General Blanck. Yes, sir; we have several protocols of how
    we are using it, who goes through it, the ages, what we are
    finding, all of those kinds of things. But some longer-range
    studies, because exactly as you have described, we are trying
    to use it not as a diagnostic tool when someone comes in with
    chest pain. We want to get them much, much earlier than that so
    that early on they can see their own coronaries noninvasively.
    And what a tool we believe this is to give them information
    that will allow patients to make choices and motivate them to
    make the right choices, the healthy choices. If they see the
    beginning of disease, they can do things now that will then
    prevent the need for coronary bypass later.
        Senator Stevens. I asked the developer of that to give me
    all of the instructions that he sends out, and I am going to
    read that over this recess.
        In terms of preventive medicine, it seems to me if it is
    really going to work, that ought to be the first thing you do
    on an annual physical of your people, and you ought to get back
    to the idea of asking all these people to take an annual
    physical so you can stay ahead of the curve as far as providing
    health services to them. But that is going to take a lot of
    those machines.
        General Blanck. Exactly right. Of course, TRICARE has built
    into it for the prime option the periodic fitness evaluation,
    the health promotion evaluation, and this would be one of the
    tools that potentially could be used. It gives a lot of
    information that again motivates patients to change behavior.
    We can give them a lot of information but it is difficult for
    them to take that step--and them is all of us too.
    Understanding that we are all patients--is critical to real
    health promotion.
        Senator Stevens. I have some other questions I want to ask.
    First I want to give it over to my friend here to see what
    questions he has. Senator Inouye.
        Senator Inouye. A long time ago I learned that when Senator
    Stevens speaks, I listen. [Laughter.]
        And I would suggest to you gentlemen you listen very
    intently. He has given you the green light to get more
    facilities. He has given you the green light to cut down the
    paperwork from 1,500 to 15. I think it can be done.
        In looking over the reports of the medical services, it is
    easy to note that there is an increasing demand upon your
    services for humanitarian operations and low intensity
    operations. Looking at the budget again, I somehow feel that
    the budget will have an impact upon your readiness.
        Are you concerned?

                           budget impact on Readiness

        General Blanck. We are all pointing at each other.
        Yes; I am concerned. I will let the others speak for
    themselves. Not that we cannot continue to do our day-to-day
    business. We can. But there are increasing demands, new
    surveillance demands on us, new kinds of health promotion
    demands. Increasingly we are trying to shift resources to
    healthy communities, to preventing disease, but that does not
    have a payoff in the same year. It has a payoff 5 or 10 or 20
    years down the pike. So, when you are dealing with a year-to-
    year budget, sometimes it is difficult to make the decisions to
    shift that when you have a waiting room full of patients that
    have acute problems or where you are dealing with chronic care.
        So, again, yes, we can continue to do the same things, even
    do some innovations perhaps, but all of us are, I am sure,
    constrained by the resources. Yet, there is only so much money
    and I think we all understand that. So, we are looking for
    innovative ways to be able to shift dollars.
        I would comment that the Department of Defense has
    committed to fully funding, within that budget constraint, the
    health program, and right now we are working with the
    Department of Defense to find some moneys that were taken by
    their inflation readjustment. And I think all of you have
    information papers on that. It totals I believe $87 million
    because when they readjusted for inflation, it cut the managed
    care contracts, which by contract have to get a certain amount.
    So, it cannot be adjusted. Therefore, we are short a certain
    portion.
        And also our pharmacy costs have increased out of
    proportion to just the normal inflation, as it has throughout
    this country in every system, not just ours. So, you cannot
    apply the lower inflation rates to that as well.
        We believe that the Department of Defense will find those
    dollars, but it still does constrain us, as I have described.
        General Roadman. But I also think that it is perfectly
    obvious that we also consume WRM assets as we put air
    transportable hospitals and the tentage is out and being
    exposed to the environment and the supplies are being used. So,
    there are costs to that, and WRM is underfunded for us.
    Obviously, we can give you those numbers for the record.
        But there is another component, Senator Inouye, that we
    have to keep in mind and that is as we do these missions, this
    is the best training that we can get for the real mission that
    we have which is our war readiness ability. I would just give
    you the example of the six burn patients that we brought back
    from Ecuador about 4 weeks ago. We had a group of people from
    Wilford Hall down in Ecuador giving training to the Ecuadorian
    physician community on trauma care. They got through 1 day of
    the trauma care didactics, and early in the morning or late
    that night, an oil pipeline exploded and oil came down through
    a community. These same physicians that were there then shifted
    into an operational mode and began treating severe wound
    casualties, burn casualties, and ultimately through the State
    Department, we, through our casualty transport system, brought
    six of them back to Galveston.
        That is the type of stuff that differentiates us from all
    the other civilian health care agencies. That ability to do
    that real-time training, that real-time experience just pays
    for itself.
        So, there are two aspects of it. One is positive and one is
    negative.
        Admiral Koenig. We are, as I mentioned before, about ready
    to deploy the hospital ship for a 6-week exercise. When you
    send a force like this to a part of the world where they have
    never seen anything like this, it sends a real message. This
    has great diplomatic benefits for the United States, but we do
    it at a cost. We will send 600 people on that ship. That will
    impact our health care system. We will adjust to that as best
    we can by cross-leveling and bringing in Reserves and so forth.
    But it is very important that we do this because if we do not
    know how to make that ship work, if we ever really need it for
    something very, very critical, and we do not know how to run
    it, we will not be able to do it. So, it comes at a cost when
    we do this, but we will benefit.
        There are things that we need to do with those type of
    platforms in the future. We are already starting to skimp on
    that and I do not like to see it happening. If you ask for it,
    we could certainly provide that information for you.

                       Air Force humanitarian operations

        General Roadman. Senator, if I could just add one more
    thing. When our people come back from those deployments, in our
    parlance we say they are really reblued. If it is their first
    deployment, they finally understand why we do what it is we do.
    If they have gone before, they have come reblued. So, it is
    important that we do those things both for recruitment and
    retention, as well as for the diplomatic aspects of our playing
    on the world stage.
        Senator Inouye. So, these operations have a positive
    impact.
        General Roadman. Absolutely.
        Senator Inouye. Admiral, I was pleased to learn that women
    are not little men. [Laughter.]

                             Research program funds

        But they make up 14 percent of the military population.
    There are about 340,000 now.
        In fiscal year 1994 and 1995, we did have a research
    program in which we appropriated $40 million per fiscal year. I
    would like to ask the same question the chairman asked. Why did
    we not request funds after 1995?
        Admiral Koenig. It was not in the defense program after
    those years, so there has been no additional funds brought in
    to continue this research for the last 2 years. We have a lot
    of questions that we need to get answers to, and we simply do
    not have the dollars to go after that right now.
        Senator Inouye. Do you consider this important enough to
    submit it?
        Admiral Koenig. Yes, sir.
        Senator Inouye. I would hope that you will submit it to the
    committee.
        Admiral Koenig. We will.

                            USUHS graduate retention

        Senator Inouye. On retention, that concerns the committee.
    Retention and recruiting. I note that all three services have
    concerns about not being able to retain physicians and
    physicians' assistants, nurses, et cetera.
        What is the retention rate for the USUHS grads? I ask this
    because last year we saw numbers that were unbelievable, that
    92 percent of the graduates of USUHS who have gone through the
    obligatory time have stayed on. Is that number still holding?
        General Roadman. I think it is in the 96 percent range now.
        Admiral Koenig. Admiral Zimble is sitting back there. He is
    the resource man. He can tell us.
        Senator Inouye. Well, Admiral?
        General Blanck. But the point is, it is very, very high.
    Jim, what is it specifically?
        Admiral Zimble. The number--of the 2,740 graduate
    physicians in the Uniformed Services University, 92.5 percent
    remain on active duty. Some of them still obligate, but they
    are still on active duty. So, roughly 17 percent of the
    physicians in the Department of Defense are graduates of the
    Uniformed Services University.
        Thank you for the opportunity.
        General Blanck. But the point is correct. The retention of
    those trained in the Uniformed Services University is far
    higher than from any other program. In-house GME is next. Those
    who train in civilian institutions are the ones least likely to
    remain on active duty because they do not have quite the
    culturalization. They have not identified themselves as
    military physicians. I think all of us are absolutely committed
    to have everyone in our medical departments, physician, nurse,
    physicians' assistants, dentist, whomever, practice military
    medicine, know about military medicine, not just medicine in
    the military, and it is fundamentally different.
        Admiral Koenig. Many of the USUHS students, by the way,
    have prior service. They come to us with a whole lot of
    military background and they are very, very valuable assets.
        Senator Inouye. I met an outstanding physician who was a
    commander of a tank company who is now an M.D.
        I am happy that DOD has finally seen the light and taken
    their fingers off USUHS and will permit it to go on. I do not
    want to bring this up, but the retention rate of USUHS grads,
    when placed against the retention rates of West Point,
    Annapolis, and Colorado Springs, would make the other services
    look pretty bad. So, congratulations to all of you.
        Mr. Chairman, I have many other questions I would like to
    ask, but may I just submit them?
        Senator Stevens. Yes, sir, please.
        Senator Inouye. I have to get back to the other hearing.
        Senator Stevens. So do I.
        Senator Inouye. I am going to be back for the little men.
    [Laughter.]
        Admiral Koenig. Twenty-five percent of our nurses are male.
    [Laughter.]
        Senator Stevens. I think we better stay off that.
    [Laughter.]
        I am going to submit some of my questions, but I am first
    going to yield to Senator Shelby and see what he has----

                      prepared statement of senator shelby

        Senator Shelby. Mr. Chairman, I appreciate this. I have a
    written opening statement I would like to be made part of the
    record, and I have some questions that I would just submit to
    the record.
        [The statement follows:]

                Prepared Statement of Senator Richard C. Shelby

        The American health care system is the best in the world.
    The Defense Health Program reflects our society's expectation
    of quality care: a highly trained medical professional
    supported by innovative technology and research. United States
    military personnel receive the best medical care of any
    military in the world. The military has a tradition of
    providing quality care.
        There are serious problems in the Defense Health Program,
    however. Military personnel and their families who have opted
    for TRICARE Standard coverage have reported being denied
    treatment at military facilities. The Military Services are
    experiencing difficulty in recruiting and retaining dentists.
    Military retirees are being shut out of the Defense Health
    Program and contend that they are not receiving health care.
    The Administration has consistently underfunded the military
    health care program, which indicates a lack of commitment to
    our military personnel and their families. It is clear that
    these deficiencies are causing members of our armed forces to
    vote with their feet, because the erosion of the health care
    benefit is frequently cited as a primary reason for leaving the
    military.
        We can improve the Defense Health Program and correct the
    deficiencies in the system. I look forward to hearing the
    testimony of the witnesses today and their responses to our
    questions.

                              Facilitating service

        Senator Shelby. I see my friend, General Blanck, here. I am
    always glad to see you as well as the other Surgeons General.
        Thank you, Mr. Chairman.
        Senator Stevens. Well, thank you very much. Let me be as
    brief as I can, and I am not too good at it this morning.
        I agree with you on Internet. All of you now have Internet
    developments and availability. But not many guys my age are
    using the Internet. [Laughter.]
        What are we going to do to find some way to facilitate the
    services?
        I was thinking of trying to see if we could not find some
    way to find a person in every community where there are a
    sizable number of retirees and have that person be the contact
    point who from their own home will run Internet services for
    fellow retirees. Can we do things like that? Are you trying to
    outreach to somebody who knows how to do it? Otherwise, despite
    the availability or not, they are going to be coming to the
    hospitals to make their appointments despite the fact we are
    going to have an Internet appointment system.
        General Blanck. Absolutely. The mail order pharmacy is an
    attempt to make something available that is relatively easy,
    everybody is familiar with. The use of a 1-800 number for
    information for appointments for various services, including
    refills, making things more readily available through a drive-
    in pharmacy that is in use in some of the facilities. All of
    these things--and there are many, many more--have to be used in
    combination. There should be a whole menu for a variety of
    services that people can choose from and, of course, making
    that information available is part of our challenge, whether it
    is through mailout, through the Internet, through visits to the
    hospitals, or health benefits advisors.

                              Technology and costs

        But, yes, we are very interested in working with groups and
    with specific representatives.
        Senator Stevens. I am not tooting my own horn, but I just
    want to tell you something. I hope you know when I first came
    here, that to use the PET scan process, you had to have an
    enormous cyclotron. I looked at that out at UCLA and said, you
    know, the trouble is there are not many universities who are
    going to get a cyclotron. Let us miniaturize cyclotrons. So, we
    used some of your money and we did that. Right? Cyclotrons are
    now fairly small. I saw one at UCLA that fits in a room one-
    third this size.
        What are we doing about using your systems now to try to
    drive down costs of this technology? That is what I asked my
    friend out there with that angio-CT. It is a wonderful thing,
    but how are we going to drive down the costs so we can have one
    of those in every military hospital? Are you looking at these
    things to be the cost driver on second and third generations of
    these things?
        Admiral Koenig. I think we have seen the cost of new
    technologies that have come into medicine over the last decade
    or two drop significantly. I am thinking of things like
    computer tomography, MRI's. The cost of this kind of equipment
    has dropped as it has become more proven and more people learn
    how to use it. I think we are going to see the same thing with
    this new technology that we have spoken of.

                      cost reduction of Medical technology

        Senator Stevens. I have to tell you, Admiral, I went to a
    symposium and they showed us the telecommunications and digital
    communications and the interfaces of all of the things that
    come out of the computer and digital revolution. And every new
    generation of that has been less costly, and it is now down to
    a factor of one one-hundredth of what it was when it started.
        If you look at your medical technology, in spite of the
    fact that the costs are being held down, each new generation is
    more costly than the one preceding it. We have not had the
    drivers. There have not been any drivers in terms of trying to
    get the costs of medical technology down ala the concept of
    looking at what was the largest cost of the PET scan which is a
    cyclotron and driving it down. I think you ought to have within
    the services a group that is there to try and look at the
    systems and find out how those costs could be driven down.
        General Roadman. That is being done, but the CBO in 1996
    did a study and said 62 percent of the increases in health care
    from 1996 to 2000 would be attributable to technology. The
    problem that we have with technology is that, as you bring this
    up and if you have the electron beam CT scan, what you then
    have got to do is quit doing some of the interventive stuff
    that we have done in the past. So, the preventive stuff has
    really got to be a cost lever in order to be effective.
        What technology has done in medicine in general, not in the
    service, is that medicine has been paid for on a fee-for-
    service basis and it encouraged more films exposed, more
    surgeries done, more procedures done, and what that has done
    since 1965 in our country has driven the cost of health care in
    an almost exponential climb.
        So, as we take the technology, what we have got to do is
    assure ourselves that it does something that we are trying to
    stop and that we then can lever that to prevent illness out in
    the future because it is waiting for people to get sick that is
    so expensive for us. That is why we are talking about
    prevention and why you have as well. We have got to apply
    technology in the prevention area, not just in the intervention
    area.
        Senator Stevens. I do not disagree with anything you said,
    but I do think you ought to think of a contract like MIT and
    Cal Tech and a few others and get them to look at this current
    generation and ask them to reengineer them, look at them, and
    find out how they could produce them for less money in volume.
    And we are not doing that. You need volumes of these things
    that are coming on that are preventive medicine related.
        If you look at the PC--did you ever see that first computer
    over in the Smithsonian? Look at the cost of that thing and I
    am told you are going to have one that size by 2005. It will
    have the same power that that thing had over there in the
    Smithsonian.
        It is a question of who is driving the cost. CBO showed us
    that figure. That means if we are going to have any impact on
    cost of your services, we have got to have an impact on the
    cost of the new technology.
        General Roadman. And the utilization, Mr. Chairman.
        General Blanck. Mr. Chairman, we have a steering committee
    that Admiral Koenig chairs, and it rotates, called the
    Technology Insertion Steering Committee. What we do is try to
    look at technology and we try to, through our research
    communities, partner with academics and with industry and in
    some ways we can use what is developed out there and in some
    ways be a testing bed for it and reduce the cost. We can get
    their expertise in downsizing and miniaturizing.
        We right now, by the way, are not buying these things. We
    are leasing them because the next one that will come along will
    be better and we do not have to rebuy the thing and so forth.
        All of this is going on and we need to continue that
    because we should be a model not only for how we manage care,
    health promotion, but also how we use the technology in health
    care.
        Admiral Koenig. Another thing that we are working on is
    with the Department of Veterans Affairs [VA]. We are working
    very, very closely with the VA now on these issues, and we
    figure if we can bring the power of our Department, along with
    the Veterans, to bear on some of these very tough issues, these
    high cost areas, we can drive the cost down.
        For example, we buy that machine that we have been talking
    about like they have at Walter Reed. Why not put one in a VA
    facility or a military hospital and then use it 24 hours a day?
    For some reason we are wed to the idea of 8-hour days, 5-day
    weeks. When you buy a piece of equipment that costs $1 billion,
    you better get the most out of it.
        Senator Stevens. Well, I agree with that.
        Admiral Koenig. And that is the kind of innovative change
    thing we need to make.
        Senator Stevens. But I also think if you can design one
    that costs $1 billion, you can redesign it and it will cost
    $500 million and the next one ought to cost $250 million. And
    you can get it down to where we have got one everywhere.
        We were talking about angio-CT II, and this will be my last
    comment. I foresee that that is going to be in the emergency
    room of every major city in the world. If it will work for the
    guys who have just come off the battlefield, it ought to work
    in Battlefield D.C. too, you know. [Laughter.]
        But we have got to prove it through your use and then I
    think find some ways to produce it for less.
        Well, let me thank you all. Admiral, we wish you the best.
    Maybe you can head up that task force I would like to see
    created and find some ways to analyze these things and bring
    the cost down. Most of the private practitioners just do not
    have time to do it, and your guys and the hospitals do not have
    time. Someone is going to have to take the time and sit off and
    think about it. Let us drive the cost down. Miniaturization.
    You had the word, General.

                         Additional committee questions

        We thank you all for what you are doing and look forward to
    working with you. And you are going to give us that figure.
        Admiral Koenig. Yes, sir.
        Senator Stevens. 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 Lt. Gen. Ronald R. Blanck
                Questions Submitted by Senator Richard C. Shelby
                                  hepatitis c
        Question. I am informed that Hepatitis C continues to be a public
    health threat and may be particularly alarming to the men and women of
    our military. Does the military have an accurate count of the number of
    active duty personnel infected with Hepatitis C?
        Answer. The prevalence of Hepatitis C among the Active Duty
    population is 1.3 percent, as determined by a Serosurvey at Walter Reed
    Army Institute of Research involving 16,000 AD and 30,000 applicants.
    This compares to a 1.4 percent prevalence of Hepatitis C in the general
    population.
        Activities \1\ placing any individual at greatest risk for
    contracting Hepatitis C are: IV drug use; transfusion; hemodialysis;
    tattooing; high risk sexual behavior.
    ---------------------------------------------------------------------------
        \1\ Annals Internal Medicine October 15, 1996.
    ---------------------------------------------------------------------------
        Causes: \1\ 40 percent to 50 percent no identifiable risk factor;
    40 to 50 percent intravenous drug use; 5 to 10 percent transfusion.
        Question. Does the military routinely screen active duty personnel,
    not just new recruits, for Hepatitis C in order to slow the progression
    of disease in infected personnel and to prevent the transmission of
    disease to other military personnel?
        Answer. Individuals found serendipitously to have positive
    Hepatitis C serology, individuals with acute Hepatitis C, and people
    found to have serological evidence of Hepatitis C at blood donation are
    reported through Preventive Medicine channels. Identifying asymptomatic
    individuals who have positive serology for Hepatitis C is not being
    pursued.
        Question. I have been told that exit testing for Hepatitis C at the
    time of retirement or discharge is the only reliable method of
    detecting the presence of Hepatitis C infection to ensure the health
    and safety of the individual separating from the military. Does the
    Department test for Hepatitis C during the exit physical? If so, what
    specific tests are performed during the routine exit exam?
        Answer. The military does not screen active duty personnel.
    However, all blood donors are tested for Hepatitis C virus.
    Additionally, the Army continues random drug testing to identify and
    eliminate drug abuse within its ranks. The Department does not test for
    Hepatitis C during the exit physical. However, the SM completes a
    history form on which he/she is questioned about hepatitis, liver
    disease, etc. Depending upon further history and physical exam,
    appropriate tests would be ordered to determine if pathology or chronic
    diseases are present.
                                     ______

                Questions Submitted by Senator Daniel K. Inouye
                               medical readiness
        Question. An important readiness issue of concern is the shortage
    of provider specialties, dentists and physician assistants. What types
    of recruitment incentives are you implementing to actively recruit and
    retain these providers?
        Answer. The recruitment and retention of highly trained individuals
    to serve within the Military Health System is critical to the overall
    health and readiness of the force. There are actually two areas which
    we feel assist us in meeting this challenge. They are economic and
    educational, and both assist in recruitment and retention.
        The following economic incentives are in place to assist us in the
    recruitment of active component health professionals:
        Nurse Corps Recruitment Bonus.--This bonus of $5,000 is paid to
    Nurse Anesthesia Recruits and Family Nurse Practitioners who opt to
    accept a four-year active duty service obligation rather than a three-
    year obligation.
        Dental Corps Accession Bonus.--This bonus of $30,000 is paid to
    Dental officers who join the force with a four-year active duty service
    obligation. This program was begun in fiscal year 1996 and has proven
    to be a valuable tool. The current statutory authority for this program
    expires in fiscal year 2002. By that time, we are hopeful that our
    efforts to increase Health Profession Scholarship Program allocations
    utilized by the Dental Corps will be successful and that program will
    become the basis to meet future recruitment needs.
        Health Professions Loan Repayment Program.--This program was
    provided to us by the Fiscal Year 1997 National Defense Authorization
    Act. It provides for the repayment of loans utilized for professional
    education. It provided for $22,000 per year of incurred obligation to a
    maximum of four years. Our experience with this program is limited to
    date, but we are optimistic that it will assist us. If there is a
    ``downside'' to this program, it is the fact that it is funded with
    monies which are available as a result of unexecuted Health Professions
    Scholarship Program allocations. One program has to be less than
    successful for this program to succeed. As we gain experience with this
    program we are initially limiting it to the recruitment of Dental
    officers.
        The following economic incentives are in place to assist us in the
    recruitment of reserve component health professionals:
        Education Loan Repayment Program.--Health Professions Officers
    Serving in Selected Reserve with Wartime Critical Medical Skill
    Shortages (10 USC, Sec 16302). The loan repayment currently pays $3,000
    per year up to a max of $20,000 to certain shortage specialties for
    service in the Selected Reserve. Amounts have not kept up with the
    costs of schooling. The dollar amount should be increased so that it
    actually means something to a physician or dentist with many times that
    amount in loans. Suggested change is $20,000 per year to a lifetime max
    of $50,000. Also needing a change in language is the requirement that a
    person be fully qualified in his specialty to be eligible. We would
    like the law to allow participation by someone in training as well.
        Special Pay.--Selected Reserve Health Care Professionals in
    Critically Short Wartime Specialties program (37 USC, Sec 302g) is
    currently being used as an accession program wherein practicing
    physicians and other healthcare professionals receive up to $10,000 per
    year for a maximum of three years for participation in the Selected
    Reserve. This incentive is no longer appropriate given the increased
    chance of mobilization today. Active Component uses a tiered Multiyear
    Special Pay (MSP) for retention of certain health professionals. The
    law allows this reserve program to be used in a similar fashion and the
    Reserve Components would like to work toward that end.
        Financial Assistance.--Health Care Professionals in Reserve
    Components program (10 USC, Sec 16201). The Financial Assistance
    Program (FAP) pays a stipend ($10,000/yr) to interns,
    residents, and some others in certain critical shortage specialties in
    return for future two-for-one obligation to the Selected Reserve. This
    program could be the best recruiting tool available to the Reserve
    Components by modifying the law to allow physician and dental students
    to participate (similar to the Active Component HPSP (10 USC, Sec
    2121). The obligation is based on full years of participation. The
    program should be changed to allow six-month increments similar to
    several of the Active Component counterpart programs.
        Another one of the invaluable tools assisting recruitment is the
    educational opportunities offered. In addition to attracting high
    quality applicants, graduates of the various programs have incurred an
    active duty service obligation which provides a level of stability to
    the force as a whole.
        Currently, the following educational programs are being utilized to
    attract high quality individuals into military service:
        Health Professions Scholarship Program.--This program provides the
    bedrock levels of accessions into various health disciplines.
    Currently, we are utilizing HPSP allocations to support entry level
    training for physicians, dentists, veterinarians, nurse anesthetists,
    optometrists, and clinical psychiatrists.
        Financial Assistance Program.--This program enables us to
    ``subsidize'' individuals undergoing specialty level training within
    civilian institutions. At the present time, this program is being
    utilized to recruit physicians and dentists in specialties which
    directly effect force readiness.
        Enlisted Commissioning Program.--Enlisted members already on active
    duty may compete for this program. It is designed for individuals who
    can complete a Bachelor of Science in Nursing within two years. Upon
    completion of the academic requirements and licensure by the
    appropriate state, the individual is commissioned into the Nurse Corps.
    We find to this to be an extremely popular program providing excellent
    upward mobility to outstanding enlisted soldiers.
        Physician Assistant Training Program.--This is another in service
    training program which provides us with highly trained health care
    providers. Currently, sixty active duty individuals are selected to
    undergo this two-year, tri-service course. We have in the past counted
    on this source to provide 100 percent of our requirements. In fiscal
    year 1999, we will attempt to directly recruit physician assistants.
    Our success in this venture will determine if additional measures are
    required to insure the force structure required in this critical
    readiness specialty is maintainable without additional incentives.
        In addition to the specific programs mentioned above, we are also
    offering in service training programs for our Physical Therapists,
    Podiatrists, Pharmacists, and Dietitians.
        Currently there are five Medical Corps Specialty pays authorized
    for payment under Title 37, USC. These are: Variable Specialty Pay;
    Board Certification Pay; Medical Additional Specialty Pay; Incentive
    Special Pay; and Multi-Year Special Pay. These pays obviously increase
    the economic incentive for our physician force to remain on active
    duty. The yearly adjustment of these rates by OSD (HA) to maintain
    parity among the services is a critical link in the entire retention
    process.
        Non Physician Health Care Provider Board Certification Pay is
    provided to non-physician clinical specialties who have demonstrated
    clinical excellence by virtue of becoming Board Certified in their
    particular area of expertise. Again, this economic incentive aids in
    the retention of our clinical specialists.
        Dental Officer currently receive three type of Special Pays. They
    are: Variable Special Pay; Dental Additional Special Pay; and Board
    Certification Pay. Additionally, the Fiscal Year 1998 National Defense
    Authorization Act has authorized the Dental Officer Multi Year
    Retention Bonus. Currently, we are working within the service process
    to insure funding is available to support this new initiative. Once
    funding is obtained, we are confident that this will assist us in the
    retention of our future dental leadership. We are currently offering,
    and have funded, a multi-year retention bonus for Oral Surgeons. Also,
    the Army has included in its POM submission funding for expansion of
    the multi-year retention bonus to all qualified Dental Corps officers.
                                     usuhs
        Question. The 1997 DOD Defense Reform Initiative mandates the USUHS
    remain open with one of you as Executive Agent. Was this transfer of
    management from Health Affairs to the Surgeons General a sound business
    decision for military medicine?
        Answer. Yes. The decision to establish the Navy as the executive
    agent for the operation of the University is sound. The building is
    physically located on a Navy installation. All of the base operations
    support received will be ``controllable'' by one service. Placing the
    service Surgeons General in an oversight role of the University
    established to meet their needs is an excellent move. We feel that this
    will make the University more responsive to our individual and
    collective needs. This coupled with the fact that the University does
    not exhibit the same growth of costs to operate as the civilian
    counterparts, makes the outcome of the DRI with regard to the
    University a sound decision for us all.
                                     ______

                Questions Submitted by Senator Patrick J. Leahy
                           mobile breast care center
        Question. General Blanck, I have been following a program by the
    Army Medical Research and Materiel Command called the Mobile Breast
    Care Center. The vehicle that other Senators and I toured here on
    Capitol Hill is filled with the latest digital mammography equipment,
    as well as a telemedicine capability. The idea is to give mammograms to
    populations of women who have traditionally been underserved, such as
    in the inner city, rural areas or remote military locations. At the
    same time, the telemedicine technologies incorporated in the vehicle
    are useful to ongoing DOD research. Last year the Defense
    Appropriations Bill contained language which urged the Army to continue
    this program.
        General, does the Army have any plans to procure any more of these
    vehicles? I hope you look at procuring more than just the one
    demonstration vehicle, and then moving forward with clinical trials.
    This technology is too important for military women--and all women--not
    to be properly tested.
        Answer. In response to Congressional interest and last year's
    Defense Appropriations Bill, the Congressionally Directed Medical
    Research Program has included in its 1998 Breast Cancer Research
    Program Announcement language that encourages research proposals that
    test the optimization and efficacy of digital mobile mammography/mobile
    breast care centers to address the basic and clinical research needs of
    at-risk, underserved, rural, and urban communities, as well as active
    and retired military personnel and their beneficiaries. In the Program
    Announcement, investigators are advised that the Medical Research and
    Materiel Command has assembled a prototype digital mobile mammography
    vehicle, which is available for inspection during concept development
    of proposals and may be used for study. The Food and Drug
    Administration has not yet approved the use of digital mobile
    mammography vehicles, and the efficacy of such vehicles to address the
    needs of populations of women at risk for breast cancer still needs to
    be established through peer reviewed research.
        As per Institute of Medicine recommendations, Strategies for
    Managing the Breast Cancer Research Program: A Report to the U.S. Army
    Medical Research and Materiel Command, proposals submitted in response
    to the fiscal year 1998 Announcement will undergo two levels of review
    to ensure both scientific excellence and program relevance. The first
    tier is a peer review of proposals against established criteria for
    determination of scientific merit. The second tier is a programmatic
    review of proposals that compares submissions to each other and
    recommends proposals for funding based on the program goals.
                       personal information carrier [pic]
        Question. General Blanck, I also see in your statement that the
    Army is working with the other services on something called a Personal
    Information Carrier, or PIC. This is a sort of high-tech dog tag that
    will carry medical information about each soldier, thus helping to
    track and correct medical problems that may occur while a soldier is
    deployed. I have two questions about the PIC. First, how much data
    should a PIC be able to carry in order to maximize its medical
    effectiveness?
        Answer. It is undetermined at this time how much should be stored
    on the PIC for maximal medical effectiveness. A chartered group of
    quad-service health care providers, the Theater Clinical Workgroup, has
    determined the essential requirements for the initial phase of the PIC.
    However, as enhanced automated medical systems get deployed to the
    field to support the requirements of H.R. 1119 (Force Health
    Protection), the PIC will need to expand to store and transport the new
    data produced by these systems. The maximum medical effectiveness of
    the PIC will be realized when the PIC includes all relevant information
    required to maintain a fit and healthy force.
        Question. Second, I have heard that DOD plans to test the PIC in a
    30,000-person deployment overseas. Is that effort funded in the
    President's budget request?
        Answer. The fiscal year 1999 President's request included a command
    and control issue of the funding for PIC and another system called
    Preventive Health Care System (PHCS), which will be one of the major
    data sources for the PIC. PHCS will integrate data needed for force
    health protection, the pre and post force protection questionnaire
    information, immunization information, history and physical. It will be
    installed in all medical treatment facilities. The PIC was addressed as
    a high priority unfinanced requirement. Costs to develop and deploy
    30,000 PICS were included in the budget projections. The total
    additional fiscal year 1999 funding for both the PIC and PHCS is $32.1
    million. At present, this remains unfunded in the President's Budget.
                                     ______

                 Questions Submitted to Vice Adm. Harold Koenig
                  Question Submitted by Senator Arlen Specter
                               freeze-dried blood
        Question. The Navy has for many years been supporting research to
    develop a freeze-dried blood platelet product for the treatment of
    battlefield wounds. As you know, platelets are the blood cells critical
    for clotting and thus for stemming the loss of blood from battlefield
    wounds. The product being developed by the Navy in collaboration with
    the pharmaceutical industry would be a lightweight powder with a shelf
    life of 1-2 years (compared with the current short shelf-life of five
    days for liquid platelets).
        What is your opinion of the development of such a product and do
    you agree it would enhance the quality and effectiveness of medical
    care in combat situations?
        Answer. Yes, the development of freeze-dried blood would enhance
    the quality and effectiveness of medical care in combat situations. The
    development of functional freeze-dried blood products to treat combat
    casualties is an important R&D program for the military, particularly
    the Navy because of its remote, isolated, and afloat platforms. The
    development of improved blood product preservation and storage are key
    technologies because of blood product therapeutic importance in
    decreasing combat casualty hemorrhage and mortality. Currently, the
    availability of blood components and their shelf-life and storage
    capacities is severely limited and creates huge logistical burdens for
    delivery to remote locations.
        Freeze-dried blood products, including red blood cell and
    platelets, will enhance medical readiness and support for warfighting
    requirements. Clear economic savings accrue because of the reduced need
    for replacement of expired blood products. The costs associated with
    providing blood products in the combat theater and aboard surface ships
    is a relatively significant component of medical support costs. In the
    relatively short Gulf War, approximately $20 million was spent to
    maintain the blood inventory. The increasing costs of testing units of
    blood for safety would also be improved by extending the usable shelf-
    life for these tested transfusion units. Finally, the very real need
    for long-term storage capability is further demonstrated in providing
    the ability to meet blood requirement surge capacities during major
    combat contingencies.
                                     ______

                Questions Submitted by Senator Richard C. Shelby
                                  hepatitis c
        Question. I am informed that Hepatitis C continues to be a public
    health threat and may be particularly alarming to the men and women of
    our military. Does the military have an accurate count of the number of
    active duty personnel infected with Hepatitis C?
        Answer. No, at this time the military does not have an accurate
    count of the number of active duty personnel infected with Hepatitis C.
    It is assumed that the prevalence is the same as the civilian
    community.
        Question. Does the military routinely screen active duty personnel,
    not just new recruits, for Hepatitis C in order to slow the progression
    of disease in infected personnel and to prevent the transmission of
    disease to other military personnel?
        Answer. The Navy does not routinely screen recruits or active duty
    personnel for Hepatitis C. Hepatitis C positive individuals are
    identified during voluntary blood donations. The Navy has been
    screening its blood donors for Hepatitis C since 1990.
        Question. I have been told that exit testing for Hepatitis C at the
    time of retirement or discharge is the only reliable method of
    detecting the presence of Hepatitis C infection to ensure the health
    and safety of the individual separating from the military. Does the
    Department test for Hepatitis C during the exit physical? If so, what
    specific tests are performed during the routine exit exam?
        Answer. Hepatitis C testing is not routinely performed on
    individuals separating or retiring from the Navy or Marine Corps.
    Routine laboratory tests performed as a part of discharge or retirement
    physicals include a PPD (tuberculosis test), lipid profile (cholesterol
    test), RPR (syphilis test), and HIV determination. For individuals over
    the age of 50 years, a prostate specific antigen and stool for hemocult
    (blood in stool) are also performed.
                           acute lung injury research
        Question. Admiral Koenig, in the past, Navy medical research and
    development programs have supported research efforts in acute lung
    injuries associated with combat trauma and massive hemorrhage,
    particularly the condition called Acute Respiratory Distress Syndrome
    at university centers. Does this remain a high priority research
    initiative for the Navy?
        Answer. Yes, research efforts in acute lung injury remain a high
    priority initiative for the Navy. A number of potential combat injuries
    including battlefield wounds, extensive burns, hemorrhagic shock,
    sepsis, smoke inhalation, or exposure to agents used in biological or
    chemical warfare, often result in a clinical condition referred to as
    Acute Respiratory Distress Syndrome (ARDS). This condition is
    characterized by respiratory insufficiency, tissue hypoxemia, and
    multi-organ failure as a result of trauma and tissue ischemia or oxygen
    deprivation. The incidence of ARDS in the civilian population in the
    United States is estimated at 150,000 cases per year, and regardless of
    its etiology, ARDS has an associated mortality of 50-70 percent.
    Historically, more than 90 percent of combat casualties who die after
    evacuation from the battlefield had histological evidence of ARDS;
    those surviving for more than two to five days had a high incidence of
    pneumonia and alveolar hyaline membranes, and well known sequelae of
    ARDS.
        Presently, there is no known cure for ARDS. A common mechanism that
    may explain the clinical manifestations of ARDS is excess production of
    free radicals by various lung and inflammatory cells. Current R&D
    efforts are developing novel mechanisms for antioxidant defenses to
    reduce the morbidity and mortality of ARDS, including specific drug and
    gene delivery to lung and other tissues to prevent the occurrence of
    ARDS complications. Researchers have identified new strategies for the
    enhancement of antioxidant defenses in both the lungs and systemic
    organs, thus limiting the catastrophic consequences of various combat
    traumatic injuries, sepsis, chemical/biological warfare agents, and
    various inflammatory agents in combatants and civilian personnel. These
    efforts will permit definitive preventive and treatment measures for
    combat trauma and massive hemorrhage associated with acute lung
    injuries, particularly acute respiratory distress syndrome (ARDS), and
    related complications.
        The acute lung injury program strengthens collaborative research
    efforts between participating DOD research organizations and civilian
    institutions working to meet combat casualty care requirements. These
    efforts are recognized as high priority initiatives for the Navy.
    Principal performers and past collaborators include: University of
    Alabama, School of Medicine Birmingham, Alabama; and Uniformed Services
    University of the Health Sciences, Bethesda, Maryland.
        Question. The Navy medical research and development organization
    should be commended for maintaining strong research efforts in combat
    casualty care that have produced life-saving measures in combat
    environments. Do the efforts in acute lung injury research represent a
    component of this research strategy to support casualty care life-
    saving and treatment initiatives?
        Answer. Yes. Future Navy warfighting requirements have emphasized
    the need to limit the medical support footprint in theater and develop
    the capability to stabilize severely injured and hemorrhaging
    casualties with minimal on-site medical support assets. Navy medical
    research endeavors emphasize projects supporting far-forward care and
    delayed resuscitation procedures extending the classic ``golden hour''
    to enable casualty evacuation and transport to fixed, stateside medical
    facilities for definitive surgical care and treatment.
        The primary emphasis for these efforts is directed at casualty
    stabilization and sustainment modalities that permit a delay in
    resuscitative measures prior to definitive care and treatment. Current
    research and development efforts involve study of the therapeutic
    induction of a state of tolerance to temporary, severe to complete,
    systemic ischemia; i.e., protection from injury of the casualty during
    extended circulatory collapse and/or cardiac arrest beyond the ``golden
    hour'', followed by resuscitation to full recovery without brain or
    other vital organ damage, particularly acute lung injury to maintain
    essential respiratory functions upon full resuscitation.
        These initiatives constitute a comprehensive strategy for saving
    the lives of future severely injured combat casualties, who have
    historically died from massive injuries, organ failure, and hemorrhage.
        Question. Will this research have application to civilian trauma
    victim management?
        Answer. Yes. The results of these initiatives can be applied to
    both combat-related trauma victims as well as emergency cases
    presenting to a major civilian trauma center.
                                     ______

                Questions Submitted by Senator Daniel K. Inouye
                               medical readiness
        Question. An important issue of concern is the shortage of provider
    specialties, dentist and physicians. What types of incentives are you
    implementing to actively recruit and retain these providers?
        Answer. Several initiatives have been taken to improve recruiting/
    retention effectiveness within the Medical and Dental Corps.
    Recruitment/retention goals for non-physician providers in the Nurse
    Corps and Medical Service Corps are currently being met.
    Medical corps
        Field recruiting efforts are focusing on key specialties, rather
    than diffusing efforts over several specialties. In fiscal year 1996,
    Navy Medicine recruited for direct accessions in 14 specialties. The
    staffing needs in many of these specialties were small. Navy Recruiting
    Command suggested improved recruiter effectiveness could be gained by
    focusing efforts on key requirements. Thus in fiscal year 1998, we
    recruit for direct accessions in just five specialties.
        The Financial Assistance Program (FAP), a stipend program, when
    applied to physicians in residency training has proved successful. In
    addition, the FAP incurs longer obligated service than direct
    accessions, reducing attrition. Unlike student scholarships, this
    program can be focused on key specialties. Currently 50 percent of
    available funds are devoted to three key shortage areas: family
    practice, general surgery, and orthopedic surgery.
        The Loan Repayment Program (LRP) is a new program authorized for
    implementation in 1998. This program will further expand the breadth of
    the potential market in which we compete by providing medical school
    loan repayment for physicians at the end of residency training. It can
    also be focused on key specialties, and is expected to further assist
    correction of manning shortfalls.
        In an effort to reduce the family dislocation resulting from
    operational assignments, a ``homeporting'' concept is being utilized.
    Physicians completing training in a large homeport area are assigned to
    an operational unit based in that homeport, and upon completion of the
    operational assignment can often be reassigned to a medical facility in
    the same homeport location. Thus, families are not required to move
    from their home or school. Medical Corps assignment officers estimate
    that 90 percent of operational assignments are now made in this
    fashion.
        Naval Recruiting Command conducted focus groups in 1997-1998 which
    revealed previously unrecognized misconceptions held by young
    physicians regarding Navy physician quality of life as compared with
    other services. The results of these focus groups formed the basis of
    the 1998 physician marketing plan, including a physician recruiting
    video. This video has been very effective at capturing the attention
    and addressing the concerns and misconceptions of potential physician
    candidates. Other marketing media now in use likewise more effectively
    address the interests of today's young physicians.
        Continued attention to reducing the civilian-military pay gap,
    focusing financial aid programs on key specialties, precise marketing
    guided by focus groups, and reducing family dislocation will steadily
    reduce manpower shortages.
    Dental corps
        In 1995 the Chief of the Navy Dental Corps with the support of the
    Surgeon General and in concert with the Bureau of Naval Personnel and
    Navy Recruiting Command developed a 10-point action plan to restabilize
    the Navy Dental Corps. The program consisted of legislative action to
    increase dental special pays to make the Navy Dental Corps competitive
    with the civilian market; to offer a $30,000 accession bonus to allow
    new dentists to pay educational loans; and to offer medical loan
    repayment for dental school loans. Promotion incentives; Navy
    Recruiting Command's primary focus on general dentists; initiation of
    student financial incentives through scholarships and other educational
    incentive programs; the expansion of postgraduate training
    opportunities for recent graduates, and the production of a dental
    recruiting video are also underway.
        Navy Recruiting Command conducted focus groups in 1995 which
    revealed previously unrecognized misconceptions held by dentists
    regarding military dentistry in general; Navy compared to other
    services, and that of the civilian sector; and, addressed quality of
    life concerns. A video was prepared both addressing these concerns and
    targeting the 40 percent female market in dental schools. This video
    was mailed to dental students and recent graduates in fiscal year 1998
    and has been very effective at capturing the attention of young
    dentists and addressing common misperceptions of military service.
        The Navy Dental Corps through the 10 Point Program seems to have
    stabilized. Scholarships, other financial incentives, the accession
    bonus and the dental video seem to have cured the accession problem.
                                     usuhs
        Question. The DOD Defense Reform Initiatives mandates that USUHS
    remain open with one of you as Executive Agent. Was this transfer of
    management from Health Affairs to the Surgeons General a sound business
    decision for military medicine?
        Answer. The Defense Reform Initiative placed oversight of USUHS
    under the collective management of the Services Surgeons General. The
    Navy has been appointed executive agent for program, budget, and
    funding execution responsibilities for USUHS. By moving direct
    oversight to the Surgeons General, the transfer moves management of the
    university closer to the customers and assures continuation of
    responsiveness to Service requirements. The added benefit is that the
    middleman is removed from the management process, thus making savings
    possible on the DOD staff.
                            women's health research
        Question. Do you see a need for focused research in military
    women's health issues?
        Answer. Yes, I think we need focused research in military women's
    health issues. Approximately 340,000 women, 14 percent of the total
    active duty personnel and 16 percent of reservists, serve in the Armed
    Forces. Military women are generally young, healthy and fit. However,
    from basic training to deployment in combat, military women experience
    physical stresses that may include overuse injuries and exposure to
    environmental extremes, as well as the need to cope with military
    equipment, clothing and procedures designed largely for men. Research
    is needed to focus on how these stresses may affect the female physical
    condition and factors that can prevent short-term and long-term
    injuries and illnesses which may be peculiar to women. For example, as
    we have deployed increasing numbers of women on ships over the past few
    years, we have recognized the need for a longitudinal study of the
    effects of ship board living and working conditions on the health of
    pregnant women and the short-term and long-term effects of these
    stresses on their unborn children.
        Question. What is the current status of the DWHRP and what is
    needed in terms of funding for the next fiscal year?
        Answer. Current proposed Women's Health Research Studies in the
    Department of the Navy submitted by Bureau of Medicine and Surgery
    (BUMED), Office of Naval Research (ONR), Naval Health Research Center
    (NHRC), Center for Naval Analysis (CNA), and Naval Air Warfare Center
    (NAWC) include:
    Priority: 1
        Longitudinal Study of Pregnancy Outcomes in Navy Women Serving
    Aboard Ship and Ashore. Cooperative study with Naval Health Research
    Center designed in response to recommendations of the Standing
    Committee on Military and Civilian women in the Department of the Navy
    three year study; total funding: $1.065 million ($355,000/year).
    Priority: 2
        Development and Refinement of Interventions to Reduce Unplanned
    Pregnancy in Navy and Marine Corps Women. Two year study; total
    funding: $440,000 ($220,000/year).
    Priority: 3a
        Occupational Fitness of Active Duty Women for Sustained Operations.
    Three year study; total funding: $450,000 ($150,000/year).
    Priority: 3b
        Dynamic Strength Capability of Women in High Performance Flight
    Tasks. Three year study; total funding: $900,000 ($300,000/year).
    Priority: 4
        Gender Norming Human Factors for the Next Generation Ships and
    Equipment. Five year study; total funding: $1.5 million ($300,000/
    year).
    Priority: 5a
        Premilitary History of Sexual Assault and Active Duty
    Revictimization and Resulting Health Care Utilization. Three year
    study; total funding: $2.4 million ($800,000/year).
    Priority: 5b
        Relationship Between Active Duty Women Premilitary Maltreatment
    History and Health Care Utilization. Three year study; total funding:
    $2.4 million ($800,000/year).
    Priority: 5c
        The Relationship Between Post Traumatic Stress Disorder
    Symptomology and Occupational Performance and Attrition in Active Duty
    Women. Three year study; total funding: $2.4 million ($800,000/year).
    Priority: 6
        The Effects of Maternal Absence on Child Development, Health Care
    Utilization, and Operational Readiness. Two year study; total funding:
    $500,000 ($250,000/year).
    Priority: 7
        Pregnancy, Physical Fitness, and Force Medical Protection: A Pre
    and Post Natal Exercise Model for Active Duty Navy and Marine Corps
    Women. Two year study; total funding: $400,000 ($200,000/year).
    Priority: 8
        The Development of a Safe and Effective Exercise Curriculum to
    Reduce Musculoskeletal Injury in Navy and Marine Female Training
    Populations/Operational Communities. Two year study; total funding:
    $500,000 ($250,000/year).
    Priority: 9
        Establishment of a Registry of Birth Defects in Offspring of Active
    Duty Women. Ongoing registry; total funding: $250,000/year.
    Priority: 10
        Medical Care of American Women in OCONUS Host Nation Medical
    Systems. Cooperative study with George Mason University. Two year
    study; total funding: $180,000 ($90,000/year).
    Priority: 11a
        Self Esteem of Active Duty Navy and Marine Corps Women and
    Relationship to Medical Force Protection. Three year study; total
    funding: $450,000 ($150,000/year).
    Priority: 11b
        Shipboard Health of Active Duty Women in the Navy and Marine Corps.
    Three year study; total funding: $1.5 million ($500,000/year).
    Priority: 11c
        Health, Wellbeing, and Health Care Delivery Services Available to
    Women Aboard Ship. Three year study; total funding: $1.5 million
    ($500,000/year).
    Priority: 12
        Application and Assessment of Urine Based Screening for Chlamydia
    in Navy and Marine Corps Women. Two year study; total funding: $300,000
    ($150,000/year).
    Priority: 13
        Gender Differences in Immune Defense Mechanisms: Potential
    Application to the Management of Combat Associated Major Trauma. Three
    year study; total funding: $750,000 ($250,000/year).
    Priority: 14
        The Effectiveness of Telemedicine Consultation in Assessing
    Gynecological Disease. Three year study; total funding: $750,000
    ($250,000/year).
    Priority: 15
        The Knowledge Base of Active Duty Navy and Marine Corps Women
    Concerning Health Promotion and Disease Prevention Behaviors. One year
    study; total funding: $50,000 ($50,000/year).
    Priority: 16
        Continuation of Defense Medical Epidemiological Database
    Development. One year study; total funding: $100,000 ($100,000/year).
    Priority: 17
        Mixed Gender Value Added Tactical Decision Making Under Stress.
    Three year study; total funding: $750,000 ($250,000/year).
    Priority: 18
        Gender Comparison of Suicide Risk and Adverse Psychological
    Response Assessment in the U.S. Navy. Two year study; total funding:
    $280,000 ($140,000/year).
    Priority: 19
        Gender Differences in Response to Cold Stress. Two year study;
    total funding: $500,000 ($250,000/year).
    Priority: 20
        Female Physiological Heat Exposure Limits (PHEL). Two year study;
    total funding: $1.2 million ($600,000/year).
    Priority: 21
        Tri-Service Hospitalization Rate Comparison for Female Specific
    Disease. Two year study; total funding: $400,000 ($200,000/year).
    Priority: 22
        Anthropomorphic Measures as Indicators of Body Fat Change. One year
    study; total funding: $100,500 ($100,500/year).
    Priority: 23
        The Health Status of Repatriated Female Prisoners of War/Torture
    Survivors. One year study; total funding: $100,000 ($100,000/year).
        Proposed future studies addressing successful integration of women
    aboard submarines are: Gender difference in response to potential toxic
    atmospheric contaminants or radiation exposures that may occur during
    submarine duty; Women on submarines-health issues; Psychological
    predictors of attrition; and Psychological predictors of successful
    integration of women aboard submarines.
                                     ______

                  Questions Submitted by Senator Byron Dorgan
       center for naval analysis [cna] fehbp-65/expansion of mail order
                                 pharmacy study
        Question. At page 14 of your remarks, you refer to a Center for
    Naval Analysis study being performed on the subject of FEHBP-65 for
    retirees, as well as on the subject of expanding the mail order
    pharmacy to retirees. You also state that the studies are expected to
    be completed later this year. Do you have a specific date when these
    studies would be available to this committee?
        Answer. A draft of the CNA study regarding the feasibility of
    FEHBP-65 and expansion of the Mail Order Pharmacy will be sent to the
    sponsor, Principal Deputy Assistant Secretary of the Navy (Manpower and
    Reserve Affairs), on May 31, 1998. The final report will be published
    on September 30, 1998.
        Question. What is the current status of those studies?
        Answer. The CNA study is ongoing and currently in the analysis
    phase.
        Question. Is there any doubt of what the outcome will be?
        Answer. Currently CNA only has preliminary cost estimates, which
    may change with further analysis.
        Question. Isn't the only solution to the problem of availability
    and affordability of health care for retirees over 65 to allow them to
    enter the Federal Employees Health Benefits Program?
        Answer. CNA is examining the cost effectiveness of a range of
    options for beneficiaries over 65. These options include a pharmacy
    benefit, some form of Medigap coverage, along with the Federal Employee
    Health Benefits Program.
        Question. What about the problem of billings and payments; is the
    Navy getting any complaints? If so, are these complaints being taken at
    face value, with solutions being sought and implemented?
        Answer. Yes, the Navy has received complaints regarding balance
    billing and civilian provider reimbursement.
        The current ``balance billing'' system is a major irritant and
    financial problem for many of our beneficiaries. Under the present
    system, providers who ``participate'' in CHAMPUS (now TRICARE) agree to
    accept the CHAMPUS Maximum Allowable Charge (CMAC), cost-shared between
    the government and patient, as payment in full. However, providers who
    do not ``participate'' receive the CMAC payment, but may also bill
    their patient for an amount not to exceed 115 percent of CMAC. In
    addition, non-institutional providers (ambulances, clinical
    laboratories, etc.) are currently exempt from CMAC limits. Bills from
    these providers are fully payable and the patient is responsible for
    the co-payment and any remaining balance exceeding the government CMAC.
        OASD(HA) is presently working on implementing the provision in the
    Fiscal Year 1996 Authorization Act to remove the 115 percent limit
    exclusion for non-institutional providers. This provision will limit
    the financial liability of the TRICARE Standard user to normal co-
    payments and 15 percent above CMAC. Navy Medicine has stressed that
    once language is implemented, policy needs to be retroactive to date
    Fiscal Year 1996 Authorization Act was signed into law. The fiscal year
    1997 and fiscal year 1998 Authorization Acts have also enacted
    provisions that will cover all bills for TRICARE Prime enrollees above
    the TRICARE Prime fees. These provisions will remove the possibility of
    the patient being billed for services above the TRICARE Prime user fee.
    Both initiatives are scheduled to begin Spring 1998.
        Prompt civilian provider reimbursement is another issue being
    addressed. Civilian providers customarily submit claims for payment to
    a fiscal intermediary who processes the claim. These claims are on
    behalf of TRICARE Prime, Extra and Standard patients. Prompt payment
    ensures satisfaction by the provider community. However, delayed
    payment aggravates the provider who may consider dropping out of a
    TRICARE network, refusing to see further TRICARE patients, and/or
    passing the bill to the patient for complete payment.
        The current DOD contract standard for claims processing is 75
    percent of all claims being paid within 21 days. This standard is being
    achieved and often exceeded, however Navy Medicine believes this
    standard is too low and should be raised. Aside from cases when the
    contractor fails to meet the standard, the fact that one out of four
    claims need not be paid is unsatisfactory given today's technology and
    adjudication processes. TRICARE Standard providers incur the most
    delays in payment, while contractors focus on paying their network
    providers first.
        OASD(HA) is acutely aware of this issue and has worked hard with
    the TRICARE contractors to improve performance when it falls below
    standard. OASD(HA) also plans to set a new standard for claims
    processing to 100 percent within 14 days in the next generation of
    TRICARE contracts.
                                     ______

             Questions Submitted to Lt. Gen. Charles H. Roadman II
                Questions Submitted by Senator Richard C. Shelby
                                  hepatitis c
        Question. I am informed that Hepatitis C continues to be a public
    health threat and may be particularly alarming to the men and women of
    our military. Does the military have an accurate count of the number of
    active duty personnel infected with Hepatitis C?
        Answer. Hepatitis C virus (HCV) is a single-stranded RNA virus
    transmitted almost exclusively by blood or blood products. It is
    possibly transmitted by sexual contact, but efficiency of transmission
    is exceedingly low. Hepatitis C infection is a significant problem in
    the United States, and is usually a chronic illness without symptoms
    until late in its course. It is close second to chronic alcoholism as
    the cause of cirrhosis, end-stage liver disease, and a hepatocellular
    carcinoma in the United States. Available treatments are expensive and
    are only curative in 15 to 25 percent of cases; therefore, primary
    disease prevention is key.
        Literature shows that in the United States, there are approximately
    3.5 million carriers of the Hepatitis C virus. The significance of HCV
    infection in the Air Force is low. Among blood donors in Air Force
    medical treatment facilities in 1996, prevalence of HCV by repeat-
    positive enzyme immunoassay was 0.27 percent. The Air Force Reportable
    Events Surveillance System (AFRESS) shows 47 cases of HCV among active
    duty personnel in 1996 (0.012 percent), four of whom were health care
    workers but only one of whom was involved in direct patient care. In
    1997, AFRESS reported a total of 44 active duty cases of HCV.
        Question. Does the military routinely screen active duty personnel,
    not just new recruits, for Hepatitis C in order to slow the progression
    of disease in infected personnel and to prevent the transmission of
    disease to other military personnel?
        Answer. The risk in the Air Force is very low for Hepatitis C
    infection, therefore the level of risk does not warrant routine
    screening of the general Air Force population.
        Question. I have been told that exit testing for Hepatitis C at the
    time of retirement or discharge is the only reliable method of
    detecting the presence of Hepatitis C infection to ensure the health
    and safety of the individual separating from the military. Does the
    Department test for Hepatitis C during the exit physical? If so, what
    specific test are performed during the routine exit exam?
        Answer. The Air Force does not test for Hepatitis C during exit
    physicals. No major public health authorities recommend routine
    screening for Hepatitis C. Additionally, current treatment of cases has
    not significantly improved outcomes, and current screening tests have
    relatively high false positive rates.
        Intravenous drug abuse is the major risk factor in the nation for
    acquiring Hepatitis C. The Air Force's aggressive entrance and random
    screening for drug abuse is the most effective method to minimize the
    incidence and prevalence of Hepatitis C in the military population
    (i.e., controlling the behavior that puts one at risk for acquiring the
    disease). Again, from all available evidence, Hepatitis C does not
    appear to be a major public health threat in the United States or in
    the U.S. military population.
                                     ______

                Questions Submitted by Senator Daniel K. Inouye
                               medical readiness
        Question. An important readiness issue is the shortage of provider
    specialties, dentists and physician's assistants. What types of
    incentives are you implementing to actively recruit and retain these
    providers?
        Answer.
    Provider specialties:
        Recruiting.--For short-term immediate needs, our primary accession
    tool is direct recruiting from civilian sources. Recruiting produces
    accessions in the current year. Over the past six year period,
    recruiting services attained over 80 percent of their physician
    recruiting goal. The desire is to reduce reliance on recruiting and
    focus on sponsored accessions through various scholarship programs,
    which select high quality candidates from a very competitive selection
    process.
        Retention.--Retention varies by specialty; but overall retention
    has remained stable and predictable. The anticipated losses are
    replaced by new accessions. Most physician accessions enter the Air
    Force because of an active duty service commitment resulting from
    sponsored training. Most common forms of sponsorship are the Health
    Professions Scholarship Program (HPSP), the Financial Assistance
    Program (FAP), or the Uniformed Services University of the Health
    Sciences (USUHS). Sponsorship is our principal sustainment pipeline
    which is programmed years in advance prior to the actual year of
    accession. Annual incentive special pay contracts are one of the tools
    we use to motivate physicians to remain in the Air Force. These pay
    amounts are determined annually by a DOD Flag Officer review board and
    consider staffing levels as well as comparable salaries for civilian
    physicians in similar specialties. Additionally, opportunities for
    senior leadership positions are used as retention incentives.
    Dentists:
        Recruiting.--The new $30,000 dental accession bonus is an incentive
    motivating new accessions to enter for four years vice three.
    Additionally, we increased our level of Health Professions Scholarships
    for dentists to sponsor high quality candidates in dental school which
    relieves some of the burden from Recruiting Services.
        Retention.--Existing special pays for dental officers have
    increased for the first time since 1981. The increases affected both
    junior and senior officers, and is expected to improve retention
    noticeably. Additionally, the new Multi-Year Special Pay (MSP) will
    enhance retention. It will offer an incentive for dental officers to
    remain on active duty for contractual periods ranging from two to four
    years. The amounts will vary by specialty and length of the contractual
    obligation. Furthermore, active duty Graduate Medical Education offers
    advanced dental training (often in active duty programs) for general
    dentists to become specialists. This is also a retention tool as
    dentists become trained in a specialty and incur a training obligation.
    Finally, board certification pay offers incentives to advance their
    personal standing in the dental profession.
    Physician assistants:
        Recruiting.--Although we have been successful in recruiting direct
    accessions, the volume necessary for sustainment is mostly generated
    from an active duty two-year educational program which commissions
    highly qualified, and very competitively selected, enlisted personnel.
    This is a highly successful program, and one which is a great incentive
    to our enlisted force to become a commissioned officer.
        Retention.--It appears that the incentive is to serve as a
    commissioned officer for at least 10 years, so Physician Assistants can
    retire with the benefits of an officer rather than their prior enlisted
    grade. Approximately 95 percent of Physician Assistants in the Air
    Force (397 of 418 per the September 30, 1997 database) had some form of
    prior service. Almost half of those Physician Assistants with prior
    service had served over 10 years as a commissioned officer (186 of the
    397 officers).
                                     usuhs
        Question. The 1997 DOD Defense Reform Initiative mandates that
    USUHS remain open with one of you as Executive Agent. Was this transfer
    in management a sound business decision for military medicine?
        Answer. The Air Force agrees with the concept of unifying the
    administration of Graduate Medical Education under USUHS with executive
    agent oversight. This unification would enhance economies of scale,
    encourage resource sharing and joint planning, and standardize
    monitoring and oversight using a common database. However, we need to
    further define goals and objectives that will drive the types of
    resources, personnel and budget required in the unified office at USUHS
    and where they would come from.
        In the short term, there are no cost savings realized by the Air
    Force, but in the long term, this joint venture will allow us to more
    effectively meet force management demands and training requirements.
                                   telehealth
        Question. How has nursing interfaced with telemedicine/telehealth?
        Answer. As the primary aeromedical evacuation (AE) mission
    operators, flight nurses and aeromedical evacuation technicians (AET's)
    have been pivotal in the pursuit of telemedicine in AE. Due to severe
    limitations in our present aeromedical communication systems, it is
    almost impossible to relay important information from the flight nurse
    in the air to the physician on the ground. This has always been an
    extreme frustration for flight nurses and AET's as they provide care at
    40,000 feet and 4-6 hours flying time from the closest medical
    treatment facility. This can be an extremely prolonged time when a
    patient's condition deteriorates and the nurses need immediate and
    clear consultation with a physician. Telemedicine can provide real-time
    communication for health care professionals and improve medical
    capabilities essential in our quest for quality care to battlefield
    soldiers anywhere, anytime. Almost two years ago, the Air Force stood
    up the first DOD working group to establish an Aeromedical Evacuation
    Strategic Plan for the insertion of telemedicine into the aeromedical
    environment.
        As the champion for this effort, the Air Force Medical Service
    brought 45 participants from all walks of the DOD telemedicine and user
    communities together in May 1996. Of this group, one-third were Total
    Nursing Force personnel: active duty, Reserve, and Air National Guard
    personnel. They developed the strategic plan and the operational
    demonstration. They initiated a Breakthrough Area to architect and
    implement a proof of concept demonstration to document the need for
    telecommunication from ground to air to ground. With our current
    operations of transporting more critical patient loads during peacetime
    and contingency operation missions, this communications capability is
    vital to safe quality patient care. The operational demonstration was
    conducted from September 22-27, 1997, and involved ``live'' channel AE
    missions using C-141, C-9, and C-130 airframes for a total of 70.6
    flying hours. This demonstration used commercial off-the-shelf computer
    systems and applications in addition to existing airframe communication
    systems. We were able to validate the use of e-mail and ``chat'' to and
    from the aircraft to ground AE command and control elements. The flight
    nurses and AET's on the team were impressed with the enhanced
    communication capability demonstrated by the test. We are excited and
    energized by the successes and lessons learned. We are now working
    toward our Phase II proof of concept demonstration in the Pacific Air
    Forces Theater.
                                     ______

                  Questions Submitted by Senator Byron Dorgan
                                    tricare
        Question. It is my understanding that the transition to Tricare has
    gone quite smoothly in North Dakota. There has been some question as to
    why dependents must re-enroll on an annual basis, once they are
    enrolled in ``Tricare Prime.'' Can you explain why this is necessary?
        Answer. The lack of automatic reenrollment into TRICARE Prime has
    been an active concern of the Air Force and Department of Defense. The
    TRICARE Management Activity is pursuing regulatory, contract and
    program actions necessary to establish continuous enrollment. This will
    allow family members who enroll in Prime to remain enrolled until they
    elect to disenroll or lose their eligibility. As early as this summer,
    Prime will automatically re-enroll users who live in the 40-mile
    ``catchment areas'' unless they elect to end participation or become
    ineligible. According to surveys, we know the vast majority of our
    Prime enrollees, about 90 percent, are satisfied with the program.
        Question. What is the status of billings and payments in the Air
    Force portion of the Tricare program?
        Answer. Each of the regions has experienced claims processing
    problems as health care delivery was initiated. This difficulty in
    meeting the claims processing standards listed in the Managed Care
    Support Contracts resulted from larger than anticipated enrollments and
    claims submissions. The TRICARE Management Activity and the Lead Agent
    closely monitor the claims processing on a monthly basis. The contracts
    also contain quarterly positive and negative incentive clauses that are
    automatically implemented when thresholds are reached. At the moment,
    close to 80 percent of claims are processed within 21 days.
        Question. Are there complaints being received from Tricare
    contractors?
        Answer. Yes. The most often heard complaint from contractors is
    that the requirements in the current Managed Care Support Contracts are
    much too voluminous, prescriptive and inflexible. The contractors
    believe this hamstrings them and prevents them from employing their
    best commercial practices. The next generation of Managed Care Support
    Contracts under development are substantially smaller in volume,
    significantly less restrictive and expressly encourage best commercial
    practices. During development of these new contracts, industry
    officials were invited to review the proposed requirements and offer
    suggestions based on their private sector experience.
        Question. Is the Air Force experiencing any problems with medical
    providers being reluctant to continue providing services because of
    failure of the Tricare system to promptly pay bills submitted?
        Answer. Yes. There have been a few instances where civilian
    providers have expressed frustration with untimely claims payments and
    the cumbersome system used to process claims. The TRICARE Management
    Activity and Lead Agents have worked hard to reduce the administrative
    impediments associated with claims processing. As a result, claims
    processing currently exceeds the current contract requirements.
                                  Nurse Corps

    STATEMENT OF BRIG. GEN. LINDA J. STIERLE, DIRECTOR OF
                MEDICAL READINESS AND NURSING SERVICES,
                OFFICE OF THE SURGEON GENERAL, DEPARTMENT
                OF THE AIR FORCE

                               opening statement

        Senator Stevens. We are going to now go to a second panel,
    the Chiefs of the Nurse Corps. We want to welcome Brig. Gen.
    Bettye Simmons, the Chief of the Army Nurse Corps; Capt. Mary
    Anne Gardner, the Deputy Director of the Navy Nurse Corps;
    Brig. Gen. Linda Stierle, Director of Medical Readiness
    Doctrine and Planning and Nursing Services for the Air Force.
        The two of us know a lot about nurses. We have seen a lot
    of them from beds. I want you to know we respect what you do.
    Your health care professionalism does not go unnoticed by the
    Congress. This committee in particular appreciates the
    dedication and the high professionalism that military nurses
    bring to their jobs.
        Your statements have all been filed in the record, as I
    said in the last panel, and I want to give my good friend and
    your good friend, Senator Inouye, an opportunity to make
    opening remarks first.
        Senator Inouye. I wish to join you, Mr. Chairman, in
    welcoming General Simmons, General Stierle, and Captain
    Gardner. It has been my pleasure to work with military nurses
    for many years, and I thank you once again for the 60 years of
    help and assistance.
        I understand, Captain, that this is your last appearance as
    Deputy Director of the Navy Nurses Corps.
        Captain Gardner. Yes, sir, it is.
        Senator Inouye. I would like to take this opportunity to
    thank you for your outstanding service. I wish you the very
    best.
        Captain Gardner. Thank you very much.
        Senator Inouye. I also would like to take a few moments to
    congratulate the Nurse Corps for recent landmark achievements.
    In the Navy, Rear Admiral Engel was promoted to a second star
    in the fall of 1997. In the Army, Brig. Gen. Nancy Adams,
    former Chief of the Army Nurse Corps, was nominated for a
    second star and she just assumed command of Tripler Army
    Medical Center on March 17, making her the first Army nurse to
    command a major medical center. I am looking forward to the Air
    Force to be able to give similar reports soon.
        We have worked long and hard for the statutory change which
    allowed Nurse Corps officers to compete for senior corps in
    material positions.
        Advanced practices nurses must often fight for the very
    existence when they are placed in competition with other health
    care professionals as the most economical providers of primary
    care. A recent example is the present controversy between
    anesthesiologists and certified nurse anesthetists. The Health
    Care Financing Administration has proposed a rule to remove the
    Medicare requirement for supervision of nurse anesthetists by
    anesthesiologists, and I am certain all of us have noted the
    resistance to this rule from the medical community. However, I
    am pleased that it has not been the case within the military
    health system.
        Nurse anesthetists are clearly proving themselves as
    independent practitioners both in peacetime and during
    conflicts. I believe that at the present time the nurse
    anesthetists throughout the United States provide at least 85
    percent of the anesthetics.
        Military nurses have often led the way in creating new and
    expanded roles for nurses, but the core of nursing care and
    concern for the individual remains constant. This combination
    has enabled the services to provide health care throughout the
    world, on land, at sea, and in the air.
        As the military health system again leads the way in the
    development and implementation of health care delivery models,
    the military nurses will be at the forefront in developing
    innovative ways to reduce health care costs and to continue to
    provide quality care.
        So, I appreciate the appearance of all of you this morning
    and look forward to hearing more about the progress of the
    corps in terms of readiness, research, the graduate school of
    nursing, and telehealth.
        Thank you, Mr. Chairman.

                      overview of nursing in the Air Force

        Senator Stevens. Thank you.
        We started from the left before. We will start from the
    right this time. Let us go with the Air Force first this time.
        General Stierle. All right, sir.
        Mr. Chairman and Senator Inouye, it is an honor to report
    on the achievements of Air Force nursing. Thanks to your
    ongoing endorsement and our determination, we continue to be a
    vital player in the Air Force Medical Service.
        I have submitted my written testimony for the record and
    will now highlight some of our successes.
        First, I am encouraged by the increasing leadership
    opportunities for nurses in the Air Force Medical Service. The
    percentage of medical groups commanded by nurses steadily
    progressed from 5 percent to 16 percent over the past 3 years.
        After we reorganized into squadrons in 1994, squadron
    commander positions filled by nurses dipped from 16 percent to
    13 percent in 1996. I am pleased to report the most current
    statistics on these squadron commander positions indicate a
    rebound back up to 16 percent.
        Not forgetting the Air Reserve component, the Air National
    Guard has 12 percent presently of the medical units with nurse
    commanders, and the Air Force Reserve Command has 36 percent.
    We anticipate continued progress on filling active and reserve
    senior positions as more nurses are competitively selected and
    successfully meet the challenges of command.
        Now I would like to spotlight some of the successful
    disease and population health management initiatives. Medical
    commanders have capitalized on nursing's expertise and have
    developed nurse-run clinics. Typically these clinics focus on
    case management, patient education, followup, and coordination
    of services. The medical groups at Patrick AFB, FL, and Grand
    Forks AFB, ND, have expanded their nurse-run clinics to manage
    women's preventive health services. Nurses in primary care
    triage services manage acute appointments, referral processes,
    and provide self-and home care advice. The triage service at
    Offutt Air Force Base in Nebraska responded to 266 patient
    calls per day with home care advice sufficient for 14 percent
    of the callers.
        Also the medical groups at Barksdale AFB, LA; Travis AFB,
    CA; and Eielson AFB, AK, reassigned nursing personnel to manage
    medical specialty consultation process. Their clinical
    understanding of primary care changed the historically bumpy
    consultation system into a smoother process with fewer delays
    and referral appointments and more reliable provider followup.
        Across the board, nurses and medical technicians have
    played a pivotal role in converting inpatient medical units to
    23-hour ambulatory procedure units. These units provide nursing
    care services to patients on an outpatient basis and are
    excellent examples of customer convenience and quality care.
        Mr. Chairman, I am proud to say that Nursing Services has
    often provided the vision and the tenacity to move all of these
    programs forward. The total nursing force has been integral in
    improving medical force protection programs, aeromedical
    evacuation operations, and advanced trauma education. Our
    support of sustainment operations, humanitarian assistance, and
    disaster relief missions around the world directly keeps the
    wartime skills of our nurses and medical technicians honed
    while assisting those in need.
        The partnership between the active, the Reserve, and the
    Guard nursing forces has never been better. I credit our
    success with the development of our first total nursing force
    strategic plan.
        One of the best examples of our enhanced working
    relationship is a program called TopSTAR, a medical readiness
    training program using state-of-the-art mannequins and
    computer-based instruction. In 2 weeks, students complete 100
    percent of their sustainment training that was previously
    spread out over 1 to 4 years. With the significant reduction of
    Air Force hospitals, it will be increasingly more difficult to
    meet clinical training requirements for the active and the
    Reserve components. We hope to expand TopSTAR from the first
    training platform at Wilford Hall Medical Center to more sites
    in the coming years.
        Accession and recruiting efforts remained in the forefront
    also in 1997. In recent years, we have had an ample supply of
    entry level, novice nurses. In order to enhance our force
    structure with clinically experienced and specialty nurses, we
    have redirected the nurse accession bonus policy to incentivize
    these more difficult recruitment categories.
        A recruitment initiative, that I described in last year's
    testimony, was the cadet BSM to MSM program, and I am pleased
    to report that the Air Force Academy has scholarships for
    cadets to attend nursing school. In the fall of 1997, two
    cadets entered Vanderbilt University, and starting with the
    class of 1998, up to five cadets annually will have the
    opportunity to attend nursing schools.
        Another resounding recruitment success story is the
    commissioning of airmen who have completed a bachelors of
    science degree in nursing and we have targeted 10 allocations
    per year but hope to see this increase over time because we are
    committed to retaining these stellar individuals as Nurse Corps
    officers.
        Now I would like to recognize the cost savings and
    outstanding joint training offered by the Uniformed Services
    University of Health Sciences, the family nurse practitioner
    program, and the certified registered nurse anesthetist
    program. We have seen an increased demand for FNP's in our
    peacetime health care delivery system and recently validated
    wartime requirements for FNP's in our mid-level provider
    deployment taskings. Our CRNA's continue to provide critical
    wartime skills and the majority of peacetime anesthesia
    services. After 45 years, we closed the Air Force CRNA training
    program. We found the USUHS program to be strong and have
    assigned all Air Force CRNA students to USUHS. By incorporating
    Air Force CRNA faculty and training into USUHS, we saved
    approximately $300,000 in civilian contract costs.
        I have continually been impressed by the value that nurses
    place on advanced technologies and educational opportunities.
    We maintain a dynamic nursing home page, offering worldwide
    access to our strategic plan, our newsletter, the nursing
    research corner, and professional development opportunities. We
    developed a distance learning guide as a ready reference to
    courses and programs that give our nursing personnel the
    opportunity to advance their education. The USUHS Graduate
    School of Nursing offers an innovative distance learning
    program affording geographically separated nurses avenues to
    pursue advanced degrees.
        Foremost, though, I want to thank Congress for the
    continued backing for the tri-service nursing research program.
    Air Force nursing is generating lines of research aimed at
    issues critical to military and civilian health care delivery.
    Our clinical investigation sites, staffed with a doctoral
    prepared nurse, have spearheaded our efforts to educate our
    nursing personnel and to improve practice through research
    validated results.
        In closing, I feel a great sense of pride and
    accomplishment as the Corps Chief of such an extraordinary
    group of officer and enlisted nursing professionals. I can say
    with absolute certainty that Air Force nursing personnel are
    ready, willing, and able to protect our forces, protect our
    national interests, and advance democracy and freedom anytime
    anywhere.

                               prepared statement

        Mr. Chairman and Senator, thank you for providing us this
    forum to showcase military nursing. We appreciate your support
    in behalf of the Department of Defense, the Air Force Medical
    Service, and the patients we serve.
        Senator Stevens. Thank you very much, General.
        [The statement follows:]
               Prepared Statement of Brig. Gen. Linda J. Stierle
        Mister Chairman and members of the committee, it is an honor to
    report on the achievements of the Air Force Nurse Corps (AFNC) since my
    testimony in April of 1997. Thanks to your ongoing endorsement and our
    determination, the AFNC continues to be a vital player in the Air Force
    Medical Service (AFMS). As reported in my testimonies over the past
    three years, we developed the first-ever Total Nursing Force Strategic
    Plan (TNFSP), outlining the future directions of nursing personnel in
    the Air Force. This nursing strategic plan stands apart from previous
    plans as it is the first time the Total Nursing Force (TNF), officer
    and enlisted, active duty, reserve and guard, collaborated on a shared
    vision, mission, goals and objectives.
        The TNFSP links directly to the AFMS strategic initiatives and in a
    broader perspective, correlates with the strategic plan of the Military
    Health System (MHS). This strategic plan presently has six goals. The
    goals are (1) Cultivate, Identify and Advance Strong Leaders, (2)
    Spearhead Customer-Driven Nursing Practice, (3) Forge Ahead as a Full
    Partner in the AFMS Building Healthy Communities, (4) Champion an
    Integrated Ready Force, (5) Effectively Use AF Nursing Resources, and
    (6) Employ and Integrate Technology and Research. These goals will help
    us reach our vision of Air Force Nursing as an integrated force
    committed to maximum readiness and customer-focused practice.
    Goal No. 1: Cultivate, Identify and Advance Strong Leaders:
        Goal statement.--Optimize nursing leadership to meet mission
    challenges of the 21st century.
                Command Opportunities
        I am encouraged by the leadership opportunities for Nurse Corps
    (NC) officers in the AFMS. It is my opinion that a NC officer in a
    medical group or squadron commander position brings a customer-focused
    orientation to the organization. Nurses have the distinct advantage of
    understanding all the disciplines. By virtue of providing specialty
    services to patients after duty hours or coordinating the delivery of
    those services, nurses have a diverse blend of clinical expertise,
    managerial experience, and interpersonal skills. Nurses are perceived
    to be the strongest patient advocate by the patients themselves. The
    majority of nurses start out as generalists caring for our
    beneficiaries in our bedded facilities, 24 hours a day, 7 days a week,
    365 days a year. In addition, I believe advanced academic degrees serve
    to strengthen their qualifications for command roles. Thus, robusting
    the number of NC commanders means increased diversity within the Major
    Commands and at senior medical leadership forums thereby enhancing
    problem solving and decision making.
        I am pleased to report opportunities for command in the AFMS is on
    the rise for NC officers. Since 1987, all corps had the opportunity to
    compete for medical group commander positions however; these positions
    were physician dominated. The AFNC never had more than 2-3 nurses as
    commanders at any given time. After the centralized group commander
    selection process began in January 1996, the number of nurses selected
    for the opportunity to command medical groups significantly rose from 5
    in 1996, to 11 in 1997, and to 18 in the most recent fiscal year 1998
    board. As a result, the percentage of medical groups commanded by AFNC
    officers steadily progressed from 5 percent to 16 percent over the past
    three years. While the number of NC officers selected to command small
    and medium facilities has increased, the number of nurses to command
    large facilities and Major Commands has not. We anticipate continued
    progress in this area as more nurses are competitively selected and
    successfully command medical groups.
        In order to evaluate progress in our goal achievement for the TNF,
    we also began tracking senior leadership positions for nurses in the
    Air Reserve Components (ARC). The percentages of medical units
    commanded by nurses in the Air Force Reserve Command (AFRC) is 36
    percent, and in the Air National Guard (ANG) is 12 percent, averaging
    to 23 percent of the total Air Reserve Component (ARC).
        I would like to briefly focus on one of the squadrons in the
    medical group. The Medical Operations Squadron (MDOS) is usually the
    largest of the squadrons in our medical groups and known for its
    clinically focused mission. Gaining squadron commander experience is
    crucial for future selection to medical group commander positions. The
    MDOS is ideal for nurse commanders to gain that experience. After the
    AFMS reorganized into squadrons, the MDOS commander positions filled by
    nurses dipped from 44 percent in 1994, to 34 percent in 1996. I am
    pleased to report the most current statistics on MDOS commander
    positions filled by NC officers has rebounded to 47 percent. Similarly,
    the overall number of squadron commander billets from all four
    squadrons filled by NC officers rose from 13 percent to 16 percent this
    past year.
                Nurses In Senior/General Officer Billets
        In September 1994, the 2-star general officer promotion board
    opened to all corps and in September 1995, the 1-star board became a
    corps neutral opportunity. Moreover, the Fiscal Year 1996 DOD
    Authorization Act expanded the 3-star Surgeon General position beyond
    the Medical Corps (MC) to include all health care service corps.
    Finally in 1996, all services allowed all corps to compete for major
    command roles. These are important steps in assuring a level playing
    field for leadership opportunities for all corps throughout the AFMS.
        Officers compete for 1-star flag officer promotion at 2 years time
    in grade of colonel and must assume 1-star rank before their mandatory
    retirement date (normally 30 years commissioned service). Officers
    competing for 1-star flag officer positions in the AFMS normally
    progress through a series of medical group commands and other senior
    leadership positions. Eligibility for Medical Group command begins
    after the officer has been selected for colonel and ends at 26 years of
    commissioned service.
        The usual phase point for Medical Corps (MC) and Dental Corps (DC)
    officers to reach colonel is between 13 to 18 years of commissioned
    service. The MC/DC officers have up to 13 years as a colonel to
    progress through medical group commands, and a total of 17 years to
    reach other higher level career milestones in preparation for general
    officer promotion. In comparison, the normal phase point to colonel for
    the DOPMA constrained corps, the Nurse Corps, Biomedical Science Corps
    (BSC), and Medical Service Corps (MSC), is 21 to 22 years. These
    officers only have a 4 to 5 year window to progress through multiple
    medical group commands, and a total of 8 years to achieve higher
    positions that make them competitive for general officer promotion.
    This puts nurses, as well as other DOPMA constrained corps, at a
    distinct disadvantage for general officer promotion.
        In order to be competitive with the non-DOPMA constrained corps
    (MC/DC) and have enough time to progress through a career track toward
    general officer promotion, DOPMA constrained candidates (NC, BSC, MSC)
    need at least one, if not more, below-the-primary-zone (BPZ)
    promotions. Currently, the BPZ opportunity for DOPMA constrained corps
    is significantly less than for Line of the Air Force (LAF) officers and
    non-DOPMA constrained corps (physicians/dentists). We are evaluating
    the viability of these BPZ promotion opportunity percentages for NC,
    BSC, and MSC officers.
                Senior Leadership Development
        In March 1997, we had our very first Total Nursing Force Executive
    Leadership Symposium for both enlisted and officers. For the first time
    we were able to bring together the vast majority of Active Duty, Guard,
    and Reserve Chief Nurses and senior enlisted Medical Service Managers.
    A survey conducted during the symposium overwhelmingly demonstrated a
    need to continue this Total Nursing Force senior leadership forum.
    Similarly, at the Association of Military Surgeons of the United States
    (AMSUS) meeting, we had our first Total Nursing Force day. The Guard,
    Reserve, and Active-Duty nursing leadership presented overviews of
    their respective programs, a progress report on the TNFSP, a panel
    discussion surrounding enlisted training issues. We also received
    presentations from guest speakers on utilization of forensic nurses and
    the challenges of forensic investigation of the airline crash in the
    Florida Everglades. The programs were top-notch with standing room
    only. The TNF is committed to exploiting these opportunities annually
    to help us achieve our vision of a seamless, integrated Total Nursing
    Force.
        Another senior leadership strategy undertaken this year was the
    revision of the USAF Nurse Corps career path. We are in the process of
    distributing it and posting it on our Total Nursing Force Homepage. The
    career path expands guidance beyond the traditional clinical track to
    career paths in senior leadership and staff officer tracks such as
    medical readiness, health promotion, managed care, and education.
    Goal No. 2: Spearhead Customer-Driven Nursing Practice:
        Goal statement.--Champion competent, collaborative practice among
    healthcare professionals to deliver truly customer-centered, affordable
    and accessible healthcare.
                Customer Satisfaction
        The TNF is heavily invested in the AFMS Customer Satisfaction Task
    Force, chartered to develop an overall strategy for instilling a
    climate and culture of customer focus and service. Our Surgeon General
    has emphasized this focus must be a cultural change rather than a
    program.
        The Task Force determined that the implementation of this culture
    change was dependent upon eight essential elements: Leadership;
    Performance Management; Education and Training; Communications;
    Measurement; Best Practices; Facility Implementation; and Products,
    Services, and Systems. The Task Force appointed champions for each
    element and then developed objectives to meet the overall strategies.
    Nurse Corps officers are champions for the Leadership, the Performance
    Evaluation, Recognition and Rewards, and the Education and Training
    elements.
        The future endeavors of the Task Force will include planning for
    the roll-out of the AFMS Customer Service Culture Change Plan to all AF
    Medical Treatment Facility (MTF) next spring. The Task Force will
    provide support to five model sites, taking their ``lessons learned''
    to refine the Customer Service tools and pushing for inclusion of
    customer service training in all AFMS formal courses.
        A revolution in customer service culture in the AFMS is on the
    horizon. The TNF is committed to continually improving our skills in
    patient advocacy and supporting our personnel in their initiatives to
    ensure quality care to delighted customers.
    Goal No. 3: Forge Ahead as a Full Partner in the AFMS Building Healthy
            Communities:
        Goal statement.--Integrate nursing's unique healthcare expertise
    into building robust prevention-based health and wellness, which will
    make healthy communities cultural and societal realities.
                Prevention-based Health and Wellness
        Nurses and medical technicians have traditionally been the front-
    line champions of this goal through day-to-day health promotion and
    utilization management (UM) activities. Approximately 75 percent of the
    AFMS health promotion and UM officers are nursing personnel.
        Disease management is a part of UM methodology, but it represents a
    change in paradigm. What can disease management do for the AFMS? A
    review of the literature has demonstrated that managed care
    organizations which have embraced disease management have documented
    improved quality of care and services, and cost efficiencies. An
    effective disease management strategy seeks to reduce the variability
    in treatment between providers and individuals. Each phase of the
    patients' care, from an ambulatory preventative visit, to illness, then
    recovery must coincide with the disease management strategy. Thus, a
    population health management approach requires specific techniques,
    skills, and strategies in addition to those needed in clinical
    practice. Nurses and medical technicians have the basic skills to fully
    contribute to these programs. We have targeted nurses to take on the
    role of the Health Care Integrator (HCI). We anticipate assignment of
    an HCI at every MTF to be the driving force in case management and in
    coordinating a continuum of care and services for the patients in the
    AFMS system.
        With the patient's best interest in mind, nurses and medical
    technicians have stepped forward with vitality to take on this new
    role. In my previous testimony, I described the HCI role. The HCI's
    responsibilities range in depth and scope based on individual MTF
    needs, however the majority are extensively involved in disease and
    population health management. We believe the HCI's can make a
    tremendous impact at MTF's supporting large and diversified
    populations. We invested in our HCI's by sending them for training at
    the 1998 AF Worldwide Prevention Conference where they participated in
    presentations and panel discussions by the LoveLace Healthcare
    Innovations Corporation and other AF HCI's. The educational objectives
    focused on the application of disease management programs to day-to-day
    nursing practice and the successful implementation of the HCI role.
        Since its introduction in 1997, 48 percent of the AFMS facilities
    have resourced an HCI, as compared to 11 percent a year earlier. Of the
    facilities that do not have HCI's assigned, 75 percent plan to do so in
    the next year. We anticipate the HCI will become the focal point for
    our enrolled population and the conduit between the Primary Care
    Manager (PCM), the patient, and the community at large. We believe the
    HCI will be the bridge to successful and sustained implementation of
    the DOD's Putting Prevention into Practice Program. I would like to
    highlight some of the successful disease and population health
    management initiatives implemented at our facilities.
        Ambulatory clinics across the AFMS have consistently developed
    Nurse-Run clinics, primary care triage services, and Ambulatory
    Procedure Units (APU). Typically Nurse-Run clinics focus on managing
    asthma, hypertension, and diabetes with HCI's providing case
    management, patient education, follow-up, and coordination of care
    between the PCM's, referral services and patients. Some facilities have
    expanded management activities to routine women's health and
    obstetrical services. Nurses in primary care triage services use
    approved protocols to manage acute appointments, referrals, and provide
    home and self care advice.
        The triage service was especially valuable at Offutt AFB in
    Nebraska during peak influenza season. The triage nurses responded to
    266 patient calls per day with home care advice sufficient for 14
    percent (37) of the callers. The 2nd Medical Group (MDG) at Barksdale
    AFB, Louisiana, the 60th MDG at Travis AFB, California, and the 354 MDG
    at Eielson AFB, Alaska, have reassigned consult management from
    administrative personnel to nurses or medical technicians, exploiting
    their clinical expertise, rapport with PCM's, and problem solving
    skills. This move has changed a historically ``bumpy'' system into a
    smooth process with fewer delays in referral appointments, fewer missed
    appointments, and reliable provider follow up.
        The 74th MDG at Wright-Patterson AFB, Ohio, instituted pediatric
    disease management strategies for special needs children. In the past,
    the parents of these children were on their own to identify and access
    all needed resources in the military and civilian medical communities.
    The HCI for this population enhanced the holistic multi-disciplinary
    team approach, coordinating services addressing the family's clinical,
    psychological, financial, and social needs. Similarly, the 45th MDG at
    Patrick AFB, Florida, and the 90th MDG at F.E. Warren AFB, Wyoming,
    instituted pediatric asthma clinics. Intensive patient education in
    these clinics improved home care treatment and decreased readmission
    rates.
        Across the board, nurses and medical technicians played pivotal
    roles in converting inpatient medical units to 23-hour APU's. The APU's
    were designed to provide nursing care services to patients on an
    outpatient basis such as administering intravenous antibiotics and
    intravenous hydration, performing dressing changes, giving wound care,
    and offering extended post-procedure monitoring. This is a primary
    example of offering customer convenience and point of contact quality
    care. Wright-Patterson developed a Nurse-Run Ambulatory Infusion
    Service for oncology patients with chemotherapy regimes. Previously,
    these patients were admitted to inpatient units because of traditional
    practice, insufficient staffing in the clinic, and inadequate clinic
    hours. Since implementation, the outcomes are overwhelmingly positive.
    The service provides therapies at the appropriate level of care,
    patients are pleased with reduced time in treatment, and admission for
    that treatment have decreased from 117 to 19 per year.
        In summary, I am proud to say the TNF has often provided the vision
    and tenacity to move these programs forward. These are just a few
    examples of nursing programs that directly support the AFMS strategic
    initiative of building healthy communities.
    Goal No. 4: Champion an Integrated Ready Force:
        Goal statement.--Maximize medical readiness capability with the
    right mix of multi-skilled personnel, incorporating joint training and
    interoperable equipment.
        The AFMS continues to lean forward in the areas of medical force
    protection and has made great strides in the past year to improve AE
    operations, advanced trauma education, Biological Warfare/Chemical
    Warfare (BW/CW) protection, Self Aid and Buddy Care (SABC) training,
    health promotion and disease prevention programs. The TNF is an
    integral part in the development, implementation, and deployment of all
    these programs. The AFMS has not lost sight of the fact that our number
    one job is to ensure we have a ``healthy and fit force.'' Through these
    programs, our Airmen will be ready to do their job, whenever and
    wherever that may be.
        As our Surgeon General pointed out in his testimony, the
    operational tempo (Ops Temp) in the past year for the AFMS has again
    been extremely high. The deployment of medical forces in support of
    sustainment operations, humanitarian assistance, and disaster relief
    has continued to grow. The AFMS has directed many of its energies in
    the past years to operations identified as Operations Other than War
    (OOTW). Such involvement directly supports our goal to keep the skills
    of our nurses and medical technicians honed for rapid deployment while
    truly assisting those in need; a definite Win-Win situation for all
    involved. Now, I will highlight the OOTW's the TNF has supported.
                Sustainment Operations
        Operation Desert Focus.--The ongoing support to Southwest Asia
    (SWA) has been a Total Nursing Force commitment from all Active Duty,
    AFRC, and ANG medical specialties. A 25-bed Air Transportable Hospital
    (ATH) remains deployed to Prince Sultan Air Base (PSAB), Kingdom of
    Saudi Arabia. It is staffed with 65 medical personnel on a 120-day
    rotational deployment. Aeromedical evacuation assets are collocated
    serving as the hub for tactical and strategic patient movement. In
    addition, the ARC was tasked to provide complete coverage of the ATH.
    The ANG's rotation begins in April 1998.
        Our enlisted Independent Duty Medical Technicians contribute to a
    theater medical surveillance team positioned at PSAB to monitor the
    health of personnel pre/post deployment and to conduct environmental
    surveillance of sites within the SWA. They also support an in-theater
    clinic at Eskan Village in Riyadh and numerous Squadron Medical
    Elements (SME) deployed with operational flying units.
        Operation Joint Guard.--The TNF remains engaged in Bosnia and
    Croatia primarily in aeromedical evacuation missions and staffing a 5-
    bed Air Transportable Hospital and a Mobile Air Staging Facility (MASF)
    asset.
        Operation Uphold Democracy.--The AFMS was tasked by the Joint Chief
    of Staff to deploy a 10-bed ATH to support deployed forces at Port Au
    Prince, Haiti. The TNF performed numerous humanitarian projects within
    the Haitian community during this operation.
                Humanitarian Civic Actions (HCA)/Disaster Relief
        The AFMS provides medical relief for natural and man-made disasters
    throughout the world. From contributing to flood relief efforts in
    Grand Forks, ND, to responding to military and civilian airline
    accidents, to providing health care to refugees, the TNF is a full
    participant. These programs enhance our National and Military Strategic
    Objectives, provide quality healthcare to a needy population, and
    imparts good healthcare practices to future generations.
                Joint Training Through Mirror Force
        A major objective of the TNFSP Goal No. 4 is to arrange (joint)
    training to meet contingency needs. As has been briefed in previous
    year testimonies, Mirror Force is an Air Force Leadership initiative by
    the Active, AFRC, and ANG to share similar training and missions,
    optimizing utilization efficiencies. Mirror Force is designed to bring
    the Active, Reserve, and Guard personnel together into a seamless,
    medically ready force. The TNFSP directly links to this strategy.
        Recently the AFMS established active duty nurse positions at the AF
    Reserve Region Support Groups (RSG) at each of the three AF Reserve
    Numbered Air Forces (NAF). As Directors for Clinical Readiness
    Programs, Training, and Readiness missions, these nurses will be
    responsible to the RSG Surgeons General for all clinical professional
    matters and provide expert guidance and operational guidance to all
    subordinate medical and aeromedical units within the NAF's. This
    initiative will enhance readiness training for 2,500 medical officers
    and 5,000 enlisted technicians and offers a ``Total Force'' approach by
    developing a team composed of active duty, air reserve technician and
    reserve personnel.
        To promote interoperability the DOD conducted one of the largest
    joint medical training exercises in history. In June 1997, more than
    2,000 Active-Duty, Reserve and Army, and Air National Guard doctors,
    nurses, medical technicians from all services came together for Patriot
    Medstar 1997. The exercise helped military medical professionals
    assess, treat, stage and evacuate ``wounded'' soldiers from a fictional
    battleground. Initiatives are underway to make this a recurring Joint
    bi-annual DOD Patient Evacuation exercise.
        The Nursing Department at the USAF School of Aerospace Medicine,
    Brooks AFB, Texas stood up a total force training endeavor in the past
    year. The Critical Care Air Transport Course was established and began
    accepting students this year. Flight nurse instructors put together
    this training program to meet the patient care skills needs in both
    peacetime and wartime environments. It trains Total Force physicians,
    nurses, and enlisted specialists who may be required to provide
    critical care support to AE patients.
        A prime example of the partnership of the TNF in support of medical
    readiness is the training initiative called TopSTAR (Sustainment
    Training/Advanced Readiness). The TopSTAR initiative was identified in
    last year's testimony, as a total force program creating optimal and
    efficient medical training opportunities for all clinical specialties
    required to perform wartime tasks. The primary driver for the
    initiative is the reduction of Air Force inpatient MTF's as medical
    readiness training platforms. In 1988 the AFMS operated 82 hospitals
    with 5,053 operating beds. Currently we have 37 hospitals with 1,487
    beds. It will be impossible to meet all training requirements in the
    remaining inpatient settings for our active duty medics, not to mention
    our reserve component medics.
        TopSTAR was implemented in February 1998 at its first training
    platform at Wilford Hall USAF Medical Center in San Antonio, Texas. The
    training is conducted in a simulated environment, using state-of-the-
    art mannequins and computer-based instruction. The highly technical
    nature of medical skills training requires extensive practice in both
    actual and simulated patient care settings. Simulated wartime
    environments can be used in the lab to practice critical skills and
    procedures prior to actual patient care or deployment and improve
    access and training opportunities for medical personnel. After a 2-week
    rotation, the students complete 100 percent of their sustainment
    training requirements. Previously, this sustainment training was
    fragmented and spread out over the entire year. We hope to identify
    west and east coast sites to expand this valuable program in the years
    ahead.
                Standardized Medical Readiness Training System
        Another task under the TNFSP Goal No. 4 of the TNFSP is to deploy
    the Standardized Medical Readiness Training System (SMRTS)
    implementation guidelines for nursing to the field. SMRTS is an
    automated system to track standard medical readiness training for all
    medical personnel. The original SMRTS database was quite comprehensive
    but was cumbersome and redundant. Nursing Services took the lead in
    reengineering the SMRTS. System changes have centered on restructuring
    the database to provide user requested features and system flexibility
    and compatibility with other data base management programs. The Air
    Force Inspection Agency (AFIA) is actively engaged in ensuring all
    training programs are in compliance with Air Force directives.
    Goal No. 5: Effectively Use AF Nursing Resources
        Goal statement.--Capitalize on Air Force nursing personnel to
    optimize support for the AFMS mission requirements. We want to ensure
    the TNF maintains the proper skill mix, grade structure, and experience
    balance necessary for mission accomplishment. We begin this sustainment
    process through accessions and recruiting efforts, accompanied by force
    sculpting of size, skill mix, and grade requirements.
                Accessions
        Since 1979, the entry-level educational requirement for
    commissioning as AFNC officers was a Bachelors of Science in Nursing
    (BSN) degree. In response to the nursing shortage in 1987, the AFMS
    altered the entry-level requirement to include registered nurses
    graduating from an Associate Degree in Nursing (AND) or Diploma
    programs. However, the candidates must also have completed a
    Baccalaureate degree in a health science field. In the past several
    years, the AFMS attained its nursing accession goals. We have an ample
    source of entry level, novice nurses with BSN degrees. In 1997, the Air
    Force senior nursing leadership carefully scrutinized our accession
    success rate and the AFNC manpower requirements. The AFMS changed the
    entry-level educational requirements for AFNC commissioning to a
    minimum of a BSN degree.
        BSN nurses have the requisite knowledge base, flexibility, and
    experience to teach our medical technicians, and collaborate with
    interdisciplinary professionals and agencies. Our nurses plan and
    evaluate health care for individual patients and communities in a wide
    range of settings. Military nurse officers require the same enhanced
    leadership skills and professional expertise required by other medical
    service and line officers. In the rapidly changing U.S. health care
    environment, the military nurse must be educated to focus on patient
    education, health promotion and disease prevention. Air Force nurse
    officers must independently lead, manage, teach, and integrate health
    care across the spectrum of peacetime, war, and humanitarian
    operations.
                Recruitment
        In order to meet the AFMS strategic initiative and the more complex
    demands of our present and future health care environment, we want to
    enhance our force structure. We refocused the accession bonus policy to
    incentivize difficult recruitment categories, such as nurses with three
    or more years of nursing experience, and nurses with specific advanced
    academic degrees.
        A recruitment initiative I described in last year's testimony was
    the Cadet to BSN/MSN program. As early as 1992, cadets at the United
    States Air Force Academy had voiced interest in entering the AF Nurse
    Corps. I am pleased to report that the Air Force Academy now has
    scholarships for cadets who want to attend nursing school. In the fall
    of 1997, two cadets entered Vanderbilt University. Starting with the
    Class of 1998, up to five cadets annually will have the opportunity to
    attend nursing school. To assist these cadets in validating that a
    health profession career is what they want, the U.S. Air Force Academy
    Hospital established a shadow for those who wish to enter the Health
    Profession.
        Finally, an area of concern in previous testimony was the
    insufficient number of obstetrical (OB) nurses we have in our
    inventory. We addressed this issue by increasing the number of
    accelerated obstetrical training sites and establishing a rigorous on-
    the-job-training program. These two initiatives, coupled with the
    incremental closure of OB services across the AFMS, brought the OB
    nursing shortage under control.
                Force Sculpting: Rightsizing
        The AFMS Mission Support Plan (MSP), accomplished in late 1997, was
    a ``bottom-up'' review process in which each MTF identified their plans
    for health care delivery and resource requirements through the year
    2003. The changes in facilities and reduction of inpatient beds
    significantly decreased nursing manpower requirements in these patient
    care areas. We support this downsizing of clinical nurses assigned to
    inpatient areas.
        Conversely, the number of nurses in ambulatory care settings will
    need to increase, not in management roles, but in providing disease and
    population health management, patient education, and coordination of
    care. The Community Health Clinic (CHC) model for primary care (whether
    hospital-based clinic or freestanding clinic) was developed by the
    AFMS. The staffing pattern for CHC's is population-based--the number of
    providers needed is based on enrollee population and case-mix. The
    nurse to provider ratio defined in the CHC model is one nurse for every
    two providers. The Surgeon General's office will be conducting an
    ``enterprise'' level multidisciplinary review to ensure the MSP
    manpower requirements support the AFMS strategic initiatives. From a
    nursing perspective, the review will focus on the ratios of nursing
    personnel to providers and the evaluation of the appropriate mix of
    physician and nurse providers in the CHC's, women's health, primary
    care, pediatric and mental health environments.
        Even after robusting nursing requirements into the outpatient
    areas, we anticipate a reduction of nursing manpower requirements over
    the next five years. In reviewing potential rightsizing goals for the
    AF Nurse Corps, it appears all nurse specialties except flight nurses
    could be decreased by varying degrees. Planning at this point indicates
    that in order to meet the overall fiscal year 2003 end strength, we
    need to increase annual losses approximately 130 above and beyond
    normal attrition (separations/retirements). For fiscal year 1999 we
    anticipate that voluntary reduction options, such as Temporary Early
    Retirement Authority (TERA) and Limited Active Duty Service Commitment
    (LADSC) waivers should be available to NC officers. Reduction
    incentives would be limited to the specialties with rightsizing targets
    beyond normal attrition. For nurse-provider specialties, end-strength
    numbers can most likely be achieved through normal attrition and by
    decreasing the number of nurses selected for graduate education to
    enter the provider specialty, and/or by decreasing recruiting goals for
    those specialties.
                Force Sculpting: Skill Mix
        Graduate Education.--The professional practice model of nursing
    demands that all nurses practice in each of four domains: clinical,
    research, education and administration. Graduate education prepares the
    nurse for expanded roles in one or more of these domains.
        We have been successful at validating the wartime requirement for
    increased numbers of Women's Health and Family Health Nurse
    Practitioners. As we deploy TRICARE for peacetime healthcare, there is
    an increasing need for a mixture of these nurse practitioners to
    provide cost effective quality care.
        The Air Force Nurse Corps will continue to stress the importance of
    Master's and Doctoral prepared nurses as it is a hallmark of our
    profession and supports our changing mission. We analyzed our advanced
    academic requirements for each MTF and coded each authorization that
    required an advanced degree for the position. We used these codes to
    participate in the Inter-disciplinary Forecast Board (IFB), as
    described in General Roadman's testimony. The IFB process compares the
    current inventory of specialists with the number of coded
    authorizations for that specialty, and forecasts the training
    requirements. The IFB enhances our efficiency and accuracy in
    forecasting advanced academic education needs and non-clinical
    fellowships.
        Uniformed Services University of the Health Sciences (USUHS).--The
    USUHS Graduate School of Nursing (GSN) was officially approved on
    February 26, 1996. The mission of the GSN is to prepare advanced
    practice nurses (APN's) at the graduate level to deliver primary and
    chronic care, including anesthesia services, to active duty members of
    the Uniformed Services, their families, and all other eligible
    beneficiaries. USUHS has a worldwide perspective for education,
    research, and consultation uniquely related military health care and
    military medical readiness. Three Air Force Nurse Corps officers are
    assigned to the GSN faculty, two to the Certified Registered Nurse
    Anesthetist (CRNA) program, and one to the Family Nurse Practitioner
    (FNP) program. By incorporating USAF faculty and training into the
    USUHS program, we saved the USAF approximately $300,000 in civilian
    contract educational costs. With the addition of these officers, the
    faculty is now more Tri-service and more military oriented. Already I
    am hearing how these AF nurse instructors contribute significantly to
    curriculum development and student mentoring.
        In April 1994, the CRNA Program was accredited, permitting
    admission of students. Recognizing the outstanding training and cost
    savings offered by the USUHS CRNA program, the Air Force has now
    assigned all CRNA students to the USUHS GSN. This program allows us to
    continue the tradition of military trained CRNA's at a lower cost then
    we have ever experienced before. Additionally, we have evaluated the
    program and believe it to be one of the strongest in the country. The
    USAF CRNA students graduating from the USUHS program have had a 100
    percent success rate on their board certification exams.
                Force Sculpting: Enlisted Specialists
        A resounding success story is the increasing number of medical
    technicians utilized in non-traditional roles like managed care,
    readiness, and health promotion. Exploiting their professional talents
    acts as a force multiplier increasing efficiency without degrading
    effectiveness. Another success story is the commissioning of enlisted
    Airmen who have completed a Bachelor's of Science Degree in Nursing.
    The TNF is committed to retaining these stellar individuals as NC
    officers who have already demonstrated their leadership potential and
    investment in the AFMS. Therefore, the AFMS chartered an Inter-
    disciplinary Process Team to develop a marketable total force career
    track for enlisted medical personnel, providing them with opportunities
    to achieve appropriate academic credentials or commissioning. Initial
    focus will be on medical technician personnel with commissioning
    opportunities in the AFNC.
    Goal No. 6: Employ and Integrate Technology and Research:
        Goal statement.--Exploit cutting edge technology and research to
    manage information and advance nursing practice.
                Modeling and Simulation Technology in Medical Readiness
        NC officers have recognized the value of advanced technologies and
    have been the driving force in its development and use. Currently, Air
    Force medical readiness is using databases and simulation models to
    answer a variety of questions about our medical deployment packages in
    the areas of staffing, equipment, configuration and patient management.
    We call our simulation models Unit Type Code (UTC) Validation Models.
    The models simulate patient care within a given facility created by the
    user selecting a variety of packages. As the model runs, we analyze
    where patient bottlenecks occur. We evaluate the maximum number of
    major equipment items such as ventilators or cardiac monitors in use at
    one time, then recommend changes or an augmentation package for a
    particular casualty stream. The models allow us to test changes in
    aeromedical evacuation policies to see how it effects staff and bed
    utilization. Similarly, we can also analyze the difference in patient
    care outcomes between deploying a specialty surgeon versus a general
    surgeon.
        Exploiting modeling and simulation technology provides many
    benefits in the areas of cost containment and increased efficiency.
    Organizing and conducting large readiness exercises consumes a great
    deal of resources and time. A smaller cadre of personnel can run models
    against many different scenarios in a very short period of time. The
    results can be more exact and provide valuable information for
    decision-making or planning real time exercises. Modeling is also a
    defendable, valid and auditable means to determine medial readiness
    manpower requirements.
                Telemedicine Technology in the Aeromedical Evacuation (AE)
                        Environment
        Almost two years ago, the Air Force stood up the first DOD working
    group to establish an AE Strategic Plan for the insertion of
    telemedicine into the aeromedical environment. Their charter was to
    provide telemedicine capabilities throughout the AE continuum, from the
    point of entry into the system to the patient's final MTF.
        Telemedicine, or telehealth, is integrated across the military and
    civilian health care continuum. It is a technological tool that
    provides quality consultation and assessment to patients separated from
    medical providers by time and space. The insertion of this capability
    into our aeromedical environment leverages our readiness capability by
    placing advanced medical technologies closer to the battlefield. It
    supports changing doctrine of a smaller forward footprint, earlier
    evacuation of injured soldiers and movement of stabilized verses stable
    patients. The Bottom-line: telemedicine provides communication and
    medical capabilities essential in our quest for quality care to
    battlefield soldiers anywhere, anytime.
        As the champion for this effort, I brought 45 participants from all
    walks of the DOD telemedicine and user communities together in May of
    1996. We developed the strategic plan for the insertion of Telemedicine
    into the AE environment. Of this group, one-third were TNF personnel.
    The intention of this strategic plan was to insert a system that makes
    a difference in how we provide care, not to insert state of the art
    technology that is not wanted or needed by AE system users.
        Dedicated, reliable communication from the air to the ground, and
    back to the air was identified as the most desired attribute of
    telemedicine. Due to severe limitations in our present communication
    systems, changes in patient's conditions, the need for further clinical
    information, and updates prior to landing are almost impossible to
    relay in today's AE environment. This has always been a frustration for
    flight nurses and aeromedical evacuation technicians as they routinely
    provide care in the air without direct access to a physician.
        A Breakthrough Area was initiated to architect and implement a
    proof of concept demonstration to document the need for
    telecommunication from ground to air to ground. With our current
    operations of transporting stabilized rather than stable patient loads
    during peacetime and contingency operation missions, this
    communications capability is vital to safe quality patient care. The
    operational demonstration was conducted September 22-27, 1997 and
    involved ``live'' channel AE missions using C-141, C-9, and C-130
    airframes for a total of 70.6 flying hours. This demonstration used
    commercial off-the-shelf computer systems and applications in addition
    to existing airframe communication systems. We were able to validate
    the use of e-mail and ``chat'' to and from the aircraft to ground AE
    command and control elements. We are now working toward our Phase II
    proof of concept demonstration in the Pacific Air Forces Theater.
                Information Technology
        The TNF maintains a viable and dynamic homepage website offering
    access to real-time information to AF nursing personnel around the
    world. We reached a significant milestone this year through the use of
    this medium. Our constituents now have an INPUT FORM they can access
    from the Nursing Homepage, complete it and forward to Headquarters Air
    Force, Nursing Services. The senders receive an immediate return
    receipt. Nursing Services' then forwards the suggestion to the
    appropriate goal group for consideration. Through this form all nursing
    officers, enlisted and civil service personnel have the opportunity to
    actualize the Total Nursing Force vision.
                Technology in Education
        Contemporary training of the USUHS CRNA program requires innovative
    technologies while maintaining traditional, proven techniques. A
    diversified clinical and basic science cadre of instructors is teaching
    a unique program. The classrooms and library have several software
    packages ``on line'' and these are used during the Anatomy/Cell Biology
    Course. In addition, computer-aided instruction is routinely used to
    teach human anatomy, cell biology, and nervous system structure and
    function. These courses utilize the Visible Human Project, which is
    available through the National Library of Medicine. Anesthesia
    Simulators allow students to practice anesthetic procedures in a more
    controlled virtual environment before progressing to the clinical area.
    These programs are a high-tech link between didactic and clinical
    education.
                Distance Learning Technology
        The DOD Federal Nursing Chiefs requested that APN's in the
    TriServices complete a Master of Science Degree in their specialty. A
    distance learning CRNA advanced degree program is now offered by the
    USUHS GSN. It was established to afford military CRNA's the opportunity
    to complete an advanced academic degree even though they are
    geographically separated from USUHS. Students participate in discussion
    groups over website technology and use video teleconferencing for one-
    on-one interaction with their instructors. This distance learning
    program is able to reach out to military nurses around the world to
    provide them an opportunity for higher education. There are five
    students enrolled, one is stationed as far away at Turkey and one is
    assigned to shipboard duty. The program eliminates the need for
    expensive relocation assignment and the cost of tuition.
        In November 1996, the TNF stepped out and established a working
    group to define available distance learning program options for nurses.
    Distance learning provides an economical, effective, and efficient
    method of achieving academic goals even though students may be
    geographically separated from colleges or universities. The working
    group developed a Distance Learning Guide and published it on the AF
    Nurse Corps website and in hard copy. The guide is a quick reference
    for distance learning websites, descriptions of degree-awarding
    programs, and listings of colleges and universities offering distance
    learning nursing courses. The guide focuses on programs that may be of
    interest to our enlisted and officer force in pursuing bachelor's,
    master's, and doctoral level courses or degrees.
                Military Nursing Research
        Thanks to Congressional financial backing for the Tri-service
    Nursing Research Program, Air Force nursing research continues forward
    again this year. Between 1992 and 1995, 13 of the 75 Tri-service
    nursing research studies came from the Air Force: 1 of 8 (13 percent)
    in 1992, 5 of 20 (25 percent) in 1993, 3 of 24 (13 percent) in 1994, 4
    of 23 (17 percent) in 1995, 7 of 29 (24 percent) in 1996, and 4 of 30
    (13 percent) in 1997. Proposals completed through Tri-service Nursing
    Research Program during those years included: Readjustment of Gulf War
    Veteran Women/A Follow Up, Healing Touch, Impact of Story Telling on
    Burnout/Nursing Expertise, the Air Force Nurse Transition Program, and
    Leadership Development. Through the fiscal year 1998 Department of
    Defense (DOD) Appropriations Bill for military nursing research, 12 of
    the 63 proposals for Tri-service nursing research were forwarded by the
    AF Nurse Corps for consideration by the Tri-service Nursing Research
    Program oversight body. In line with legislative language in the
    appropriations bill, proposals submitted by Air Force nurses in the
    Active-Duty, Guard, and Reserve Command included: Prenatal Care for
    Women In and Out of the U.S., Preventive Services: Role of the Nurse
    Practitioner, Nurse Roles During Deployment to Croatia: A Grounded
    Theory, and Health of Persian Gulf War Veteran Women.
        Our medical centers have spearheaded the TNF efforts to ``change
    the culture'' and infuse research into practice. Assignment of Clinical
    Nurse Researchers (CNR) to each of our clinical investigative sites has
    provided the integral and essential link for nursing staff to
    incorporate research into day-to-day activities. The CNR's are tasked
    with increasing the nursing staff's knowledge and participation in
    clinical research, increasing dissemination of research findings, and
    then utilize research findings.
        Investigators at Wilford Hall Medical Center (WHMC) received four
    TriService Nursing Research grants over the past 18 months. The studies
    are ongoing, and although no results are available, we anticipate the
    findings will have direct applicability to the AFMS. Nursing research
    will study: Effects of Position on Chest Tube Drainage and Pressure,
    Efficacy of Three Fluids on Hydration During BW/CW training, Critical
    Care Experience and Training During Aeromedical Transport, and
    Experience of Chief Nurses in Military OOTW's. In addition, the number
    of nursing research studies at WHMC has increased 900 percent since
    assignment of the CNR. In the previous 18-month period there were two
    nursing research protocols, currently there are 18. A study in the
    prevention of blister formation changed the management Basic Military
    Trainees preventing unnecessary outpatient visits and lost training
    time. Investigation of the safe time frame for use of disposable oxygen
    humidification bottles for each patient led to a decreased consumption
    rate, saving $6,000 annually in resupply.
        Since assignment of a CNR to Keesler Medical Center in Mississippi,
    nursing staff conducted and collaborated on eleven research studies and
    clinical trials as compared previously to two studies. Research topics
    range from health outcomes in diabetic management, effectiveness of
    smoking cessation programs, music therapy, and clinical trials testing
    alternative antibiotic treatment of penicillin-resistant pneumonia and
    use of Interferon as a treatment for interstitial fibrosis. For the
    first time, three research proposals were submitted to the Tri-Service
    Nursing Research Program for extramural funding. The proposals will
    study self-help for women with breast cancer, management of
    hypertensive patients through clinical nurse specialist interventions,
    and improvement of mother/infant outcomes by a locally designed and
    implemented prenatal program.
        David Grant Medical Center (DGMC) in California conducted three
    different types of research classes per quarter for nursing personnel.
    Subsequently, nursing personnel received over 254 continuing education
    units at no external cost to the Air Force. Six nursing studies were
    completed in clinically diverse areas such as prenatal fatigue for
    active duty mothers, birth control, visual changes with hyperbaric
    treatment, assessment of pitting edema, critical care nursing
    experience, and value perspectives of military officers. Four more
    clinical studies are ongoing, with three more studies in the planning
    process.
        A recent Air Force graduate of the USUHS Nurse Anesthesia program
    won the American Association of Nurse Anesthetists' 1996 Student
    Writing Contest for the study she prepared on the ``Incidence of
    Visible and Occult Blood on Laryngoscope Blades and Handles,''
    published in the Association's June 1997 journal. This paper discussed
    the extent of contamination on anesthesia equipment that was identified
    as being ready for patient use. The study confirmed that more rigorous
    decontamination protocols must be instituted to ensure complete removal
    of blood prior to sterilization.
        An Air Force Associate Professor at the USUHS is in the third phase
    of a large international project to study the education and utilization
    of Nurse Anesthetists in 177 World Health Organization (WHO) member
    countries. The WHO collaborated in this international study to provide
    information with respect to the quantity and quality of anesthesia care
    delivered by nurses in all countries. This study is providing
    information that can serve as a basis for the future planning of
    anesthesia manpower resources and education. The results will be of use
    to the MHS as health care providers and executives search for cost-
    effective approaches for the provision of care and the management of
    services for their beneficiaries.
        Mr. Chairman and distinguished committee members, I believe you can
    see that Air Force nursing is generating lines of research aimed at
    issues critical to healthcare delivery, whether in the military or
    civilian sector.
                                   conclusion
        In closing, I feel a great sense of pride and accomplishment as the
    Corps Chief of such an extraordinary group of officer and enlisted
    nursing professionals. The Total Nursing Force is eager to work tough
    systemic issues impacting our people, health care, and outcomes. Our
    Total Nursing Force Strategic Plan scripts the foundation of an
    evolving, living document addressing the challenges and opportunities
    facing Nursing Services and the Air Force Medical Service today and
    into the 21st century. As I address you today, I can say unequivocally
    that Air Force Nursing personnel are ready, willing, and able to
    protect our forces, protect our national interests, and advance
    democracy and freedom anytime, anywhere. Mr. Chairman and committee
    members, thank you for recognizing the invaluable contributions of
    military nursing. We appreciate your support in behalf of the
    Department of Defense, the Air Force Medical Service and the patients
    we serve.
    STATEMENT OF CAPT. MARY ANNE GARDNER, DEPUTY DIRECTOR,
                NAVY NURSE CORPS

        Senator Stevens. Now we turn to you, Captain Gardner.
        Captain Gardner. Mr. Chairman, Senator, on behalf of
    Admiral Engel who unfortunately could not be here today, I am
    honored to attend and wish to thank you for this opportunity.
        As Admiral Engel prepares to relinquish her position as
    Director, I would like to take the opportunity to highlight a
    few of Navy Nurse Corps' accomplishments and relay some
    concerns.

                                  Nurse's role

        In the changing U.S. health care environment, the military
    nurse's role remains unique. As we shift our practice focus to
    health promotion and illness prevention, we must continue to
    care for patients who are critically ill due to disease or
    trauma. At the same time, we must remain prepared to go into
    harm's way to care for casualties in our operational missions.
    I am proud to relate some of the work that Navy nurses of all
    grades, assignments, and practice settings are doing to
    implement and support the seven goals of the Nurse Corps'
    strategic plan: operational readiness, nursing practice,
    quality of life, leadership, participation in political
    processes, education, and resources.

                             Operational readiness

        Our fundamental goal and reason for existence is
    operational readiness. Over 5,300 active and Reserve nurses
    constantly prepare and are ready at a moment's notice when the
    call comes to deploy. Navy nurses excel in their abilities to
    practice diverse clinical nursing skills in varied locations
    such as aircraft carriers, hospital ships, fleet surgical
    teams, and with the Fleet Marine Force.
        Operational readiness also means being instantly prepared
    for any event. A few examples include the recovery and
    treatment of survivors after the tragic crash of Korean Air
    flight 801 in Guam, deployment to Laos to aid in the
    humanitarian assistance program educating the local hospital
    staff on the setup and use of donated hospital equipment, and
    the upcoming exercise which will deploy the U.S.N.S. Comfort
    that Admiral Koenig spoke of.

                         utilization of Reserve forces

        Crucial to our ability to continue the daily peacetime
    mission, while maintaining a readiness posture, is the
    successful utilization of our Reserve forces. Providing total
    force integration, Reserve nurses superbly replace deployed
    active duty staff, thereby allowing continuation of our
    peacetime mission without interruption of care. They have done
    this at Naval Hospital Bremerton during the deployment of Fleet
    Hospital Five to Haiti, during operation Kernel Blitz, and we
    drill at regular mobilization sites.
        Contributory support at stateside, overseas, and other
    service military treatment facilities is another example. The
    reserves same-day surgery program, staffed by Navy, Army, and
    Air Force Reserves, moved to David Grant Medical Center at
    Travis Air Force Base, when Naval Hospital Oakland closed.

                             executing Health care

        But operational readiness also means keeping our service
    members fit, healthy, and at work. Navy nurses excel in
    planning and executing health care delivery wherever needed.
    This could be pierside, underway in local or extended ship
    operations, during plebe summer at the Naval Academy, or during
    various recruit training exercises such as the 54-hour Crucible
    Exercise at the end of Marine Corps recruit training.
        In more conventional settings, Navy nurses independently
    manage various patient populations in nurse-run clinics or they
    may be at headquarters staff, working on the strategic plan
    that Admiral Koenig also spoke of for women's health.
        In concert with the Surgeon General's goal of making
    TRICARE work, Navy nurses play pivotal roles at all levels,
    ranging from one-on-one beneficiary education at the facility
    level, to shaping and implementing policy at the lead agent and
    headquarters level, all in a tri-service environment.
        Recognizing health care delivery requires knowledge and
    proficiency related to information management and technology,
    Navy nurses informatics expertise is steadily rising as more
    and more nurses gain increasing education and even master's
    degrees in this exploding field. Nurses at all levels are
    closely involved with the development and deployment of current
    clinical information systems which assist providers in making
    decisions about diagnoses and treatments and also tracks
    readiness status for deployment.
        As telehealth awareness increases, there are endless
    possibilities for increasingly independent applications of
    telehealth by nurses, by corpsmen, and by other health care
    personnel. A few of the nursing applications include education
    conferences and the clinical applications might include wound
    care clinics or patient education efforts.
        In another new initiative, we have focused efforts on
    acknowledging and respecting cultural diversity among our
    customers and among our corps. Our recently formed cultural
    diversity working group is defining culturally competent care
    and identifying ways to ensure its delivery, with the
    understanding that culturally competent care is a major issue
    for Navy medicine and not just the Nurse Corps. On the local
    level, various commands have established diversity councils and
    nurses reach out into communities assisting groups in melding
    cultural practices with healthy lifestyles.
        As the complexity of our professional practice increases,
    it is absolutely essential to maintain a strong research
    foundation. Thanks to the support of this committee, nursing
    research in the Navy has made huge strides. Our doctorally
    prepared nurses at larger stateside and overseas facilities
    actively mentor the junior nurses in basic clinical studies, in
    grant writing, and practice-based research utilization. Study
    topics may range from military managed care in the tri-service
    nursing environment and clinical studies on the effect of pain
    and patient positioning on patient recovery. These research
    results will help focus our efforts and limited resources in
    areas that will positively impact our customers and provide
    potential cost avoidance.

                             Funding and leadership

        Continued funding availability is essential to our
    maintaining a solid base of nurse researchers. We continue to
    disseminate new findings to the caregivers in the field,
    yielding new scientifically validated information as the basis
    for our nursing practice.
        Leadership is one of the strongest attributes of the nurses
    in our corps. Admiral Engel, as you mentioned, exemplifies the
    changes allowing Nurse Corps officers to compete for promotion
    to O-8, or for a second star. Legislative initiatives that
    allow all Medical Department Corps to be eligible for selection
    as Surgeon General are certainly welcome. The recent revision
    of the DOPMA grade tables which allows more equitable promotion
    for Nurse Corps officers is having positive effects.
        By mid-1998, there will be 9 nurses in command and 15
    executive officers or chiefs of staff at military medical
    treatment facilities, lead agent staffs, and education
    commands. Reserve Nurse Corps officers currently command two of
    the four reserve fleet hospitals in the Navy and three of the
    nine stateside hospitals that will be receiving casualties
    after combat.
        The numerous accomplishments noted here would not be
    possible without the dedicated, educated, and motivated nurses
    who demonstrate nursing excellence on a daily basis. Essential
    foundations for this level of success have included a
    diversified accession plan, an all baccalaureate basic
    preparation sufficient numbers of master's prepared and board-
    certified members, and increasing doctoral education for
    research and practice development.
        Legislative initiatives have both encouraged and rewarded
    these efforts. Accession bonuses for registered nurses, the
    nurse officer candidate program, special pay for nonphysician
    providers with board certification, incentive special pay for
    certified registered nurse anesthetists, and continuing funding
    for nursing research are welcome evidence of this committee's
    support for nursing.
        With an increased demand for baccalaureate prepared nurses
    by the civilian sector, coupled with early indications of
    decreased numbers of eligible nurse graduates in the 21st
    century, we depend on the continuation of these diversified
    programs to meet our requirements. Navy ROTC, the nurse officer
    candidate, and enlisted commissioning programs, combined with
    the direct recruiting accession bonus, in total form a robust
    source for the best qualified nurses.
        As Admiral Engel's tenure as the Director of the Nurse
    Corps comes to a close, we feel great pride in the
    accomplishments resulting from the hard work of so many people
    throughout Navy medicine. However, much work remains.
    Increasing demands despite limited resources require that our
    efforts be focused on maximizing and integrating our personnel
    and training assets. Rapidly changing technologies and health
    care environments, coupled with expanding joint humanitarian
    missions, chemical, biological, and radiological threats,
    increased operating tempos, and the implementation of TRICARE
    will continue to challenge our readiness.
        Mr. Chairman, thank you for the opportunity to share the
    successes of the Navy Nurse Corps with you. These achievements
    would not be possible without the continuing support of this
    committee. The Nurse Corps will always treasure that support
    because it has been instrumental in allowing Navy nurses to
    demonstrate that Navy nursing is nursing excellence.

                               prepared statement

        Admiral Engel looks forward to serving this great Nation of
    ours in a new capacity and providing the necessary leadership
    to develop tomorrow's leaders today as we move into the 21st
    century.
        Thank you.
        [The statement follows:]
                 Prepared Statement of Rear Adm. Joan M. Engel
        Mr. Chairman and distinguished members of the Committee, thank you
    for inviting me to represent the Navy Nurse Corps. This is my last
    appearance before you as Director of the Navy Nurse Corps. Before I
    relinquish my tenure, I would like to highlight a few of our many
    accomplishments and to relay my concerns.
        The Compass that will continue to direct the Nurse Corps into the
    next century is our Strategic Plan--``Charting New Horizons.''
    Fittingly named at its origin, our plan is a living document, which
    guides all aspects of our practice. Our plan is in concert with the
    goals of the Navy Medical Department's plan, ``Journey to Excellence--
    Meeting the Challenges of the Future,'' as well as the Military Health
    System (MHS) plan. In the changing U.S. health care environment, the
    military nurse's role is unique. As we shift our practice focus to
    health promotion and illness prevention, we must continue to care for
    patients who are critically ill due to disease or trauma. At the same
    time, we must remain prepared to go into harm's way to care for
    casualties of our operational missions. I am proud to relate some of
    the work that Navy Nurses across the spectrum of grades, assignments,
    and practice settings are doing to implement and support the seven
    goals of our Strategic Plan: Operational Readiness, Nursing Practice,
    Quality of Life, Leadership, Participation in Political Processes,
    Education, and Resources.
        Our fundamental goal and reason for Navy Nurse Corps' existence is
    operational readiness. Over 3,200 active and 2,100 reserve nurses
    constantly prepare to be ready at a moment's notice when the call comes
    to deploy. On a daily basis, this means keeping diverse clinical skills
    honed for patient care, whether in a stateside military facility or
    assigned to one of many operational platforms worldwide. Nurse Corps
    officers' broad range of expertise and the comprehensive view they
    bring to any assignment are well utilized in multiple operational
    settings. They excel in their abilities to practice nursing in such
    diverse locations as aircraft carriers, hospital ships, Fleet Surgical
    Teams, and with the Fleet Marine Force. Additional assignments include
    the Chemical/Biological Incident Response Force, Flight Nursing at
    Scott Air Force Base, and as part of the Hyperbaric Medicine Team at
    the Naval Operational Medicine Institute in Pensacola. Nurses also play
    a significant role as medical planners at the Naval Doctrine Center and
    the Marine Corps Combat Development Center.
        Operational readiness also means being instantly prepared in
    response to sudden tragedy. Navy nurses from Naval Hospital Guam
    participated in the recovery and treatment of survivors after the
    tragic crash of Korean Air flight 801 with 254 passengers and crew
    onboard. Nurses from other military medical treatment facilities also
    played a key role in saving lives. Of the 32 survivors of this tragedy,
    19 received treatment in the Naval Hospital, many requiring intensive
    nursing care. Navy nurses provided significant psychological and
    debriefing support to the caregivers as members of our Special
    Psychiatric Rapid Intervention Team (SPRINT) deployed to this area.
        Navy Nurses routinely support numerous operational exercises
    including all annual Marine Corps Medical Battalion exercises.
    Exercises involving our hospital ships U.S.N.S. Mercy and U.S.N.S.
    Comfort are critical to giving Navy Nurses experience in an operational
    setting as well as supporting the exercise itself. In the upcoming
    ``Baltic Challenge'' exercise, the U.S.N.S. Comfort will deploy
    significant numbers of Nurse Corps officers for an extended period. It
    will also test the lessons learned from Desert Shield/Desert Storm in
    meeting our day to day missions of peacetime health care in facilities
    supporting the deployment. In an unprecedented assignment, last fall,
    an operating room nurse was sent to Sepon Hospital, Laos, to support a
    Humanitarian Assistance Program--Excess Property program. The purpose
    of the mission was to educate the local hospital staff on the set up
    and use of donated medical equipment.
        Integral to our ability to continue our day to day peacetime
    mission while maintaining a readiness posture is the successful
    utilization and integration of our Reserve personnel. Reserve nurses
    contribute to the ``total force integration'', providing superbly
    skilled replacements for deployed active duty staff, thereby allowing
    continuation of our peacetime mission without decrement in care. Prior
    to Fleet Hospital Five's deployment to Haiti, staffed by Naval Hospital
    Bremerton, Naval Reserve medical department nurses and other health
    care personnel substituted for hospital staff members sent to Fleet
    Hospital training. During the active duty training phase alone,
    inpatient care was largely uninterrupted and over 1,000 patient visits
    with ancillary tests were accomplished in 9,600 hours of Reserve duty
    (all corps and specialties).
        Several other treatment facilities implemented the Integrated
    Medical Support Plan (IMSP). This plan emphasizes consistent Reserve
    drills at mobilization sites, enhancing both the Reservists' skills and
    the facility's ability to meet its peacetime and operational missions.
    A facility can gain six full weeks a year of a Reservist's time,
    instead of two weeks of annual training and disjointed portions of
    weekend drills. For example, with the IMSP implementation, National
    Naval Medical Center, Bethesda will become the primary drill site for
    approximately 450 officer and enlisted personnel. The positive effects
    of contributory support also extend to our overseas facilities. Twenty-
    nine Nurse Corps officers are providing support at such diverse sites
    in Okinawa, Guam, Spain, Italy and Africa. Reserve nurses' contributory
    support also extends to the other Services. Specifically, the Naval
    Reserve Same Day Surgery program, which moved to David Grant Medical
    Center at Travis Air Force Base, California when Naval Hospital Oakland
    closed, is being staffed by Navy, Army, and Air Force Reserves.
        Operational readiness also means keeping the Sailors, Soldiers,
    Airmen and Marines fit, healthy and at work. Numerous efforts are
    underway to bring medical care to the deckplates, instead of the
    patient going to traditional clinic sites or medical treatment
    facilities. Navy nurses were integral in this planning and remain
    essential to the daily operations of pierside clinics in Norfolk and
    Okinawa. In addition to providing care in the clinic, the medical staff
    has expanded its services to include a broader spectrum of health care
    onboard several of our ships. For example, a nurse goes aboard these
    ships while in port or on local operations, supporting a weekly women's
    clinic, conducting regular health promotion classes and assisting the
    staff in routine care. Nurses independently manage various patient
    populations in wellness centers, cardiac rehabilitation programs and
    diabetes clinics, utilizing established protocols, focusing on
    improving patient outcomes.
        Navy Nurses practice at a broad scope of sites ranging from recruit
    training to the headquarters level. Joining other Navy medical
    personnel, they support Marine recruits as they complete their final
    boot camp exercise--``The Crucible.'' They are there throughout the 54-
    hour exercise, assessing the potential risks, administering treatment
    for blisters and dehydration, and providing lessons learned to better
    prepare for the rigors of the next exercise. Traditionally responsible
    for the education and preparation of hospital corpsmen for independent
    roles, nurses are carrying out this important task in a variety of
    settings. They are assigned to Field Service Support Groups, Field
    Medical Service Schools, to Marine Forces Pacific, and they deploy with
    Amphibious Readiness Groups on Fleet Surgical Teams. The nurse-run
    Wellness Clinic at Quantico implements the Marines' ``Semper Fit''
    program objectives during the annual summer ``Operation Bulldog''
    exercise, and nurses are part of an augmented medical staff supporting
    Midshipmen at Annapolis during their plebe summer. At the headquarters
    level, Navy nurses are integral members of the Women's Health Strategic
    Planning Group (WHSPG), which coordinates, guides, and monitors women's
    health issues throughout the Navy Medical Department.
        In concert with the Surgeon General's goal of ``making TRICARE
    work,'' Navy nurses play pivotal roles in the TRICARE arena.
    Interfacing with all levels of customers, these nurses provide
    consumers and staff members comprehensive education regarding key
    TRICARE concepts. Their assignment to Lead Agents staffs ensures
    valuable insights into staffing, contracting, performance improvement,
    and standards of care, critical to shaping and implementing policy
    within the Military Health System (MHS). With the advent of managed
    care, the three uniformed Services have integrated Mental Health and
    Maternal Child services in the National Capitol Region. Uniformed and
    civilian nursing staff are shared between National Naval Medical
    Center, Walter Reed Army Medical Center and Malcolm Grow Air Force
    Hospital. Issues related to consolidation are actively addressed and
    resolved by multidisciplinary, TriService groups intent on keeping the
    patient as the focus and center of care-giving.
        As the complexity of our professional practice increases, it is
    absolutely essential to maintain a strong research foundation. Thanks
    to the support of this committee, nursing research in the Navy has made
    tremendous strides since its inception. There are doctorally prepared
    nurses at our larger stateside and overseas facilities who are actively
    mentoring junior nurses in basic clinical studies, in submission of
    grant proposals and in utilizing research results in practice. A few of
    the newly funded Navy studies for this fiscal year include: ``Barriers
    to Subspecialty Care in Military Managed Care;'' ``Effects of Pain on
    Postoperative Pulmonary Complications;'' ``Effects of Patients
    Positioning on Post-Surgical Recovery;'' ``Infant Birth Weights and
    Psychosocial Profiles of Mothers;'' and, ``Nursing in a TriService
    Environment.'' Results of these studies will help focus our efforts and
    limited resources in areas that will positively impact our customers
    and provide potential savings to the Navy. Funding availability for
    novice as well as experienced investigators is essential to ensuring we
    maintain a solid base of nurse researchers. Research Dissemination
    conferences help to get the new findings out to the caregivers in the
    field, yielding new, scientifically validated information as an
    underpinning for nursing practice.
        Recognizing that health care delivery requires knowledge and
    proficiency related to information management and technology, Navy
    nurses at the local and enterprise level are closely involved with the
    development, deployment and maintenance of current Department of
    Defense (DOD) clinical information systems and the development of the
    Computer-based Patient Record (CPR). These systems are much more
    sophisticated than bedside computers used to create a patient record.
    They will accept data from monitoring devices, feed data to personal
    information carriers, incorporate health risk assessment surveys, and
    accept and deliver information from multiple providers involved in the
    beneficiary's care. These information systems and their data assist
    providers and clinicians in making decisions about diagnoses and
    treatments, and also ascertain readiness status for deployment. The
    Computer-based Patient Record will ensure that data are accessible to
    authorized users at military health facilities worldwide; from medical
    centers to ships, field medical units; and, TRICARE network sites. In
    addition, automated information systems will aggregate data, without
    patient identifiers, to support research, utilization management and
    improvements in patient care. Expertise in information management as
    well as computer and database technologies applied to nursing is being
    operationalized as more nurses are gaining masters' degrees in nursing
    informatics and becoming certified each year. This knowledge is being
    utilized in our military medical treatment facilities, at information
    management commands, and by health care policy staffs. There is also
    growing Nurse Corps participation in the rapidly expanding field of
    telemedicine. While the primary users are currently physician-focused,
    as exemplified by radiology, pathology and medical education
    applications, nurses are increasingly involved as more clinics,
    hospitals and ships utilize telemedicine as an adjunct in the delivery
    of health care. As telehealth awareness increases, there are endless
    possibilities for increasingly independent applications of telehealth
    by nurses, corpsmen and other professionals. A few of the nursing
    applications include wound care clinics and the extensive array of
    patient education opportunities.
        Leadership is one of the strongest attributes of the nurses in our
    corps. Changes allowing Nurse Corps officers to compete for promotion
    to O-8, and for all Medical Department Corps to be eligible for
    selection as Surgeon General are welcome. The recent revision of DOPMA
    grade tables, to allow more equitable promotion, is having positive
    effects on the Nurse Corps, and on Navy Medicine. By mid-1998, there
    will be 9 nurses in command and 15 executive officers or chiefs of
    staff at military medical treatment facilities, lead agent staffs, and
    education commands. Reserve Nurse Corps officers currently command two
    of the four Reserve Fleet Hospitals. Three of the nine Integrated CONUS
    Medical Operations Plan (ICMOP) facilities (San Diego, Bremerton and
    Bethesda) are commanded by Reserve Nurse Corps officers. In the past
    two years we doubled the presence of Nurse Corps officers assigned to
    Health Affairs and the TRICARE Management Activity (TMA). They hold
    such pivotal positions as Director, Health Services Financing Policy,
    acting TMA Chief of Staff and another as the Clinical Business Area
    Functional Manager. These assignments provide much-needed clinical
    background and expertise during planning and decision-making in health
    care delivery. Additional experience is provided to our Nurse Corps
    leaders of the future, who will continue to break new ground in health
    care delivery and contribute to a strong Navy presence in the Military
    Health System.
        The many, many accomplishments mentioned here would not be possible
    without the dedicated, educated, and motivated nurses who demonstrate
    nursing excellence on a daily basis. The essential foundations for this
    level of success include an all baccalaureate basic preparation, a
    sufficient number of master's degreed and board-certified members, and
    increasing doctoral education for research and practice advancement.
    Again, legislative initiatives have both encouraged and rewarded these
    efforts. Accession Bonuses for Registered Nurses, Nurse Candidate
    Program, Special Pay for Nonphysician providers with board
    certification, Incentive Special Pay for certified registered nurse
    anesthetists, and continuing funding of nursing research are welcome
    evidence of this committee's support for nursing.
        These external quality of life initiatives complement the internal
    efforts focused on acknowledging, respecting, and valuing cultural
    diversity among our customers and our Corps. Our newly formed Cultural
    Diversity Working Group is defining Cultural Competence and identifying
    ways to ensure its delivery, with the understanding that Culturally
    Competent Care is a Navy Medicine issue. Valuing the necessity for
    culturally competent care, this group's goal is to conduct and
    disseminate research findings that will familiarize and educate our
    staff members in our military medical treatment facilities worldwide to
    practices and customs unique to our diverse patient populations. To
    date, emphasis has been placed on identifying educational resources,
    literature review, and exploring community resources to develop a
    cultural competency model. More local efforts are visible as various
    commands establish diversity councils and as nurses go out into
    communities to assist groups in melding cultural practices with healthy
    lifestyles.
        As I review events over my tenure as the Director of the Nurse
    Corps, it gives me great pride to reflect on the accomplishments that
    resulted from the hard work of so many people throughout Navy Medicine.
    However, our work is not finished. Increasing demands despite limited
    resources require that our efforts be focused on maximizing and
    integrating our personnel and training assets. Our rapidly changing
    technologies and health care environments coupled with expanding joint
    humanitarian missions, chemical, biological and radiological threats,
    increased operating tempos and the implementation of TRICARE will
    continue to challenge our readiness.
        The Nurse Corps will continue to reap the benefits of and rely on
    the various diversified Nurse Corps initiatives that target recruitment
    and retention of generalist and advanced practice nurses. With an
    increased demand for baccalaureate prepared nurses by the civilian
    sector, coupled with early indications of a reduced pool of eligible
    nurse graduates in the 21st century, we depend on the continuation of
    these programs to meet strength requirements. The Naval Reserve
    Officers Training Corps (NROTC), Nurse Candidate Program (NCP), Medical
    Enlisted Commissioning Program (MECP), in addition to the direct
    recruiting accession bonus, in total combine to form a robust source
    for the best qualified nurses. The NROTC Nurse Option program has
    finally matured. This program is the linchpin of Nurse Corps
    accessions, with 287 midshipmen currently enrolled in 52 colleges and
    universities. Every NROTC unit with Nurse Option midshipmen has been
    ``adopted'' by one of our Navy Military Medical Treatment Facilities'
    Nurse Corps officer staff. As a result, the transition is eased from
    academia to the first practice assignment for these new nurses and
    naval officers.
        After several years of annual loss rates between 10 percent and 11
    percent (or higher), the Nurse Corps recorded an annual loss rate for
    fiscal year 1997 of 8.75 percent. While too early for conclusive
    analysis, these indicators point to the pay-off of these diversified
    accession sources and special pays (increased incentive special pay for
    nurse anesthetists and board certified pay for non-physician providers)
    so important for retention. As in the other Corps, the Nurse Corps
    relies on training-to-skills required for specialties within the
    community, as recruiting has been historically unsuccessful. I ask that
    my relief continue to benefit from these various initiatives that
    target the recruitment and retention of generalist and advanced
    practice nurses. These accession and retention initiatives, in
    conjunction with strong leadership and congressional support are
    critical components to turning the challenges ahead into readiness
    successes.
        Mr. Chairman, thank you for the opportunity to share the successes
    of the Navy Nurse Corps with you. These achievements would not be
    possible without the continuing support of this committee. I will
    always treasure that support because it has been instrumental in
    allowing Navy Nurses to demonstrate that ``Navy Nursing IS Nursing
    Excellence''. I look forward to serving this great nation of ours in a
    new capacity providing the leadership necessary to move us into the
    future as we develop tomorrow's leaders today.

        Senator Stevens. Thank you very much. We appreciate that.
    Give the Admiral our best.
        General Simmons.
    STATEMENT OF BRIG. GEN. BETTYE SIMMONS, CHIEF, ARMY
                NURSE CORPS

        General Simmons. Mr. Chairman, distinguished members, thank
    you for this opportunity to provide brief remarks on the Army
    Nurse Corps which today is 34 percent men. We are very, very
    proud that we have such a high percentage of men in our Army
    Nurse Corps. Senator, you will be glad to know that.
        Army nurses continue to set the pace for innovations with a
    focus on improving the timeliness, appropriateness, and quality
    of health care. I will share some brief comments within the
    context of the three core functions of the Army Medical
    Department: projecting a healthy force, deploying the medical
    force, and managing the care of our beneficiaries.
        One initiative Army nurses are engaged in is a project to
    project a healthy force through the Put Prevention Into
    Practice Program. This program, part of a national campaign,
    focuses on the community and soldier work site prevention of
    disease rather than urgent intervention. Through this
    initiative we formed partnerships with commanders to promote
    healthy family lifestyles and prevent injuries. This unit-based
    program improves overall line unit readiness by decreasing the
    amount of time soldiers are away from their unit because of
    injuries and promotes healthy soldier lifestyles and personal
    responsibility for health.

                          Tri-service nursing program

        Senator Inouye, your vision and support of tri-service
    nursing research serves to enhance the proliferation of
    relevant military nursing research. For example, one study
    funded through tri-service nursing research dollars examined
    the benefits of physical training for pregnant soldiers. The
    study analyzed the effects of a pregnant soldier wellness
    program, including exercise and health education in regard to
    birth outcomes, health care costs, and soldier postpartum
    physical fitness. Findings indicated that soldiers
    participating in this program were more likely to carry their
    babies to term and that they had fewer birth complications.
    Hospital costs for soldiers in this program were significantly
    less than for soldiers who did not participate. We thank you,
    sir.
        We support the second core function of deploying the
    medical force by ensuring individual medical readiness and the
    deployment of Army nurses who are specialty trained to provide
    care in any contingency. Again, a study funded by the tri-
    service nursing research program lays the foundation for
    clarifying the concept of individual readiness. We have used
    this information to develop training programs aimed at keeping
    ourselves ready and ensuring that we are personally and
    mentally prepared and physically qualified for the challenge.
        We are training and graduating flexible advanced practice
    nurses, specifically family nurse practitioners, who play a
    pivotal role in TRICARE. Based on the tri-service nursing need
    to graduate the most flexible nurse practitioners, the
    Uniformed Services University of Health Sciences instituted a
    1-year program to transition adult and pediatric nurse
    practitioners to become family nurse practitioners. The role of
    the family nurse practitioner in providing quality, affordable,
    accessible health care is gaining acceptance in the service as
    well as in the civilian sector.
        Army nursing continues to use research as the mortar and
    bond for clinical practice. The tri-service nursing research
    program is the foundation on which we build this initiative.
    The tri-service nursing research program has enabled the
    creation of a partnership with the National Institute of
    Nursing Research. This initiative fosters the rapid translation
    of fundamental research findings into clinical applications and
    directs a portion of this investment toward military and
    peacetime operations and the urgent problems stemming from
    preventable disease, violence, and substance abuse.
        Nursing continues as a linchpin in the health care delivery
    system by spearheading initiatives to increase individual
    responsibility and accountability for wellness.

                               prepared statement

        Mr. Chairman, I thank you and members of this committee for
    your ongoing support of initiatives to improve the delivery of
    health care to our beneficiaries. As military nursing practice
    continues to evolve, we remain a recognized leader in our
    profession because of the unswerving commitment to recruit and
    retain the very best nurses to care for America's sons and
    daughters.
        Thank you.
        [The statement follows:]

                Prepared Statement of Brig. Gen. Bettye Simmons

        Mr. Chairman and distinguished members of the committee, I
    am Brigadier General Bettye Simmons, Chief, Army Nurse Corps.
    Thank you for this opportunity to provide a brief report on the
    status of the Army Nurse Corps. Army nursing continues to set
    the pace for innovations with a focus of improving the
    timeliness, appropriateness and quality of healthcare. Today I
    will share some of these initiatives within the context of the
    three core functions of the Army Medical Department. These
    functions are: Project a healthy and protected force, Deploy
    the medical force, and Manage the care of all beneficiaries as
    accountable advocates.
        Army nurses are active participants in deploying a healthy
    force through initiatives aimed at protecting the health of
    soldiers. These initiatives include improving soldier access to
    care, preventing disease and injury and promoting soldier
    awareness of healthy lifestyles. We are improving access and
    efficiency by providing care where soldiers live. At Fort Hood,
    soldier sick call and family care services are provided in a
    facility that is co-located with troop billets and family
    housing areas. Here, the health care team collaborates to not
    only provide acute care management but teach family strategies
    designed to promote family health. Readiness is enhanced with a
    nurse managed OB-GYN clinic at Fort Campbell staffed with nurse
    practitioners and nurse midwives that provides easy, in and out
    nursing care conducive to female soldier's around-the-clock
    schedules.
        We continue to make tremendous strides in health promotion.
    Army community health nurses are busy putting the punch into
    the Army's ``Put Prevention into Practice'' program. This
    program, part of a national campaign, focuses on community and
    soldier worksite prevention of disease rather than urgent
    intervention. Today, at Fort Bliss, Texas, we are
    collaboratively implementing one of the first service model
    sites for this program. By figuratively pushing the walls of
    the medical facility out to soldier worksites, we can form
    partnerships with line commanders to promote healthy soldier
    lifestyles and prevent injuries. This concept of worksite
    wellness includes wellness lecture and self-care portable take-
    home packages. The program will improve overall line unit
    operability by decreasing the amount of time soldiers are away
    from their unit due to disease or injuries and will promote
    healthy soldier lifestyles to further reduce sick days.
    Commanders will have optimally fit and healthy soldiers with
    which to perform their missions.
        Military nursing research supports our initiatives to
    deploy a healthy force. One Army nursing study examined whether
    physical training is safe for pregnant soldiers and their
    unborn children. Physical training is a routine part of normal
    military duty because of its role in maintaining combat
    readiness. The study's investigator analyzed the effects of a
    pregnant soldier wellness program, including exercise and
    health education in regard to birth outcomes, health care costs
    and soldier postpartum physical fitness. Findings indicated
    that soldiers participating in the program were more likely to
    carry their babies to term, their babies had higher birth
    weight and there were fewer birth complications. Hospital costs
    for the care of each soldier in the wellness group was
    significantly less than for soldiers who did not participate in
    the program. This research sparked a highly successful nurse
    managed program at Fort Campbell that enrolls active duty
    pregnant females; monitors and educates them as they proceed
    through their pregnancy so that these soldiers are returned to
    duty quicker, healthier, fitter.
        Moving health care access out to the soldiers and their
    families, providing fast, ``carry-out'' health education for
    soldiers, promoting healthy lifestyles that focus on prevention
    of illness rather than intervention, are three ways that we are
    supporting the Army Medical Department to deploy a healthy
    force.
        We support the second core function of deploying the
    medical force by ensuring individual medical readiness and the
    deployment of Army nurses who are specialty-trained to provide
    care in any contingency. Defining the term, ``individual
    medical readiness'', is crucial to our abilities to measure it,
    track it and promote it. One study funded by the Tri-Service
    Nursing Research Program lays the foundation for clarifying the
    concept of ``individual readiness.'' The Army nurse researchers
    uncovered interesting go-to-war readiness variables such as
    psychological readiness and attitude readiness that extend
    beyond the variables we've traditionally used to define
    readiness, that is; immunization status or weapons
    qualification. We can use this information to develop training
    aimed at promoting a type of ``comprehensive readiness
    coverage'' that insures our medical personnel are mentally
    prepared and physically qualified to face the austere combat
    environment.
        We have re-focused our specialty nurse training so that
    active duty nurses as well as our reserve component partners
    are capable of global deployment with the right skills and the
    right knowledge for the right mission. We implemented the
    reserve and active duty Emergency Nurse Course to increase our
    pool of trauma-trained nurses thereby expanding and improving
    our capabilities on the battlefield. We are training and
    graduating flexible advanced practice nurses; specifically,
    family nurse practitioners who play a pivotal role in TRICARE
    as well as any contingency environment. Based on the Tri-
    Service's urgent need to graduate the most flexible kind of
    nurse practitioners, the Uniformed Services University of
    Health Sciences (USUHS) instituted a one-year certification
    program whereby adult or pediatric nurse practitioners can
    become family nurse practitioners. This partnering between the
    Tri-Service community and the University opened three faculty
    positions for active duty instructors at the nurse practitioner
    schoolhouse. As the mission of the Army Medical Department
    changes and continues to evolve, we remain proactive in
    producing nurses who can meet the challenges of a dynamic
    healthcare environment.
        Army nurses are an important linchpin in managing
    beneficiary care as accountable advocates. Several Army nursing
    studies that examined better business practices were funded
    through Tri-Service nursing grants. For example, a project
    dubbed the electronic housecall is using technology to improve
    access to care. This project, directed by a nurse at Eisenhower
    Army Medical Center in Georgia, furnishes interactive
    television nursing assessment of patients at high risk for
    complications and frequent admissions to the hospital. The
    project has been underway for more than a year and has provided
    over 200 telenursing visits to more than two dozen patients.
    Data shows that patients enrolled in this project are requiring
    less outpatient clinic visits and fewer in-home visits.
    Community health nurses in Hawaii are using telehealth
    technology to reduce the potential for child abuse and neglect
    with a Department of Defense sponsored program called ASPECTS,
    an acronym that stands for ``A Solid Parenting Experience
    through Community Teaching and Support''. Long range goals for
    this program include utilizing real-time images, voice,
    worldwide web and Internet chat rooms to provide enhanced 24-
    hour access for the program's parents to resources that support
    their learning process. The program just completed a research
    study that demonstrated a reduction in child abuse and neglect
    tendencies as well as the unexpected finding of 99 percent
    child immunization rates.
        Army nursing continues to use research as the mortar
    linking science with clinical practice. The Tri-Service Nursing
    Research Program is the foundation for this movement. Recently,
    a full-time executive director position was established, based
    on Institute of Medicine guidance, to provide oversight and
    maintain day-to-day operational management of the Tri-Service
    Nursing Research Program. The Army Nurse Corps had the honor of
    being the first to serve in this new position, which will
    rotate among the three services. The maturation and evolution
    of the program, with an ever-growing number of funded grants,
    now over 135, has demanded this oversight to ensure fiscal
    responsibility. The Tri-Service Nursing Research Program has
    enabled the creation of a partnership with the National
    Institute for Nursing Research. This initiative fosters the
    rapid translation of fundamental research findings into
    clinical applications and directs a portion of the Department
    of Defense investment toward military and peacetime operations;
    humanitarian assistance, and the urgent problems stemming from
    preventable illness, violence, and substance abuse.
        Army nurses continue to serve soldiers and their families
    by preventing disease, promoting health and delivering
    specialized care. Wherever you find soldiers, sailors, airmen,
    marines or Coast Guard personnel, you will find Army nurses
    standing by, Ready, Caring, Proud.
        In closing Mr. Chairman, I thank you and members of this
    committee for your ongoing support of initiatives to improve
    the delivery of care to our beneficiaries. Military nursing
    continues to be on the cutting edge of healthcare as well as a
    recognized leader in our profession through your commitment to
    a world-class healthcare system.

        Senator Stevens. Thank you very much, General.
        Senator Inouye.

                               entry level degree

        Senator Inouye. Mr. Chairman, I just received my second
    call to return to the Commerce Committee. So, I have many
    questions I would like to submit to the panel, but I have one
    question I want to ask for the record here.
        As most of you are aware, I have been following nursing
    careers ever since the end of World War II, and I have noted
    that since the end of that war, the entry level for nurses has
    always been a professional bachelor's of science baccalaureate
    degree. This has provided you the independence, the
    professionalism that is necessary in your work. But now I
    gather that OMB is recommending that the entry level be reduced
    to an associate's degree. I personally think it is a bad step,
    and I hope you agree with me. What are your thoughts?
        General Simmons. Sir, thank you for that statement. We
    cannot afford to let the associate degree be the entry level in
    the Army Nurse Corps. The standard for professional military
    officership is minimally the baccalaureate degree.
        In addition, in an ever-increasing complex health care
    delivery system, we need to ensure that we have the very
    brightest and very best providing care. The only way to ensure
    that nursing as a discipline is at the decisionmaking table in
    the health care delivery system is to ensure that we are
    comparably leader developed and educated as the rest of our
    colleagues. To compromise that in any way is to subjugate us in
    the organization and to decrease our ability to be at the table
    in our organizations.
        Senator Inouye. Thank you.
        Captain Gardner. I would certainly endorse everything that
    General Simmons has said. It is my understanding that for the
    moment OMB has agreed to support us, but will ask for a
    separate independent study of associate degree prepared nurses.
    And that is fine. We would be glad to support and provide that
    information. It is readily available about the differences
    between associate degree graduates and baccalaureate graduates,
    and what we need is the additional training and experience and
    education that a baccalaureate has because of the unique role
    of a leader as well as a nurse.

                entry-level qualifications for Air Force nurses

        Senator Inouye. General.
        General Stierle. I would agree with what both of my
    colleagues have said.
        In addition I would say--I think General Simmons hit on it
    a little bit in terms of flexibility--that in the military you
    really have to be a generalist, and a baccalaureate education
    provides our nurses with the additional skills and knowledge
    that they need to be able to operate successfully in many
    different environments. We are not talking just about inpatient
    care. As health care moves into the ambulatory care setting, as
    we become more and more involved with prevention and community
    health care, individuals that are trained at the ADN level
    absolutely do not have that knowledge and skills.
        Senator Inouye. Thank you very much.
        May I be excused?
        Senator Stevens. Yes, sir. Thank you.
        General Simmons, you spoke about the physical training
    study. Have you published the results of that in places like
    the Journal of American Medicine and that sort of thing?
        General Simmons. Yes, sir; the results of that study--sir,
    it was funded by tri-service nursing research in 1997 and it is
    pending publication right now. But we have numerous examples of
    studies that have focused on wellness of soldiers to include
    certainly female soldiers, sir.
        Senator Stevens. I think that is the kind of thing that we
    can do for the general community is to make available the
    results of studies like that. I am a prostate cancer survivor.
    We have a whole series of statistics now coming out following
    people in the military, men who have had prostate problems. The
    whole concept now having this enormous force of women in
    uniform is that there is a statistical base there, and the
    results of these studies can be shared with the public at
    large. I hope that you will do that and follow through on it.
        I also want to congratulate you very much in terms of what
    you are doing to shift the concepts of military health care
    delivery to focus on prevention rather than on really
    intervention and in-hospital care. The concepts that you have
    with collocating your health care facilities in the family
    housing areas are extremely beneficial to all concerned.
        I understand that those are at a very limited number of
    facilities. Can you tell me why are those programs that have
    been so beneficial just at a limited number of military
    facilities?
        General Simmons. Sir, I think the move toward wellness,
    obviously consumer driven, takes time. Health care has always
    been hospital based. It is totally a different mindset and we
    have to evolve as well. We are hospital based. The structures
    are based on where people come when they are sick. The
    initiatives to put wellness centers, health promotion centers
    in family housing areas is evolving, slowly but surely, but we
    also have to resocialize ourselves and our consumers of health
    care to be responsible and accountable for their own health
    care rather than coming to a health care provider to treat them
    when they are sick. We are resocializing ourselves. We are
    resocializing our consumers, just as mainstream America is
    doing the same.
        That does not really answer your question, but it is
    happening, probably not as quickly as any of us would like to
    see, but I would say that we are making steady progress, sir.

                        Physical training/breast feeding

        Senator Stevens. Well, the results of your study on
    physical training--has a directive gone out in the services to
    women who are in all the services to pursue the physical
    training tactics?
        General Simmons. Yes, sir; initially when women became
    pregnant, they sort of became physically inactive. As a result
    of this study, we have at least one-half of our installation
    wellness programs for pregnant soldiers to keep them ready, to
    keep them actively engaged in their units. So, the findings are
    disseminated in the Army and in the other services, and all of
    those programs to keep women healthy during pregnancy, to
    return them to duty very quickly, to ensure that they deliver
    healthy babies with few complications and decrease the cost of
    the hospitalization and recovery are again, sir, happening
    very, very successfully.
        Senator Stevens. What are you doing about breast feeding
    for soldiers and people in the service?
        General Simmons. Sir, breast feeding. General Stierle
    probably wants to answer that. [Laughter.]

                        Air Force breast-feeding program

        Senator Stevens. We are very pragmatic up here. I am
    looking at some programs now trying to find ways to assist
    women in the economy in general to have access to breast
    feeding time and to assure that they can follow their own
    desires in that regard but have available time for that.
        Are you looking into that in the services?
        General Stierle. Well, I think again that Put Prevention
    Into Practice Program and the focus on health promotion in
    terms of educating not just the medical community but the line
    community. Recent studies, that have been done, show the
    advantages that breast feeding has for the child throughout the
    course of their lifetime. So, it is making sure that we get
    this information out there so that there is support for these
    individuals that want to breast feed and, not only those that
    want to, but also trying to increase the numbers that will
    breast feed in terms of the long-term benefits.
        Also when you were speaking about what we are doing to try
    and get the word out in regard to various nursing research
    studies that have been completed, we are partnering also with
    USUHS to develop a central repository for all of the tri-
    service nursing research. It will also then tie into the
    national data base, so that we do not necessarily have to keep
    replicating and we can build upon research that has been done
    in the past.
        Senator Stevens. I am going to put someone in touch with
    you all to see that we have your ideas as we go into this new
    concept of legislation to assure that there is a national
    policy that allows for time. In my State, 70 percent of the
    women of childbearing age work out of their home, and this is
    becoming a sizable problem now to assure that the facilities
    are available, that the people understand, particularly the
    male employers understand, what their obligations are to see
    that the woman can follow the procedures she wants to follow
    with regard to her child.

                              Career professionals

        Let me talk to you about another thing. I think you heard I
    have sort of got a technology bent here lately. The
    advancements in technology, particularly in medical technology,
    are creating new careers now for professionals that are
    nonphysicians. What are the nurses doing about examining those
    careers and determining which should be in the Nurse Corps and
    which should be in any other part of the armed services?
        The technology really I think is coming very rapidly, the
    angio-CT and all those things. You do not have to be a
    physician to be involved, but they are going to require very
    capable career professionals. Tell me, what is your thinking
    about that?
        General Simmons. Sir, as we look at scope of practice
    issues, what constitutes appropriate practice for nursing, we
    collaborate with all members of the team, the physician, the
    physicians' assistant, our clinical medical service corps
    officers, to identify what skills we need to best provide
    beneficiary care in a resource efficient manner that translate,
    oh, by the way, to our go-to-war skills.
        There are some skills, if you talk about advanced
    procedures and techniques that are the basis for graduate
    medical education. Some of that in our health care delivery
    system will almost always be provided by physician providers
    because of graduate medical education and the need to prepare
    physician providers.
        But as we look at resource efficient primary care,
    maintaining health--you mentioned earlier about physical exams
    and the components of those. The role of the nurse practitioner
    to keep people healthy rather than treating disease, that is,
    someone comes in for an annual physical, needs a colonoscopy
    and all those other things associated with wellness. That role
    is indeed happening as we speak in our family practice clinics,
    in our adult primary care clinics to maximize the ability of
    every member of the team, the nurse practitioner, the PA, to
    maximize the skills that we have and at the same time ensure
    that we get our beneficiaries to the right place that we
    maintain physician subspecialty care for the sickest and
    maximize our own ability to keep our beneficiaries healthy.
        Senator Stevens. Captain, we saw a demonstration of the use
    of telemedicine in operating procedures. I am sure you have
    seen the same demonstration. What is the Navy doing? Are some
    of those professional requirements being filled by nurses in
    the Navy, highly technical medical delivery services?
        Captain Gardner. As far as delivering health care via
    telehealth, we are doing this to a certain extent, but along
    the more traditional lines of the providers that we have right
    now--for instance, the nurse midwives have been heavily
    involved in some telehealth with both conferencing, consulting,
    and with educating their population.
        Where we have more involvement, rather than increasing the
    technological skill level of the providers by using telehealth,
    is where we have more nurses involved in the policy and
    planning of telehealth and how best to leverage it for all
    health care personnel. We have people involved in the computer-
    based patient record development which benefits all of the
    providers, as well as the patients.
        We have people involved in the radiology and picture
    archiving technology system, not as the individual who is going
    to read the technology, but the individual who plans how best
    to utilize it once it is in place and where best to put it.
        We have other nurses involved in the clinical information
    system that again is a system used by more than just nurses.
    You are going to seldom find things that are just targeted
    toward one provider but really require the collaborative team,
    and that has been our place in the telehealth business to date.

                                   Telehealth

        Senator Stevens. General, you started to answer.
        General Stierle. Yes; in the U.S. Air Force, again, one of
    our unique missions is global aeromedical evacuation. General
    Roadman addressed care in the air. We are going to be
    transporting stabilized versus stable patients--more critically
    ill patients than we have ever transported in the history of
    the Armed Forces.
        Again, telehealth, is going to be an important concept of
    caring for those patients in the air. It is going to become
    increasingly more important that we be able to transfer real-
    time information from the air to the ground and back to the
    air. We must be able to consult with people on the ground in
    regard to patients that may deteriorate in flight and need
    things changed.
        Actually the delivery of care in the aeromedical
    environment is predominantly nursing. That is going to be
    changing over time. We are going to have more physicians and
    respiratory therapists involved than we have had in the past.
    But historically it has been predominantly a nursing care
    environment.
        But getting back to again what you are saying about
    advanced technologies and who are we allowing to do what, I
    think, again, the Armed Forces has always been an example of
    where we have typically allowed people to practice beyond the
    traditional scope of practice because of wartime requirements.
        All three services have been looking at very intently at
    positions and they need to be a specific discipline or be corps
    neutral. We have individuals very qualified to practice in many
    different areas, and we should not deprive them of
    opportunities to expand into other areas of practice, based on
    historical practices.
        Senator Stevens. Very good. We thank you very much.
        Senator Inouye and I will send a letter to OMB about the
    issue of lowering the educational requirements. We would not
    like to see the situation develop where we have to put a
    prohibition in law but I think they might get the message. We
    hope they will.
        General Simmons. Thank you, Senator.
        Senator Stevens. We do thank you for what you do, and I
    commend the way that you are moving into these areas and
    assuring us that we have the ability to carry out the plan
    which is downsizing, to a great extent, the people who are
    involved in military hospitals. More and more the system is
    going to rely upon the physicians' assistants and the nurses
    who are going to take on particularly this outpatient load that
    is increasing as the facilities are closed. So, I want you to
    know Senator Inouye that I have had a great interest in this
    over the years. We hope you will keep us informed if you run
    into any difficulties.

                         Additional committee questions

        And we congratulate you on the studies you are doing too. I
    think they are very beneficial.
        So, thank you very much. I am looking forward to seeing you
    again.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
                Question Submitted to Brig. Gen. Bettye Simmons
                 Question Submitted by Senator Daniel K. Inouye
                                   telehealth
        Question. How has nursing interfaced with telemedicine/telehealth?
        Answer. The Army Nurse Corps has two ongoing telenursing
    initiatives, two research studies with a telehealth focus and a
    distance learning initiative.
    Telenursing initiatives
        A telenursing project at Dwight D. Eisenhower Army Medical Center
    in Georgia furnishes interactive television nursing assessment of
    patients at high risk for complications and frequent admissions to the
    hospital. The project, funded through DOD, Medical College of Georgia,
    the medical facility and Georgia Institute of Technology, has been
    underway for more than a year and has provided over 200 telenursing
    visits to more than two dozen patients.
        Community health nurses in Hawaii are using telehealth technology
    to reduce the potential for child abuse and neglect with a DOD
    sponsored program called ASPECTS (``A Solid Parenting Experience
    through Community Teaching and Support''). The program just completed
    an intensive, valid and reliable research project that clearly
    demonstrated the program is in fact reducing the potential for child
    abuse and neglect within the targeted high-risk population. Long range
    goals for the project are to increase the nurse's frequency of contact
    with patients and allow them to assess potential problems more quickly
    and efficiently, thus making the nurse more responsive to the family's
    needs.
    Telenursing research
        One nursing study funded by Project Akamai is aimed at identifying
    key factors of patient and provider satisfaction with telemedicine. The
    nurse researcher intends to use data collected during the study to
    develop a survey instrument geared toward evaluating the impact of
    telemedicine on the science of medicine (technical/instrumental aspects
    of care), the art of care interpersonal/expressive/communicational
    aspects of care) and the amenities of care (properties of the setting
    in which care is provided). The finalized instrument will provide
    guidance and a quality focus for emerging telemedicine systems.
        A nursing study funded by the TriService Nursing Research Program
    is developing a monitoring system using piezoelectric film material to
    provide an accurate measurement of patients' vital signs in high-noise,
    high-vibration environments such as MEDEVAC helicopters or combat
    areas. The piezoelectric material is built into MEDEVAC stretchers and
    is picking up pulse and respiratory rates very effectively, even
    through Battle Dress Uniforms.
    Distance learning
        The DOD/VA Distance Learning Project (initiated in Fall, 1997) at
    the Uniformed Services University of the Health Sciences, successfully
    links DOD and VA assets to collaboratively implement an accredited
    academic post-master's program. The program is designed for clinical
    nurse specialists practicing at VA or DOD Medical Center facilities who
    met the admission criteria. It will award a certificate in adult nurse
    practitioner education and graduates will be eligible for national
    certification. The interactive teleconferencing technology located at
    USUHS is the broadcast site that connects with eight offsites for two-
    way (audio and video) interaction. This program will reduce educational
    costs by electronically reaching out to different worksites across the
    country. This project can offer recommendations for further uses of
    distance learning.
                                     ______

                 Question Submitted to Capt. Mary Anne Gardner
                 Question Submitted by Senator Daniel K. Inouye
        Question. How has nursing interfaced with telemedicine/telehealth?
        Answer. Expertise in information management, computer and database
    technologies applied to nursing is being operationalized. More nurses
    are gaining masters' degrees in nursing informatics and becoming
    certified each year. This knowledge is being utilized in our military
    medical treatment facilities, at information management commands, and
    by health care policy staffs. Examples include the following:
        A Navy Nurse Corps Commander is the Project Officer for Joint
    Imaging Technology Project Office (JITPO) under the direction of the
    Telemedicine Program Office.
        Triservice personnel as well as government/contract civilians are
    responsible for the planning, coordination and installation of Picture
    Archiving Communication Systems for digital radiography and management
    of 31 sites valued at more than $100 million.
        Clinical Business Area.--Navy Nurse Corps officer is assigned as
    Functional Manager. Navy nurse participation in telemedicine is
    growing. Although primary use is currently physician-focused and
    directly applicable to radiology, pathology and medical education
    applications; nurses are becoming increasingly more involved as
    clinics, hospitals and ships begin to utilize telemedicine as an
    adjunct in the delivery of health care. Further examples of Navy nurse
    involvement in telemedicine/telehealth are:
    Distance learning:
        Presentation of a Bicoastal Emergency Room/Critical Care Nursing
    conference.
        Participation in joint Department of Veterans' Affairs/Department
    of Defense distance learning program.
        Participation in USUHS distance learning for Certified Registered
    Nurse Anesthetists to obtain Masters of Science degree.
        Telemedicine/Telehealth application is a high interest item for the
    Military Nursing Chiefs. Future uses of telehealth by nurses and
    corpsman are envisioned in independent settings such as wound care
    clinics and through an extensive array of patient education
    opportunities.

                              subcommittee recess

        Senator Stevens. We are going to recess now. On April 22 we
    are going to have the ballistic missile defense program before
    the subcommittee, and we will announce the room at a later
    date. Thank you very much.
        [Whereupon, at 11:55 a.m., Wednesday, April 1, the
    subcommittee was recessed, to reconvene at 10 a.m., Wednesday,
    April 22.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 1999

                                  ----------

                           WEDNESDAY, APRIL 22, 1998

                                           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, Domenici, Shelby,
    Hutchison, Inouye, Bumpers, and Dorgan.

                             DEPARTMENT OF DEFENSE

                     Ballistic Missile Defense Organization

    STATEMENT OF GEN. LESTER L. LYLES, U.S. AIR FORCE,
                DIRECTOR

                     OPENING STATEMENT OF HON. TED STEVENS

        Senator Stevens. Good morning. We are pleased to welcome
    you to discuss ballistic missile defense [BMD] programs. There
    are many other committee meetings going on this morning. I have
    no knowledge of how many other members of our committee will
    get here today. I do hope others will come if they have
    questions.
        When we met 1 year ago, we were still on the verge of a
    fifth bad intercept attempt. We are awaiting the first PAC-3
    intercept attempt, and we are anticipating the selection of a
    lead systems integrator to permit the National Missile Defense
    Program to proceed.
        The underlying progress--there is underlying progress in
    many areas, both the national and defense interceptor secrets
    have been successfully flown and collected data. Further
    significant integrated testing has been completed on THAAD and
    the PAC-3 interceptors, testing which will, hopefully, lead to
    successful flight tests. I am sure you will highlight other
    progress made in this past year as you outline the fiscal year
    1999 budget request. I think we need to be conscious of what
    lies ahead.
        The Defense budget is likely to be flat for the foreseeable
    future. Together with other members of this committee, I have
    been and will continue to be a strong supporter of the
    Ballistic Missile Defense Program. These programs to me are
    still very essential. The tight budget environment will provide
    less tolerance for cost growth and troubled programs. We need
    to work with you to ensure that your programs are structured
    for success, with adequate ground and flight testing to develop
    a combat ready system.
        The supplemental spending bill is moving to conference now.
    It does include funds to enhance the integration and testing of
    current theater ballistic missile defense systems. I want to
    welcome your thoughts on the initiatives recommended in the
    supplemental, many of which were highlighted to the Congress by
    Deputy Secretary of Defense, Mr. Hamre.
        You have a tough job, General. We want to help you whenever
    possible. We look forward to your testimony, and I'm going to
    make your full statement a part of the record. Before you
    proceed, when he arrives--Senator Inouye will be late--we will
    ask him to make his opening remarks when he comes and will
    reserve a place in the record here for his statements if he
    wishes to make any.
        General Lyles. Yes, sir.
        Senator Stevens. I have to tell you I am a little
    frustrated with what is going on up my way in terms of that
    Kodiak test site. I do hope to get a chance to talk to you
    about that, either here today or later.
        General Lyles. Yes, sir.
        Senator Stevens. But I would be pleased to have your
    comments at this time. Thank you, General.

                               opening statement

        General Lyles. Thank you, Senator. Mr. Chairman, it really
    is a pleasure to be back here to present the Department of
    Defense's Ballistic Missile Defense Program. Mr. Chairman, I do
    have a formal statement that I will submit for the record and
    some brief remarks I would like to go through, and I promise to
    keep them brief so we can welcome your comments and the
    comments of the other members.
        Mr. Chairman, over the past few years, Congress and the
    administration have consistently directed that the Ballistic
    Missile Defense Organization [BMDO] focus on three priorities
    for our missile defense programs. The first priority is
    developing and fielding highly effective theater missile
    defense programs or TMD as we refer to them. The second
    priority is developing for deployment a National Missile
    Defense Program and a third is maintaining a substantial
    advance missile defense technology program.
        Mr. Chairman, our fiscal year 1999 budget request reflects
    those priorities, and it maintains both program focus and
    momentum to try to keep the challenges we have ahead of us on
    the right track. To outline very quickly, Mr. Chairman, our
    total BMDO fiscal year 1999 budget request is $3.6 billion.
    This includes $3.1 billion for research, development, test, and
    evaluation; $409 million for procurement; and $17 million for
    military construction.
        When you combine these three budget categories and you look
    at the aggregate in terms of percentages, theater, air, and
    missile defense account for $2.1 billion of that $3.6 billion
    or roughly 59 percent. NMD, the National Missile Defense
    Program represents $962 million in fiscal year 1999, or 27
    percent. Advanced technology is $253 million, which is about 7
    percent of our budget, and something we call generically
    technical operations which includes infrastructure support for
    all of the other programs is $194 million or 5 percent of our
    budget.
        There are two new categories for fiscal year 1999, Mr.
    Chairman. One is threat and countermeasures. A program that
    owes a lot of credit to Senator Cochran for the strong support
    he's given us in trying to make sure that's a robust effort.
    And the next is international cooperative programs. Now, these
    are not new efforts, but we've aggregated them in a different
    manner. Together they represent $72 million or about 2 percent
    of the BMDO budget.
        Mr. Chairman, I don't need to tell you our experience over
    the last couple years reaffirms that developing and fielding
    missile defenses is not an easy task. It's a unique challenge
    in many respects. And all of us who participate in this
    challenge realize how difficult it really is.

                    Ballistic missile defense mission areas

        Ballistic missile defense should not be looked upon as
    individual programs, but literally as an entire mission area.
    As an example, in theater missile defense, we're trying to
    develop a family of systems. And that's not just BMDO that's
    making that statement. We recently had several of our CINC's,
    including Admiral Gaman from an Atlantic command talk to the
    Joint Requirements and Operations Counsel, the JROC, within the
    Joint Staff emphasizing that we need to look at theater missile
    defense as a family of capabilities, interoperable
    capabilities.
        Those family of systems have to be interoperable with each
    other. They have to complement each other to provide what the
    warfighter needs in terms of capabilities. And as the committee
    is keenly aware, when conflicts arise, the military fights
    jointly. They do it in an integrated manner, and we have to
    make sure that we're procuring systems and acquiring and
    developing them in that same joint manner. That's what
    interoperability and in some respects what our organization is
    all about.
        Mr. Chairman, this past year, the Department of Defense has
    given BMDO an added responsibility. About a little over 1\1/2\
    years ago, we were directed to develop and integrate a joint
    architecture for not just ballistic missiles threat, but for
    cruise missile defense also. We're bringing together those two
    architectures, and we really are trying to do them from a joint
    perspective. We call this integrated activity theater air and
    missile defense. And our task is to provide a joint
    architecture for both sides of that particular problem.
        Mr. Chairman, in spite of our many challenges, I can tell
    you literally that we are on the verge of fielding a
    comprehensive interoperable and highly effective missile
    defense system that's responsive to the existing and to the
    emerging threats to the United States. And clearly, this is due
    in no small part to the very, very strong support we get from
    Congress.
        I provided a set of charts which outline the details of our
    programs and the details of what we're trying to do. I would
    not go through each one of them in detail. I'll just very
    quickly list them and tell you what's in them, and they have
    been provided for the record, and we can literally answer any
    questions associated with each one of them.
    [GRAPHIC] [TIFF OMITTED] T02AP22.000

        The first chart illustrates the master schedule for our
    theater missile defense programs and for our NMD Program. It
    outlines the current funding shown on the chart, the fiscal
    year 1999 request, and our projected future years defense
    program of FYDP level for each one of those specific programs.
        In addition, the chart outlines some of the key milestones
    for each one of those major defense acquisition programs and
    including when they will go into production and when we will
    actually start fielding them. While TMD and NMD comprise the
    lion's share of our budget as I mentioned earlier, as I stated
    also, we're developing very critical missile defense
    technologies.
    [GRAPHIC] [TIFF OMITTED] T02AP22.001

        The second chart, Mr. Chairman, lists some of those key
    efforts. And that's just a subfit of all the things we're doing
    in technologies, but those are some of the major efforts that
    we are embarking upon.

                                 Affordability

        Mr. Chairman, my prepared statement also provides some
    detailed information on cost control. And I think it gets to
    the heart of one of your comments. Affordability is a very,
    very important parameter for all of us. I can tell you
    literally in the past when we talk about missile defense
    programs, we talked about performance, we talked about
    schedule.
        I can tell you and promise you, Mr. Chairman, that
    affordability is now a major part of our efforts for each one
    of our programs. My prepared statement outlines some of the
    major things we're doing to ensure that we are addressing
    affordability for each of our specific programs. I have
    insisted not to just my own office, but to the executing agents
    that we make sure that all of our programs are not just
    effective, not just timely, but they're also affordable. And
    we're doing a lot to make sure we can bring that to fruition,
    and I'd be happy to address any questions or concerns anybody
    might have about what we're doing in the area of affordability.
    [GRAPHIC] [TIFF OMITTED] T02AP22.002

        My third chart, Mr. Chairman, illustrates something I think
    you've seen before and I think the committee members are very
    familiar with. It talks about the battle space, the battle
    space covered by each one of our programs. We show this to show
    and illustrate that each one of our programs has a unique
    niche. They are all extremely important. All of them are
    required to ensure that we really do have robust and effective
    theater missile defense systems.
        While we're emphasizing affordability, we also emphasize
    that we need to have all of our programs because of the unique
    nature that they provide in terms of protecting us against the
    threat.

                                 Major programs

        Mr. Chairman, I'd like to briefly give you an update on
    each one of our major programs. I will keep this very, very
    brief, again, in the interest of time. I want to just highlight
    some of the key areas associated with them.
        Let me start with PAC-3. The PAC-3 Program is currently in
    the engineering, manufacturing, and development phase, EMD, for
    our development and acquisition cycle. It's currently being
    fielded in three phases, that is PAC-3. We currently had the
    first two phases already in the field. And as a matter of fact,
    if something had taken place in the Middle East over the last
    couple of months, we would have had the capability in the
    Patriot Program to have those first two phases in the field.
    And I think had the capability to counter any threat that
    exists in today's environment.
        The third and final configuration for PAC-3 is the most
    important one, however. And that is bringing on the hit-to-kill
    lethality methodology for PAC-3. That is extremely important
    because that is the kill mechanism we think is required to
    counter weapons of mass destruction whether they be chemical,
    biological, or nuclear warheads. The hit-to-kill technology is
    the key element of both the final variant of PAC-3, it is also
    the key element for our Theater High Altitude Area Defense
    Program for our Navy Theater Wide Program and also in a
    different form for the National Missile Defense Program.
        And so this is an important parameter. And PAC-3 will be
    the first system that will demonstrate that. We are currently
    maturing and preparing for our first intercept of the PAC-3
    Program. That intercept is now scheduled to take place in the
    midpart of the summer, roughly the latter part of July or the
    early part of August. We're making sure that every step in our
    preparation for the testing is being done accurately and
    thoroughly. We've had some delays, but I think we're now on
    track to have a successful intercept at the midpart of the
    summer.
        Our other lower tier program, the Navy Area Program,
    following last year's successful intercept flight test is now
    also in EMD phase, engineering, manufacturing, and development
    phase of our acquisition cycle. The program commenced
    development flight tests in fiscal year 1999, the early part of
    fiscal year 1999 following some operational evaluation sea
    trials being done for the aegis fleet which will take place in
    fiscal year 2000. And we plan to have first unit equippers for
    the Navy lower tier program in 2001, and that program is on
    track to meet that specific date. Switching now to the very
    robust things we need to have to really counter the threats of
    the future, the long-range and medium-range threats possibly
    carrying weapons of mass destruction. The Theater High Altitude
    Area Defense Program or THAAD is one of our two Hallmark upper
    tier programs. It's the one that's pacing the effort in terms
    of schedule, and the one that we're looking for to getting that
    capability as rapidly as we possibly can. It complements the
    program we have with the Navy, the Navy Theater Wide Program.
    Mr. Chairman, in fiscal year 1997 as a result of all the
    failures we had following four attempts for an intercept with
    the THAAD Program, we conducted a series of detailed
    evaluations, detailed reviews, and detailed tests to ensure we
    understand how robust the THAAD Program is and specifically how
    robust the design is.
        We worked very closely with the prime contractor, and I am
    very confident that the prime contractor is doing everything
    they can to ensure they are working with us to have a
    successful THAAD Program. We've completed those detailed
    reviews, and I can tell you the basic premise of those reviews
    is that we have a sound design for the THAAD Program. We had
    some concerns about the reliability, concerns about the margins
    of the testing that we've done in the past, but in terms of the
    basic design both we, the Government, and the contractor feel
    very, very confident about that.

                                 THAAD testing

        Nevertheless, I want to outline some of the key tests we've
    done over the last year. We've done ground testing. We've done
    specific subsystem hardware testing. We've done systems testing
    at an aggregate level. We've done subtesting for all the
    various components. We've done software testing, and we've done
    hardware in the loop testing. And amongst those testing, I
    think probably the most key are tests to ensure that we
    understand how reliable the components are and what design
    margins we have in the components.
        Those latitude tests, I think, get at the heart of why we
    had four specific, but unique failures in our four attempts for
    intercepts to date for the THAAD Program. Both we and the
    contractor are very confident that we have addressed the right
    kinds of testing, and we think we're prepared to proceed to a
    very successful intercept for the THAAD Program.
        The next THAAD intercept attempt is scheduled for the month
    of May. Roughly the midpart of May, we think we'll be prepared
    to do that test. We've had some slips, some minor slips as we
    prepared for the test, but I'm very confident that those slips
    were for good reasons because we identified in some of those
    tests some questions we didn't have answers to. In the past, we
    would have flown anyway. In today's environment, we want to
    ensure that we have a successful program, so we went back and
    did more testing to ensure that we understand how robust the
    design is, hence, the delays in our program. But we're now
    ready and on track to proceed to a successful intercept in the
    May timeframe for the THAAD Program.
        Mr. Chairman, I think one issue that's been of concern to
    the Congress and also a concern to the Department following the
    successful THAAD intercept test, our current plans were to
    proceed to a user operational evaluation system or UOES for
    THAAD. Under this plan, we would have procured 40 UOES missiles
    for the program. That is currently our plan, but I want to
    assure you that we're not going to do that, we're not going to
    proceed along that plan based just on that one intercept flight
    test.
        We actually have always had in the program a robust series
    of ground tests and hardware tests and software tests before we
    actually committed all the dollars associated with the UOES
    Program. There have been some roughly $190 million of
    commitment today in the cost to the UOES Program. Most of that
    money has been associated with battle management command and
    control with the launcher, with all the support activities
    associated with the total THAAD system.

                       User operational evaluation system

        The one area that's been hanging out because of our failure
    to have a successful intercept has been buying the UOES
    missiles. And that's the part we would have committed dollars
    for assuming we have a successful intercept. There's some $67
    million roughly that would have to be committed this fiscal
    year with that successful intercept. But I want to assure you
    again, Mr. Chairman, we've laid out a step by step approach to
    ensure that before we commit all those dollars, we understand
    exactly how good the design is.
        The next chart you have in your package lays out that step-
    by-step approach.
    [GRAPHIC] [TIFF OMITTED] T02AP22.003

        It showed the series of tests that are being done in the
    hardware and ground environment. It also shows that we actually
    scheduled to have two more flight tests and will complete them
    before we make our final commitment of dollars to the UOES
    Program. I think this is a sound approach, and I am committed
    to make sure we stick to this to ensure we address everything
    we need to know about THAAD in the THAAD UOES Program before we
    commit very, very valuable dollars to the specific initiative.
        We think UOES is a smart thing to do, but we want to make
    sure we know everything about the program before we make the
    final commitment of dollars. I'll be happy to answer any
    questions that anybody might have about this approach.

                               Navy theater wide

        Let me switch, Mr. Chairman, very quickly to our other
    upper tier program, the Navy Theater Wide Program. We are
    preparing to enter into a Defense Acquisition Board Review for
    the Navy upper tier program this summer. This will give us an
    opportunity to have the first milestone review of the Navy
    Theater Wide Program. We're looking at an evolutionary
    acquisition strategy for the Navy Theater Wide Program.
        This consists of an initial block one capability that we
    will plan to procure as quickly as we possibly can followed by
    sometime in the future with a more capable block two. The block
    one will have the capabilities we need to address the threat at
    the time, but we ultimately want to get a full up block two
    capability no later than the year 2010 or somewhere around
    that.
        I fully endorse this evolutionary acquisition approach. I
    think it's a wise thing to do, both we and the Navy program
    office are committed to make sure that we lay out the right
    kind of strategy and get support for that strategy so we can
    embark on that program.
        During this POM development for this year, for the year
    2000 to 2005, we are working very aggressively to understand
    the types of program, total program, we need for the Navy
    Theater Wide Program, trying to get the capability no later
    than 2006, but looking at opportunities to try to move it back
    as much as we possibly can and specifically in an approach that
    could give us the capability by the year 2005.

                   Medium extended air defense system [MEADS]

        Finally, Mr. Chairman, in the area of theater missile
    programs, let me quickly talk about the MEADS Program. As you
    know, this is our cooperative program with Germany and Italy.
    It is currently in the project definition and validation phase.
    The program, that phase, is scheduled to be completed in the
    first quarter of fiscal year 1999. This is a program that is
    very important to us in terms of its specific requirements
    that's giving us a maneuverable system with 360 degree coverage
    to protect the maneuver forces in the kinds of environment we
    think we're going to see in contingencies in the future.
        The Department is committed to make sure we address both
    the requirements and how we might get the MEADS Program into
    our inventory. We addressed this during a quadrennial review.
    Other Defense priorities, however, precluded us from addressing
    anything more than the fiscal year 1999 budget. We had the
    responsibility, and I am now addressing a wide range of
    alternatives working with the leadership in the Department to
    see how we can get a viable MEADS Program to continue and to
    get it into our POM and our program for the out-years. We are
    looking at those alternatives, and we will be able to address
    something relative to MEADS in our POM development.

                                 Airborne laser

        Mr. Chairman, one area that I did not address in terms of
    our total architecture for theater missile defense is airborne
    laser. I know you're very familiar with that program and what
    unique niche it provides in terms of providing a space
    intercept capability force. While airborne laser is not in my
    specific portfolio, that is we do not provide funding for it
    within BMDO, it is a very, very important part of our
    architecture.
        I could tell you I feel very, very comfortable with that
    program being worked by the U.S. Air Force. I know they feel
    very strongly about it and have committed the resources to the
    program. I think they're doing the right things to ensure that
    they mitigate all the technology risks associated with this new
    endeavor and that they are proceeding very, very well to ensure
    the program stays on track.
        They keep me apprised very often on how the program is
    proceeding. And to my knowledge and what has been provided to
    me, it is progressing not just on schedule, but ahead of
    schedule. And all the things they're doing are very, very
    encouraging toward having a very, very successful Airborne
    Laser Program. And I wholeheartedly endorse the effort that's
    being addressed in that particular effort.

                         National missile defense [NMD]

        Let me switch very quickly to our National Missile Defense
    Program. Mr. Chairman, I know you're very familiar with it. It
    is, as you know, our primary program to provide defense of the
    United States, all 50 States. This program gives us the
    capability of providing a limited ballistic missile defense
    from either a rogue nation attack or to have some capability
    against a small accidental or unauthorized launch from one of
    the current nuclear powers.
        You're very familiar, Mr. Chairman, with our Three-Plus-
    Three Program that we have embarked upon. This strategy we
    consider to be a right one, but it's a very ambitious program
    strategy in terms of schedule. But we are committed to it
    because it allows us to develop the NMD system as rapidly as we
    possibly can.
        Under this program strategy, we will test and integrate all
    the different elements that are required to give us a total
    national missile defense system. We will do this in the next
    couple years and look to evaluate the threat and do an
    integrated test by the year 2000. And if this threat warrants
    it, we will be prepared to deploy the system within another 3
    years, by the year 2003.
        The program strategy is laid out so that if the threat does
    not warrant it, we will continue refining the development but
    always be prepared to deploy the system within 3 years of the
    identification of a threat against the United States. This
    program has actually made significant progress over the last
    year, Mr. Chairman.
        We've conducted two tests, as you mentioned in your
    statement. Two very successful national missile defense
    exoatmospheric kill vehicle or EKV flight tests. Those tests
    were very, very encouraging toward reducing some of the risk
    and identifying what we know about being able to discriminate a
    real target in the exo environment in which the national
    missile defense system has to operate.
        Both tests were very successful. Each test was done by one
    of two different contractors who were competing to be our EKV
    contractor. And again, we're looking forward to the successful
    completion of that effort as part of our National Missile
    Defense Program.
        Also, as part of NMD in the very near future, literally in
    about 1\1/2\ weeks, Mr. Chairman, BMDO and our National Missile
    Defense Joint Program Office will announce the award of the
    lead systems integrator, our prime contractor for national
    missile defense. We have two very, very strong industry teams
    competing to be our prime contractor for NMD. The Boeing Co.,
    and the United Missile Defense Co., which is a joint venture
    between Lockheed Martin and Raytheon and TRW.
        I am scheduled literally, Mr. Chairman, to get the down
    select briefing tomorrow and to spend the rest of the time from
    tomorrow for the next week or so deliberating on my
    recommendation and decision for the prime contractor and then
    give that recommendation to the Secretary of Defense and others
    who are very involved and very interested in the National
    Missile Defense Program and then be prepared to make an
    announcement and to award the contract by the first week of
    May. We're on track for that schedule, and I am looking very
    much forward to the briefings tomorrow to ensure that we can
    stick to the environment and the schedule that we have laid out
    for this program.
        We have a very strong contractor team. The contractor team
    led by the Joint Program Office is a federated approach. We
    have strong support and a strong team that's developed in all
    aspects of this federated environment. At Huntsville, at
    Colorado Springs, in Boston, in Los Angeles, everywhere where
    there's an aspect of the National Missile Defense Program, we
    have developed and evolved a very, very strong team. And I feel
    very, very confident about our ability to execute the National
    Missile Defense Program ahead of us.
        We're proceeding very, very well and progressing very, very
    well. And again, Mr. Chairman, I feel very confident about
    that.

                                Missile testing

        Mr. Chairman, let me just mention two other comments before
    I close. One is on the issue of defense testing. Missile
    testing is very, very important to us, and I think we all are
    very, very confident in ensuring that we have a very, very
    successful test program for all of our missile defense
    programs, whether we're talking TMD or national missile
    defense. I have one last chart that I've laid out in front of
    you.
    [GRAPHIC] [TIFF OMITTED] T02AP22.004

        It reflects the testing philosophy for all of our programs.
    It just happens that this test philosophy matches the test
    philosophy done by our DTE defense test environment and test
    community, the independent test community. We are also very,
    very confident that we are trying to lay out our programs in
    the same manner that's reflected on this chart.
        We have to make sure that we have a robust test program.
    Because of our compressed schedules, we don't have as many
    tests as I would like to see in programs of this importance. We
    also have, as I stated, some compressed schedules. So it's
    very, very important to us that we follow this hierarchy of
    tests. We follow the philosophy shown on this particular chart.
        The independent test community has raised concerns in the
    past about how well we're doing this, and I think you're very,
    very familiar, Mr. Chairman, with a recent test report done by
    the Institute of Defense Analysis, Gen. Larry Welch and a lot
    of others including my former boss, Dr. Paul Kaminski, who have
    specifically reviewed all of our missile defense test programs.
    We chartered them. I was one of the sponsors to look at our
    programs.
        They identified some concerns. And in some respects, I
    consider their report to be a wake up call to ensure that we
    don't deviate too much from the test philosophy shown on that
    last chart. As a result of that report and my concerns about
    making sure we do robust testing, we're going back and
    relooking at our--taking a relook at our theater missile
    defense programs and also at our national missile defense
    programs to ensure we know exactly the kinds of test we've done
    and whether there are some things that we need to do a little
    bit differently in terms of following this test philosophy. And
    I'm--what we find once we get a report out and continue our
    look see at how robust our test programs are.
        We're committed to ensure that we have an aggressive
    program. The threat warrants that we do that, but I want to
    make sure we're doing testing in the right manner to ensure
    effective and successful programs.

                               Advance technology

        Let me make my final comment, Mr. Chairman. The final
    comment talks about our third priority and that is advanced
    technology, making sure we continue an advanced and robust
    technology program. Just about 1 month ago marked the 15th
    anniversary of President Reagan's speech that launched the
    original Strategic Defense Initiative [SDI] Program. If you
    look back on our SDI Program, at the time, for very good
    reasons, we devoted some 70 percent of our budget to
    technology. The program was technology focused.
        Today, if you look at our programs, because of our emphasis
    on getting rubber on the ramp or capability in the field, only
    about 6.8 or 7 percent of our budget is devoted to technology.
    I am not confident, Mr. Chairman, that that's the right amount.
    I have a vision that I've articulated to our program office and
    to all of our executing agents that we would like to get our
    technology budget up to about the 10-percent level.
        That level matches the goals in the entire Department of
    Defense for advanced technologies. Now, I know the exigencies
    of the budget environment probably are not going to make it
    very easy for us to realize that 10 percent number. But we want
    to keep the stretch goal in front of us so we can try to ensure
    that we're doing everything we can to make sure we have a
    robust technology program.
        And two specific actions that I've taken to help us even if
    we can't get additional funding in this area is to ensure that
    we're leveraging the right kinds of technology funds with the
    money we have today and moneys in other areas within the
    Department of Defense. We started two specific things to ensure
    we do that.
        One, I have commissioned and started what I call a Joint
    Technology Board. It's an effort to bring together the
    technology experts from all the services. I have on that Joint
    Technology Board the missile defense expert from the
    laboratories down at Huntsville, AL, from the Army. We have the
    missile defense experts from the Navy's Research Laboratory. We
    have the missile defense and space experts from the Air Force's
    Research Lab at Kirkland Air Force Base in Albuquerque.
        Those people are part of my Technology Board to advise me
    on how we should spend our very precious technology dollars.
    They're also there to advise me where we may have plans to
    spend some technology money but somebody else in one of the
    other laboratories also has money devoted to that effort and
    how we might bring together our efforts so we can leverage,
    again, the very precious dollars that we have.
        Part of the responsibility of this Joint Technology Board
    is not just to advise me, but also to help me and my office to
    lay out a technology master plan, a road map for where we need
    to be in the future with all of our technology programs and
    where we specifically need to apply our efforts, particularly
    to ensure we can address the threats of the future. We have our
    first variant, first entity of this technology master plan that
    was published just in the last month or so. We're now taking it
    out to the entire missile defense community throughout the
    entire Department of Defense.
        We will also be sharing it with industry, and I think
    between these two efforts, even if we can't get our technology
    dollars up to about the 10-percent level, we will be doing a
    better job in the future of ensuring we have the right kind of
    focus on technology for missile defense.

                                    closing

        Mr. Chairman, I'd like to close here. I've talked perhaps a
    little bit long because I wanted to assure you of the things
    we're doing to make sure we have robust and effective missile
    defense programs for the Department of Defense and for our
    country. I want to assure you and the committee members that we
    are absolutely committed to making sure we can provide those
    effective missile defense programs for our country and more
    importantly for our warfighters.
        We want to make sure in both theater missile defense and
    national missile defense we have effective programs, we have
    interoperable programs, and we also have affordable programs.

                               prepared statement

        Mr. Chairman, that concludes my remarks; and I'll be happy
    to address any questions you or the other members might have on
    this particular subject. 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 of Defense's
    Ballistic Missile Defense (BMD) program and budget for fiscal year
    1999.
        Over the last few years, working with Congress, the Department of
    Defense has structured a comprehensive missile defense program that is
    responsive to the existing and emerging threat to the United States,
    our deployed military forces, our allies and friends. In years past we
    have characterized the BMD program as having three fundamental
    priorities: Theater Missile Defense (TMD), National Missile Defense
    (NMD) and Advanced Technology. While those priorities remain consistent
    today, I think we have modified them slightly to respond to emerging
    realities. First, increasingly, I refer to the program as missile
    defense instead of ballistic missile defense. This is because during
    the past year BMDO has taken on the additional responsibility for
    developing and integrating a joint architecture for theater air and
    missile defense (TAMD). I will provide greater detail on this matter
    later in my testimony. The next substantial modification has been the
    increased emphasis on NMD, with the designation of NMD as a major
    defense acquisition program (MDAP). This increased emphasis
    demonstrates that the Department's policy priorities are clear and
    remain consistent. Finally, we are focusing our advanced technology
    program to ensure that our resources are dedicated to those efforts
    that have direct pay off for missile defense technology needs.
        Last year's Quadrennial Defense Review (QDR) reaffirmed the
    importance and priorities of the missile defense program, including the
    integration of Cruise Missile Defense (CMD) activities into our
    capabilities. The specific recommendations of the QDR, which were
    designed to improve program stability and reduce risk, were provided to
    BMDO in the accompanying Fiscal Guidance. BMDO and our Service
    Executing Agents have successfully implemented the Department's
    direction. Our fiscal year 1999 budget reflects these adjusted
    priorities for the missile defense program. In order to successfully
    manage and execute these important priorities--and to successfully
    field missile defenses for the warfighter--I have directed my
    organization and our Service Executing Agents to evaluate and
    strengthen our management tools and processes. I will close out my
    statement with a review of the management improvements I have directed
    at BMDO.
        Before I begin with the programmatic details, I would like to
    outline for the Committee the highly active year we anticipate in the
    world of missile defense. It will feature some highly visible flight
    tests and program decisions that will demonstrate the results of our
    past efforts and investments. Frankly, I would characterize this year
    as one of ``challenging opportunities.'' I say this because almost
    everything we are attempting is a substantial challenge as we are not
    responsible for a single weapons system or even a class of weapons--but
    rather an entire joint mission area.
        One of our successes in this area is the shared responsibility of
    BMDO and the Joint Theater Air and Missile Defense Organization
    (JTAMDO) to provide the Joint Force Commanders with an improved
    capability to defend against air and missile threats. The JTAMDO is
    defining the required system interoperabilities and operational
    architectures and validating mission capabilities in coordination with
    the war-fighting CINC's and the military Services. BMDO assumes the
    role of System Integration Architect for theater air, cruise, and
    ballistic missile defenses working with JTAMDO and the Services
    translating the operational architecture into a systems architecture
    and carrying out systems engineering, integrated testing and program
    acquisition functions.
        Another example of our joint view of missile defense is in the area
    of Attack Operations. As a result of SCUD missile attacks during the
    1991 Gulf War, the Department decided that the preferred method of
    negating attack by threat missiles is to prevent launch by conducting
    attack operations. Such attack operations ultimately will help reduce
    our missile defense inventory requirements. BMDO and the Joint Staff
    have formed a collaborative team, which includes the Services and
    defense agencies, called the Joint Attack Operations Working Group
    (JAOWG) to improve our joint warfighting capability to conduct attack
    operations.
        Equally important is the need to conduct and evaluate realistic
    joint training, field experiments, and demonstrations. These activities
    are low cost, high payoff opportunities to improve our joint attack
    capability.
        While we consider our relationship with the Joint Staff, the
    CINC's, and the Services to be a success, the development and
    acquisition of systems in a joint manner remains a challenge. And when
    we add to that the technical challenges of missile defense, one
    immediately realizes how difficult a task this really is.
        This year we will conduct a series of important flight tests for
    our TAMD and the NMD programs. We will continue several important
    technology development efforts as well. The NMD program began 1998 with
    a highly successful flight test of the exoatmospheric kill vehicle
    (EKV) sensor, which I will address in more detail later on. Another
    major element of our NMD program strategy is the award of a Lead System
    Integration contract. We plan to award the LSI contract this Spring.
    Two contractor teams, Boeing North American and the United Missile
    Defense Company (a joint venture between Lockheed Martin, Raytheon and
    TRW) are competing for this effort. The LSI contractor's main task will
    be to complete element development and integrate the elements into a
    system in time to provide the Department a viable deployment option in
    the year 2000.
        Two systems in our TAMD program, the Patriot Advanced Capability-3
    (PAC-3) and Theater High Altitude Area Defense (THAAD), will undergo a
    series of intercept tests at White Sands Missile Range in New Mexico.
    THAAD is scheduled to fly two intercept attempts and PAC-3 will conduct
    five. As we have seen in the past, complex flight tests like the ones
    we plan to conduct this year are very challenging. Sometimes, we
    experience slight delays because of minor technical difficulties with
    either range instrumentation, the target or the interceptor vehicle.
    Moreover, the challenge of achieving a ``hit-to-kill'' intercept is
    significant when one considers that the closing velocities of the
    target and interceptor are over 8,000 miles per hour, depending upon
    the missiles' ranges. However, we are confident that we have structured
    our programs to succeed on the test range and look forward to beginning
    this new year of challenging opportunities. I will talk about both the
    THAAD and PAC-3 flight tests in more detail later in my testimony. We
    will also make several important decisions and conduct some less-
    visible, albeit important, tests in our Advanced Technology program.
        Fiscal Year 1999 Program and Budget.--In order to address the
    missile threat and fully execute the plans for missile defense, the
    Department has structured a sound and affordable program for fiscal
    year 1999. The total fiscal year 1999 budget request for the Ballistic
    Missile Defense Organization is $3.605 billion. This includes $3.179
    billion for RDT&E, $409 million for procurement, and $17 million for
    military construction activities. Combining these three budget
    categories, Theater Air and Missile Defense programs account for $2.121
    billion or roughly 59 percent of the budget, while National Missile
    Defense represents $962.7 million or 27 percent. We are requesting
    $253.6 million for Advanced Technologies, which is about 7 percent of
    the overall budget. BMD Technical Operations accounts for $194.7
    million and is about 5 percent of the budget. Finally, two of our new
    program elements, Threat and Countermeasures and International
    Cooperative programs represent a total of $72.8 million, or about 2
    percent of the budget.

                                                         BALLISTIC MISSILE DEFENSE ORGANIZATION FUNDING
                                                                    [TY dollars in millions]
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      Fiscal year--
      Program                                              -------------------------------------------------------------------------------------------------
      element                     Program                                     1998          1999          2000          2001          2002          2003
                                                             1997 actual    estimate      estimate      estimate      estimate      estimate      estimate
    --------------------------------------------------------------------------------------------------------------------------------------------------------
               Procurement:\1\
      0208861C     THAAD System Procurement               ............  ............  ............  ............  ............  ............       131.952
      0208863C     HAWK Procurement                             14.989  ............  ............  ............  ............  ............  ............
      0208864C     TMD--BM/C\3\ Procurement                     17.320        19.653        22.827  ............  ............  ............  ............
      0208865C     PAC-3 Procurement                           219.038       341.300       343.235       446.737       431.543       417.973       381.306
      0208867C     Navy Area                                     9.087        15.058        43.318       125.679       155.034       226.607       215.780
                                                         ---------------------------------------------------------------------------------------------------
                     Total Procurement                         260.434       376.011       409.380       572.416       586.577       644.580       729.038
                                                         ===================================================================================================
               RDT&E:
      0602173C     Support Tech--Applied Research              122.176       109.628        86.866        79.370        75.295        69.722        67.533
      0603173C     Support Tech--Adv Tech Dev                  248.011       299.788       166.676       165.431       163.514       170.079       171.169
      0603861C     THAAD System--Dem/Val                       549.579       390.785       497.752        37.000         5.400  ............  ............
      0603867C     Navy Area--Dem/Val                          157.028  ............  ............  ............  ............  ............  ............
      0603868C     Navy Theater--Dem/Val                       304.171       419.414       190.446       186.144       183.258       139.273       144.357
      0603869C     MEADS--Dem/Val (PDN)                         58.825        46.144        43.027  ............  ............  ............  ............
      0603870C     Boost Phase Intercept--Dem/Val               22.755        15.766  ............  ............  ............  ............  ............
      0603871C     NMD--Dem/Val                                811.416       941.142       950.473       864.435       664.930       359.444       313.406
      0603872C     Joint TMD--Dem/Val                          493.429       582.000       176.846       219.480       217.220       221.349       219.982
      0603873C     Family Of System E&I                   ............  ............        96.915       130.289       141.315       155.948       147.810
      0603874C     BMD Technical Operations               ............  ............       190.147       161.136       165.802       170.125       166.617
      0603875C     International Cooperative Programs     ............  ............        50.676        37.716        37.555  ............  ............
      0603876C     Threat And Countermeasures             ............  ............        22.113        17.608        23.909        23.720        22.020
      0604861C     THAAD System--EMD                            66.737  ............       323.942       596.310       574.513       602.713       501.974
      0604865C     PAC-3--EMD                                  382.808       198.273       137.265  ............  ............  ............  ............
      0604867C     Navy Area--EMD                              143.343       278.790       245.796       231.592       160.193        50.296        36.792
      0908612C     Acq Stability Reserve                  ............  ............  ............         6.347        12.651        18.905        25.115
                                                         ---------------------------------------------------------------------------------------------------
                     Total RDT&E                             3,360.278     3,281.730     3,178.940     2,732.858     2,425.555     1,981.574     1,816.771
                                                         ===================================================================================================
               MILCON:
      0603871C     National Missile Defense               ............          .540        12.230  ............  ............  ............  ............
      0603872C     Joint Theater Missile Defense                 1.404         1.965          .331         1.372          .323         1.549         1.550
      0603874C     BMD Technical Operations               ............  ............         4.600  ............  ............  ............  ............
      0604861C     THAAD System                           ............  ............  ............  ............  ............  ............         4.689
                                                         ---------------------------------------------------------------------------------------------------
                     Total MILCON                                1.404         2.505        17.161         1.372          .323         1.549         6.239
                                                         ---------------------------------------------------------------------------------------------------
                     Total BMDO Program                      3,622.116     3,660.246     3,605.481     3,306.646     3,012.455     2,627.703     2,552.048
    --------------------------------------------------------------------------------------------------------------------------------------------------------
               \1\ Returned to the BMDO.

               [GRAPHIC] [TIFF OMITTED] T02AP22.005

        Program Element Realignment.--As you will note, our program element
    structure has been modified in the fiscal year 1999 budget request. My
    organization proposed these changes to the Department, after consulting
    with Members and Committee staff, in order to update the program
    element structure to align with the current BMDO mission focus and
    program management responsibilities. The catalyst for this proposal is
    the fundamental shift in the Department's management approach for both
    the NMD program and TAMD ``Family of Systems,'' and Congressional
    direction on our International Cooperative program.
        Last year, the Deputy Secretary of Defense delegated to BMDO the
    total TAMD integration and architectural-level planning responsibility.
    These TAMD ``Family of System'' costs are now captured in the ``Family
    of Systems'' Engineering and Integration (FoS E&I) program element.
    These are the activities and functions primarily executed by BMDO's
    TAMD Systems Engineer and supported by the Chief Architect. These
    activities include providing optimal TAMD architectural solutions via
    cost-performance analyses evaluating the participation of each system,
    working in concert with all other systems, to address the entire
    theater-level threat. This program element will increase the stature
    and visibility of these architecture-level, MDAP-like program
    activities and costs, and align the program management responsibility
    for the TAMD efforts consistent with the current BMDO organization
    focus.
        The BMD Technical Operations program element captures those BMDO
    centrally-managed activities that provide functional expertise,
    analytic tools and support (i.e. the Joint National Test Facility), and
    test resources (i.e. data collection assets and test ranges) for TMD,
    FoS E&I, NMD and Advanced Technology efforts. These activities were
    previously ``housed'' across three separate program elements, with
    algorithms to determine cost-shares between TMD, NMD and Technology. By
    consolidating these activities into one program element, it enhances
    resource visibility and simplifies our management of these activities--
    especially from the perspective of paying internal Departmental
    ``taxes'' or allocating undistributed reductions in the authorization
    or appropriations processes.
        The creation of the International Cooperative Programs program
    element is in response to both a Congressional initiative and new
    Secretary of Defense cooperative program policy guidance. This program
    element contains significant developmental programs which are jointly
    funded with international partners. However, it specifically excludes
    the MEADS program (which is housed in its own program element) and
    small-scale Innovative Science and Technology programs. Hence, it
    provides greater insight and focus for BMD international cooperative
    programs.
        The Joint TMD, NMD, and Advanced Technology Development program
    elements have been modified to reflect the transfer of the
    infrastructure (Technical Operations) and International activities. The
    Boost-phase Intercept and TMD BMC\3\ program elements have been
    eliminated, as these costs have been accounted for in the new program
    elements. The remaining RDT&E and Procurement program elements for
    MEADS and the TAMD MDAP's are unchanged.
    Theater Air and Missile Defense Programs--The Family of Systems
        The Family of Systems (FoS) concept is a flexible configuration of
    Interoperable Theater Air and Missile Defense systems capable of joint
    operations, which allows the joint force commander to tailor the right
    mix of systems and capabilities according to situation and threat. This
    FoS must be able to counter a wide range of threats providing a near-
    leak proof shield to U.S. forces, allies and friends around the world.
    This mission cannot be accomplished with just one or two systems, it
    requires multiple systems designed to counter an ever-growing and
    diverse missile threat during all phases of flight.
        One system cannot do it all, which requires a layered defense
    allowing for multiple shot opportunities. The threat is so varied, and
    the mission demands so complex, that we do not currently have the
    technology to allow us to develop a single weapon system that can meet
    all of the demanding and complex requirements. In short, there is no
    single ``silver bullet.'' Multiple systems working in unison greatly
    enhance the probability of destroying incoming missiles before they can
    effect critical assets.
        For these reasons, BMDO is pursuing the acquisition and integration
    of land and sea-based systems that will effectively counter current and
    future theater missile threats. This strategy includes leveraging prior
    investment in ongoing Service programs, and developing new systems and
    capabilities for the future.
    [GRAPHIC] [TIFF OMITTED] T02AP22.000

    [GRAPHIC] [TIFF OMITTED] T02AP22.001

    [GRAPHIC] [TIFF OMITTED] T02AP22.002

        Let me summarize the status of these programs:
        PAC-3.--The Patriot PAC-3 is the most mature of all our TAMD
    systems--it is currently in the Engineering and Manufacturing
    Development (EMD) phase of the acquisition process. PAC-3 is being
    fielded in the course of three phased upgrades called
    ``configurations.'' Currently, we have fielded the first two
    configurations of PAC-3, providing the Army with improved operational
    performance. The third configuration will provide the final element in
    the form of the hit-to-kill interceptor missile, along with additional
    communications, radar, and ground support system improvements. I expect
    the program to conduct the first intercept flight this year, to be
    followed by a decision to begin Low Rate Initial Production (LRIP) of
    the new missile. The first deliveries of the ground system hardware and
    software have already begun, and development and operational testing
    will start this year. All of these efforts support a First Unit
    Equipped (FUE) date of late fiscal year 1999.
        The fiscal year 1999 budget request for PAC-3 is $137 million for
    RDT&E and $343 million for Procurement. The funding request supports
    the deployment of the Configuration 3 system starting in 2000.
        As the Committee is aware, we had planned to fly an intercept test
    for the PAC-3 missile in February but the test date has slipped. The
    reason for this delay is that the Patriot Program Manager assessed that
    the missile development effort and integration of the hardware and
    software into our hardware-in-the-loop testing facility would take
    longer than planned. As a result, we now plan for the test to take
    place in the fourth quarter of fiscal year 1998. The hardware-in-the-
    loop and acceptance testing are important pre-flight qualifications to
    ensure that all system hardware and software meet our standards and are
    ready to fly. Operational testing is currently planned to begin in
    fiscal year 1999.
        Navy Area.--Following last year's successful intercept flight test,
    the Navy Area program was approved for entry into EMD on February 22,
    1997. The program will commence Development Test (DT) flight testing in
    fiscal year 1999, followed by an at-sea demonstration of the User
    Operational Evaluation System (UOES) in fiscal year 2000. LRIP will
    begin in fiscal year 2000, with an FUE date of fiscal year 2002. The
    BMDO fiscal year 1999 budget request for the Navy Area program is $245
    million for RDT&E and $44 million in Procurement funds. As part of our
    ``shared approach'' for this program, the Navy has requested in their
    Procurement budget $111 million.
        Theater High Altitude Area Defense (THAAD).--The THAAD program is
    currently in the Program Definition and Risk Reduction (PD&RR) phase of
    development and is the most mature of our upper-tier TAMD systems. In
    1997, as a result of our failure to achieve an intercept in flight
    tests and the need to reduce technical and programmatic risk, the QDR
    endorsed a plan to restructure the program and to achieve a FUE in
    2006.
        After flight test seven, BMDO and the Army commissioned an
    Independent Review Team (IRT) to review the program's processes and the
    design of the THAAD missile. I believe the IRT has had a direct,
    positive impact on the way the THAAD program conducts its business. As
    a result, we have increased the rigor in our ground testing program as
    we prepare for the next flight test. That is where we detected the most
    recent technical problems. Therefore, I applaud the THAAD team for
    discovering these faulty components during their many ground-tests and
    quality assurance checks--well before we tried to fly the interceptor.
    The next flight test is scheduled for later this Spring.
        The Department's fiscal year 1999 budget request for $822 million
    fully supports deployment of the THAAD system in 2006. This level of
    funding is required for completion of the PD&RR flight test program,
    continuing risk reduction for EMD, and for acquiring missiles for a
    UOES capability. In fact, the budget request is tied very closely to
    three concurrent contractual requirements. About $414 million is for
    the extension and completion of the PD&RR flight test program and
    completion of the Pre-EMD risk mitigation effort. This risk reduction
    effort is principally focused on the design of the EMD radar and battle
    management software, both of which are on the critical path to
    achieving the FUE in fiscal year 2006. Another $302.9 million will be
    used to initiate EMD and its associated start-up costs, such as
    materiel orders, Government Furnished Equipment procurement and
    ``turning on'' five major subcontractors. A substantial portion of the
    EMD start-up costs are associated with the THAAD radar development and
    not the interceptor missile. Finally, about $105 million will be used
    to execute the UOES missile buy for 40 missiles. This will provide the
    warfighter with an interim capability in fiscal year 2001 until the
    objective system is fielded. The THAAD program is currently on schedule
    to fly its next intercept attempt in May. A successful intercept will
    allow exercise of the UOES contract option.
        Navy Theater Wide (NTW).--The Navy Theater Wide program is
    currently in the Program Definition and Risk Reduction phase of
    development and is preparing for an initial Defense Acquisition Board
    (DAB) Review. This review is equivalent to a Milestone I review. The
    Navy has proposed an evolutionary acquisition approach consisting of an
    initial Block I system followed by a more-capable Block II system. The
    Milestone I-level DAB will be asked to review and approve the proposed
    evolutionary acquisition strategy. The fiscal year 1999 budget request
    for Navy Theater Wide is $190 million.
        Family of Systems Engineering and Integration (FoS E&I).--Each
    member of the Family of Systems contributes what is sees to a common
    picture of what is occurring in the battlespace, and then based on that
    picture, the warfighter launches the most effective and efficient
    response. All TAMD systems must be capable of joint or autonomous
    operations. For example, based on cueing from a space-based sensors and
    target detection and tracking by a THAAD radar, a Navy Area interceptor
    could be launched to counter a threat. This concept is demonstrated
    through a series of ``systems integration tests,'' such as the one we
    conducted last year, where we operate Army, Navy and Air Force TAMD
    sensors, such as the THAAD or AEGIS radars, to track and
    ``communicate'' the threat with a Patriot firing unit.
        Our Family of Systems concept will provide the warfighting CINC a
    ``plug and fight'' architecture, allowing him to selectively deploy the
    weapon system or systems tailored to the requirements of his theater.
    This Family of Systems responsibility means that all the TAMD weapons
    systems must be completely interoperable and capable of sharing and
    exchanging information that provides a common view of the battlespace.
    Through a rigorous systems engineering process, BMDO ensures that
    BMC\4\I, sensors, and weapons systems retain their singular capability,
    yet can function as one complete defense no matter what elements it is
    comprised of to meet the CINC's needs. The ``plug and fight'' approach
    enables the CINC's to tailor their forces to the threat and theater
    geography.
        Our budget request for Family of Systems engineering and
    integration is currently $96 million in RDT&E and roughly $20 million
    in Procurement funds. The responsibility for TAMD integration of
    ballistic missile defense, cruise missile defense, attack operations
    and the BMC\4\I ``back bone'' capability into a single integrated air
    picture will continue to drive the requirement for additional
    resources.
        Airborne Laser (ABL) program.--I would like to take a moment and
    talk about an important TAMD system that is a part of our Family of
    Systems architecture, but managed and budgeted by the U.S. Air Force.
    The Airborne laser is the Department's primary boost-phase intercept
    program for theater missile defense. BMDO and the Air Force work very
    closely to ensure that the ABL system is effectively integrated into
    our TAMD Family of Systems. When this system is developed and deployed
    it will provide our warfighters with a powerful TAMD capability and
    will strengthen our overall TAMD architecture. By providing a critical
    boost-phase intercept capability, before a missile can deploy a
    separating warhead or countermeasures, ABL will thin out the attack for
    ground- and sea-based TAMD systems.
        Medium Extended Air Defense System (MEADS).--The MEADS program is a
    cooperative development program with our German and Italian allies. The
    program is currently in the Project Definition and Validation phase,
    which is scheduled to be completed in the first quarter of fiscal year
    1999. The Memorandum of Understanding (MoU) negotiations for the Design
    and Development (D&D) phase are currently underway with our
    international partners. The QDR recommended continuation of the MEADS
    program and increased the fiscal year 1999 funding level to provide a
    bridge to the next RDT&E phase, D&D. In light of the QDR guidance, the
    importance of this international program and continuing Congressional
    interest in out-year funding, I raised MEADS as an issue during the
    Department's POM deliberations this past Fall. Nonetheless, other
    defense program priorities at the time superseded addressing the issue.
    During the POM process this Spring, the Department will identify the
    resource requirements for all BMD programs and future funding of MEADS
    will be reviewed in this process.
        Joint Theater Missile Defense.--This activity funds projects which
    support our TAMD programs. This includes target missiles, collection
    and analysis of target signatures, technical support and TMD-unique
    test resources. In addition, funding in this program element supports
    CINC-level planning and participation in wargaming exercises. This
    ensures that TAMD program development reflects military needs and the
    combined warfare capabilities of allies and friends. These efforts
    support all the TAMD major defense acquisition programs in a
    centralized manner. I believe such centralization reduces costs and
    enhances the integrity in our test program.
        National Missile Defense (NMD) Program.--The primary mission of the
    NMD system is to defend the United States against a limited ballistic
    missile threat by a rogue nation, should such a threat emerge. In
    addition, the NMD system would have some capability against a small
    accidental or unauthorized launch of a ballistic missile from more
    nuclear capable states. To ensure that the Department would have the
    required capability to defend the Nation against an emerging threat, it
    has adopted an ambitious strategy known as ``3 plus 3'' for National
    Missile Defense: by 2000 the United States will be in a position to
    make a deployment decision if warranted by the threat, which would
    result in the deployment of an initial NMD system by 2003. To meet this
    challenging schedule, and to mitigate risks, we have taken numerous
    steps to leverage previous NMD technology development. We are
    constantly evaluating our performance in mitigating risk to achieve the
    strategy and meet the program objectives. If, in 2000, the threat
    assessment does not warrant a decision to deploy, improvements in the
    NMD system component technologies will continue, while the ability to
    deploy a system within three years of a decision is maintained. In
    order to give the program the appropriate level of acquisition emphasis
    and oversight, NMD was designated an Acquisition Category (ACAT) 1D
    program and the Joint Program Office (JPO) under BMDO was formed to
    manage the program.
        NMD ``Tool Box''.--The NMD system is being developed with a
    flexible architecture to allow for a variety of deployment options in
    order to respond to unknown and emerging threats and provide an
    evolutionary path to a more robust system. The elements of this system
    include battle management/command, control and communication; the
    Ground-Based Interceptor; and X-band and upgraded early warning radars.
    The architecture also uses space-based sensors such as the Defense
    Support Program (DSP) and Space-based Infrared System (SBIRS). Since
    the architecture is very flexible, we refer to the collection of
    potential NMD system elements as the ``NMD Tool Box.'' Literally, as we
    approach the 2000 deployment decision and assess the threat to the
    United States, we will be in a position to determine which NMD system
    element ``tools'' we will need to address the threat. If the threat
    does not warrant deployment at that time, we will continue to develop
    and refine both the individual system element ``tools'' and strengthen
    the overall NMD architecture.
        During the past year, the NMD program has conducted two very
    successful flight tests that demonstrated sensor performance for the
    two competing contractor exoatmospheric kill vehicle (EKV) designs.
    EKV's are a major subcomponent of the GBI--indeed it is the ``front
    end'' of the interceptor that ``sees'' the target and destroys it by
    colliding with it at an incredibly high velocity. The first successful
    sensor flight test took place on June 23, 1997, using an EKV sensor
    built by Boeing North American. The second flight test, flying a
    Raytheon-designed EKV, took place on January 16, 1998. The purpose of
    each test was to analyze the ability of an EKV sensor to identify and
    track objects in space, including a representative threat target and
    decoys to provide risk reduction for future intercept flight tests, and
    to conduct an integrated system test of other NMD elements and
    surrogate systems. Data gathered during the tests indicate that both
    EKV sensors performed extremely well. The EKV sensor payload includes
    an optical seeker, a data processing system and a telemetry unit. The
    seeker and data processor are literally the ``eyes'' and ``brain'' of
    the EKV, enabling it to intercept an attacking intercontinental
    ballistic missile (ICBM). Neither of these flight tests attempted an
    intercept.
        In addition to these two important flight tests, the NMD team
    participated in three NMD risk reduction flight tests, in May, June and
    November 1997, to evaluate the BMC\3\ software and NMD system
    communications and cueing of ground-based sensors. Finally, the NMD
    program completed construction of the ground-based radar prototype
    facility at the Kwajalein Missile Range. The GBR will be used in
    upcoming flight tests and will play a vital role in next year's
    integrated system test.
        The next flight test for the NMD program will also be the first
    intercept test under the ``3 plus 3'' program. During this test, we
    will fly one of our competing EKV designs against an ICBM target. The
    interceptor and kill vehicle will be launched from the Kwajalein Atoll
    in the central Pacific Ocean and will attempt to intercept and destroy
    a ``dummy'' warhead deployed from a Minuteman ICBM launched out of
    Vandenberg AFB, California. A second intercept attempt, using the other
    competing EKV design, will follow and provide the data necessary to
    downselect to one EKV design. These represent important milestones on
    the path to the integrated system test in 1999 that will demonstrate
    overall system capabilities against threat-representative targets.
        In the very near future, BMDO and the JPO will announce the award
    of the Lead Systems Integration (LSI) contract. Two industry teams are
    competing for this contract: the Boeing Company and the United Missile
    Defense Company, a joint venture between Lockheed Martin, Raytheon and
    TRW. The LSI contractor's main task will be to complete element
    development and integrate the elements into a system in time to provide
    the Department a viable deployment option in the year 2000. We have
    received two excellent proposals and are completing our evaluation.
    [GRAPHIC] [TIFF OMITTED] T02AP22.004

        Ballistic Missile Defense Testing.--Flight testing represents a
    particular challenge for advanced programs like ballistic missile
    defense hit-to-kill interceptors, especially when the test events are
    limited in number and compressed in time. As an integrated part of any
    military acquisition program, test and evaluation activities will be
    most successful if we can conduct them according to some important
    principles:
      --Event driven rather than schedule driven test events to have the
            opportunity to apply test outcomes deliberately within the
            systems engineering process.
      --Stable funding at levels to permit adequate testing.
      --A disciplined engineering approach extending throughout the system
            development activity, to include its test and evaluation.
      --Modeling and simulation including full program life-cycle modeling
            and simulation. Ground testing using hardware-in-the-loop and
            software-in-the-loop test capabilities gives vital preflight
            information, especially when conducted in realistic
            environments.
      --Flight testing at a level that allows verification of system
            performance and also to acquire the extensive data needed for
            successive phases of engineering and development--and the
            latter signifies substantial amounts of instrumentation.
      --Finally, because success can never be assured, spare resources--
            targets, interceptors and range instrumentation support are
            needed to conduct a testing program consistent with these
            principles.
        Despite the valuable information that flight testing produces, even
    in the absence of a successful intercept, we all recognize that the
    investment we make in a flight test, the publicity attendant to it, and
    the limited time and resources for accomplishing the performance
    verification of our interceptors, place a high premium of achieving
    successful flight test outcomes.
        In conjunction with the OSD testing organizations, I recently
    initiated an independent Task Force on Reducing Risk in BMD Flight Test
    Programs out of shared recognition of the challenge that flight testing
    represents. The report of that task force highlights a number of
    important aspects of our overall BMD test and evaluation program.
        The task force noted that there have been deviations from that
    philosophy in the past and our programs have been making adjustments
    over recent months to use our test and evaluation infrastructure more
    effectively. The task force found that PATRIOT's test and engineering
    approach was deliberate and is following a supportable schedule with
    adequate resources; and the PATRIOT program manager is staying the
    course.
        National Missile Defense has applied its additional funding, as
    intended, to increase the number of flight tests as well as supporting
    ground tests. The program manager has provided resources for both his
    targets program and engineering program to provide spare targets and
    system hardware.
        The task force's insights have generated a set of recommendations
    that I have shared with our PEO's and PM's, and I will be evaluating
    with them alternatives for how we might implement the recommendations
    for the benefit of all of our programs. The task force's tasking was to
    identify and additional ways in which we could bring best technology
    and practices to bear effectively on our T&E programs for hit-to-kill
    interceptors. Its recommendations point to engineering disciplines and
    management practices at the PM level and at my level. There may be
    value in taking its recommendations as the basis for a follow-on review
    team to report more specifically on the technical attributes that our
    test managers and infrastructure managers must plan for in their future
    test activities.
        Our existing and planned T&E and M&S facilities are complete and
    well-suited to meet the needs or our programs as they develop hardware
    from flight testing. The task force has reported persuasively that we
    need to keep greater discipline in using those capabilities as
    intended. BMDO recognizes its important role, not only in bringing best
    technology and practices to bear, but in helping our programs apply
    them in consistent ways to help solve the engineering challenges of
    building hit-to-kill interceptors.
        Threat and Countermeasures Program.--Fiscal year 1999 marks the
    first time that our Threat and Countermeasures program is treated as a
    separate program element of our requested budget. I directed that we do
    this in response to recommendations by Congress that this important
    area of our program gain greater oversight visibility. In addition, it
    is a prudent step because it simplifies our internal budgeting
    practices and allows us to make program and budget decisions in a more
    coherent fashion. The fiscal year 1999 request for this program element
    is $22 million, or roughly 0.6 percent of our budget.
        BMDO's Threat and Countermeasure program provides a wide spectrum
    of intelligence and threat support to all aspects of the missile
    defense program. The efforts covered under this program element
    directly support our TAMD and NMD acquisition programs by providing
    potential threat and countermeasure information central to the planning
    and execution of those programs. In addition, it supports our Advanced
    Technology program by providing information on future threats and the
    timelines associated with their emergence. Our effort draws heavily on
    the Intelligence Community for analysis, reports and, in some cases,
    collection of technical data in the field. It also sponsors threat work
    tied closely to the performance parameters of BMDO's defense systems,
    exploring possible vulnerabilities as they might be perceived by
    potential adversaries. This countermeasures-oriented work is conducted
    in a systems engineering context by means of a newly developed threat
    risk assessment methodology that is supported by selected hardware-
    oriented experiments. For example, we work with the U.S. Air Force
    Phillips Laboratory's Countermeasures Hands-on Project (CHOP) to assist
    us with such hardware-oriented efforts. Lastly, the BMDO Threat and
    Countermeasures program produces a series of carefully constructed and
    documented missile attack scenarios, including simulated flight
    trajectory information, for use in many forms of missile warfare
    engagement modeling and simulations. These include wargames conducted
    at the Joint National Test Facility in Colorado Springs, Colorado.
        Advanced Technology Programs.--For many years the primary focus of
    the Nation's missile defense program was the research and development
    of fundamental technologies. Under the Strategic Defense Initiative
    (SDI) program, the focus was largely directed toward the development
    and demonstration of technologies useful in building a missile defense
    system capable of defending the United States against missile attack.
    Therefore, the budget dedicated to technology development was
    significant. The dividends from those investments are substantial, for
    as the program focus shifted to the development and fielding of actual
    defenses for the theater and Nation, we were ready to ``cash in'' on
    those technologies we had developed.
        However, with the increased emphasis on fielding TAMD systems and
    developing an NMD system for deployment, one critical effect has been
    the limited resources available for continued technology development.
    Today, our technology budget accounts for only 7 percent of the overall
    BMDO budget request. Continued technology investment is absolutely
    necessary because it represents not only our seed corn for future
    missile defense systems, but it also helps us address near-term
    technology needs that our MDAP's may experience. The chart on the
    following page illustrates the declining investment in technology
    programs.
    [GRAPHIC] [TIFF OMITTED] T02AP22.005

        Today's technology program, therefore is a leaner one. However,
    reduced resources present us both a challenge and opportunity. Reduced
    resources drive us to the challenge of ensuring all our technology
    efforts are directly relevant to the mission of missile defense--to
    make every dollar spent on technology truly matter. With this in mind,
    I have instituted two major efforts that demonstrate we are rising to
    the challenge and seek greater cooperation with the Services in this
    critical area.
        Joint Technology Board.--The first effort is the Joint Technology
    Board (JTB) which will examine areas where BMDO and the Services can
    better coordinate technology efforts, share resources and leverage off
    one another to develop an integrated technology program. The JTB
    includes members of my staff and representatives from the Service
    technology communities. The JTB advises me on the advanced technology
    program, ensures the Services have better insight into the BMD
    technology program, and provides an avenue for BMDO to work with the
    Services to understand both their technology requirements and
    investments. The JTB works within our existing BMDO ``board
    structure.'' Hence, by being fully integrated into our core processes,
    the JTB represents a critical management response to the challenge of
    leaner technology resources. Indeed, we have come to the point in time
    where we must think smarter and not simply rely on increased resources
    to meet the missile defense challenge. This initiative ties directly
    into the second one, the establishment of a Missile Defense Technology
    Master Plan.
        Missile Defense Technology Master Plan.--In a few moments, I will
    address some of the initiatives I have instituted at BMDO to strengthen
    our management and execution of the program. One of those is the
    development of an organizational strategic plan, which includes the
    ``mission essential task'' to plan and execute a coherent missile
    defense advanced technology program that reduces program risk, improves
    system performance and affordability, and keeps pace with the threat.
    The Technology Master Plan is the guiding document that will help us
    implement this mission essential task. The plan represents a
    fundamental shift in the way we do business in the BMDO advanced
    technology program. It represents a development and maturation program
    consistent with the requirement of maintaining and enhancing U.S.
    technical superiority in missile defense technologies. The Technology
    Master Plan will address the issue of transitioning technology
    investments into the MDAP's using a more structured and routine
    planning process. Specifically, the process will:
      --Create a greater understanding of the evolving threat and mission
            essential/enabling capabilities;
      --Identify and define which technologies should be pursued to keep
            pace with the threat, reduce MDAP costs, and mitigate MDAP
            risk;
      --Identify the timelines along which technology development should be
            undertaken;
      --Align existing technology programs and development of new programs
            to meet the needs and foster innovative technologies for
            potential BMD applications; and
      --Determine the level and timing of required financial resources.
        The approach I have directed follows a path from understanding the
    BMD architectures to identification of missile defense drivers to meet
    military needs. From there we identify technology needs, along with
    solutions which satisfy those needs and produces an investment
    strategy. The Technology Master Plan is designed to have a major
    influence on the development and execution of the BMDO advanced
    technology program, as well as the BMDO budget process. Therefore, the
    process is closely coupled and synchronized with the overall BMDO and
    Office of the Secretary of Defense financial planning, programming and
    budgeting process--the PPBS.
        The Technology Master Plan process begins each year in January with
    an annual review of both the evolving threat and the performance of the
    MDAP systems under development. Working with the user representatives,
    MDAP Program Managers, and others in the missile defense community, my
    Chief Engineer will identify needs for technology focus to counter
    evolving threats by existing or new systems/architectures, reduce MDAP
    costs and mitigate MDAP risks. These technology needs are then
    prioritized and approved by my System Architecture and Engineering
    Board. The technology needs are then used as input by my Deputy for
    Technical Operations, who in turn formulates and designs the advanced
    technology program.
        To achieve these objectives, we will use an approach similar to
    Integrated Product Teams (IPT)--however, they will be called Technology
    Planning Teams (TPT). We have set up TPT's for specific technology
    areas, such as Interceptor and Surveillance Technology, and will soon
    set up a TPT for BM/C\4\I and others. Membership of the TPT's is both
    diverse and inclusive to provide a comprehensive, corporate approach.
    They will include Service representatives of the Program Executive
    Officers (PEO's), the MDAP program offices, the threat community,
    technology program managers and executing agents, BMDO, and the Defense
    Advanced Research Projects Agency (DARPA). The Joint Theater Air and
    Missile Defense Organization (JTAMDO) and organizations within OSD are
    also invited to participate.
        Throughout the technology planning process, periodic reviews are
    provided by senior leadership from BMDO and the Services. The Joint
    Technology Board, System Architecture and Engineering Board (SAEB) and
    Planning and Resources Board (PRB) will review the results of the TPT's
    during the course of the planning year. This rigorous review cycle
    ensures that the Technology Master Plan addresses the challenges of
    emerging threats; provides a means to address technical issues as they
    arise in the acquisition process and executes technology programs to
    provide for block upgrades or pre-programmed product improvements for
    BMD systems. Finally, the missile defense technology investment
    strategy that results from the Technology Master Plan has the single,
    important goal of providing maximum effectiveness for each defense
    dollar spent. My bottom line is that the Technology Planning Process
    ensures a strong, effective and stable technology program which is
    responsive to the needs of BMDO, the Services and our Nation.
        Advanced Technology Programs.--While we just started the Technology
    Master Planning process during this past year, we obviously have a
    legacy of technology developments which have laid the foundation for
    today's missile defense systems. The focus of our technology program
    has been, and will now be in a stronger sense, focused on developing
    those components and systems that may be required in the future.
    Currently, the largest efforts we have underway are two specific
    programs: the Space-based Laser (SBL), a high-payoff next-generation
    concept for a missile defense weapons, and the Atmospheric Interceptor
    Technology (AIT) program, a technology integration program to exploit
    advances in kill vehicle technology to counter more complex threats.
    Together, these two programs represent roughly 33 percent of the
    advanced technology program budget in fiscal year 1999.
        Space-based Laser.--The SBL program is a high-payoff, next
    generation concept for a missile defense system. The SBL system, if
    developed and deployed, could provide highly effective boost-phase
    intercept of both longer-range theater-class and strategic ballistic
    missiles. Working with ground-based defenses, the SBL's boost-phase
    intercepts would ``thin out'' missile attacks and reduce the burden on
    ground- or sea-based mid-course or terminal phase defenses.
        Last year BMDO and the Air Force signed a Memorandum of
    Understanding, designating the Air Force as the new executing agent for
    the program. While the SBL remains an important BMDO technology program
    and will continue to be funded in the BMDO budget, the Air Force will
    be responsible for executing the program. As the Director of BMDO, and
    the Acquisition Executive for BMD programs, I will retain the role of
    program oversight and will be responsible for centrally planning and
    budgeting for SBL. In addition, I will be responsible for making
    overall system architecture trades for SBL as we integrate it both as a
    technology development program and as a potential weapon system in the
    future.
        In response to Congressional interest in accelerating the
    development of the SBL technologies through a readiness demonstration
    program, both BMDO and the Air Force sought to increase program
    resources through the Department's POM process. Other Defense program
    funding needs superseded this BMD funding issue. Together, BMDO and the
    Air Force internally realigned approximately $65 million for SBL in
    fiscal year 1999, with a combined budget request of about $94 million.
    BMDO added approximately $30 million to its previously planned budget
    and the Air Force added $35 million. Funding at this level allows the
    program to progress at the level of maturing SBL technology and
    components, but precludes the integration of those components and
    launching an SBL readiness demonstrator in the foreseeable future. BMDO
    and the Air Force are currently reviewing the feasibility of
    alternatives to such a launch by the year 2005. The Air Force recently
    concluded that a more realistic approach may be to plan a space-based
    experiment for 2008. The Air Force has awarded two Concept Definition
    Study contracts with industry hardware teams to examine all the
    development options and lay out schedules which bracket a number of
    potential launch dates for a space-based experiment. Once these studies
    are reviewed, the Air Force and BMDO will make a concept decision. This
    approach allows us to reduce development risk and test a configuration
    that would be more readily scaleable to an operational system.
        In parallel to the Air Force concept definition studies, BMDO is
    working to identify a suitable location for a facility to develop,
    integrate and test the SBL system. The current test facility in San
    Juan Capistrano, California has been deemed inadequate to fully
    integrate and ground-test a readiness demonstrator and prepare it for
    space-launch. Site selection is expected to be completed by late Fall
    1998. Four potential sites have been visited by a site selection team.
    They are Cape Canaveral Air Force Station and Kennedy Space Center,
    Florida; Stennis Space Center, Mississippi; and the Redstone Arsenal in
    Huntsville, Alabama. I will keep the Committee fully informed as this
    process proceeds.
        Atmospheric Interceptor Technology.--The other major technology
    endeavor is AIT. It is a technology integration effort which will
    exploit advances in hypervelocity hit-to-kill vehicle technology to
    counter more complex and evolving threats. I do not view the AIT
    program as the development of a new system per se, but rather a
    technology testbed. In this approach, we use the AIT program to develop
    component technologies which could be applied to current acquisition
    programs as part of a pre-programmed product improvement program. The
    AIT program is designed to provide: new capabilities with reduced costs
    and risks compared to current interceptor weapons systems, and
    enhancements to other interceptors under development; reduction of
    technical risks and costs in support of current acquisition programs
    through direct technology insertions; and technical solutions to
    provide theater missile defense interceptor capabilities for
    contingencies and against advanced threats not currently addressed by
    the TMD system programs.
        I have specifically directed that AIT be planned and conducted with
    BMDO, Navy, Army and Air Force cooperation to make maximum use of
    existing Service infrastructures and to ensure that AIT is responsive
    to the needs of our current TMD acquisition programs. As part of this
    process, the Army and Navy in particular have provided information
    about their requirements in order to ensure AIT meets the needs of its
    primary end users.
        BMD Management Initiatives.--During the past year, my staff and I
    have embarked on a critical process of developing and strengthening our
    management tools. Specifically, we have begun our strategic planning
    process, refined and strengthened our corporate board processes,
    commenced a second round of our internal management reviews, initiated
    cost control and Cost as an Independent Variable (CAIV) measures and
    begun work on our performance-based contract. These measures will help
    us focus our efforts, ensure our resources are appropriately allocated
    to developing and fielding missile defense systems, and organize our
    efforts toward achieving those important results.
        Strategic Planning.--As I mentioned at the beginning of my
    testimony, BMDO does not manage a particular weapon system, nor even a
    class of weapons. We manage the development and acquisition of an
    entire mission area--one which cuts across all the Services. No one
    else in the Department does this to the scale that BMDO does.
    Therefore, in line with our chartered responsibilities, BMDO's vision
    is to be the Department's premier joint mission area acquisition
    agency, ensuring the deployment of interoperable missile defenses to
    the warfighter. Our strategic plan is our roadmap to achieve new levels
    of missile defense effectiveness, interoperability, and affordability
    for the 21st century. Our plan embodies the relevant elements in Joint
    Vision 2010, the Office of the Secretary of Defense planning and
    acquisition guidance, the Quadrennial Defense Review, and the National
    Defense Panel. The Strategic Plan focuses our efforts toward the
    successful development, deployment, and follow-on initiatives for both
    NMD and TAMD.
        Within the Department of Defense, BMDO is responsible for managing,
    directing, and executing the acquisition of joint missile defense
    systems. This is our mission and reason why a centrally-organized BMD
    agency exists. In order to achieve this mission, we have identified a
    series of mission essential tasks, with each task incorporating key
    performance goals that deliver greater service, foster partnerships,
    and drive our own internal reinvention. To this end, BMDO strives to
    develop the systems which will defend our Nation, our deployed forces,
    friends and allies. In so doing, we seek to become the premier agency
    for achieving the National Performance Review Reinvention Impact
    Center's acquisition goals by the year 2000. The Mission Essential
    Tasks that we are dedicated to executing are:
      --Serve as the Nation's source of technical expertise for all matters
            relating to ballistic missile defense;
      --Establish and implement joint systems engineering processes that
            provide the technical foundation for BMD planning and
            execution;
      --Develop and enable the deployment of a cost effective, affordable,
            and interoperable Theater Air and Missile Defense (TAMD) to
            meet the missile threat to deployed U.S. forces, friends, and
            allies;
      --Develop options to deploy a National Missile Defense (NMD) for the
            United States, should a deployment decision be required;
      --Plan and execute a coherent missile defense advanced technology
            program to reduce program risk, improve systems performance and
            affordability, and keep pace with the threat;
      --Lead the international dialogue and cooperation for missile defense
            activities;
      --Articulate and advocate the joint mission area of missile defense;
      --Support our people by developing and implementing human resource
            strategies that enable and enhance the achievement of our
            vision and mission; and
      --Plan and execute a program budgeting system process and other key
            business processes that enable and support the accomplishment
            of our mission essential tasks.
        These tasks are goals upon which our performance will be measured.
    They also simultaneously serve as a planning tool and our basis for
    benchmarking. Each one of these mission essential tasks include a full
    implementation plan, with measurable activities and outcomes. My
    intention in embarking on this process is to: first, to comply with the
    Department's Defense Reform Initiatives; and, just as importantly, add
    rigor into every one of our efforts to ensure that we are appropriately
    focused toward achieving results.
        Even before we began our strategic planning process in earnest, my
    senior staff and I redesigned our corporate board processes. The two
    most central are our Systems Architecture and Engineering Board--which
    reviews critical systems-level and architecture-level issues and makes
    fundamental system or architectural decisions--and our Planning and
    Resources Board--BMDO's senior executive corporate body--which reviews
    and directs all missile defense plans, programs, budget actions and
    policies. During the past year, we have made major strides in
    streamlining these processes, ensuring the inclusion of Service program
    stakeholders, and focusing our efforts toward more timely decisions. In
    addition, my Deputy, Rear Admiral Richard West, has been spearheading
    our Management Review Team effort to review our organization, staffing
    and use of support service contractors. The purpose is to assess how we
    are organized and staffed to perform our mission--with the purpose of
    buttressing those areas that need additional focus and resources while
    reducing those areas that no longer require the support they
    traditionally have enjoyed. I expect that this process will conclude
    later this Summer, with organizational adjustments occurring in the new
    fiscal year.
        Cost as an Independent Variable (CAIV).--In order to control
    missile defense program cost growth, I am in the process of instituting
    very specific processes and procedures for all our acquisition programs
    to follow. Cost as an Independent Variable (CAIV) features aggressive,
    realistic cost goals that the Program Manager and the contractor team
    work together to meet or exceed. Given the costs of developing and
    fielding missile defense systems, and the overall constrained Defense
    budget, we must effectively utilize these tools to contain or reduce
    program life-cycle costs.
        While the NMD Program CAIV process is under the purview of a single
    program manager who is managing a single acquisition program, the CAIV
    process for theater missile defense programs is complex because we are
    involved in a joint mission area, as opposed to a single acquisition
    program. While an individual TAMD system Program Manager has the
    primary responsibility to formulate CAIV metrics tailored to his
    specific program and will use those metrics to manage progress toward
    cost objectives, BMDO must be concerned with the overall architectural
    impacts. For example, the design of an interceptor in one TMD system
    may impact the design or performance of a fire control sensor and the
    battle management/command, control and communications. Therefore, these
    ``cross system'' interfaces must be carefully coordinated to achieve
    the full system requirements. Hence, BMDO has the responsibility for
    overseeing the implementation of TAMD CAIV, whereas the individual
    Program Manager bears the primary responsibility for the development
    and management of TAMD CAIV objectives for his program. Implementation
    of this important process involves the necessary procedures to state
    requirements in terms of needed military capability at the architecture
    level without offering specific system designs. Architecture cost
    objectives may be established through analysis of architecture-level
    development and performance issues which drive element costs.
    Therefore, CAIV at the TAMD architecture-level will allow the process
    to ``trade-off'' requirements, design parameters, and features versus
    cost of individual elements, while producing a missile defense system
    that fully provides the needed military capability. I consider our cost
    control measures to be an extremely important element of our
    overarching effort to develop and field highly effective and affordable
    missile defense systems.
        Performance-based Contract.--Finally, we are beginning to develop
    our performance-based contract. As the Committee is aware, the Deputy
    Secretary of Defense will chair the Department's Defense Management
    Council. All defense agencies and OSD staff offices will be required by
    the end of the fiscal year to prepare, negotiate and sign a performance
    contract with the Defense Management Council. This contract will be
    directly linked to the BMDO strategic plan. If the strategic plan is
    our roadmap, then the contract will be the guideposts that measure our
    progress.
        I view these management initiatives as absolutely critical efforts
    that will ensure we remain focused on our goals and deliver for the
    public, the Congress and our warfighters the very best systems and
    technologies we can in an affordable manner. My staff and I are
    committed to accomplishing these important mission essential tasks--in
    spirit, in results, and in the stewardship of our vital defense
    resources.
        Closing.--Mr. Chairman, in closing I appreciate the opportunity to
    appear before the Committee and share my perspective on the BMD program
    and budget. This is indeed an ambitious year in the world of missile
    defense. We will attempt more flight tests and intercept tests this
    year than any previous year. As we have already seen, some of those
    tests have experienced delays. However, I encourage the Committee to
    not equate delay with failure. These are very complex weapons systems.
    They operate at extreme conditions of speed, atmospheric pressures, and
    short times of flight. The closing velocities of the target and the
    interceptor are absolutely incredible. And we are attempting to create
    a TAMD ``family of systems'' that are interoperable with other Service
    systems. Indeed, we are attempting things that are not frequently
    accomplished elsewhere in the Department. While I will admit that I do
    not want to see any further delays in the PAC-3, Navy Area, THAAD or
    Navy Theater Wide programs, I am encouraged that these most recent test
    delays are the result of strong quality control checks and procedures.
    Frankly, I would rather see a flight test delayed because an astute
    engineer or technician questions the reliability of a component during
    a pre-flight review, than see a flight take place and fail because of
    faulty quality control processes. The importance and expense of these
    flight tests are too high to risk failure in the name of haste. We must
    obviously balance the need to demonstrate and field these systems as
    quickly as possible with the responsibility to ensure they are fully
    effective. I am confident that both PAC-3 and THAAD will experience a
    successful series of flight tests beginning in the very near future.
        Mr. Chairman, I am delighted to report that the NMD program is
    progressing on schedule. Brigadier General Cosumano and his team are
    literally working six and seven days per week to conduct the planned
    test program and to execute all the critical acquisition process
    requirements for this program. I think they should be commended for
    their drive and perseverance to ensure the Nation is in a position to
    make a deployment decision in 2000, if required by the threat. In spite
    of the fact that the NMD program has an extremely aggressive schedule
    and is technically challenging, I am confident that once the third
    critical element of the NMD strategy--the LSI contractor--is in place,
    General Cosumano and his team will continue to make unprecedented
    progress in the 3 plus 3 program.
        Mr. Chairman, I encourage the Committee to support our efforts to
    bring strength and coherence to our advanced technology program. Our
    Technology Master Plan represents a critical roadmap to the future for
    this portion of the missile defense program. While we started the
    technology planning process out of sequence, we recognized its
    importance and have been working the monumental task of a yearlong
    process in roughly six months. Again, the dedication of the BMDO and
    Service Executing Agent staffs has been remarkable. The level of
    teamwork and jointness across BMDO and the Services in this critical
    area has been tremendous. I ask that the Committee have patience as we
    continue to build the correct technology roadmap and identify critical
    technology needs. Ultimately, I ask that the Congress help us instill
    both coherence and relevance into the investment plan for our missile
    defense future. With the Technology Planning Process we are trying to
    rigorously assess where we must invest. I feel this is an issue that
    requires strong leadership on the part of both the Administration and
    Congress--to ensure we provide adequate funds for our future. If we
    fail to invest today in a coherent and relevant manner, those component
    technologies and follow-on systems will not be there when we need them
    five, ten or fifteen years hence. We must maintain our technological
    superiority in the face of evolving and emerging threats across the
    spectrum--especially as weapons of mass destruction and missile
    technologies proliferate.
        Finally, Mr. Chairman, after another year as Director, I must tell
    you how impressed I am with the combined Government-industry team that
    is working to develop and field highly effective missile defenses. This
    is true in every part of our program: TAMD, NMD, Technology and our
    Management team. Missile Defense is a very challenging field. In many
    ways, this team is charting new ground for the Department. This is
    frequently overlooked. BMDO is not responsible for a single weapon
    system or even a class of weapons. We are responsible for a new
    concept: joint mission area acquisition. As we have all seen, this
    requires incredible levels of support from the Services and the OSD
    staff to embrace the notion of jointness. In many ways, this requires a
    cultural change for the Services and Department--to look beyond a
    single Service solution--because in future conflicts our military will
    be called upon to fight jointly. Therefore, as we must develop and
    acquire our missile defense systems in the same joint manner. While our
    critics may focus on the differing interests of one Service over
    another, the most important message I want to convey to the Committee
    is that today, we are working together better than ever before to build
    into all our missile defense systems the capability to communicate and
    fight together. That is our mission and I am confident that we will
    succeed.
        Thank you Mr. Chairman, I look forward to working closely with you
    and the Members of the Committee on this important program. Mr.
    Chairman, that concludes my statement. I look forward to answering the
    Committee's questions.

                                Out-year funding

        Senator Stevens. Thank you, General. We will run the clock
    up here on a 10-minute basis. I do want you to know that we
    have great confidence in you and your leadership, and there is
    some political problems developing, and you have been very
    capable in keeping yourself out of those political problems.
    But we have a very difficult problem facing BMDO, and that is
    the out-year due bills. You do not have any funds now
    identified for the 1999-2003 Defense budget to deploy a
    national missile defense system or to develop and buy MEADS.
        Those are both multibillion dollar bills. Congress has
    urged BMDO to accelerate the Navy theater wide missile defense.
    Senator Lott and others have urged BMDO to move forward with a
    demonstration of a scale model. That would cost $2.3 billion.
    We have now given you responsibility for 10 missile defense
    programs and almost every one has cost more than was originally
    estimated. I really think that the real problem we face is the
    continued deployment that we have had of our forces in Bosnia
    and in the Persian Gulf is eating away at our ability to
    develop the systems our Nation will need, in my judgment, and
    need them long before we are going to have them. I would urge
    that we find some way to try to settle in on a system and try
    to develop it. I remember so well the arguments we had here
    with some of your predecessors over the question of PAC-2.
        And although it did not solve the whole problem, at least
    it was available when we needed it. And I have that feeling
    that we are not going to have anything available when we need
    unless we start singling out something and moving forward. I do
    congratulate you personally for your decision to be very
    thorough about testing, but I do think that somehow or other
    there is a lot of intraservice competition entering into this.
        I, as I indicated before, personally am extremely disturbed
    over this attitude that is now coming out of the Army that the
    testing that is going on or proposed to be tested up my way is
    just an exercise in futility, and they are doing everything
    they can to block it. With attitudes like that really reflect
    intraservice rivalry. I think the whole system is going to lose
    support that it needs in Congress.
        So I would urge you to do what you can to straighten this
    thing out so we do not have that kind of development. It does
    seem to me and you really have emphasized PAC-3, and whether it
    is PAC-3 or 1 of these other systems, if 1 of them shows
    capability of moving forward, I think we are going to have to
    decide to move 1 or 2 forward and not to spend all our time on
    10 or more systems.
        You mentioned that you believe we should have a system that
    would provide protection for all 50 States, and I remember when
    Senator Inouye and I heard the proposal that indicated that the
    system that would be considered would not cover our States and
    probably not some of the southern States. I want to ask you
    again, do you think we should put a requirement in law that the
    system to be deployed should protect all 50 States?

                              NMD threat coverage

        General Lyles. Mr. Chairman, I think we already have that
    requirement. And actually, it's been stated in two ways. It's
    been stated within the Congress. It's actually language within
    the fiscal year 1998 authorization bill. But even before that,
    the requirements given to me by the user, by CINC-SPACE,
    Commander in Chief for U.S. Space Command, was to protect all
    50 States. That's an absolute for us for the National Missile
    Defense Program, and we are not deviating from that at all.
        Senator Stevens. Then I do not understand without
    modification why we are spending money on the Grand Forks
    deployment because by definition it does not cover 50 States.
        General Lyles. Mr. Chairman, as we look at the various
    architectures, possibilities, one of the key things is to
    understand where the threat might emanate. And I'd love to come
    back and lay out and show you some of the classified charts. I
    can't do it in this particular room with the audience here.
        But there are some threats from some places around the
    world where you could actually provide protection for all 50
    States from the one site that you mentioned. That's not
    necessarily from all threats. They can't meet it from all
    threats. So we are looking at examining all the different
    architectural approaches, but the key premise for us, the key
    mandate--it's not just a premise--is protection for all 50
    States.
        Senator Stevens. Well, I think I can use the reference to
    C-1 threat, can I not, here?
        General Lyles. Yes, sir, you can. Yes, sir.
        Senator Stevens. Well, where Senator Inouye and I live, the
    C-1 threat is predominant. The Grand Forks deployment will not
    protect against that. I do not have--I really think that the
    two of us are going to have to get on our high horse here
    pretty soon because it seems that we are at every turn that is
    being forgotten.
        General Lyles. Sir, I can assure you that I haven't
    forgotten it, that the Joint Program Office and the program
    manager, Brig. Gen. Joe Cosumano sitting behind me, we
    absolutely have not forgotten that. And the term we use, Mr.
    Chairman, is C-1 capability, and that C-1 capability will look
    at all varieties of threats and depending on where the threat
    emanates we will make sure that if there is a decision to
    deploy we always deploy to protect all 50 States. And I can
    promise you that that is not something we're deviating from.

                                  Welch panel

        Senator Stevens. You mentioned the Welch panel. That panel
    based on its review said this: successful execution of the
    three-plus-three formulation on the plan schedule is highly
    unlikely. You again this morning mentioned three-plus-three.
    Can you realistically develop and deploy that national missile
    defense system by 2003?
        General Lyles. Mr. Chairman, that is exactly what we're
    trying to do. As I've stated to the committee and other
    committees last year and throughout the past year, it is a very
    high risk schedule. The program was laid out as sort of a hedge
    strategy because of the concerns about a possible emerging
    threat.
        And so we are trying to do this in a very aggressive
    manner. I don't disagree, and actually I support everything
    that came out of General Welch's study. Again, we were one of
    the people who commissioned that study, and what we have to do
    is sort of make a balance between good, robust proper
    hierarchal testing and also the need to ensure we get a
    capability as rapidly as possible. So we are desperately trying
    to make that a reality.

                                 NMD deployment

        Senator Stevens. But I think Welch's panel looked at the
    probability of funding at the current level of the budget.
    Would you give us your best estimate of the cost and schedule
    for deploying the initial national missile defense capability
    for the record?
        General Lyles. For the record--I'd like to provide it for
    the record if I could, Mr. Chairman. And one of my reasons for
    hesitating in discussing it openly is that the cost, the real
    costs, are going to be part of this down select source election
    decision we're going to make in the next couple weeks from this
    prime contractor. And to give you real good numbers, I'd like
    to provide that for the record and tell you exactly what----
        Senator Stevens. I am not trying to compromise your
    judgment on that. What I am trying to see is whether it is
    really possible with the budget we have. I really do not see
    the budget capability to add the money that is necessary to
    meet the existing bills, as I said.
        General Lyles. Oh.
        Senator Stevens. The out-year bills that are due under the
    system already seem to eat up the money, and we do not see a
    capability of funding that in the three-plus-three concept
    under this budget as it stands now.
        General Lyles. I'm sorry, Mr. Chairman. I gave you the
    wrong answer. You were correct. We do not, and the
    administration's position has been there are not deployment
    dollars currently in our budget for it to be three-plus-three.
        [The information follows:]

                         National Missile Defense [NMD]

        Current RDT&E funding for NMD development is sufficient to
    complete the system design for an initial operational system by
    fiscal year 2003, if a decision to deploy is made in fiscal
    year 2000. However, each year beyond fiscal year 2000 that a
    deployment decision might be deferred would require additional
    RDT&E dollars which are currently not budgeted. Once the
    decision to deploy is made, an additional $4 billion to $6
    billion in procurement, MILCON, and Operations and Maintenance
    funding, beginning in the year of the deployment decision, is
    necessary to field an initial system. Specific funding is
    dependent on threat, selected architecture, and siting
    considerations.

                               THAAD development

        Senator Stevens. Let me shift to another one. If the THAAD
    flight test is successful, will that be sufficient in your
    judgment to give THAAD a clean bill of health and let it
    proceed?
        General Lyles. No, sir; I will never say that one flight
    test at this stage of a program is sufficient to give a system
    like that, a complex system like that, a clean bill of health.
    As you know, we're still in the demonstration and validation
    phase of the THAAD Program, and that phase is really to wring
    out the design.
        We have a lot more testing, a lot more development to go
    before I could sit in front of you, Mr. Chairman, or the
    committee, or the Secretary of Defense and say that we have a
    clean bill of health, the program is ready to proceed to
    deployment. It's a major step, but I would not use that
    statement.
        Senator Stevens. We may have to have a subsequent meeting,
    General, in our classified area to discuss this further.
        General Lyles. I would love to, Mr. Chairman.
        Senator Stevens. I think we should try to see if we cannot
    get more members here at that time. Senator Bumpers.
        Senator Bumpers. Thank you, Mr. Chairman. General Lyles, on
    the question Senator Stevens was just asking about, are we
    going to go ahead with buying THAAD missiles after one
    successful test, and you said something to the effect that no
    we're not. But I am not sure what the qualifier was because the
    Department of Defense said on March 24, once we have one
    success, we are going to order 40 interceptors. Now, how does
    that square with what you just said?
        General Lyles. Senator Bumpers, as I stated in my opening
    statement, and that one chart that I showed in your package, we
    actually have a series of hierarchy of different tests that
    we're doing for the THAAD Program. The plan is after the first
    intercept, this is what we have put on contract, that we would
    make a decision to procure those 40 user operational evaluation
    missiles, UOES missiles, and that is a correct statement.
        But if you look at that one chart, you will see that there
    are a series of other tests, some of which have been going on
    for some time, ground tests, hardware-in-the-loop tests,
    software testing, et cetera, that are also giving us confidence
    in that design.
        But more importantly, the thing I've tried to ensure is
    that before we commit our precious dollars to totally commit
    all the money for this particular program that we've laid out a
    hierarchy of reviews. The chart shows that there are at least
    two if not three in progress reviews that we will conduct
    before we fully obligate the money this year for the UOES
    Program. And if we stay on schedule, there will actually be two
    more flight tests that will be completed before we fully
    obligate the money for that particular effort.
        So our contractual requirement is to turn it on, turn on
    that option with the contractor, but I want to make sure from a
    fiscally smart manner that before we fully obligate the effort
    we know exactly everything about THAAD, hence the other
    activities that are taking place.

                              BMD test philosophy

        Senator Bumpers. Well, General, I may during the
    appropriations process or the authorization process offer some
    kind of an amendment to be sure that we do not obligate
    ourselves to a few billion dollars on one possible random hit.
    And this chart right here, BMD test philosophy, down at the
    bottom it says, BMDO's objective is to be consistent with the
    task force report. Now, I have not read the report in detail,
    but I have had my staff do the highlights for me, and I thought
    it was an excellent report that General Welch and his group put
    together.
        General Lyles. Yes, sir.
        Senator Bumpers. Apparently you do, too.
        General Lyles. Oh, yes, sir.
        Senator Bumpers. And they called what is going on now in
    BMDO, they called it a rush to failure. Now, that is a fairly
    current report. What have we changed? What have we changed to
    make sure that we honor the task force observation that we are
    headed for a rush to failure? I mean, what are we doing? You
    know how strongly I support the Three-Plus-Three NMD Program.
    But it is insane to me to set deadlines for doing these things
    regardless of what the tests or the technology may be. What are
    we doing to make sure we are not rushing to failure?
        General Lyles. Senator, let me answer that----
        Senator Bumpers. I am still not satisfied that that is not
    precisely what we are doing.
        General Lyles. Yes, sir; Senator, let me tell you exactly
    what I have done in response to that report. Again, one of the
    reasons I was one of the commissioners of that study is to
    ensure I specifically and all of our program managers knew and
    understood how we were doing from an independent look at our
    test program. Since that report came out, I have specifically
    tasked the program managers for each one of our programs and
    their program executive officers, PEO's as we call it, to go
    back and in light of that report, in light of the lessons
    learned from the THAAD Program over the last year to come back
    and tell me what things we may have to consider doing in each
    one of our programs to ensure that we stay consistent with that
    test philosophy and the concerns raised by General Welch.
        They owe me that response and answer within the next 30
    days or so, and I would, again, be very happy to report back to
    Congress as to what our assessment is of that. In the National
    Missile Defense Program at a recent hearing, I have committed
    to Senator Levin that I will bring back that Welch panel to
    have them to review our test program for national missile
    defense once we have down selected to our prime contractor, our
    lead systems integrator. And we have essentially gone on
    contract for the test approach being recommended by that
    specific contractor.

                             Patriot effectiveness

        We will bring back that panel to relook at that to ensure
    we are staying consistent with that test philosophy. We are
    very serious about that, and we don't want to take it lightly.
        Senator Bumpers. General Lyles, let me ask you two quick
    questions. No. 1, on Patriot, we found out after Desert Storm
    that Patriot had not been nearly as successful as we thought
    watching CNN and watching the Patriot explode instead of
    intercept. Now, it is now estimated that so far as the real
    threat to our forces is concerned it is mostly from Scud-type
    missiles with ranges of less than 500 kilometers. And my
    question is, it seems to me that if the Patriot is what it
    ought to be or what we have been led to believe that it is and
    which you alluded to in your comments, that gives us a little
    breathing room. If 97 percent of the threat is from short range
    missiles, it seems to me that that gives us a little breathing
    room so we do not have to go balls out to do this thing on some
    kind of a time schedule that we cannot possibly meet.
        General Lyles. Senator, the Patriot----
        Senator Bumpers. What I really want you to tell me is what
    is the confidence level in the Patriot as against the Scud for
    example?
        General Lyles. The confidence level is very high of the
    current Patriots we have fielded today with the first two
    phases of the Patriot Program, Patriot Advanced Capability
    Three Program, the guidance enhanced missile that's fielded
    today. The confidence is very high, and I can tell you a
    specific reason. Because about this time last year in February
    or March specifically in 1997, we actually tested the current
    generation of Patriots against the current generation of Scuds.
        I can't obviously talk in this environment about how we
    acquired those, but we did do testing in the Kwajalein Pacific
    missile range. We conducted two tests. Both were intercept
    tests. Both were very, very successful. Both cases, we
    intercepted and killed the Scud. Now, we did learn something.
    We learned something about the aim point selection on one of
    those tests, and we've now made some software modifications to
    actually improve even what we have in the field.
        And those software modifications are now in the field
    today. So I am very confident, Senator Bumpers, based on those
    tests, based on the current threat, based on what we have in
    the field today that we can counter today's threat. The key is
    about tomorrow's threat and weapons of mass destruction. That's
    our concern.

                            protection of 50 States

        Senator Bumpers. Well, my final question is also a follow
    up to what Senator Stevens was asking and I share his concern
    about his home State, as well as Hawaii. I do share their
    concern about their home States just as any of us would have.
    And the ABM Treaty grants us one site. And that is Grand Forks.
    And it seems to me--I am a great champion of the ABM Treaty. I
    do not want a brouhaha or a violation of it, and I think the
    Russians are comfortable right now. But do you feel comfortable
    with your answer to Senator Stevens on the 50 State philosophy
    from Grand Forks? I mean, I think there is a real question as
    to whether you can do it from Grand Forks or not, but I would
    be interested in hearing your answer to that.
        General Lyles. Senator Bumpers, I think the correct
    answer--and I probably should have expanded upon this earlier
    as stated literally 2 years ago when we embarked on this three-
    plus-three strategy by Dr. Perry when he was the Secretary of
    Defense--is we will develop this capability is a treaty
    compliant manner, but when it comes to actually to deploying a
    capability we will deploy and if necessary readdress the ABM
    Treaty. We will deploy to make sure we can protect our Nation,
    protect all 50 States from the threat.
        As I stated to Senator Stevens, from Grand Forks, if you
    look at it architecturally, there are at least some threats by
    which you can protect all 50 States from that particular site,
    but not all threats. And the key issue is what do we think
    about the threat and where the threat may emanate that will
    determine where and when we deploy.

                             ABM Treaty compliance

        Senator Bumpers. Are you familiar with the bill called the
    American Missile Defense Act of 1998?
        General Lyles. Yes, Senator, I am.
        Senator Bumpers. So far, there are 47 cosponsors, only 2
    Democrats, but it says it is the policy of the United States to
    deploy as soon as it is technologically possibly an effective
    national missile defense system capable of defending the
    territory of the United States against limited ballistic
    missile attack whether accidental, unauthorized, or deliberate.
    Have you read this bill? Have you looked at it?
        General Lyles. Yes, sir, I have.
        Senator Bumpers. Are you comfortable with some of the
    language in it? For example, there is no definition of
    technologically possible, and it does not define territory of
    the United States. For example, does it include Guam?
        General Lyles. I'm not sure what is meant by territory in
    that particular bill so I'm not clear as to whether or not that
    does.
        Senator Bumpers. It does not say that this defense system
    has to be ABM compliant. I assume though that that is a given
    by both the administration, you and the Department of Defense.
        General Lyles. Again, Senator Bumpers, as we stated before,
    our program will be developed in a treaty compliant manner, ABM
    Treaty compliant manner; but when it comes time to making a
    decision to where to and when to deploy, we will deploy to make
    sure we're protecting the United States. And if they have to
    relook at the ABM Treaty--I think that's what Dr. Perry said--
    we will do that.
        Senator Bumpers. Thank you very much, General Lyles. I have
    maybe two or three questions I might submit to you in writing.
        General Lyles. Yes, sir. Sure. I would be very happy to
    answer those. Thank you.
        Senator Bumpers. Thank you, Mr. Chairman.
        Senator Stevens. Senator Bumpers, I am sure you realize
    that there is nothing in the ABM Treaty that specifies Grand
    Forks. It is one site in the United States.
        Senator Bumpers. I did not say that.
        Senator Stevens. Senator Domenici.

                                 Airborne laser

        Senator Domenici. Thank you, Mr. Chairman. General Lyles,
    many Americans would be astounded to know that we have no
    ballistic missile defense at this point. People would probably
    be surprised that we have no missile defense in place.
        It seems to me you are in a dilemma because you have to
    decide whether you are going to do something in the short term
    that will be partially effective or wait for a longer-term
    solution that will be more effective. That is what I am hearing
    you indicate your concerns about in terms of technology
    availability and which program might work and to what extent.
        I have a concern that as each of the branches of the
    military proceed to carry out their budget squeeze that you
    will not be involved in their budgets as it pertains to their
    participation in the ballistic missile defense system. I
    believe we could go down the one path which says full speed
    ahead here where in another department things are slowed down.
    With the Air Force being short of money, it may be going down a
    slower path in something that contributes to the solution. So I
    have two issues involved, just to point up my concerns. I
    understand that the Air Force has some very, very exciting
    technology by way of the Phillips Laboratory in Albuquerque,
    NM.
        General Lyles. Yes, sir.
        Senator Domenici. And tied into some of the other big
    laboratories which have worked on the airborne laser system.
    Now, let me ask are you certain that even though that program
    is exclusively within the U.S. Air Force, that as the Air Force
    has to cut its budget that somebody is speaking up when the
    budgets are prepared that this is a very distinct function that
    is bigger than the Air Force, it is part of the overall system,
    and that they get adequate funds for something like the
    airborne laser?
        General Lyles. Senator Domenici, I am very confident about
    that for two reasons. One, the very strong commitment that we
    see from the Air Force leadership to ABL and not just ABL in
    terms of how it supports missile defense, but as you stated,
    that it is such revolutionary technology it stands a chance of
    revolutionizing air warfare for the future. And so I, literally
    having talked to the Chief of Staff and the Secretary of the
    Air Force know that they are absolutely committed to making
    sure the ABL Program progresses.
        The second reason is we have very good relationships with
    all of the Services who are involved in missile defense, and I
    clearly do have an opportunity to voice concerns if I see that
    there is some inequity or something going on where money might
    be in jeopardy. So I don't feel that we will be isolated. I
    feel very confident that we'll have an opportunity to raise any
    concerns.

                           White Sands missile range

        Senator Domenici. Now, let me raise another issue that has
    bothered me because I am not sure whether the management and
    future of it is being looked at from the standpoint of your
    ballistic missile needs. Let us just take the largest inland
    test site that we have in America that America has any control
    over which is White Sands. Are you aware that in the current
    Army's budget that missile range is going to be restrained in
    terms of personnel and capacity because the Army does not have
    enough money to continue to man it in the manner it did before?
    Again, since that has something to do with testing the kind of
    weapons you are talking about, are we sure that one hand is not
    restraining something because of budgets while you are going to
    have a demand that you cannot meet your goals in 5 years
    because the ranges are not up to it?
        General Lyles. Senator, we are, I think, fairly familiar
    with the problems and challenges they have budgetary wise for
    all their ranges, and not just the Army. I think all the
    services do. So I am familiar with that. One thing that we try
    to make sure--again, we have a very strong linkage with the
    range community; and from time to time in specific areas, we've
    actually provided additional funding to help them in various
    places.
        Some of the manpower, and operation and maintenance things
    are not necessarily our responsibility; but we do get a chance
    to raise concern if we see that cutbacks or reductions in those
    areas might jeopardize our opportunities to have successful
    flight tests. So again, we do get a vote in the process.
        Senator Domenici. So being a little more precise, you have
    certain ideas about the kinds of tests you are going to have to
    have over the next 5 or 6 years?
        General Lyles. Yes, sir.
        Senator Domenici. You have talked about them here. Are you
    sure that you will not be 3 years down the line and come up
    here and say, well, we do not have the testing capacity at
    White Sands or one of the others because we cut back at a point
    in time when we let somebody work on them without the impact
    potential of our missile defense program? Are you sure that is
    not going to happen?
        General Lyles. Senator, my answer today to that question is
    yes; but since I like to be thorough and always completely
    honest, I'd like to, if you could, since I have been asked that
    specific question to go back and look at the situation as it
    stands and then if you like I can report back to you or the
    committee and tell you what I think about that. Today, my
    answer is yes; but I want to be thorough.
        Senator Domenici. Mr. Chairman, can we ask him to do that
    and report back to you and the committee on his findings?
        Senator Stevens. Sure.
        [The information follow:]

                        White Sands Missile Range [WSMR]

        Recent cuts in the White Sands Missile Range (WSMR) budget
    have resulted in a reduction in the civilian work force
    (approximately one-seventh of the total remaining civilian work
    force) as well as military Operations and Maintenance (O&M) and
    other military field support personnel. Personnel cuts have
    been fairly consistent with reductions in work load. WSMR is
    carefully planning budget cuts to reduce overhead cost and
    posture themselves to be more competitive in the future. WSMR's
    plan is to maintain a core capability in all areas and
    establish contracts that can supplement the core and provide a
    surge capability to cover periods of increased activity.
        At this point, WSMR will be able to support any planned
    BMDO tests. BMDO testing at WSMR will be reduced in the years
    ahead with THAAD moving toward the Engineering and
    Manufacturing Development (EMD) phase at Kwajalein, PAC-3
    entering the production phase and Navy programs conducting
    their testing at the Pacific Missile Range Facility (PMRF).
        If additional funding cuts occur in the future, we will re-
    assess our test infrastructure requirements.

        Senator Domenici. Thank you very much.
        General Lyles. Yes, sir. Thank you.
        Senator Stevens. Senator Inouye.
        Senator Inouye. Thank you very much, Mr. Chairman. Of
    course, I apologize for being late. As you know, there was a
    very important confirmation hearing this morning. I am not
    certain whether these questions have been asked, General.
        General Lyles. That's fine, sir.

                                   THAAD UOES

        Senator Inouye. But last year we had our seventh test of
    the THAAD; and once again, it missed the target. Do you agree
    with me that we should not begin to purchase these missiles in
    the absence of multiple successful tests?
        General Lyles. Senator----
        Senator Inouye. I ask this because I have been told that
    when we get the first successful one they are going to start
    purchasing. Is that the policy?
        General Lyles. It's not exactly, Senator Inouye. The plan
    is to procure after one intercept or to turn on the contractor
    to procure what we call user operational evaluation systems
    missiles. They would be procured or actually bought with
    research and development dollars. They're primarily for test
    purposes. That's the original purpose of those particular
    missiles. But as the name of that project or that initiative
    implies, user operational evaluation system, we intend to allow
    the users, the soldiers in the field to work with those THAAD
    missiles, work with the other components of the THAAD system,
    get familiar with it, maybe even identify some problems with
    it. And our plan was to procure 40 of those advanced missiles,
    if you will.
        As I stated in earlier comments and stated in my opening
    statement, we've tried to make sure we lay out and do that in a
    smart manner. Our contract says, yes, after one intercept we
    will turn the contractor on to procure those 40 missiles, but
    we've laid out a schedule so that there's lots of other
    testing, ground testing, software testing, hardware-in-the-loop
    testing to give us confidence that we know exactly how the
    THAAD Program is proceeding.
        We have three major reviews that are planned before we
    fully obligate dollars to this particular initiative. And if we
    stick to the schedule, we will actually have two more flight
    tests before we will actually fully commit and obligate all of
    our dollars. So from a contractual standpoint, you're right,
    Senator, the plan is to turn on the contractor to procure those
    40 missiles. But from a good stewardship of the dollars for the
    taxpayer and for our program, we've laid out a series of
    reviews and other activities before we formally and finally
    commit all the money to it.
        Senator Inouye. So you believe that BMDO should exercise a
    greater oversight role considering some of the problems we have
    had with the Army and the contractor?
        General Lyles. We do have responsibility for the oversight
    role today. I will not fool you or tell you that we don't have
    some issues sometimes where we need to have tighter controls,
    but I am working toward that objective with the full support of
    my bosses.
        Senator Inouye. We have been told time and again that
    flight testing is very expensive so we have gone into computer
    testing. Do you have confidence in relying on computer testing?
        General Lyles. Senator Inouye, the test philosophy I talked
    about in one of the charts that I left during my opening
    statement, there's a sort of hierarchy of testing that we'd
    like to do for all programs, not just missile defense programs.
    And it really is to wring out the design, understand what the
    design is, do that in a very, very robust manner starting with
    modeling and simulation computer testing, subsystem testing,
    component testing, all the things that you want to do in a
    smart manner to understand things so you don't try to answer
    all the questions in a single flight test.

                            Modeling and simulation

        And so we are relying and actually need to do more reliance
    on modeling and simulation and computer testing. To answer your
    question specifically, that's the way we all need to do things.
    We need to make sure the models are very reliable and robust
    and accurate. There's a lot that needs to be done to make sure
    that's true. But I think you're going to see more and more
    reliance--again, not just in ballistic missile defense, but in
    other programs--of doing more robust modeling and simulation in
    computer testing and then saving flight tests to verify that
    your models are right. And they answer those kinds of
    questions.
        Senator Inouye. I ask this because we have been advised
    that THAAD has undergone about 10,000 computer intercept tests
    and all of them succeeded. In the computer, you have succeeded
    10,000 times. In real flight testing, not one. Something is
    wrong there.
        General Lyles. Yes, sir, there is. And I can tell you
    specifically in terms of THAAD because we have wrung that
    system completely over the last year. It's one thing to have
    successful modeling and simulation computer runs to show that
    you can do it. There are two things that are required there, to
    make sure the models are accurate and that they are reflecting
    truth if you will. I think that's the case with THAAD. I feel
    very confident about THAAD.
        But if you look at the four intercept failures we had,
    those four failures, each different, a different failure
    mechanism, all were pointed back to one key entity--two of them
    I guess you'd say. One is reliability and good reliability and
    a lack of understanding about the design margins. They were not
    failures in the design. We think we feel very confident from
    all the things we've looked at in the past year, that the
    design is sound.
        But our reliability program and what we knew about the
    design margins on the various components was not very--not
    where I'd like it to be, and that's where we have focused our
    efforts over the last year, to make sure we understand and
    qualified all the components, all the subsystem, that we
    understand the design margins. That's the kind of smart thing
    you do in developing a program, and we've had to go back to put
    emphasis on that in the last year.

                                 Navy area wide

        Senator Inouye. General, I have been advised that the
    testing for the Navy's area wide defense will begin at the
    Pacific missile range sometime in the last quarter of 1998. But
    we have been told that facility and instrumentation upgrades
    would be necessary. How much do you have in your budget for
    this purpose?
        General Lyles. We are working with the Navy to define all
    of that now, Senator Inouye. I'm trying to find my notes to see
    if I can give you an accurate answer. I think it is to the tune
    of a couple of million dollars, but let me provide that answer
    to you for the record to make sure it's completely accurate,
    but we are working with the Navy on that.
        Senator Inouye. I would appreciate that.
        [The information follows:]

                     Pacific Missile Range Facility [PMRF]

        The fiscal year 1999 Presidents Budget includes $34.867
    million (fiscal year 1997 and fiscal year 1998 funds) for
    Pacific Missile Range Facility (PMRF) Upgrades. Congress added
    $4.692 million in fiscal year 1997 and $4.852 million in fiscal
    year 1998 to Navy research, development and test (RDT&E) funds
    for Optical Sensors and other PMRF upgrades. These funds were
    reprogrammed to BMDO RDT&E Defense-Wide in April 1998. The
    revised amounts total $8.882 million in fiscal year 1997 and
    $35.529 million in fiscal year 1998 funds for a total of
    $44.411 million in the BMDO budget for upgrades at PMRF.
    Necessary upgrades will be complete in order to meet Navy Area
    testing requirements in fourth quarter 1998 (first quarter
    fiscal year 1999.) All remaining efforts are scheduled to be
    completed by fourth quarter fiscal year 1999 and in place for
    system testing in first quarter fiscal year 2000. Further
    upgrades are not planned at this time, and funding for such is
    not included in the fiscal year 1999 Budget.

                              Arrow third battery

        Senator Inouye. In previous statements, you have noted that
    our Nation derives a lot of benefits from its participation in
    the Arrow Program. The Israelis have identified a need for a
    third battery because the two batteries will not cover that
    State. What is your view on the need for a third battery?
        General Lyles. Senator, we participated with the Israelis,
    and they worked very closely with us to analyze ways that we
    could help them and actually help ourselves to address the
    potential emerging medium-range threat in the Middle East,
    particularly from Iran. Our analysis done with them shows that
    there is benefit of having a third battery. There's some
    additional more robust coverage, overlaps in coverage, of
    having a third battery. And so from that standpoint, I think as
    even stated by the Secretary of Defense, we understand there is
    a benefit from having a third battery. The issue is how to
    procure that third battery.
        And at least in our program within BMDO, we are not allowed
    from policy standpoint of buying hardware for them. We help
    jointly develop a capability, but our responsibility is not to
    buy hardware for them, and there are other means that are being
    addressed to figure out how to do that.
        Senator Inouye. Mr. Chairman, I was very interested in the
    question asked by my colleague from Arkansas on the so-called
    Cochran-Inouye missile bill. I would just like to state that I
    was most honored to be called upon by the Senator from
    Mississippi to join him in this endeavor, and he has spent much
    time in drafting this.
        But we all know that this science is still at its infancy,
    though we have been involved in it for several decades. There
    are changes all the time. And obviously, we would have to work
    out legislative intent and definitions as we move along in the
    legislative process. I hope that you will work with us as we
    progress in its consideration in the Congress.
        General Lyles. Yes, sir, we will.
        Senator Inouye. I thank you very much.
        General Lyles. Thank you, Senator.
        Senator Stevens. Thank you. Senator Hutchison.

                                     PAC-3

        Senator Hutchison. Thank you, Mr. Chairman. I appreciate
    you calling this hearing because this is a great concern of
    Congress. Both the deployment opportunities for the
    intercontinental or the national missile system as well as the
    development of the theater missiles. I would like to ask you a
    couple of questions starting with the Patriot 3. I think that
    Senator Bumpers was correct. Many of us got the wake up call in
    Desert Storm about the lack of ability to defend our troops in
    the field from Scud missiles and other types of incoming
    missiles. The Patriot 3 by all accounts is testing well. I
    would like to ask you when it will be ready to be fielded for
    actual use?
        General Lyles. Senator Hutchison, our plan is to have the
    PAC-3 in the inventory by the end of fiscal year 1999. That's
    our current schedule for PAC-3. We're on track with that.
    Assuming we have successful intercept tests starting with our
    test this summer, we think we can stick to that schedule.
        Senator Hutchison. Well, let me ask you if there is
    anything that you could do or anything that we would need to do
    to allow you to be able to make that not longer, but shorter?
        General Lyles. I don't think in terms of that particular
    program, the PAC-3. It has progressed very, very well, just as
    you said, Senator.
        Senator Hutchison. And the testing that you are doing you
    feel is enough?
        General Lyles. The testing so far. We haven't started the
    actual intercept test. That's the--our first one of those is
    going to be this summer. And I think we're going to be very
    successful with that, but we haven't started that series of
    tests yet. I hesitate to say there's anything we could do to
    try to accelerate that program any further.
        What provides us some comfort, however, is the answer I
    gave to Senator Bumpers that the capability we have in the
    field today--the Patriots in the field today can and actually
    have been proven--are capable of countering the current threat.
    Now, where we need PAC-3, of course, is particularly hit-to-
    kill lethality capability to counter weapons of mass
    destruction. So we do not have a window of vulnerability right
    now, but I don't think we can actually accelerate PAC-3. It has
    really been very successful, and I hate to try to tinker with
    it right now.
        Senator Hutchison. OK. Because we know that the original
    Patriot was not meant to hit missiles. It was meant to hit
    planes.
        General Lyles. Exactly.
        Senator Hutchison. Therefore, the accuracy rate was not
    what we thought it would be, but that would have been a severe
    change in position.
        General Lyles. Yes, ma'am.

                              NMD three-plus-three

        Senator Hutchison. All right. The next question that I have
    is on--it is along the same line, but in a different direction
    from Senator Bumpers, and that is the three-plus-three.
        General Lyles. Yes.
        Senator Hutchison. I got the impression he thought that
    that was perhaps too long. I think it is too short. And I would
    like to ask you if there is any more R&D that we could be doing
    that would make the three-plus-three shorter in opportunity
    because I do not think the ABM Treaty--the ABM Treaty is being
    used as an excuse not to deploy, but I do not think that is
    going to be a valid excuse. So I think we have got to go
    forward full force to do what is right for our country and the
    ability to protect our shores. So, therefore, from that line,
    is there anything that we could be doing if we did not have
    artificial barriers like the throwing up of the ABM Treaty to
    make the three-plus-three shorter?
        General Lyles. Senator, I don't think so. To be perfectly
    honest with you, as I stated many times before Congress and
    others, we have a very, very high risk program today in terms
    of schedule constraints. We are compressing our normal
    development cycles, but doing it rightfully so because of the
    concern about the threat just like you stated.
        But I don't think there's any way we could try to
    accelerate that program any more than what we are currently
    doing. We have a minimal number of flight tests that are
    planned for the program. Three-plus-three, as you know, is
    envisioned that based on literally two no more than three
    intercept tests, total intercept tests, integrated systems
    tests, that we will look at the program in terms of its
    capability, look at the threat and might have to deploy that
    capability--again, depending on the threat--just based on three
    tests.
        That is unprecedented for any of our programs in the
    Department of Defense. I would hate in terms of getting an
    effective program, an effective capability, to try to skip
    anything, rush anything. I just don't think there's anything
    more we can do.
        Senator Hutchison. Well, I really was not in any
    disagreement with Senator Inouye about making sure that before
    we go into production we have it down right.
        General Lyles. Yes, ma'am.
        Senator Hutchison. But I just want to make sure we are
    doing everything in the research and development phase in as
    short a period as we can to make sure that we have it right
    with whatever testing is necessary to determine that and then
    be able to go into full production at the earliest time.
        General Lyles. Yes, Senator. Given, again, the high risk
    associated with this compressed schedule we are doing
    everything. The one thing I keep getting reminded by the
    program manager, General Cosumano, is that even if we wanted to
    do some additional testing we have some what we call long lead
    times to actually buy hardware, put it together to support some
    of our supports. It takes 24 months to actually build up the
    kill vehicle on the top of the intercept missiles. And we don't
    think there's any more we could do to try to compress the
    schedule because of things like that, in addition to the high
    risk associated with it. But we are aggressively pressing on as
    fast as we can.

                                Arrow technology

        Senator Hutchison. The next question is regarding the
    Arrow. By sharing in the development of the Arrow, to the
    extent that you can say here, what are you learning and what is
    that going to do for our national missile defense or the THAAD?
    Are we learning things that are relevant for the development of
    our own missiles?
        General Lyles. Yes, ma'am. And it is literally a two-way
    street. It's a shared development between us and the Israeli
    Government. We are learning things primarily that apply to our
    theater programs. In a couple of specific areas, the seeker,
    the mechanism that actually has to discriminate and determine
    what is the target in the threat environment, the seeker
    technology we're planning for the THAAD Program is identical to
    the seeker that is already in the Arrow system.
        So it's a new technology for us to some extent here for our
    missile defense program. NSB is the scientific name for the
    specific seeker. They are using it, testing it, working with it
    today in the Arrow Program. We are applying the same technology
    to the seeker for the THAAD Program. So we're learning from
    them because they've had a lot more experience. There is shared
    technology work in terms of the algorithms we have to develop
    to seek, discriminate, and hit the specific target and so it
    really is sort of a shared development for us.
        Senator Hutchison. Do you think it has a chance to help us
    work out the problems with the THAAD?
        General Lyles. It does primarily from that one component,
    the seeker. Not some of the others because of the uniqueness in
    the system. The Arrow system is an endo-atmospheric system
    designed to kill the threat below 100 kilometers. THAAD is
    intended to be both endo and exo, to kill both slightly below
    and above 100 kilometers. So we're operating in two different
    regimes, but there are some lessons learned primarily on how do
    we use, how do we work with this particular NSB seeker? That's
    the primary area where they've been able to help us.
        And by the way, we have had THAAD people going to Israel
    and Israelis coming down to Huntsville to make sure that we are
    sharing in the technology from that standpoint.
        Senator Hutchison. All right. Thank you very much, General.
        General Lyles. Yes, ma'am.
        Senator Stevens. Senator Cochran.

                                   BMDO costs

        Senator Cochran. Thank you very much, Mr. Chairman. General
    Lyles, one of the questions that has come up is the total cost
    of the BMDO office and whether or not there are ways to achieve
    economies and use more program dollars for actual research and
    development of systems rather than on overhead and bureaucracy
    within BMDO. Have you taken a look at that and tried to find
    ways to cut down on the costs of the bureaucracy?
        General Lyles. Senator Cochran, we--not only have I taken a
    look at it, but more specifically, my deputy, Adm. Dick West,
    who is sitting here in the audience, started looking at this
    issue before I came on board to BMDO. And I can tell you,
    Senator, we have literally scrubbed our program, scrubbed our
    office within the Washington community, but more importantly we
    put some mandates on our program officers out in the field to
    reduce their overhead. We have--that is a success story, and
    I'd love to come back and show you exactly what we've done.
        Senator Cochran. It would be good if we could have some
    specifics. There is a question about whether you need
    congressional liaison, for example. When OSD already has that
    and each service has that, do you need that? That is an
    example.
        General Lyles. Yes, sir.
        Senator Cochran. But the specifics would be helpful in
    understanding your budget needs for the next----
        General Lyles. I'd love to come back and show you, Senator,
    what we've done, also what I've mandated for the field. I think
    that's also critically important.

                               Program deadlines

        Senator Cochran. There have been some questions already
    asked by other Senators about some of the specific programs and
    the progress being made to meet this Three-Plus-Three Program
    deadline. Let me ask you a question just looking at the logic
    of the current policy. Do you recall in your experience any
    other program for the development and deployment of a weapon
    system where we set up these deadlines like three-plus-three?
        General Lyles. I cannot in all honesty recall any specific
    ones, Senator.
        Senator Cochran. No; a lot has been made of the Welch
    report saying that what this has amounted to really is a rush
    to failure. Do you agree with that report? What is your
    reaction to it?
        General Lyles. Well, again, Senator Cochran, while I agree
    with the key points made by General Welch and the other members
    of that study team about how we should do testing and we should
    do hierarchal testing, we also recognize that for our missile
    defense programs we have some threats that we're very concerned
    about or emerging threats and so we have a hedge strategy in
    some cases where we recognize we're taking some high risk from
    normal practices to ensure that we can develop a capability as
    quick as possible.
        The onus is on me. The onus is on all of us to go back and
    ensure as I stated earlier that we haven't deviated so much
    from that philosophy that we are going to have guaranteed
    failures. So we're going to go back and relook at our test
    programs.

                                Lessons learned

        Senator Cochran. One thing that we observed is that there
    have been so-called unsuccessful intercept attempts in the
    THAAD Program. People talk about whether it is a success or
    unsuccessful, whether you hit it or you do not hit it,
    oversimplifying, I think, in trying to reduce complex
    information and data to a one sentence erroneous assumption.
    Has BMDO learned anything useful from these so-called
    unsuccessful tests that people criticize?
        General Lyles. Yes, sir; we--actually, we always learn from
    unsuccessful tests. And there've even been statements made by
    people as notable as Dr. Gansler, our Under Secretary for
    Acquisition and Technology, that you learn more from
    unsuccessful tests than you do from successful tests. And
    that's literally true for the most part. We have learned a lot.
    We've learned a lot about our process for setting up the
    programs and reviewing the programs. We've learned a lot about
    making sure we stick to good, sound systems, engineering
    practices, for all of our programs.
        We've learned some technical things; but in all honesty, I
    think the primary thing we've learned from the THAAD Program
    because those were different failure mechanisms and mostly all
    attributed to poor reliability or quality control is that we
    need to make sure we don't lose emphasis on that. So we have
    learned a lot, and we are applying those lessons learned to all
    of the other programs.

                             managing Program risks

        Senator Cochran. One thing that you said recently to the
    Armed Services Committee was that you would like to have more
    flexibility in the management of the missile defense program
    and that some of the risk in the program--when we were talking
    about rush to failure and that kind of thing--is due in large
    part to the schedule compression of current policy. Let me ask
    you, as a professional acquisition officer, if the National
    Missile Defense Program were to be put on a more normal
    schedule, like other programs for development and deployment,
    would this be helpful in terms of managing the risk and making
    a more rational program for the national missile defense
    system?
        General Lyles. Senator, to answer your specific question as
    an acquisition expert and as a techie, a technology guy, you
    always want more time to do more testing, et cetera. So the
    answer to the question generically is you can certainly reduce
    more risk, have more confidence in the program when you have
    more time. This program is laid out as a hedge strategy though
    with a recognition that we need to take the risk because of the
    emerging threats out there. So we have to balance those two.
        And one of the reasons for bringing a prime contractor on
    board is not just to have Government people looking at this,
    but to have industry, the top notch industry we have in our
    country, to take a look at this issue where are those specific
    risks and what kind of testing and schedules do we need to do
    to make sure we mitigate and reduce those risks so we can have
    a successful program.
        Senator Cochran. Would you say if the NMD Program were
    restructured to require deployment as soon as the technology is
    ready, the system you are developing now and would put in the
    field could be accurately described as old or obsolete
    technology?
        General Lyles. No, sir; I would not say it's old or
    obsolete. Everything we're doing in this area is sort of
    leading edge in many respects. So I could not use those
    adjectives.

                           Threat and countermeasures

        Senator Cochran. There is a program that we funded that
    simulates a country's capability to develop their own cruise
    missile from scratch. We are learning interesting things about
    what other countries, who are not considered to be threats in
    the missile technology area, are capable of doing. Is this a
    valuable learning experience for us in determining what the
    threat might be to our own country from missile technology
    development?
        General Lyles. Yes, sir, Senator. As a matter of fact, I
    made a comment in my opening verbal statement that the threat
    and countermeasures program, which you have been very, very
    strongly supportive of, has been very helpful to us and will
    continue to be so to make sure we understand what are the
    capabilities out there.
        The specific program you mention, as you know, we're trying
    to evaluate what happened in the flight test attempt to see if
    there was some error in accomplishing that program or whether
    or not that was some indication of how difficult the problem
    is. So we owe you and others an answer as to what that flight
    test failure indicated.
        Senator Cochran. There is also a recent report about how
    outside assistance has helped accelerate the development of
    missile capabilities in other countries. One example was Iran
    receiving assistance from Russia in the development of the
    medium-range missile there; another is Pakistan, where we saw
    assistance from an outside country accelerate the missile
    development program. We directed in our bill last year, an
    assessment of the feasibility of other countries' abilities to
    construct long-range ballistic missiles.
        What can you tell us about whether you have had an
    opportunity to examine ways to assess what new breakthroughs
    are possible in ballistic missile development and that other
    countries may be capable of from such outside assistance?
        General Lyles. Senator Cochran, for that specific threat
    and countermeasures program, as you know, we just started in
    earnest to address that. We've laid out a sort of two phase
    approach in doing that. Starting with doing the kind of things
    any rogue nation or any nation might have to do and that's the
    initial design stuff, the design work and how can they actually
    do that.
        Our team that's involved in that particular effort is now
    starting to do that, emulating a Third World country, if you
    will, to see how tough that job is. And we're very hopeful
    we're going to get some answers as we proceed through that two
    phase program.

                            Navy theater wide/THAAD

        Senator Cochran. My final question is that the CNO told us
    the other day that he viewed the Navy theater wide and THAAD
    programs as complementary to each other from an operational
    military perspective. Do you share that view and can you
    explain why it is important to procure both of these upper tier
    theater missile defense programs?
        General Lyles. Yes, sir, I do share that. Our analyses,
    operational evaluation analyses done sometime before I came on
    board and done a couple of different iterations since I've been
    at BMDO, show that we need our entire family of systems, upper
    tier and lower tier. When you think of THAAD specifically and
    Navy upper tier, you need to think in terms of specific
    scenarios. As an example, this is just one example, if you have
    a mature theater with assets on hand, et cetera, like THAAD for
    Navy upper tier, you can use that to counter the threat. But as
    we know, there are probably going to be scenarios where we have
    a developing theater where we don't have Patriots or THAAD's in
    theater, and the assets and capabilities provided by the Navy
    component that can literally steam and get ashore in the threat
    area in matters of days and give you the capability to protect
    incoming forces with their systems is just absolutely
    invaluable.
        So they are very, very much complementary. And I think we
    stick to the premise we have to have them both.
        Senator Cochran. Thank you very much. Mr. Chairman, I have
    a few more questions, but I think in the interest of time I
    will submit those for the record.
        General Lyles. Thank you, Senator.
        Senator Stevens. Thank you very much, and Senator Dorgan
    was called to the floor. He also wants to submit his questions.
        Senator Shelby.

                                  THAAD status

        Senator Shelby. Mr. Chairman, I have a number of questions
    that I would like to submit for the record. Other than that, I
    just want to welcome General Lyles. We worked together on a lot
    of occasions on this, and I may have missed this and this
    question may have already been asked and answered, General,
    because I was late getting here. But THAAD, where are we with
    THAAD at the moment?
        General Lyles. Senator Shelby, we've been working
    diligently.
        Senator Shelby. If you have answered that, I will get it--
    --
        General Lyles. No; I don't mind. We've been working
    diligently for the last year to address the flight test
    failures and other anomalies we've had under the program.
    Primarily addressing the quality and reliability, systems
    integration, systems engineering testing that admittedly was
    not done robustly enough previously.
        The four failures we had were all random different types of
    failures that all could be pinpointed to one key thing, poor
    reliability and quality work. We didn't understand the
    robustness of the design. So our focus has been one, to verify
    that the design is sound, both we and Lockheed Martin, the
    prime contractor, have done that. And also to go back and do
    all the testing so we know exactly what we have, and we're now
    leading up to have our next intercept attempt that I feel
    confident we'll be ready for in the middle part of May, next
    month.
        Senator Shelby. General, why put so much emphasis on one
    test here, on one test there? Whereas if you tested, if you had
    10 tests, you know if you hit 6 out of 10, you know you would
    adjust accordingly, but to just put all the emphasis on one
    test, especially where the technology is so promising is that
    sort of a shallow approach to that?
        General Lyles. No, sir, it isn't, Senator Shelby.
        Senator Shelby. It does not seem logical.
        General Lyles. It's not a shallow approach, but we have a
    series of tests, of course. But the reason we're putting so
    much emphasis is because we've had the four anomalies and four
    failures. And normally, in this stage of an acquisition
    program, a DEMVAL, demonstration validation, you expect to have
    failures.
        Senator Shelby. Sure, you do.
        General Lyles. But our missile defense programs are so
    important----
        Senator Shelby. But you do not destroy the system because
    of that. You improve it and you learn.
        General Lyles. Yes, sir; they are so important. The
    Congress has been so good about giving us resources. We need to
    make sure we understand and we've laid out the program. We're
    doing the right things, and we are leading to successful tests.
    So we are putting a lot of emphasis and have over the last year
    to make sure we understand everything about THAAD before we
    proceed to that next test.
        Senator Shelby. But, General, just one test, though. And it
    is all public, and let us say if it is successful, great; but
    what if it fails? But that does not mean the technology and I
    know it will be to some people in the press, oh gosh the
    technology is wrong, the wrong approach. You know what I am
    getting at.
        General Lyles. I don't think that at all. I could certainly
    tell you my leadership doesn't think that. Dr. Gansler recently
    answered some questions from Congress about that subject.
        Senator Shelby. But why not more tests?
        General Lyles. We have a whole series of other tests. So
    it's not just this one test. We have a whole series of tests.
    This one test has a couple of specific milestones associated
    with it that we've talked about a little bit and that's making
    the decision to proceed to procure these user operational
    evaluation systems. But there are still lots more tests that
    are required for the THAAD Program, and that's one reason why
    the first capability won't be into the field until the year
    2006 because of all the tests that we really do have on the
    program.
        Senator Shelby. But you feel good about the basic
    technology of THAAD, do you not?
        General Lyles. Oh, yes, sir. I do.
        Senator Shelby. OK.
        General Lyles. I really do, and I feel very confident that
    the contractor, the prime contractor, has put a lot of
    attention to making sure we address the things we should have
    addressed previously, but a lot of attention to making sure
    that we are ready to proceed with the program. So I feel
    confident about the entire team.
        Senator Shelby. Thank you, Mr. Chairman.
        General Lyles. Thank you, Senator.

                                Out-year budgets

        Senator Stevens. Thank you. General, I do not want to seem
    too negative, but the BMDO budget through 2003 does not include
    the $3 to $5 billion estimated to build or deploy even a single
    site national missile defense installation. It does not.
    Neither BMDO or the Army had budgeted the $1.9 billion required
    to proceed with the next phase of development of the medium
    extended air defense system, MEADS, which is scheduled to start
    in 2000.
        Congress asked BMDO to accelerate the Navy theater wide
    missile defense and build and launch a scale model space-based
    laser satellite estimated to cost $4 billion. We had the
    feeling that if we went through the base closing rounds that we
    would find some of that money, but as a practical matter if you
    look at the budget this year compared to last year, the request
    is less than we had available last year.
        We are now scheduled to spend more money on nation building
    in Bosnia and the deployments in Iraq and NATO expansion. And I
    have just been told that the bill between now and 2003 for
    environmental clean up on existing and active military bases is
    $14 billion. Now, you tell me, General, do you think you are
    going to be able to find the money to develop a national
    defense system, develop MEADS, and accelerate the theater wide
    system and space-based laser in this climate?
        General Lyles. Senator, with the exception of the issue
    about the deployment dollars for national missile defense, my
    challenge--one of my challenges for the 2000 POM that we are
    actively working right now is to figure out how to one,
    accelerate Navy upper tier, how to fund some form of MEADS
    Program and how to continue with the space-based laser
    development that we've laid out.
        We have about $100 million or so DOD money for the space-
    based laser. In terms of progressing toward a demonstrator,
    that perhaps is not enough to do it as aggressively as some
    would like us to do, but we still want to stay on that path.
    For the Navy upper tier, we have the challenge of refining and
    getting as much as we possibly can into our budget so we can
    get that capability by 2006; or if we can figure out how to get
    it into the budget, we're trying to see if we can get it by
    2005.
        And for the MEADS Program, because of its importance both
    in terms of requirements and international cooperation, we're
    working with our partners and working internal to the building
    to see how we can either squeeze it into my current portfolio,
    the budget that we have for BMDO or get additional money to
    support it. So we have a challenge, just like you've stated,
    Senator, to try to make all that happen in this 2000 POM we're
    pulling together. But that's the challenge we're trying to
    work.
        Senator Stevens. Well, are you looking at alternative ways
    to meet the MEADS requirement?
        General Lyles. Yes, sir, we are.
        Senator Stevens. What options do you have there?
        General Lyles. We've laid out a series of potential options
    that initially have been reviewed within the building by our
    comptroller community, but we have obviously been looking at it
    from an acquisition standpoint. They looked--they include a
    cost constrained program where we try to do and meet the
    requirements but do it for less than the dollars that you just
    stated. Working again, with our partners.
        They look at an evolutionary approach where perhaps we
    don't develop every part of the MEADS Program initially. We
    develop most of it, but we defer development of some
    components. And we're looking at a few sort of out of the box
    things that can allow us to meet the requirements, but may not
    actually be able to be called a MEADS Program. So we are
    examining all the options to see how we can get a viable MEADS
    Program into our budget. But also we still want to try to
    protect the international cooperation.

                                   conclusion

        Senator Stevens. We are coming into a NATO debate this next
    week, the leader told us yesterday. And I have always supported
    NATO, but as one Senator, I have decided that I cannot see
    supporting this NATO expansion unless we get some change in our
    contributions to NATO. I do not think most people realize that
    we are still contributing at the level we did in 1950.
        Before those nations had restored their economic capability
    and this article I call to your attention, Foreign Affairs
    Quarterly, about the costs of NATO expansion. Across the board,
    we see these--well, they are really not competing, but the
    other requirements coming into this defense bill. We are paying
    the cost of peacekeeping, out of this committee. We are paying
    the cost of environmental clean up, even on lands that are
    going out of Defense ownership, the moneys are coming out of
    the Defense budget.
        And I personally see such a great strain on this budget
    that we will be prevented from achieving the objective that the
    Nation demands. Senator Bumpers was mentioning the concept of
    failure. I think it was Rickover who said, failure is no
    option. But also, the inability to provide the systems is no
    option either.
        General Lyles. True.
        Senator Stevens. I hope that somehow that we can find some
    way to assure that you will get the money you need. Again, we
    opened the hearing by congratulating you. I think you are so
    far a magician. You have kept all these balls in the air at the
    same time. I do not know how you do it. You know, a friend of
    mine said, there is only one way to carry 10 tons of birds in a
    5-ton truck; you have to keep a lot of them in the air.
        You get these systems in the air somehow or other, and we
    applaud what you are doing. Again, I think all the questions
    you have heard reflect a sort of frustration with finding some
    solution here in matching our capability with our people's
    feelings as to what we have already. Each one of us, we travel
    around the country--I am sure you do the same thing, run into
    the feeling among the populous at large that we already have
    these systems why do we spend so much money on them.
        I gave the comment to the American Chamber of Commerce in
    Paris about defense and that was the first question, why are
    you spending so much money, we have already got these systems.
    And it is amazing to me that we just cannot find the money to
    meet this demand. We hope that you have continued success and
    we are all going to keep our fingers crossed on this next test
    of yours.
        General Lyles. Yes, sir.
        Senator Stevens. Somehow or other we have to get something
    to come along to get one of them to succeed and then I think we
    will have a different attitude toward it to allow us the funds
    that you need to complete your project.
        General Lyles. Yes, sir.

                         Additional committee questions

        Senator Stevens. Well, I have got some other questions I
    will submit. I do not know if anyone else had any questions.
        [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
                   medium extended air defense system [meads]
        Question. General Lyles, has BMDO looked at pairing an advanced
    airborne radar sensor with a new or existing missile defense
    interceptor?
        Answer. The Ballistic Missile Defense Organization (BMDO) has
    conducted an independent review of the MEADS program to address
    affordability. We have examined, with the Army, several alternative
    architectures, to include the use of new and existing interceptors,
    that will support the requirements of our warfighters and international
    partners. To date, no change in the MEADS program description has
    resulted from this review.
        Inherent in the required capabilities of MEADS is the ability to
    incorporate all sensor data available on the battlefield, to include
    airborne radars. However, to substitute an airborne sensor for the
    organic sensor suites in MEADS would, most likely, jeopardize
    international participation in the program. Both Italy and Germany have
    an operational requirement for MEADS and it is highly unlikely that
    either country would be interested in pursuing a system that would
    require external sensors in order to function.
                     national missile defense [nmd] basing
        Question. General Lyles, what process will define near term threat
    and therefore drive the NMD deployment site?
        Answer. Clearly, the ultimate decision to deploy a national missile
    defense system will most likely be made by the most senior DOD
    officials in consultation with the Executive and Congressional branches
    of the government. A key factor influencing this decision will
    undoubtedly be the source and nature of the threat facing the nation.
    Several agencies and processes contribute to this assessment.
    Intelligence community documents such as the National Intelligence
    Estimate (NIE) will contribute as well as the Departments Strategic
    Threat Assessment Report generated by the Defense Intelligence Agency
    (DIA). As far as the program is concerned, key milestones such as the
    fiscal year 2000 Deployment Readiness Review and subsequent annual
    reviews of the program by the Department will routinely assess the
    status of the threat for the purpose of developing a recommendation to
    the Secretary regarding deployment. This process is no different than
    that followed in determining the threat for any DOD acquisition
    program.
        Question. General Lyles, is the Defense Department committed to the
    most effective NMD deployment, even if that dictates relocating our
    current ABM Treaty designated site?
        Answer. The ``3 plus 3'' program has always been planned so that it
    complies fully with ABM Treaty constraints during the development
    phase, but we have been careful to point out that some potential
    deployments might require modification to the Treaty. We have
    accordingly designed the program to allow a system deployment at a
    site, to be chosen after a threat is identified, which would optimize
    its capability to defend the entire country.
        Question. General Lyles, has the Defense Department undertaken
    discussions or planning to lay the groundwork for changing the Nation's
    single missile defense site designated under the ABM Treaty?
        Answer. Our NMD development program is treaty compliant and we have
    not settled on a deployment architecture. In fact, we will not settle
    on a deployment architecture until a specific threat is identified. We
    continually assess deployment locations throughout the United States as
    part of our planning to enable greatest flexibility in responding to
    various threats.
                national missile defense [nmd] cost and schedule
        Question. General Lyles, as urgent as the THAAD requirement is, we
    currently plan to equip the first THAAD unit in 2006. Can you
    realistically develop and deploy an NMD system by 2003?
        Answer. Yes, but with a high risk and a limited capability. The NMD
    Joint Program Office (JPO) has always believed that achieving an
    initial operating capability (IOC) by 2003 will require a highly
    successful and extremely well coordinated development phase over the
    next few years. However, there are no insurmountable technical issues
    and the new Lead System Integrator contractor, Boeing, has developed
    several architectures that could be deployed to reach IOC in 2003.
        Question. General Lyles, are two intercept tests, one by each kill
    vehicle concept, a sufficient basis for an NMD procurement and
    deployment decision?
        Answer. We currently have three intercept flight tests planned
    before the Deployment Readiness Review (DRR) including an Integrated
    System Test. However, the NMD Joint Program Office in conjunction with
    the Lead System Integrator are exploring the possibility of having a
    test in fiscal year 2000 prior to a DRR; due to its proximity to the
    DRR, the data from this flight may not be available at decision time.
                               threat development
        Question. General Lyles, Iran's progress on developing longer range
    ballistic missiles clearly demonstrates that determined opponents can
    acquire theater ballistic missile capability. Do you believe that
    adversaries will also seek to add penetration aids, jammers, and
    maneuvering capability to their missiles in the near future?
        Answer. We believe that some of our more capable adversaries have
    already incorporated ballistic missile defense countermeasures into
    their missiles. Our less capable adversaries will direct their efforts
    toward countermeasures in the future after they have established a
    baseline missile attack capability. For the most part, we foresee these
    countermeasures appearing on short range ballistic missiles 10 or more
    years ahead but somewhat sooner in the case of medium range missiles.
        Question. General Lyles, would penetration aids, jammers, and
    maneuvering reentry vehicles significantly reduce the capability of
    THAAD, PAC-3, and the Navy Area Defense system?
        Answer. Penetration aids, jammers, and maneuvering reentry vehicles
    are examples of potential countermeasures that could degrade the
    performance of theater air and missile defense (TAMD) systems. The TAMD
    systems are being developed with these and other countermeasures in
    mind; the ability to react to intentional or unintentional,
    sophisticated or primitive countermeasures are explicit requirements
    for the THAAD, PAC-3, Navy Area, and Navy Theater Wide Defense systems.
    The TAMD Family of Systems provides capabilities across a broad
    spectrum of threat vehicles and environments. The aggregate of the
    individual TAMD systems ensures a robust response to countermeasure
    attempts to degrade our ability to kill TAMD targets. The different
    sensors and intercept regimes (i.e., endoatmospheric, endoatmospheric/
    exoatmospheric, and exoatmospheric) make it increasingly difficult for
    enemy systems to effectively counter all elements of a multi-tiered
    defense.
                   theater high altitude area defense [thaad]
        Question. General Lyles, I understand that the more thorough THAAD
    ground testing has identified several new hardware problems. Can you
    describe these and comment on whether these issues are resolved?
        Answer. Over the past several months, the Project Office and the
    prime contractor have implemented a more rigorous ground test approach,
    as recommended by the independent review teams chartered after the
    Flight Test 07 failure. The program has conducted a complete
    reassessment of the acceptance test procedures and the environmental
    stress screening of the missile components and increased the ground
    test shock and vibration testing for several components to more
    thoroughly test the packages. This increased discipline and more
    rigorous approach to ground testing has significantly increased
    confidence in the contractor's overall quality control and flight test
    preparation processes going into the next flight test.
        This disciplined test approach has successfully identified and
    corrected problems in hardware, such as the communications transponder
    (CT), booster thrust vector control (TVC) firmware, and seeker inertial
    measurement unit (IMU), that may not otherwise have been discovered
    prior to flight.
        While conducting the pre-flight ground testing in late December/
    early January, LMMS discovered anomalies associated with the CT and TVC
    firmware and had to change out these components. The CT is a device
    used to receive and transmit mission critical in-flight information
    with the THAAD radar. The firmware in the TVC, a subassembly of the
    missile booster, determines the steering commands to be executed during
    flight. In the case of the TVC, although LMMS was able to replace the
    FT08 booster with one that was already disassembled for re-ATP
    (acceptance test procedure) and re-ESS (environmental stress
    screening), they incurred a four week delay to assemble and retest the
    new package.
        The IMU drift measurement problem was detected by LMMS during a
    pedigree review and was presented at the critical technical review as a
    concern. While the drift measurements were within acceptance test
    procedure specifications, as a precaution LMMS returned the IMU to
    Lockheed Martin Infrared Imaging Systems (LMRIS) to preclude any
    potential problems that could occur in flight. All three of these
    problems have been corrected.
                     patriot advanced capability-3 [pac-3]
        Question. General Lyles, can you describe the challenges which are
    delaying the PAC-3 intercept test?
        Answer. We have demonstrated many major design features of the PAC-
    3 missile in the first two control test vehicle firings. We have
    demonstrated launch operations, a responsive airframe, and correct
    operations of most major subsystems of the missile. We are now engaged
    in the final major step leading to the first intercept with the PAC-3
    missile--the integration of the flight seeker and its software into the
    missile. This integration has presented significant challenges which
    have resulted in more software iterations than initially planned to
    resolve interface problems. We must also complete the integration of
    three hardware-in-the-loop facilities which enable us to integrate and
    checkout the flight hardware and software. The combined integration
    efforts are a complex technical challenge that resulted in moving the
    date for the first intercept flight test to the fourth quarter of this
    fiscal year. To assure ourselves that we are not missing any technical
    problems, a government missile flight readiness review team has
    conducted an intensive review of the engineering development program
    with the contractor. This team has extensive experience with managing
    missile and software-intensive development programs. Their conclusion
    is that the difficulties currently being encountered are not unusual
    for this kind of program. While progress is being made, it will
    probably require more time and resources than originally thought. We
    will continue with our event-driven philosophy and not proceed with the
    first intercept mission, DT-3, until these technical challenges are
    resolved, and the ground tests indicate we are ready. Based on the
    team's review we are confident that DT-3 can occur in the fourth
    quarter.
        Question. General Lyles, with the Welch panel recommendations in
    mind, do you believe the current PAC-3 program includes adequate flight
    testing?
        Answer. The principal observation of the Welch report on PAC-3 was
    that the flight test program and key milestones schedules are
    compressed. An integrated review of the program in March 1998 by BMDO,
    the program office, and the missile contractor resulted in the adoption
    of a flight test schedule that balanced programmatic and technical
    risks, such as those identified in the Welch Report; cost and urgency
    of the need for PAC-3. Actions have been initiated to provide the
    additional resources from within the program's budget to fund this
    schedule. The PATRIOT Program Manager has also developed contingency
    plans to enable repetition of test flights if a failure occurs. This
    plan would minimize the schedule impact if a flight test needs to be
    repeated, but would require additional funding to replace the hardware
    consumed.
        The PAC-3 program faces a challenging mission to confirm its
    ability to consistently achieve hit-to-kill against an array of threat-
    representative targets. The Welch report echoes our view that the
    urgency of the PAC-3 program is not driving it to take high risk
    approaches to testing. The PAC-3 system differs somewhat from other TMD
    programs in that it employs more mature technologies which evolved from
    the ERINT and PATRIOT growth programs (QRP, Configurations 1, 2, and
    3). PATRIOT is a mature program with well-established methodologies and
    a proven history of success. The Welch panel indicated that the PATRIOT
    program has a legacy of disciplined design and engineering processes.
    We believe that the current flight test program has been carefully
    planned and follows a disciplined approach that enables the program to
    manage the risks incurred by the compressed flight test program.
        Another key finding of the Welch report was that the technical
    demands of hit-to-kill require a rigorous ground test program, using
    high fidelity end-to-end system simulations and analysis to reduce
    known areas of uncertainty prior to flight. This ground testing should
    also include hardware-in-the-loop (HWIL) testing of critical flight
    hardware. The PATRIOT test program employs three HWIL facilities; one
    at LMVS to conduct closed loop flight operations with the missile
    hardware and software; a second, at Raytheon, that allows evaluation of
    ground system hardware/software interfaces with missile subsystems
    (hardware and software); and a third Government facility at AMCOM,
    Redstone Arsenal, Alabama, that gives increased fidelity of missile
    guidance accuracy with a high fidelity representation of the target in
    combination with natural and induced electronic countermeasures (ECM)
    flight environments. Over 1,000 flight simulations are run before each
    flight to ensure that any technical issues and other uncertainties are
    identified and resolved. The PATRIOT program also requires a series of
    three flight readiness reviews prior to each flight to ensure that the
    missile and system integration pre-mission analysis and flight test
    procedures indicate readiness for flight testing.
                                     ______

                  Questions Submitted by Senator Thad Cochran
            theater high altitude area defense [thaad] test program
        Question. General Lyles, much has been made of the Welch report's
    phrase, ``rush to failure,'' particularly with regard to the THAAD
    program. In testimony before the Senate Armed Services Committee last
    month, however, General Welch said he had ``little doubt that we do
    have hit-to-kill technology in hand'' even if it had not yet been
    demonstrated through flight testing. Do you agree with General Welch's
    assessment?
        Answer. Yes, I do agree with General Welch's assessment of the
    maturity of hit-to-kill (HTK) technology. The HTK concept, although
    technically challenging, has been successfully demonstrated in other
    missile defense programs. The PATRIOT Advanced Capability 3 (PAC-3)
    [formerly the Extended Range Interceptor (ERINT)] program is the most
    mature of the three BMDO HTK programs under development. Using HTK,
    ERINT successfully intercepted ballistic missile targets in fiscal year
    1994 and PAC-3 is scheduled to begin additional HTK missions later this
    year.
        The problems that THAAD has experienced in its attempts to achieve
    HTK intercept have, in general, involved missile reliability and
    systems engineering. Following FT-07, I chartered an Independent Review
    Team (IRT) to assess the mission critical functions and design margins,
    as well as to review the overall system concept. Though the review made
    a number of recommendations to improve the system reliability and to
    reduce flight test risk, the IRT concluded that the THAAD system
    concept and missile design are sound. Additionally, the IRT concluded
    that there were no fundamental design limitations that might preclude
    successful THAAD intercepts and none of the THAAD test failures to date
    challenge the feasibility of hit-to-kill.
                          space-based missile defense
        Question. General Lyles, you were quoted last month in Jane's
    Defence Weekly as saying the ``best way'' to defend against future
    missile attacks is by using space-based laser weapons. Can you
    explain--from a technical standpoint--why that is, what advantages and
    disadvantages there are to such weapons?
        Answer. An operational Space-Based Laser (SBL) system provides the
    potential for being the ``best way'' to defend against future ballistic
    missile attacks for two basic reasons: Early, boost-phase, destruction
    (prior to RV and Penaid deployment) and Global availability.
        The SBL is an advanced technology, next generation concept designed
    to destroy ballistic missiles during the boost-phase. A significant
    advantage of being a boost-phase intercept system is that the
    engagements generally take place over the enemy territory rather than
    near the defended asset. The potential for dumping nuclear, biological
    or chemical weapons of mass destruction back onto the adversary's
    territory may provide a deterrence to even launching such systems.
    Secondly, the SBL will be immune to the many countermeasures that are
    conjectured to reduce the effectiveness of midcourse and terminal
    engagement systems.
        An operational SBL system provides continuous, global coverage of
    ballistic missile threats. It is immediately available, i.e., it does
    not require transport of military resources or material to trouble
    spots around the world.
        An SBL system is envisioned to augment current ground systems as
    part of a tiered defensive architecture. A boost-phase system does not
    remove the need for midcourse and terminal systems; rather, it greatly
    improves the effectiveness and robustness of the defense as a whole.
    For example, in the early stages of a theater conflict, the SBL can
    help defend our access to points of entry allowing the Airborne Laser
    (ABL) and terminal phase systems to set up and operate in theater. Use
    of the easily refuelable ABL for boost phase intercept shots where
    possible would preserve the magazine of the SBL for other missions. For
    National Missile Defense (NMD), the SBL would similarly provide the
    first tier of defense for the ground-based NMD system.
        A perceived disadvantage to the current chemical SBL system concept
    is its finite magazine depth (number of times that the laser can fire)
    before refueling is required.
                              airborne laser [abl]
        Question. General Lyles, the GAO has recently written a critical
    report on the Airborne Laser program. Do you share GAO's dim view of
    this program?
        Answer. No. The Government Accounting Office's (GAO) primary
    concerns were with atmospheric turbulence. Recent testing addressed
    these concerns and they no longer appear relevant. In the early summer
    of 1997, the GAO took issue with the Air Force's non-optical method of
    measuring atmospheric turbulence (it measures air temperature
    variations which are translated into optical turbulence values). The
    GAO expressed concern that non-optical method might not be as accurate
    as required and suggested that the more complex and more expensive
    optical technique of passing a laser beam between two aircraft would be
    preferable. Since ABL's turbulence design specification is based on
    non-optical measurements, the GAO warned that the ABL specification may
    not be correct and the expected turbulence could be understated. The
    GAO's concerns with turbulence were cleared up in late August 1997 when
    the Air Force demonstrated correlation and equivalency between the non-
    optical and optical methods. OSD conducted an independent analysis and
    agrees that the methodologies correlate. Using the validated non-
    optical method, the Air Force has collected over five times the amount
    of turbulence data available at the time of the GAO investigation in
    Northeast and Southwest Asia. The results of this in-theater data
    collection validate ABL's design specification--over 80 percent of the
    measured optical turbulence levels are equal to or more benign than
    ABL's design specification.
                     long-range air launched target [lralt]
        Question. General Lyles, in testimony before the Senate Armed
    Services Committee last month, Ambassador David Smith suggested that
    BMDO was adding unnecessary requirements to the Request for Proposals
    for the Long-Range Air Launched Target in order to avoid possible
    complaints from Russia.
        a. Has the Request for Proposals (RFP) for the LRALT been issued?
        b. Does the RFP direct the designers to include a wing?
        c. Is the wing necessary to meet the LRALT's performance
    requirements?
        d. Is the LRALT compliant with the START Treaty even without a
    wing?
        e. If the LRALT is compliant without the wing, why is the wing
    being required?
        f. What is the total cost of this requirement?
        Answer. a. Yes, the RFP was released on April 16, 1998 and we
    expect to receive proposals from industry on May 15, 1998.
        b. Yes, the RFP states that the LRALT vehicle shall sustain flight
    over some portion of its boost phase by incorporating a wing that
    produces a vertical component of lift greater than the weight of the
    vehicle for at least 10 seconds.
        c. Our engineering assessments are that a wing would probably not
    be necessary to meet the LRALT's performance requirements as currently
    defined. The addition of a wing, however, would in some circumstances
    enhance the performance of this target vehicle, which in turn would
    provide a greater margin to meet possible future requirements.
        d. BMDO does not have the authority to determine whether LRALT or
    any other system is treaty compliant. To date, no final determination
    has been made as to the START Treaty compliance of the LRALT vehicle
    since the system's design is not settled. Preliminary review, however,
    indicated that an unwinged LRALT raised START Treaty compliance issues
    that pose unacceptable risk of delaying the program. The Department
    decided that adding a wing which provides aerodynamic lift would help
    avoid concerns involving START Treaty provisions dealing with air-to-
    surface ballistic missiles.
        e. Same as d above.
        f. We have estimated the LRALT total cost for design, development,
    and a demonstration flight test to be approximately $45 million. The
    additional cost of incorporating a wing onto the LRALT vehicle is
    estimated to be $5 to $10 million. Subsequent flights to support the
    theater missile defense (TMD) test programs will be bought on a per use
    basis.
                                     ______

                Questions Submitted by Senator Richard C. Shelby
                         advanced research center [arc]
        Question. a. What is the current budget for the ARC? What is BMDO's
    future funding profile for this facility and on what did you base these
    numbers?
        b. In reference to your letter dated April 1 that stated that BMDO
    would conduct a requirements review to determine the ARC's budget, why
    would BMDO cut the future funding for the ARC before they initiate the
    requirements review process?
        c. Will the Army officials who manage the ARC participate in the
    requirements review process, and if so, at what stage of the process?
    If not, why not?
        Answer. a. In the fiscal year 1999 President's Budget Submit, the
    ARC was funded as follows: $17,341,000 in fiscal year 1998 (included
    $7,000,000 Appropriation plus-up); $7,756,000 in fiscal year 1999,
    $7,119,000 in fiscal year 2000; and $21,819,000 for fiscal year 2001-
    03. Based on recent ARC requirements discussions, fiscal year 1998
    planned funding was revised to $17,100,000. Current fiscal year 2001
    through fiscal year 2005 ARC funding is shown as zero within BMDO's
    financial planning database pending the outcome of BMDO's more
    comprehensive total infrastructure requirements review to be conducted
    this summer.
        b. The requirements review will be conducted in the summer of 1998.
    Until the review is completed, BMDO will not finalize the budget for
    the ARC or any other infrastructure facility.
        c. Yes. The Army officials who manage the ARC will be full
    participants in the review process.
          kinetic kill vehicle hardware in the loop simulator [khils]
        Question. a. Why did you direct, and I am quoting from your April 1
    memorandum, that ``all interceptor development programs funded wholly
    or in part by BMDO * * * to use the * * * Kinetic Kill Vehicle Hardware
    In The Loop (HWIL) Simulator facility at Eglin Air Force Base?
        b. Doesn't the effect of your policy take away work that has been
    conducted in Huntsville? If so, what is the basis for that?
        c. I am told that IDA conducted a study that identified KHILS as
    the only Hardware-In-The-Loop facility required by BMDO for infrared
    radiation Hardware-In-The-Loop testing. Did any of the members of the
    IDA study team have any direct Hardware-In-The-Loop infrared (IR)
    missile testing experience?
        d. Since the BMDO's charter is not to duplicate existing Service
    facilities, why did BMDO develop KHILS and why are you duplicating
    other existing test facilities, such as Arnold Engineering Development
    Center, especially considering your present funding challenges?
        Answer. a. The KHILS test facility was begun by then Strategic
    Defense Initiative Organization (SDIO) in the 1980's under Air Force
    management to take advantage of the technical expertise of the Air
    Force gained from the Advanced Medium Range Air-to-Air Missile (AMRAAM)
    HWIL experience. The facility has been designed to perform dynamic,
    closed loop HWIL experiments using realistic IR scene generation and
    projection techniques. Thus it simultaneously tests the IR seeker,
    electronics, and controls under simulated flight conditions. The kill
    vehicle may then be tested under a wide variety of conditions and
    scenarios. Through the years the KHILS facility has become DOD's center
    of excellence for these measurements. As the ballistic missile defense
    (BMD) Acquisition Executive, I have several concerns about the
    management and use of key test and engineering capabilities for our BMD
    interceptors in development. First, my objective is to avoid
    investments in facilities that fail to provide lasting value to the DOD
    test and evaluation infrastructure. This policy provides firm guidance
    aimed at preventing duplication of IR HWIL facilities within the DOD.
    Second, I am ensuring that every program has access to the technical
    expertise, equipment, and support it needs for accomplishing its test
    and engineering milestones successfully. In my judgment, KHILS provides
    the ``best technology and best practices'' applicable to all our IR
    interceptor programs. My policy memo allows for waiver procedures to
    avoid creation of program bottlenecks, and, as required, BMDO will
    provide mature technologies to other facilities to ensure the best
    practices are baselined among BMD programs. Third, the experience, the
    lessons learned, and the data developed from one interceptor program's
    test events can be utilized, compared, and applied by other programs,
    thus accelerating their development cycle. By directing them all to use
    KHILS as a common facility, I am giving our overall program another
    important means for advancing in an integrated, cost-effective way.
        b. At this time it is not clear what impact this policy will have
    on other Service facilities which could provide IR HWIL support to BMDO
    programs. The primary purpose of this policy is to baseline the best
    technologies and contain costs by preventing duplication of IR HWIL
    facilities. If a BMDO program has requirements which cannot be
    accommodated at the KHILS facility, the policy provides guidelines for
    our programs to request exceptions to the policy based on program
    unique technical, cost, and schedule considerations. Requests for
    waivers will be validated by the BMDO System Architecture Engineering
    Board. This review process will determine the level and distribution of
    our HWIL workload, however, I do not anticipate a significant
    adjustment in the level of HWIL work being conducted in Huntsville.
        c. The IDA study did not identify KHILS as the only Hardware-in-
    the-Loop facility required by BMDO. The study concluded that, ``Both
    Army Aviation and Missile Command (AMCOM) and KHILS would probably
    yield valuable data on seeker performance, particularly given the
    absence, to date, of any high fidelity HWIL simulations of the
    endgame.'' while admitting that, ``A definitive assessment of the
    ability of KHILS and AMCOM to test the THAAD seeker is limited by a
    lack of experimental data.'' The study did express a preference for the
    resistive array technology used in the KHILS over the Laser Diode Array
    Projection (LDAP) technology used by AMCOM. We should note that since
    the study, Lockheed Martin is negotiating to purchase a resistive array
    for work on THAAD at Sunnyvale, while the Navy's Applied Physics
    Laboratory (APL) has acquired a resistive array for its theater
    ballistic missile defense (TBMD) programs.
        The members of the IDA study team have several years experience
    with the KHILS, AMCOM, Johns Hopkins University (JHU)/APL, and Arnold
    Engineering and Development Center (AEDC) facilities. They have
    extensive knowledge of BMD interceptor and surveillance systems, and I
    consider them well qualified to address IR HWIL testing.
        d. When the Strategic Defense Initiative Organization began
    development of Kinetic Kill Interceptor Systems in the 1980's, they
    found it required high fidelity, fast framing, infrared imaging seekers
    to provide the precision performance data necessary to perform hit to
    kill intercepts. As these imaging systems were developed and matured,
    the complexity of functions assigned to these kinetic kill weapon
    systems amplified the need for a new generation of robust hardware-in-
    the-loop (HWIL) simulation technologies and facilities, specifically
    designed to address hypervelocity, hit to kill intercepts with infrared
    seekers.
        The Munitions Directorate of the Air Force Research Laboratory was
    selected as the single IR HWIL development and test organization, and
    the Kinetic Kill Vehicle HWIL Simulator (KHILS) facility was developed
    to accomplish this role. Designation of a single facility allowed us to
    control repetitive development and learning curve costs associated with
    each of our interceptor programs. In this role, KHILS has continually
    advanced the state of infrared HWIL technology. Their work in the areas
    of real-time infrared scene generation and projection technology has
    been exemplary. Due to the work at KHILS, we have the technology in
    hand to perform realistic, robust HWIL testing of our infrared
    interceptor systems.
        The KHILS facility and those at the Arnold Engineering Development
    Center are not duplicative. The KHILS facility is used to address
    closed-loop HWIL testing of BMDO interceptor systems with infrared
    sensors, and develop technologies associated with the generation and
    projection of infrared scenes. The BMDO sponsored facilities at AEDC
    are used to performed open loop calibration and characterization of
    space based infrared sensor systems.
                    atmospheric interceptor technology [ait]
        Question. a. I was pleased by your decision to make the AIT program
    your number one support technology program. You are currently using
    SMDC to execute the program. Do you intend to continue utilizing SMDC
    to execute all AIT development activities in the future?
        b. You directed the AIT to focus on developing technologies for low
    endo atmospheric interceptors. Do you intend to use AIT to develop high
    endo atmospheric interceptors in the out years?
        c. It is my understanding that the Discriminating Interceptor
    Technology Program is being executed by BMDO. Why is there not a
    Service Execution Agent for this program?
        Answer. a. Executing agents for AIT development activities
    currently include SMDC and Navy China Lake. Executing agents are
    selected based on their capabilities, related experience in the
    technologies being developed, and ability to develop and implement
    transition paths to enable infusion of the technology into the system
    program for which it is intended. We expect that SMDC will continue to
    be a principal executing agent for AIT development activities.
        b. AIT will focus on developing component and subsystem
    technologies for those missile and air defense interceptors which fly
    within the atmosphere: principally PAC-3, Navy Area Defense, MEADS, and
    THAAD. All of these systems, with the exception of THAAD must operate
    as missile and air defense interceptors with mission altitudes
    extending down almost to the surface. The most pressing technology
    requirements encompass the low endo-atmospheric battle space. The new
    direction for AIT is to ensure the technologies developed are
    applicable to these principal technology customers. For these reasons,
    I have focused AIT to develop those technologies needed for all of our
    current and future atmospheric interceptors. AIT development thrusts
    will be coordinated with other technology programs to provide leverage
    and avoid duplication of effort.
        c. The Discriminating Interceptor Technology Program (DITP) is
    centered about the requirements of the Services and the major defense
    acquisition programs (MDAP's) to counter the anticipated advanced
    missile threat and associated counter measures. DITP is focused on the
    regime where the physics of the problem are not significantly
    influenced by atmospheric properties. This is in contrast to our AIT
    program, which must, for example, consider aerodynamic lift and drag as
    well as other effects. BMDO provides Program Integration of DITP
    activities. Current Executing Agents for DITP include the Army, Air
    Force, Navy and BMDO to maximize leveraging opportunities, avoid
    duplication, and to exploit of the unique experience and qualification
    provided by the various Service agents. We expect that DITP will
    continue to be executed as a tri-Service program.
                                     ______

                  Questions Submitted by Senator Dale Bumpers
                          targets and countermeasures
        Question. To what extent, if any, will each of our hit-to-kill
    ballistic missile defense systems be flight tested against realistic
    targets that emulate the countermeasures and penetration aids that
    could reasonably be incorporated on threat missiles, including early
    release submunitions?
        Will such intercept tests, if any, be part of a complete integrated
    systems test?
        Answer. THAAD: Prior to Milestone II, the THAAD test program
    includes radar discrimination testing against threat representative
    targets and targets with countermeasures. During Engineering and
    Manufacturing Development (EMD), the test program includes intercepts
    against threat representative targets with countermeasures.
        NTW: Prior to Milestone II, the NTW test program includes flight
    testing against basic threat representative targets. During EMD, the
    test program includes intercepts against advanced threat representative
    targets.
        PAC-3: The PAC-3 test program, currently in the EMD phase, includes
    flight testing against threat representative targets and targets with
    countermeasures. The test program also includes testing that will
    validate the radar ability to perform classification, discrimination,
    and identification of threat representative targets and targets with
    countermeasures.
                         national missile defense [nmd]
        Question. Is NMD being designed to cope with the stressful flight
    characteristics and capabilities of Russia's new SS-27? Will NMD be
    flight tested against a target that will emulate the flight
    characteristics and penetration capabilities of the SS-27?
        Answer. The NMD system is being designed to cope with sophisticated
    missile systems. However, our primary focus for near term development
    and testing for a potential 2003 deployment is on less sophisticated
    threats, such as those that may be developed by a ``rogue'' adversary,
    with some added penetration aids. Over time, as the NMD system matures
    past its initial capability, the planned NMD development strategy is to
    evolve the system capability to address more stressing threats. This
    planned evolution includes the additional sensing and battle management
    upgrades necessary to successfully negate sophisticated missiles,
    warheads, and penetration aids.
     theater high altitude area defense [thaad]--navy theater wide defense
                                     [ntw]
        Question. I understand that THAAD and Navy Theater Wide are
    optimized for exoatmospheric intercepts of longer range (1,000-2,000
    kilometers) theater ballistic missiles.
        How effective will each system be against short range Scud-type
    missiles that spend very little time at high altitude?
        Answer. NTW is an upper tier defensive system designed to provide
    protection against medium to long range TBM's in the exoatmosphere that
    has no capability against the short range Scud-type missiles. THAAD is
    designed to provide protection against short to long range (in excess
    of the range specified in your question) TBM's in both the endo and
    exoatmosphere and has the capability to engage the short range Scud-
    type missiles. Both THAAD and NTW are employed in concert with lower
    tier systems to provide defense in depth against short and long range
    threats.
                                     ______

               Question Submitted by Senator Frank R. Lautenberg
                        navy theater wide program [ntw]
        Question. General Lyles, regarding the Navy Theater Wide Program,
    would you please comment on the relative amount of funding going toward
    system and radar technology versus missile technology?
        Answer. To date, the majority of the Navy Theater Wide (NTW)
    program funds have been used for development of the Standard Missile
    (SM) interceptor. Of the subsystems that comprise the NTW system, we
    believe the interceptor to be the most challenging. Although it
    leverages off the SM legacy, it integrates an IR Seeker and is the
    first SM variant to prosecute the threat in the Exoatmosphere. The
    Aegis Weapon system and radar technology, while challenging, leverage
    off the existing Aegis Weapon system and more importantly the Navy Area
    Defense Theater Ballistic Missile Defense program. Recently however, a
    large portion of NTW risk reduction activity funds have been targeted
    toward both the NTW Aegis Weapons System Computer Programs and radar
    technology.
                                     ______

                  Questions Submitted by Senator Byron Dorgan
                         national missile defense [nmd]
        Question. If NMD were a program with a normal development
    timetable, what would its schedule look like? When would it be ready to
    deploy? By how many years, roughly speaking, does the ``3+3'' schedule
    reduce the time normally needed to develop this program?
        Answer. The Department has directed that the current NMD program be
    a ``3+3'' program, with the potential requirement to meet a deployment
    date of 2003, consistent with Public Law 105-85. A normal MDAP NMD
    acquisition program was considered as part of the ``Quadrennial Defense
    Review'' (QDR) analyses that were prepared last year. Such a program
    would most likely conduct program definition and risk reduction
    activities through 2003. At that time it would most likely reach the
    equivalent of a MS II decision, from which an Engineering and
    Manufacturing Development phase could be initiated. An initial
    operational capability under these assumptions could be reached by 2006
    at the earliest.
        The benefits of such a schedule change were perceived by the QDR as
    greater schedule realism based on historical experiences. However, they
    also noted the potential that the threat might emerge before a
    deliberate program reached maturity, a concern also expressed by both
    the Congress and the Department. It should be noted that while we are
    executing ``3+3'', we have not discarded the normal departmental
    requirements to have metrics as criteria for passing to the next phase
    or manufacturing milestones such as design reviews, the DRR (Deployment
    Readiness Review) and IST's (Integrated System Tests).
        The QDR reached the conclusion that a high risk 3+3 program was
    justified based on the potential need for an NMD deployment. Following
    that decision, the NMD Program has been focused on meeting the 3+3
    goals, and accordingly, we have not pursued the definition of a more
    deliberate program any further.
                                  welch report
        Question. Why did the Ballistic Missile Defense Organization
    sponsor the creation of the Welch independent review panel?
        Answer. The Director, Ballistic Missile Defense Organization
    (BMDO), the OSD Director for Operational Test and Evaluation (DOT&E),
    and the OSD Director for Test, Systems Engineering and Evaluation
    (DTSE&E) co-sponsored the independent task force which reviewed best
    technologies and practices for successful flight testing. The purpose
    of the task force was to independently review current and planned pre-
    flight testing practices for hit-to-kill interceptor programs, assess
    their adequacy, and identify innovations that are needed to provide a
    high level of confidence that each flight will be successful. BMDO
    believes that it is the mark of a good organization to benchmark itself
    against other similar activities past and present. We believe in
    continuous process improvement.
        Question. To quote two of the Welch panel's ``key judgments'' in
    its report, ``The strategy of accepting a high level of risk to shorten
    schedule time has been counterproductive. * * * [2] There are high
    schedule risks and inadequate test assets and testing planned in the
    3+3 program. In the judgment of the study group, successful execution
    of the 3+3 formulation on the planned schedule is highly unlikely. The
    program will benefit from the earliest possible restructuring to reduce
    risk.'' What is BMDO doing to restructure the NMD program to reduce the
    risks of schedule slippage and program failure?
        Answer. I have asked all Program Executive Officers and Program
    Managers to review the findings and recommendations of the Welch report
    and to conduct an assessment of the programs. The goal is to determine
    how the concerns raised in the report are being implemented, if
    applicable. Further, I have told everyone I will invite the Welch panel
    to review the NMD program later in the summer after the LSI has
    established a program baseline and test and evaluation plan.
        Question. The Welch report points out that while the ``3+3'' plan
    started in October 1996, we still don't have a Lead Systems Integrator
    contract. Would it be reasonable to restart the ``3+3'' time frame when
    that contract is awarded later this Spring?
        Answer. The Department has directed that the current NMD program
    with the ``3+3'' schedule, including the potential requirement to meet
    a deployment date of 2003, remain consistent with Congressional mandate
    (Public Law 105-85). The Lead Systems Integrator contract will be
    consistent with this schedule.
                     national missile defense [nmd] siting
        Question. Has the Joint NMD Program Office been inspecting sites in
    Alaska to evaluate them as possible sites for deployment of a national
    missile defense system? How many sites have been inspected?
        Answer. The National Missile Defense Joint Program Office has
    performed preliminary fact finding trips to existing Department of
    Defense (DOD) controlled sites in Alaska for potential use in
    deployment of a National Missile Defense System. Nineteen DOD sites in
    Alaska have been visited. These visits were used to support the LSI
    source selection process. The data collected, when coupled with our
    extensive North Dakota site data base, are important to allow us to
    carry out reasonable deployment planning without having to have a
    deployment decision prior to 2000.
        Question. Last year, in response to a similar question that I asked
    on this subject, BMDO stated for the record that ``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.'' Did BMDO seek this clearance before
    it examined the impermissible sites?
        Answer. The BMDO National Missile Defense Joint Program Office is
    performing analyses and planning to support a Deployment Readiness
    Review in 2000 and potential deployment of a National Missile Defense
    system within three years of such a decision. BMDO will seek the proper
    approval from OSD when it becomes necessary. No such clearance is
    necessary at present to collect data in order to be able to lay out
    potential deployment sites for OSD review.
                         national missile defense [nmd]
        Question. Is it technologically possible to have an effective
    national missile defense against limited attacks? Would you deploy such
    a system now? If not, why not?
        Answer. Although much work needs to be done, we see no engineering
    or technological impediments to deploying a national missile defense
    system that is effective against limited attacks. The NMD JPO has
    always believed that achieving an IOC by 2003 will require a highly
    successful and extremely well coordinated development phase over the
    next few years. However, there are no insurmountable technical issues
    and the Lead System Integrator (LSI) contractor, Boeing, has proposed a
    program approach to achieve an IOC in 2003. It would be extremely
    difficult to make a deployment decision now given the elements haven't
    yet been sufficiently developed, integrated, and tested in a fashion
    commensurate with making a prudent decision.
        Question. Does this mean that when considering whether to deploy
    NMD, the Congress and the Administration should consider other issues
    besides whether it is ``technologically possible'' to have an
    ``effective'' system?
        Answer. What the Administration should consider before deployment
    is beyond the charter of BMDO. From a programmatic perspective,
    however, I assume the successful demonstration of the system's
    capability will be key.
        Question. In your prepared statement, you mention BMDO's plans for
    the first intercept test for the NMD program.
        a. When will that test occur, in your view?
        b. Do you know which vehicle BMDO will use to launch the
    exoatmospheric kill vehicle (EKV) from Kwajalein Missile range?
        c. How many NMD intercept tests will there be before we reach the
    decision point, in the year 2000, on whether or not to deploy NMD?
        Answer. a. The date for IFT-3 is currently under review, based on
    current test status and LSI testing approach.
        b. The first intercept Flight Test (IFT-3) will use the Payload
    Launch Vehicle (PLV).
        c. Currently there are four intercept tests scheduled before the
    DRR. IFT-3 and IFT-4 are designed to be intercept tests of the two
    competing EKV designs. IFT-5 and IFT-5A are Integrated System Tests
    that will test system integration in addition to an intercept of the
    winning EKV design. However, the government and Boeing are in the
    process of reviewing the outlined NMD Test and Engineering Master Plan
    and schedule based upon the LSI award.
        Question. What is the status of the Air Force's Minuteman option
    for national missile defense at this point?
        Answer. There is only one Department of Defense national missile
    defense program, the ``3+3'' program which is managed by the NMD JPO.
    While developing the NMD program, a number of alternative options were
    studied. After review of these options, it was decided to retain some
    Minuteman test resources and the booster as potential system
    components. A booster for the NMD 3+3 program has not been selected at
    this point. Currently, the Minuteman booster is under consideration as
    is a Commercial Off-The-Shelf (COTS) booster. The selection will be
    made by the Government within 90 days of the Lead Systems Integrator
    contract award.
                   theater high altitude area defense [thaad]
        Question. Does the next THAAD test, in early May, have as one of
    its goals the interception of the target? If the interceptor misses the
    target, how can this subcommittee justify continued funding of the
    THAAD program?
        Answer. Yes, an intercept is one of the flight test goals. Even in
    the event of an intercept failure, the requirement for a land based
    upper-tier Theater Missile Defense (TMD) system will still exist. The
    Department has invested over $3.2 billion in the program to meet a
    critical warfighter need for this capability and despite previous
    missile intercept failures, all other elements (radar, battle
    management and launcher) of the system are working.
                                     arrow
        Question. Defense Secretary Cohen visited Israel this week and met
    with Israeli Defense Minister Mordechai. Press reports quoted the
    secretary as saying after the meeting that ``we agree that Israel needs
    a third Arrow battery to improve its defenses against missile attack *
    * * [W]e are committed to the research and development level of
    funding.'' In light of this statement by the Secretary, how would you
    suggest that we act in order to secure the funding needed to help
    Israel as it works to obtain a third Arrow battery?
        Answer. The Government of Israel estimates that a Third Arrow
    Battery (which includes radar, launch control center, fire control
    center, launchers, and interceptors) will cost about $170 million. The
    Department of Defense agrees with Israel's assessment that a third
    Arrow Battery is a valid requirement for Israel's defense. However, due
    to budgetary restrictions and a lack of funding for critical U.S.
    ballistic missile defense programs, the Department is not prepared to
    ask Congress for any additional funding to cover a third Arrow Battery.
    If Congress appropriates an additional $45 million in fiscal year 1998,
    BMDO could use this to fund a greater share of the development,
    manufacture, and testing of the Arrow user operational evaluation
    system under the Arrow Deployability Program (ADP), this would then
    free-up $45 million in Israeli national funds that could be applied
    toward the procurement of a third Green Pine radar (for the third Arrow
    battery) in fiscal year 1998.
        Question. In 1996 the U.S. and Israel signed a cooperation
    agreement on the Arrow program anti-ballistic missile system. The U.S.
    share of the program was to be $48 million, or $12 million a year over
    four years. This agreement was to lead to higher interoperability
    between U.S. and Israeli systems. Last year, Congress added $12 million
    to meet the U.S. commitment under the agreement. Could you please tell
    us what progress we have made in implementing this agreement? Do you
    support the Congress adding $12 million in fiscal year 1999 to meet our
    commitment? Will the Administration be including this sum in its future
    budget requests?
        Answer. The Arrow Deployability Program (ADP) international
    agreement was amended in February, 1998, specifically to implement
    Arrow Weapon System (AWS) interoperability with U.S. systems and to
    enhance the effectiveness of the AWS. The U.S. added $48 million to the
    ADP agreement over four years ($12 million per year), subject to the
    availability of funds, and Israel added $12 million over four years ($4
    million per year). A Joint U.S. and Israeli implementation team was
    immediately formed and a program was developed to implement functions
    and equipment to allow the AWS to interoperate with U.S. theater
    missile defense (TMD). The first supporting hardware was delivered and
    installed in Israel in late April, 1998, and Israel has begun
    procurement of necessary the Joint Tactical Information Distribution
    System (JTIDS) equipment capable of exchanging data with U.S. TMD
    systems. If funding is continued, the software development and the
    hardware integration now underway will culminate in fiscal year 2001
    with the demonstration and validation of AWS interoperabilty with the
    U.S. AEGIS and Patriot TMD systems.
        BMDO supports Arrow interoperability with U.S. TMD systems. The $12
    million in fiscal year 1999 funding is needed to fund U.S. obligations
    under the amended ADP international agreement. Due to budgetary
    restrictions and a lack of funding for critical U.S. ballistic missile
    defense programs, the Department is not prepared to include the needed
    funding in future budget requests.

                              subcommittee recess

        Senator Stevens. Do you have any further questions,
    gentlemen? Thank you very much, General.
        General Lyles. Mr. Chairman, I thank you and Senator
    Inouye, Senator Shelby for your strong support. Thank you.
        [Whereupon, at 11:42 a.m., Wednesday, April 22, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 1999

                                  ----------

                             WEDNESDAY, MAY 6, 1998

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:22 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Ted Stevens (chairman) presiding.
        Present: Senators Stevens, Cochran, Domenici, and Inouye.

                             DEPARTMENT OF DEFENSE

                              U.S. Pacific Command

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

                     OPENING STATEMENT OF HON. TED STEVENS

        Senator Stevens. Good morning, Admiral. We are delighted to
    have you here, our Commander in Chief of the Pacific.
        Congress has passed the $2.9 billion supplemental for this
    year. Several members of our committee went with us to the
    Middle East, and we have been meeting with military officials
    and others since we got back, because of our questions about
    morale, and readiness, and force levels.
        I know you have some problems about your missions, and
    deployments, and we want to know how you are impacted by these
    deployments. Some of them are under your command. I know that
    the aircraft carriers that have been dispatched to the Persian
    Gulf are under your command.
        So let me say, in the interest of time, I will put my full
    statement here in the record, and we will print your statement
    fully in the record. We hope there will be others here, but I
    have to tell you, in our absence they scheduled a vote here
    soon, so we should listen to your statement, and then we will
    come back and have questions. Senator Inouye.
        [The statement follows:]

                   Prepared Statement of Senator Ted Stevens

        Good morning, the subcommittee today will hear from Admiral
    Prueher, Commander in Chief of the U.S. Pacific Command.
        The Congress recently passed the $2.9 billion defense
    supplemental bill for fiscal year 1998. That amount was
    provided to the Department of Defense for costs resulting from
    ongoing contingency operations in Southwest Asia and Bosnia.
        As you may know, several members of the committee just
    returned yesterday from a visit to our forces in Kuwait, Saudi
    Arabia and Bosnia, and to NATO headquarters.
        In each country, we met with American military personnel,
    State Department officials, and allied leaders.
        The delegation set out to assess the existing level of
    allied support, and to measure the effects of deployments on
    troop morale, readiness and the viability of modifying existing
    force levels.
        Admiral, today we want to know whether these other missions
    and deployments 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.
        I ask that you summarize the issues that you would like us
    to focus on during today's hearing, and then I believe all of
    us will have some questions that we would like to ask you.
        Before we proceed, I would like to call upon the ranking
    member, Senator Inouye, for any comments that he would like to
    make.

                       STATEMENT OF HON. DANIEL K. INOUYE

        Senator Inouye. Mr. Chairman, I wish to join you in
    welcoming the Admiral to the committee. As you know, Admiral,
    we look upon the Pacific as an important place, not only
    because we represent States in the Pacific rim, but because we
    recognize the growing importance of this region. So I, together
    with the chairman, look forward to your views.
        Admiral Prueher. Thank you, sir.
        Senator Stevens. Yes, sir.
        Admiral Prueher. Thank you very much, Mr. Chairman, and
    welcome back to all of you. Senator Inouye, it is a treat to be
    here with you today, and I thank you for the opportunity to
    represent the men and women of the Pacific Command, and also
    present a view from the Pacific and an update on what we are
    doing there.
        In addition, I thank this committee especially for their
    steadfast support to the members of the armed services for our
    piece of national security, and more specifically, for passing
    the supplemental, which will be of great benefit to all of us.
        What I would like to do this morning, and I will do it as
    quickly as I can, is present an assessment of the Pacific
    theater, provide a little bit of a logic train, which both of
    you all have heard before, for the framework for our
    priorities, and what we are working on, talk for a moment about
    readiness, and then be happy to take your questions.
        The fundamentals and what we are doing in the Pacific are
    constant, but we adjust the activities to meet the
    circumstances. As both of you all know so well, the Pacific
    Command AOR is of great importance to the United States, with
    56 percent of the population in the world there, 35 percent of
    the population of the world in India and China alone, and 65
    percent of the world's population, when one considers the
    Pacific rim in total.
        The six largest armed forces in the world are in the
    Pacific region, and 35 percent of the U.S. trade is there. It
    is peaceful, but we always are reminded of the fact that since
    1950 the number of people who have been lost in the armed
    services in the Pacific have been higher than the rest of the
    world combined.
        Our mission for the Pacific Command is for a secure, and
    stable, and prosperous Asia Pacific region as part of our
    national military strategy. Our foundation of what we do is
    based upon two premises. One is the confluence of trying to
    work the political, the military, and the economic issues
    together, to work them in consonance, and not get one far out
    ahead of the other.
        The second premise is that military security underwrites
    the stable conditions which allow for economic and political
    prosperity to occur.
        As Secretary of State Albright has said, the economic
    system rests on political order, which in turn, rests on
    military security, and this leads to our strategy in the
    Pacific, which flows from the national military strategy of
    shape, respond, and prepare, with which you are familiar, but
    ours is one of preventive defense, which is what we do day to
    day.
        It consists of exercises, what we modestly call high-level
    meetings with other nations, it's ship visits, it's what we do
    day to day. It consists of meetings, such as what we did last
    night with the National Defense University about the Asia
    Pacific. It consists of classes of the Asia-Pacific Center for
    Security Studies which is off to a good start, with Gen. Hank
    Stackpole. But this is what we do day to day to build
    relationships and to prepare and train our forces to respond to
    crises.
        The second part of our strategy is crisis response, and
    there are examples of this. We respond with credible and ready
    forces, carrier battle groups, Marine ARG/MEUS, the newly
    flagged 172d Infantry Brigade, the crisis response force that
    would come from Alaska for airborne response, and with our Air
    Force squadrons.
        This crisis response has been demonstrated most recently in
    the last couple years with response to the China-Taiwan missile
    crisis, and then also the political infighting that occurred in
    Cambodia about 7 to 9 months ago, where we responded with
    special operations forces.
        The third part of our strategy, of course, is the ability
    to fight and win a major conflict, and what we have done for
    45-plus years of being with our Republic of Korea allies in
    Korea, has averted a war in Korea, and also created conditions
    in which that situation can be resolved.

                                Five key issues

        So with that strategy, I would like to briefly mention the
    five things that have priority for us, and they're on our plate
    right now.
        They are the preservation of the security relationship with
    Japan, building the foundations for a mil-to-mil relationship
    with China, and I'll talk about these a little more in a
    moment, creating the conditions for a noncataclysmic resolution
    or reconciliation in Korea, building a mil-to-mil relationship
    with India, and then also reacting to the East Asian economic
    crisis and the impact of that on the nations in the region, and
    then I would like to go into a little bit more detail on those
    factors.
        First, as we talk a lot about China we must not forget that
    our pivotal and key security relationship in the Pacific region
    is that which we have with Japan. Japan is working on the
    defense guidelines, which will allow for their future security
    role in Asia, and help to define that.
        Secretary Albright, when she was in Japan last week, signed
    an acquisition and cross-servicing agreement, which allows for
    us to use Japanese facilities as we work on the defense of
    Japan and other things in the region.
        We are concerned with Okinawa, of course, and the host
    nation support, in which Japan has provided $4.53 billion of
    support for United States troops and their stay in Japan.
    Together with Ambassador Foley, who is doing such a great job
    there, we are working this relationship very hard and keeping
    it a high priority.
        Second on our plate is building the mil-to-mil relationship
    with China, the foundations of that relationship, and it is a
    part of the overall relationship our Nation has with China.
        Militarily, we have come a long way from 2 years ago when
    our communications were close to zero. We are working on
    building a level of understanding with the PLA and the Chinese
    people, on what the United States and our Pacific forces are
    doing militarily.
        President Jiang Zemin, when he was in Honolulu, talked
    about the importance of gaining understanding as a precursor to
    building trust between our nations, and that is what we are
    working on.
        The issue of China and Taiwan is very important. I think
    the Chinese PLA leadership understands that Taiwan is--well, we
    understand it as a core sovereignty issue to China, and they
    also understand that the United States is committed to a
    peaceful resolution of the China-Taiwan issues.
        We are understanding also of the critical nature of 1.32
    billion people and what that means to China for economic
    modernization, for food, clothing, shelter, energy, and jobs.
    With that number of people it is a daunting governance
    challenge, as people involved in governing our Nation will
    understand, of creating that for those many people.
        So economic modernization transcends military modernization
    for the Chinese. But we deal with them from a position of
    military strength, and we deal with them from a position of
    respect for their interests as well as our interests in the
    region. As I say, we are working on the foundations, this is a
    long-haul relationship we are in with the PLA and with the
    Government of China.
        Korea, the third item, we are foremost trying to create the
    conditions for a peaceful reconciliation to occur in Korea. The
    new Kim Dae Jung government is making great strides at
    communications between the Republic of Korea and the DPRK in
    North Korea. General Tilelli there is doing a great job with
    our forces.
        It is the only nation in the world where we have a four-
    star officer assigned to represent a single nation, represent
    us with a single nation, and our solid relationship that we
    work with the Republic of Korea armed forces needs to see
    reconciliation through to a finish. It is on the horizon, but
    we need to follow through on that.
        India, we're working a burgeoning military-to-military
    relationship with India, the second largest country in the
    world, and the largest democracy in the world, and this is a
    challenge, because they had been aligned with the Soviet Union
    during the cold war, and have been largely inward looking.
        It is important for us to recognize that though we usually
    talk about India-Pakistan, the Indians look to China as their
    main security challenge, and they also look east to Asia for
    their economic growth.
        The last item then that we are looking at day to day for
    this next year is the East Asian economic crisis and the impact
    that has had. It is important for us to realize that this
    economic crisis is, in fact, a security crisis, because they
    are tied to closely together.
        Our military role, our U.S. military role with the other
    militaries of the other regions, is to create time and space to
    allow for a solution for this economic crisis to occur. So we
    are adjusting the size, the shaping, and the timing of the
    events we do with the other nations to accommodate this crisis.
        It is important for the Asian nations and for the East
    Asian nations to see that the United States is with them and is
    working with them in both good times and bad, as Secretary
    Cohen has mentioned.
        The economic crisis hit hardest South Korea, Thailand, and
    Indonesia. South Korea is dealing with this, along with the
    IMF, as is Thailand, in a very constructive way. I would like
    to address a couple of comments more specifically to Indonesia,
    which is having a very--that nation is having a very hard time
    right now.
        Indonesia, as we have talked about before the committee
    before, has over 17,000 islands, 6,000 of which are occupied.
    It is the fourth largest nation, in terms of population, in the
    world, 208 million people, and has the largest Moslem
    population of any nation in the world.
        In addition to having a geo-strategic location along the
    Strait of Malacca, through which about 400 ships a week pass to
    go up to North Asia, it is a nation that is the linchpin of
    ASEAN and the Southeast Asian nations, because of its size, and
    because of its influence there, and, therefore, it is very
    important to the United States.
        They are currently challenged both politically and
    economically, and also this presents a real challenge for the
    military in Indonesia, for ABRI. The student unrest, the
    drought, the dramatic decline of the rupiah, have given a lot
    of turbulence in Indonesia. This puts the ABRI in a sensitive
    and very challenging position.
        We talk regularly with Ambassador Roy there, with the
    country team. I talked Thursday, before we came, Thursday of
    last week, with General Wiranto, who is the head of ABRI, and
    he recognizes the sensitivity and the challenge of his
    position, and trying to react moderately to the turbulence, and
    react in a responsible way.
        I am convinced that they are working very hard to act in a
    responsible way, but it is a challenge, and my opinion is that
    contact with Indonesia versus isolation is the key to trying to
    help them through this crisis.

                           Pacific Command readiness

        I would like to shift gears now to talk briefly about
    readiness, because that is something that is very much on
    everyone's mind, and from a CINC's point of view, I would like
    to say a few words about it.
        Foremost, from a commander in chief, of one of our regions
    in the world, what we need to have fundamentally is the right
    forces, at the right time, in the right place, to fight the
    right fight. So that's the fundamentals of it.
        What capabilities do we have to do this? There are seven.
    First is combat-capable equipment. Second are qualified people.
    Third is adequate maintenance and logistics support for this
    equipment. The fourth is training. The fifth are tactics to
    capitalize on the training and the people. The sixth is the
    ability to move forces to the right place, and the ability to
    command them. Then the seventh is the infrastructure to support
    these forces.
        We look at these seven items on three different levels. One
    is the tactical level or the unit level. The second is
    aggregated to a battle group level or an expeditionary force
    level. The third is the strategic level.
        So this accounts for a lot of the items that a unit will be
    having tactical problems, the tank will not fire, the ship will
    not shoot, or something like that, and yet, that can be
    accommodated at the strategic level, and still have the overall
    forces be satisfactory.
        The bottom line of all of this is that when we look at the
    Pacific forces, overall we are ready, our forces are adequate.
    We have some shortfalls, which we have documented in the
    written statement for the record, which increase the time and
    the risk of responding to crises. Our forward deployed forces,
    the readiness is very good. As we look at the forces that are
    back in the United States that are the rotational forces, their
    readiness has declined, and we are looking--if you think of a
    bucket, that there is a bucket in the curve for the rotational
    forces, that bucket is deeper.
        We have used the parts, we have used the people, and we
    have used some of those assets, and so that bucket is, in fact,
    a deeper bucket, as we get ready to deploy the forces.
        It is becoming more challenging to deploy forces ready, but
    our forward deployed forces are currently ready. I can talk
    about that more in questions and answers, if there are
    questions about it.
        Senator Stevens. Could I interrupt you?
        Admiral Prueher. Yes, sir.
        Senator Stevens. We are just back from the Persian Gulf,
    and we found that the Air Force and the Army, and even the army
    from Bosnia, when they returned from a deployment, they are
    sent to sort of retraining area so they can restore their
    combat skills.
        Admiral Prueher. Yes, sir.
        Senator Stevens. Do your people, when they are in a
    stationary type of deployment, like off Iraq, for a fairly long
    period, do they have to come back and go through retraining,
    too? Are you saying that you have the same problem they do?
        Admiral Prueher. That problem exists for the forces that
    deploy from the Pacific, also. The real difference is between
    the traditional rotational forces of--the Marine Corps and the
    Navy have deployed on rotations for a long time, and so that is
    a normal circumstance for the Navy and Marine forces, they
    come----
        Senator Stevens. Normally, do they go through retraining?
        Admiral Prueher. Yes, sir, they do.
        Senator Stevens. So there is no added training necessary
    when they come back from like the gulf deployment.
        Admiral Prueher. The rotational forces normally, when they
    come back, they go to a lower readiness level, and then that
    readiness level comes back up as they reach another scheduled
    deployment.
        The forces that deploy out of phase are the ones that--
    primarily they would be the Army and the Air Force units that
    come there, they come, their readiness declines, because
    they're not getting the training while they're deployed, their
    readiness would decline, and then they'd come back and have to
    retrain to get back up to a higher level of----
        Senator Stevens. We discussed that with them, but I'm
    talking about your forces now. One of the things that the Air
    Force pilots complained about is that if they're in Kuwait they
    can't go outside the cleared air space, if they're in Saudi----
        Admiral Prueher. That's correct.
        Senator Stevens [continuing]. They very seldom go outside--
    but in any event, they do not have ranges, and they do not have
    the same type of training they would get if they were in the
    United States or even in Korea.
        Are you limited in your training opportunities when
    deployed, as compared to other deployments in the gulf region?
        Admiral Prueher. The answer is yes, sir, we do. The air
    units that deploy from Kadena are forward deployed PACAF forces
    that were deployed from Kadena, they would----
        Senator Stevens. I'm talking about Navy now, not----
        Admiral Prueher. OK.
        Senator Stevens. We have the PACAF----
        Admiral Prueher. I'm thinking joint, and you're thinking
    Navy, sir. OK.
        Senator Stevens. Well, the joint we ran into, there's no
    question about it----
        Admiral Prueher. The naval force is the--the Indy carrier
    battle group that is out there, and the Marine--the amphibious
    ready group [ARG] and the Marine expeditionary unit [MEU], when
    they are out there and on station, they have the same issues
    which you are discussing.
        Senator Stevens. Right now you have two carrier groups out
    there, right?
        Admiral Prueher. Yes, sir; one from our AOR, and one from
    the European AOR. Yes, sir.
        Senator Stevens. Admiral, I have to interrupt you. Do you
    have any questions on that question? OK. I'm sorry, sir. We'll
    come back, if you will just give us a----
        Admiral Prueher. Yes, sir.
        Senator Stevens [continuing]. Recess here.
        [A brief recess was taken.]
        Senator Stevens. My apologies, Admiral. I'm not sure you
    had finished your statement, sir.
        Admiral Prueher. I had a little bit more. I would like to
    take one more shot on the readiness degradation while deployed.
        Senator Stevens. All right.
        Admiral Prueher. For naval forces, the Navy and Marine
    Corps, which do rotational deployments, it is part of the plan
    that when they return from a deployment that the readiness
    would degrade prior to the increase in readiness, prior to the
    next deployment.
        For the Army and the Air Force forces, which do not
    normally do just regular rotations, but the description that
    you saw in Southwest Asia is one that happens irrespective from
    where they deploy, that occurs, and that happens with our
    forces, too.
        For rotational forces, that is a planned decrease in
    readiness, and for the others that are globally sourced, the
    readiness will degrade if they do not have training
    opportunities, which is the case in Southwest Asia, while they
    are deployed that readiness will degrade and then they will
    have to bring that up when they return.
        Senator, I have a couple of stray shots of things that I
    hope will perhaps precipitate some questions and answers, and
    these are miscellaneous things that, in lieu of talking here,
    this morning there are just a couple of things; one is the
    strategic importance of Guam, which we support; another is the
    Ford Island Development Authority, which allows for increased
    housing and quality of life in the Honolulu area, which we
    support.
        The base realignment and closure, which Secretary Cohen has
    pushed so hard, is something that I realize there are a lot of
    factors, that we need to do in order to capitalize, so that we
    can try to recover some funds for modernization and readiness.
    The other is the U.N. Convention on Law of the Sea
    ratification, which we support, and the congressional
    delegation visits to the AOR, which are so important.
        I recognize because of the role of the Congress in our
    Nation's Government how important these are for congressional
    delegations to go to the regions, just as you all have been to
    Southwest Asia, and to Bosnia, and to NATO, there is no
    substitute for seeing things firsthand, and it is very
    important, though the distances are for delegations to come to
    the Pacific region and to the Asia Pacific region to see
    firsthand what is going on out there, so that they can see with
    their own eyes, and we would really support that, sir.
        Thank you very much for the opportunity to be present.
    Again, in the military world we are paid to be pessimists, I am
    optimistic about the future of the Asia Pacific region, though,
    and our work in it.

                               prepared statement

        It is important for all of us in the political, economic,
    and the military part to work in a very forehanded way and
    preventive way to avert crises, and to pick the important
    issues, and last, I thank both of you and the members of the
    committee for the professional and the personal support to our
    U.S. military. Thank you, sir. I am ready for your questions.
        [The statement follows:]
                  Prepared Statement of Adm. Joseph W. Prueher
        Mr. Chairman and members of this Committee, on behalf of the men
    and women of the United States Pacific Command, thank you for this
    opportunity to present my perspective on security in the Asia-Pacific
    region.
                               executive summary
        Financial crisis.--As this Committee is fully aware, Asia is in the
    midst of a serious financial crisis. Some might even say it is a
    broader economic crisis. It is important that this financial crisis
    also be understood in security terms. We have seen early signs of
    instability in Indonesia and have concerns about the situation in other
    countries as well. As President Clinton said in his State of the Union
    address, a secure, stable Asia is in America's interest. Our military
    presence and our military-to-military contacts throughout the region
    undergird overall security and stability in the region.
        Security alliance with Japan.--Our alliance with Japan continues to
    be the most important U.S. security relationship in the region. The
    signing of the revised Guidelines for U.S.-Japan Defense Cooperation in
    1997 enhances this relationship. Japanese host-nation support for U.S.
    forces is a critical part of U.S. military presence in Asia and meets
    Congressional goals for burden-sharing.
        China.--China's growing economic and military power is a major
    issue for regional leaders. The past year brought improvements in U.S.-
    China relations. Carrying out the policies of the Secretary of Defense
    and, in conjunction with the Chairman of the Joint Chiefs of Staff,
    U.S. Pacific Command worked successfully to improve our military-to-
    military relationship with the People's Liberation Army. Our goal is to
    lay a foundation for a relationship based on mutual understanding,
    trust, and increased openness. Along with the U.S., China will play an
    enormous role in determining if the next century is one of conflict or
    cooperation. On the subject of Taiwan, we recognize from China's
    perspective this is a core sovereignty issue, while China recognizes
    that the United States is committed to the peaceful resolution of
    Taiwan issues. I am personally optimistic for the growth of the U.S.-
    China relationship; however, we must continue to deal with China from a
    position of strength, combined with respect, and not have unrealistic
    expectations. This is a long-haul process.
        Korean peninsula.--The Korean peninsula remains a volatile
    flashpoint. U.S. and South Korean troops would be in harm's way in the
    first hour of a conflict but are key to rapid conflict resolution. Our
    37,000 troops stationed on the Peninsula and our alliance with the
    Republic of Korea have deterred North Korea from offensive action for
    45 years. U.S. forces on the Peninsula, coupled with our reinforcement
    capabilities and ROK forces, are adequate for this task. The goal is
    eventually to facilitate a non-cataclysmic end to this situation. We
    must stay the course of deterring conflict, providing food aid,
    engaging in four-party talks, and supporting the Korean Peninsula
    Energy Development Organization, particularly in light of North Korea's
    continued economic deterioration.
        Readiness and OPTEMPO.--U.S. Pacific Command's forward-deployed
    forces are ready to execute assigned missions, but significant
    deficiencies exist under a ``two major theater wars'' scenario. In
    1997, U.S. Pacific Command Navy, Air Force, Army, and Marine Corps
    components all reported shortages of personnel in some units. Although
    components have overcome these problems in the short term, readiness
    for deployed forces is increasingly achieved at the expense of non-
    deployed forces. Currently, some forces required for long-term
    commitments in the Asia-Pacific area of responsibility are positioned
    in the Persian Gulf. Any reduction in personnel, equipment, or funding
    would significantly erode our capabilities in the Pacific. With some
    minor exceptions, we have been able to manage the operational tempo
    (OPTEMPO) for forces under U.S. Pacific Command, because we are
    accountable for and can trade off between training and operations.
    There are no firm indicators that the forces are ``wearing out.''
                        1997 in the asia-pacific region
        Five developments stand out for their impact on U.S. security
    interests in Asia in 1997:
      --The Asian financial crisis was the most significant development
            this past year. It began in July with the sharp decline of the
            Thai baht. The currencies of other nations followed suit
            shortly thereafter. Serious debt servicing problems in several
            Southeast Asian nations and South Korea brought on economic
            uncertainty and concern about potential instability.
      --The food crisis in North Korea reached new levels and continued to
            draw international attention, resulting in unprecedented
            interventions by non-governmental organizations. The aid that
            North Korea received did not address the underlying causes of
            the food shortage. The crisis will likely occur again in 1998
            and in the years ahead and increases the potential for future
            instability on the Peninsula.
      --Factional fighting erupted in Cambodia in July 1997, reversing
            earlier democratic trends. The Association of Southeast Asian
            Nations (ASEAN) postponed indefinitely Cambodia's entry into
            ASEAN and is trying to conduct negotiations to resolve the
            situation. The outcome remains uncertain.
      --In September, the United States and Japan agreed to a complete
            revision of the Cold War-era Defense Guidelines. The revised
            agreement builds upon our existing security relationship and
            includes enhancements in bilateral planning and Japan's rear
            area support. The revised Guidelines significantly improve our
            ability to meet regional security challenges.
      --At the October summit in Washington, DC, China and the United
            States committed to forging a ``constructive strategic
            partnership.'' On the military side, DOD concluded a Military
            Maritime Consultative Agreement, our first bilateral military
            agreement with China.
                    u.s. pacific command strategy in action
    Theater Strategy
        In support of the President's National Security Strategy, Pacific
    Command is striving to achieve a stable, prosperous, and democratic
    Asia-Pacific community in which the United States is a player, partner,
    and beneficiary.
        Our military strategy derives from two fundamental premises. The
    first is a notion of confluence, that the political, economic and
    military aspects of security are interdependent, and cannot be advanced
    separately. Second, security, especially military security, undergirds
    the stable conditions that are prerequisite for economic growth and
    prosperity.
        U.S. Pacific Command's strategy consists of three levels of
    activities and operations: Peacetime engagement; crisis response; and
    fight and win a major regional conflict.
        If we are engaged in the region in peacetime and our actions backed
    by credible, combat-ready forces, our strategy is able to respond to
    crises, prevent wars, and enhance stability.
        In 1997, this strategy meant that U.S. Pacific Command forces were
    extensively involved in sustaining the military component of American
    engagement in Asia, as part of the Administration's overall engagement
    program in Asia.
        In spite of Asia's current economic difficulties, the investments
    our nation is making in Asia's security and stability have yielded
    tangible benefits to the United States.
    Responses to Asia's Financial Crisis
        East Asia's serious financial crisis has implications for security
    and stability in the region. The near-term security impact will include
    slowdowns in the modernization of Southeast Asian militaries,
    reductions and cancellations in scope of some training exercises,
    possible reductions in funding of the Korean Peninsula Energy
    Development Organization, and pressure to reduce host nation support.
        Beyond these immediate effects, we are watchful for early signs of
    instability including civil disturbances, labor disputes, increased
    ethnic rivalries, and some increase in anti-American rhetoric.
        The U.S. government is responding to the financial crisis in a
    number of ways. U.S. Pacific Command is taking steps to maintain the
    visibility of American military presence and contacts with our military
    counterparts, especially in Southeast Asia. We have realigned our
    engagement programs and are directing resources to the maximum extent
    to lower-cost, higher-impact activities.
    Security Alliance with Japan
        Japan remains our foremost security partnership in Asia. With the
    support of the Hashimoto government, we have made great strides to
    bolster this relationship over the past year.
        The new Defense Guidelines signed in September strengthened our
    alliance and enabled the U.S. and Japan to engage in bilateral planning
    for crises in areas surrounding Japan. The new Guidelines agreement is
    essential to maintenance of peace and security in the region.
        Japan continues to host about 54,000 U.S. military personnel. In
    spite of the fiscal constraints of a slowing economy and a reduced
    defense budget, Japan's generous host nation support continues to meet
    Congressional goals for burden-sharing. Funding reductions in Japan's
    voluntary Facilities Improvement Program have had some impact; however,
    the impact has been minimal as construction projects have been
    carefully prioritized through close coordination of U.S. Forces Japan
    and the Government of Japan. At the bottom line, the Government of
    Japan continues to provide exceptional facilities and support for U.S.
    military personnel and their dependents.
        U.S. Pacific Command continues to work closely with the Government
    of Japan in implementing the Special Action Committee on Okinawa (SACO)
    Final Report and minimizing the impact of U.S. military presence on the
    people of Okinawa. While we have made significant progress in most
    areas, the return of Marine Corps Air Station Futenma is a difficult
    and exceptionally complex challenge. We remain flexible as to the type
    of replacement facility, as long as it maintains the critical military
    functions and capabilities of Futenma.
    Military-to-Military Relations with China
        China's regional and global influence will likely grow as its
    economy grows and the People's Liberation Army (PLA) fields a more
    modern force. Owing to its non-convertible currency, China has been
    largely insulated thus far from the direct effects of the region's
    financial crisis. Although China's growing power is high on the list of
    concerns of regional leaders, China is not a direct threat to the
    United States today. The PLA can project military power only to a
    limited extent beyond China's borders but has the potential to attain a
    regional power projection capability in the period beyond 2015--and
    then only with many correct decisions and full funding.
        The tension between China and Taiwan has lessened in the past two
    years. From China's perspective Taiwan is a core sovereignty issue. The
    U.S. is committed to ``one China'' as defined in the three joint
    communiques. On the other hand, China recognizes that the United States
    is also committed to the peaceful resolution of Taiwan issues. It is in
    no one's interest to bring the issue back to crisis levels.
        It is important to further develop the U.S.-China relationship in a
    realistic way. China has an important role in peaceful resolution of
    regional issues including not only Taiwan, but also the South China Sea
    and the Korean Peninsula. Proper, balanced management of U.S.-China-
    Japan relations will be key to regional peace and security. We need to
    continue to encourage steps in the evolution of bilateral and
    multilateral relations, together with dialogue and mechanisms to
    address the issues effectively.
        Conducted in conjunction with OSD efforts, U.S. Pacific Command's
    military-to-military contacts with the PLA are an important part of
    overall U.S. engagement with China. Contacts in 1997 included hosting
    visits by the Chief of PLA General Staff, General Fu Quanyou, and the
    Deputy Chief of PLA General Staff, Lieutenant General Wu Quanxu. The
    PLA hosted visits to China by the Commander-in-Chief, U.S. Pacific
    Command and the Commander-in-Chief, U.S. Pacific Fleet. The U.S. Navy
    conducted a ship visit to Qingdao while the PLA Navy conducted its
    first-ever ship deployment to the United States. Although falling short
    of the level of openness we seek to establish, the PLA did show us a
    nuclear-powered submarine as well as the flight test center at
    Cangzhou. Pacific Command opportunities for dialogue with President
    Jiang Zemin and all senior PLA leadership have been excellent.
    Secretary of Defense Cohen included me also on his January 1998 trip to
    China in which we toured Beijing's air defense center and met with
    President Jiang Zemin.
        U.S. Pacific Command's goals in building this relationship with the
    PLA are two-fold: to build understanding and trust, and to increase
    openness. Laying this foundation for the future enhances our
    understanding of China's military intentions and capabilities while
    giving us the opportunity to increase Chinese appreciation for U.S.
    forces stationed in the region. We are building this relationship from
    a position of both strength and mutual respect. It will take continuous
    work over a long haul. For this reason, it is important to include
    younger generations of officers in future military-to-military contacts
    to capitalize on long-term working relationships, a point on which the
    PLA leaders agree.
    Deterrence on the Korean Peninsula
        The Korean peninsula remains a volatile flashpoint where U.S.
    troops and citizens would be in harm's way on the first hour of a
    conflict.
        The North Korean economy has continued to deteriorate. North Korea
    is now dependent on international aid to feed its people. The regime
    has agreed to engage in four-party talks aimed at formally ending the
    Korean War and appears to be honoring the terms of the Agreed
    Framework. This past year also yielded an agreement with North Korea to
    accelerate the recovery of unaccounted-for American servicemen from the
    Korean War.
        Meanwhile, the Republic of Korea (ROK) is coping simultaneously
    with the Asia financial crisis and the transition to new political
    leadership. Kim Dae Jung, the new President, has already voiced support
    for U.S. military presence in Korea into the foreseeable future.
    Ensuring that ROK military preparedness is not seriously weakened by
    ROK economic difficulties is the next challenge. Despite the economic
    problems, the ROK has pledged to maintain host nation support at
    previously agreed-to levels. Secretary Cohen's recent visit moved this
    cause forward.
        While we remain hopeful that four-party talks will reduce tensions
    on the peninsula, military prudence dictates maintaining U.S. forces in
    Korea and our security alliance with the ROK to deter any hostile moves
    by the North.
        In my view, reconciliation is in everyone's best interest as a
    first step in the long-term process of resolving the situation on the
    peninsula. Economic, political, and cultural differences built up
    during fifty years of separation and mistrust will not be overcome
    easily. The United States and China have key roles to play, but the two
    Koreas will ultimately determine the pace of the process.
        Lastly, our forces in Korea require the continued use of anti-
    personnel landmines (APL's). APL's are critical in current plans to
    deter or halt an attack, to reduce casualties, and to reduce the risk
    of humanitarian disaster that would result from combat in and around
    Seoul. Until the situation on the peninsula is resolved or new
    technologies are developed, APL's should remain an integral part of
    U.S. forces on the peninsula as specified in the President's policy
    directive on this issue.
    Joint Task Force Bevel Edge in Thailand
        Thailand is an important treaty ally and security partner. Thailand
    is important both for its location in Southeast Asia and as a strategic
    bridge to the Persian Gulf. Thailand is one of the nations in Southeast
    Asia most affected by the financial crisis.
        U.S. Pacific Command maintains close relations with the Thai
    military. This relationship yielded tangible benefits in July 1997 when
    fighting erupted between rival political factions in Cambodia. U.S.
    Pacific Command temporarily staged a small special operations force
    package, Joint Task Force Bevel Edge, in Thailand in preparation for a
    possible evacuation of American citizens from Cambodia. Approval for
    this deployment was simplified and expedited because of the strength of
    our working relationship with the Thai military. This is a good example
    of the yield from our engagement program.
    Challenges in Indonesia
        The United States has a special interest in a stable Indonesia.
    With the world's fourth largest population and a location astride
    shipping lanes linking Asia to the Arabian Gulf, Indonesia is
    strategically important. Events in Indonesia affect the rest of the
    region. Indonesia's importance to the United States is especially
    significant in light of China's growing power and Indonesia's key role
    in the Association of Southeast Asian Nations (ASEAN) and the ASEAN
    Regional Forum (ARF).
        Indonesia has been hit especially hard by the financial crisis. The
    U.S. Government has urged the Indonesians to adhere to the economic
    reforms they have agreed to undertake with IMF. It remains uncertain
    whether Indonesia is willing to adhere to the prescriptive remedies
    required by the IMF in order to receive financial guarantees necessary
    to stabilize their economy. In the interim, public dissatisfaction and
    student demonstrations continue to grow over economic and political
    issues. These demonstrations have put great pressure upon the
    Indonesian Armed Forces (ABRI) to maintain order while at the same time
    showing restraint. My view is that ABRI leadership is trying hard to
    act in responsible ways.
        1997 also brought drought and major forest fires to parts of
    Indonesia and Malaysia, leaving large swaths of Southeast Asia
    blanketed in smoke and haze, and giving rise to incidents of infectious
    disease. Deployment of Air National Guard C-130's from Wyoming to
    Indonesia to fight these fires made a significant contribution towards
    controlling the fires. Similarly, U.S. Navy medical personnel in
    Jakarta continue to work with Indonesian public health authorities to
    help control outbreaks of Dengue fever. Both have brought the United
    States an enormous amount of good will.
    Engagement Dividends in Singapore
        Singapore is another Southeast Asian nation with which the United
    States is comprehensively engaged. Singapore is a strong proponent of
    U.S. military presence in the region. Among the many ties that the
    Department of Defense and other U.S. government agencies maintain with
    Singapore, forces assigned to U.S. Pacific Command train regularly with
    Singapore's defense forces. I met with Singapore's senior defense
    officials on several occasions in 1997, further cementing the bilateral
    relationship.
        American military engagement with Singapore paid off in January
    1998 when Singapore announced its intention to give the U.S. Navy
    access to the pier being built at Changi Naval Base. This pier will
    accommodate our Navy's largest aircraft carriers. Access to this pier
    will help sustain American military presence in the region.
    A New Visiting Forces Agreement with the Philippines
        The Republic of the Philippines is a treaty partner and occupies a
    geographically important position in the region. The recently
    negotiated Visiting Forces Agreement (VFA) is critical to continued
    engagement with the Philippine armed forces. We anticipate the
    Philippine Senate will ratify the agreement later this year.
        Notwithstanding current limitations, we strive to maintain contacts
    with the Philippine military. An example of this is the Philippine Army
    joining U.S. Army Pacific in co-hosting the annual Pacific Armies
    Management Seminar (PAMS) in Manila in March 1998. Forty-one countries
    attended, including China, Vietnam, and India.
    Defense Cooperation with Australia
        Australia remains a staunch ally, friend, and vocal supporter of
    U.S. presence in Asia. Pacific Command has an excellent military-to-
    military relationship with the Australian defense establishment.
    Australia is modernizing and reducing her forces, implemented defense
    efficiencies, and remains dedicated to maintaining interoperability
    with U.S. forces.
    Modest Contacts with India
        India is an emerging regional power with great potential in the
    coming century. India has been successful in liberalizing its economy
    over the last five years and has begun to expand ties with East and
    Southeast Asia.
        Though frequently overlooked because of our tendency to focus on
    the India-Pakistan situation, India also looks towards China as a
    principal security concern for the future. These concerns have been
    made clear during recent security discussions with Indian officials.
    For now, however, India and the Indian military are focused inwardly.
    U.S. Pacific Command maintains modest levels of contact with the Indian
    military.
    Cooperation on the ``Full Accounting'' Mission
        Cooperation from Vietnam, Laos, and Cambodia in support of Joint
    Task Force Full Accounting's mission continues to be good. Indeed, the
    increased contact brought about by the Prisoner of War/Missing in
    Action (POW/MIA) issue has helped pave the way for further engagement
    with Vietnam and Laos.
                                 looking ahead
        I would like to highlight several policy issues affecting the
    future of security and stability in the Asia-Pacific.
        First, despite Asia's economic turmoil, the fundamentals of U.S.
    security policy remain sound. U.S. economic, diplomatic, and security
    interests overlap and require an integrated approach to policy in the
    region. Stable conditions resulting from security will be the
    foundation upon which Asia's economic recovery will be built.
        Second, U.S. forward-deployed forces in Asia remain the linchpin of
    regional security and stability. U.S. Pacific Command participated
    extensively in the Quadrennial Defense Review, which reaffirmed the
    importance of maintaining about 100,000 military personnel in Asia. The
    United States should continue to maintain about 100,000 personnel--but
    more importantly, the capabilities that this number represents--forward
    deployed. This number is a gauge by which nations in Asia measure U.S.
    commitment.
        Third, it is important that the Department of Defense continue to
    build its military-to-military relationship with China. This
    relationship provides a means of dialogue between our nations and gives
    U.S. military leaders insights not otherwise available.
        Fourth, on the Korean peninsula, the aim is to bring about a non-
    cataclysmic resolution. Neither a lashout nor a total collapse of the
    North is in U.S. or ROK interests; either would negatively affect
    security and stability on the Peninsula and in the region. Food aid and
    four party-talks are two ways to engage North Korea to achieve the
    peaceful end-state we are after. At the same time, we must encourage
    the ROK to maintain current levels of military preparedness and host
    nation support at agreed-upon levels.
        Fifth, as the nations of Southeast Asia struggle through the
    current financial crisis, it is manifestly in U.S. strategic interests
    to remain engaged with them. Assuring them of U.S. interest in
    Southeast Asia's security and stability ultimately serves long-term
    U.S. economic, diplomatic and security interests. From a military
    perspective, International Military Education and Training (IMET)--
    especially for Indonesia, Thailand, Malaysia, and the Philippines--is
    one of our nation's most important means of influencing future leaders.
    I appreciate the dilemmas at stake in this issue, but, especially in
    light of Asia's current financial crisis, restricting IMET limits our
    ability to achieve our nation's goals--a secure, prosperous, and
    democratic Asia-Pacific region.
        Sixth, I would like to highlight the strategic importance of Guam.
    Guam was and is a strategic bridge supporting the deployment of forces
    to the Persian Gulf for military operations against Iraq and would be
    essential to combat operations on the Korean peninsula. As this
    Committee decides how much military infrastructure our nation must
    maintain, it is important that Guam be understood as a vital bridge
    linking CONUS-based forces and U.S. strategic interests in Asia.
        Seventh, an increase in Congressional delegations hosted by U.S.
    Pacific Command on their way to and from Asia was a welcome trend in
    1997, an indication that Congress recognizes the region is important to
    the United States. I urge members of Congress to visit Asia and see for
    themselves the range of economic, diplomatic, and security interests
    the United States has in the region. My Asian counterparts and their
    civilian bosses share this view.
        Eighth, we urge your support for ratification of the U.N.
    Convention on Law of the Sea. Maintaining freedom of navigation is
    critical to regional security and economic development. Some Asia-
    Pacific nations assert excessive maritime claims that challenge this
    freedom. Participation in the Law of the Sea Convention will allow us
    to participate in negotiations to resolve these claims, add credibility
    to our stated policies and interpretations, and preserve navigation
    rights vital to executing our missions.
        Ninth, I urge your support for the Overseas Humanitarian Disaster
    and Civic Aid (OHDACA) program, which promotes our engagement
    strategies and disaster response. Last year these funds helped to
    underwrite costs of providing care to Iraqi Kurdish refugees on Guam,
    to fight fires in Indonesia, to conduct demining training in Southeast
    Asia, and to respond to disasters in Vietnam and China. This well-
    leveraged program provides important flexibility in crisis response.
        Finally, a comment on ``prudent risk.'' In the ideal world, CINC's
    would both be all wise and would have enough resources to deal with
    every conceivable contingency that might arise. Of course, we don't
    live in that ideal world and our nation's resources are not that large,
    but they are mostly sufficient. Although the world is not free of
    danger and conflict, there is evidence of a ``strategic pause''
    following the end of the Cold War. In this environment, CINC's must be
    willing to weigh their instincts to avoid risk against the associated
    costs and accept some prudent level of risk. The nation and our
    national leaders must also accept ``prudent risk.''
                            resourcing the strategy
        Our nation's security strategy in the Asia-Pacific region yielded
    tangible results in the past year. The coordinated efforts of many
    people throughout the Department of Defense and other U.S. government
    agencies made this strategy effective. Due to the economic turmoil in
    the region, it is essential that we sustain this strategy of preventive
    defense in the year ahead.
        Trained and equipped combat-ready forces make the strategy
    credible. Adequate resources are essential to sustaining these forces
    and the effectiveness of the strategy.
    Force Disposition Today
        The forces assigned to U.S. Pacific Command are adequate to execute
    assigned missions today and are arrayed in two major zones spanning the
    Pacific and Indian Oceans:
      --Approximately 100,000 personnel are forward-deployed in Asia,
            principally in Japan, Korea, Guam, and Diego Garcia. These
            forces include the 7th Fleet, 8th U.S. Army, III Marine
            Expeditionary Force, 5th Air Force, 7th Air Force, 13th Air
            Force, the 1st Battalion of the 1st Special Forces Group
            (Airborne) and other joint special operations forces, maritime
            pre-positioned ships, and Army and Air Force prepositioned
            stocks.
      --Approximately 200,000 personnel are stationed in Hawaii, Alaska,
            and the West Coast of the United States. These forces include
            the 25th Infantry Division, 3rd Fleet, I Marine Expeditionary
            Force, 1st Brigade of the 6th Infantry Division, 11th Air
            Force, I Corps Headquarters, and designated units and
            individuals of the Army, Air Force, Navy, and Marine Corps
            Reserve, and Army and Air National Guard.
    Readiness and OPTEMPO
        Although U.S. forces deployed in the Pacific are ready to conduct
    assigned missions, I would like to bring some readiness issues to the
    Committee's attention.
        U.S. Pacific Command has reported significant deficiencies in six
    of the eight measured functional areas for a ``two major theater wars''
    scenario: (1) command, control, communications, and computer systems;
    (2) logistics and sustainment; (3) intelligence, surveillance, and
    reconnaissance; (4) mobility; (5) infrastructure; and (6) special
    operations. We have addressed specific deficiencies in these areas
    through the Joint Requirements Oversight Council and the Senior
    Readiness Oversight Council. Although the Department has shifted
    considerable funds into readiness accounts, further investment will be
    required to overcome these deficiencies.
        From the perspective of the U.S. Pacific Command Army, Navy, Air
    Force, and Marine Corps components, personnel shortages are the
    principal readiness concern, though pockets of lower levels of
    readiness exist due to equipment shortage and availability.
      --U.S. Pacific Fleet reported that personnel shortages have affected
            forward-deployed naval force readiness. Though command
            attention has caused recent improvements, in the near term (May
            1998), 93 of 839 Chief Petty Officer billets will be
            ``gapped.'' Pacific Fleet is currently short over 1,900 sailors
            in key technical ratings. In addition, there are backlogs in
            aircraft engines and aircraft intermediate and depot level
            maintenance, particularly for the S-3B.
      --U.S. Pacific Air Forces (PACAF) reported an Air Force-wide decline
            in pilot retention, a serious manning problem which cannot be
            corrected in the near term. PACAF aircraft maintenance
            statistics indicate the beginning of a decline in aircraft
            mission capable rates. The PACAF F-16 cannibalization rate is
            12.8 percent, compared to 6.6 percent in fiscal year 1995, due
            to lack of spare parts.
      --U.S. Army Pacific (ARPAC) reported shortfalls in infantrymen and
            ``low-density/high-demand'' specialties such as engineers,
            communications specialists, intelligence analysts, and
            mechanics, though these shortfalls will be corrected by the end
            of the fiscal year. Slower modernization of some lower-profile
            equipment, such as 2\1/2\-ton trucks, is causing increased
            maintenance difficulties, though this will be corrected in
            fiscal year 1999 with the delivery of new vehicles.
      --U.S. Marine Forces Pacific (MARFORPAC) reported shortages of
            personnel in each major reporting unit, primarily in
            communications, intelligence, air traffic control, air support,
            infantry, landing support specialists, and vehicle mechanics.
        Although components have mitigated the impact of these problems in
    the short term, readiness for deployed forces is being achieved at the
    expense of non-deployed forces.
        Maintaining adequate readiness requires predictable funding and
    investments both to bolster deficient areas and operate to meet our
    commitments. In the near term, timely passage of supplemental
    appropriations for unfunded contingency requirements, such as in Bosnia
    and the Arabian Gulf, is critical to sustain readiness. Without this
    relief, OSD has decided that Services will have to absorb costs from
    operations and maintenance accounts to the detriment of readiness.
        OPTEMPO has not been a major problem in U.S. Pacific Command. With
    minor exceptions, U.S. Pacific Command's components are staying within
    OPTEMPO goals established by service headquarters. Units that have
    exceeded or are forecasted to exceed goals include two MARFORPAC
    infantry battalions and a Marine F-18 squadron, PACAF's F-15E squadron
    and one F-16C squadron, and two ARPAC battalions. There are no firm
    indications that the force is ``wearing out.'' However, people are
    working hard and there is no sign of let-up in the workload.
    Improvements to Warfighting Capability
        U.S. Pacific Command's resource priorities were submitted to the
    Joint Requirements Oversight Council earlier this fiscal year. We have
    given the highest priority to the readiness of personnel and equipment;
    second, to near-term force improvements and upgrades to existing
    systems; third, to joint, multi-service, and multi-national systems
    which enhance warfighting capability and interoperability with our
    friends and allies; and fourth, to new, long-term recapitalization.
        I would like to highlight two new capabilities that are important
    to U.S. Pacific Command's long-term warfighting capabilities.
      --Theater missile defense.--With North Korea developing long-range
            ballistic missiles, the differences between theater missile
            defense and national missile defense are blurring. Nations such
            as China and India are actively developing new ballistic
            missiles. There is a need to keep Pacific geographic and
            geopolitical considerations in mind as we develop missile
            defenses.
      --Chemical and biological defenses.--North Korea is assessed to have
            the capability to manufacture, deploy, and employ chemical and
            possibly biological weapons. It is prudent to assume that North
            Korea would use chemical weapons in any conflict on the Korean
            peninsula. In conjunction with U.S. Forces Korea, U.S. Pacific
            Command has generated a list of near-term fixes to close the
            gap in our capability to defend against chemical and biological
            attacks.
    Quadrennial Defense Review and National Defense Panel
        U.S. Pacific Command endorses the Quadrennial Defense Review
    modernization strategy, which attempts to balance near-term readiness
    and future capabilities. The command also supports the National Defense
    Panel's conclusion that breadth of capability will be as important as
    depth for long-term readiness and modernization and that reductions in
    infrastructure are necessary to help fund modernization.
    Investments in People
        Investments in people and training are as important as new
    technologies. Adequate funding for compensation, medical, retirement,
    housing and other quality-of-life programs is necessary to attract and
    retain the skilled personnel upon which our forces depend.
        Readiness to respond rapidly in support of military contingency
    operations should be the principal guide as the military health system
    is reformed.
        Training and force protection are quality-of-life concerns as well
    as readiness issues. U.S. Pacific Command has developed plans of action
    to reduce vulnerability to terrorism and is steadily working
    requirements through the Services.
        Service military construction plans provide appropriately for
    warfighting infrastructure and improvements to quality-of-life.
    Asia-Pacific Center for Security Studies
        The Asia-Pacific Center for Security Studies (APCSS) is rapidly
    becoming a key part of U.S. Pacific Command's engagement strategy. In
    January 1998, APCSS hosted a timely conference on economics and
    security in Asia, bringing together experts from business, academia,
    and the U.S. military to discuss the origins of Asia's financial crisis
    and the implications for security and stability. Similar conferences
    have examined peacekeeping, humanitarian support, and environmental
    issues.
        The conference program complements the Center's primary academic
    organization--the College of Security Studies--that draws together
    future military and civilian leaders from around the region to explore
    national perspectives on regional security issues. The Asia-Pacific
    Center is an excellent investment in regional security.
    New Headquarters
        A new headquarters building for U.S. Pacific Command staff is
    required. The headquarters facility the staff is in today is a 45-year
    old hospital building that has deteriorated beyond the point of
    maintainability. The engineering estimate is for $75 million for repair
    alone. To meet the demands of 21st century operations this command must
    have a modern, efficient facility, one that our taxpayers can be proud
    of, and one they can afford. Funding is in the FYDP for this
    headquarters building.
                                   conclusion
        Last year I concluded that while not conflict-free, the Asia-
    Pacific region was at peace. This year the region is closer to the
    margins of general peace. The financial crisis could lead to broader
    economic and security problems.
        As military professionals, we are paid to be pessimists and
    expected to keep our powder dry. However, this charter does not keep us
    from being optimists about the future of the Asia-Pacific region. I am
    convinced that by working in a forehanded way and respecting legitimate
    views, and by maintaining a position of strength, we can best
    contribute to peace, stability, and prosperity.
        The continued support of Congress and the American people in these
    endeavors is vital and appreciated. With your support and the
    cooperation of our friends and allies, the United States will continue
    to successfully advance our national interests in the Asia-Pacific
    region.
                                     ______

                                    annexes
                   annex a. joint task force full accounting
        Joint Task Force Full Accounting's (JTF-FA) mission is to achieve
    the fullest possible accounting of Americans still unaccounted for as a
    result of the conflict in Southeast Asia. During 1997, JTF-FA completed
    250 field investigations and 48 excavations, and repatriated 31 sets of
    remains associated with unaccounted-for Americans. In 1998 to date,
    there have been over 21 remains repatriations.
        During fiscal year 1998, JTF-FA will conduct eleven Joint Field
    Activities (JFA's), five each in Vietnam and Laos, and one in Cambodia,
    to investigate, excavate, and recover remains, forensic evidence, or
    other information on unaccounted-for individuals. These field
    activities usually last about 30 days and involve as many as 100 U.S.
    personnel in Vietnam and 40 U.S. personnel in Laos. In Cambodia, the
    number of U.S. personnel varies depending on the mission.
        While JTF-FA funding lines run out this fiscal year, the task does
    not. Funding for JFA's is needed throughout the FYDP. In particular, an
    additional $5.54 million is required in fiscal year 1999 to complete
    all ten scheduled JFA's. The Department of the Navy has this issue as a
    high priority for funding.
        As of the beginning of fiscal year 1998, the number of unaccounted-
    for individuals JTF-FA is investigating stood at 364--275 in Vietnam
    and 89 in Laos. These numbers may change if scheduled field activities
    turn up additional information. There are 143 excavations or recovery
    operations to complete; these may yield information on up to 278
    unaccounted-for individuals--94 in Vietnam, 170 in Laos, and 14 in
    Cambodia.
        Cooperation from host nations continues to be good. Laos and
    Vietnam completed two very successful periods of unilateral
    investigations between August 1997 and January 1998. The Laotian
    government recovered remains possibly associated with an unaccounted-
    for American during one of these unilateral investigations. Vietnam
    continues to cooperate on the President's four key measures of
    progress: resolving discrepancy cases and live sightings, recovering
    and repatriating remains, implementing trilateral investigations with
    Laos, and providing POW/MIA documents.
        Trilateral operations also continue to achieve good results.
    Vietnamese witnesses have provided outstanding assistance to JTF-FA in
    Laos and Cambodia. Lao cooperation with JTF-FA is improving and the Lao
    government recently agreed to provide oral history questionnaires to
    senior level officials to determine whether they may have any relevant
    information on the unaccounted-for personnel.
                                     ______

               annex b. u.s. pacific command counterdrug efforts
        U.S. Pacific Command is committed to supporting the President's
    National Drug Control Strategy. U.S. Pacific Command's counterdrug
    efforts include: interdicting the flow of cocaine north from South
    America to Mexico's west coast, providing training to Thai and
    Malaysian counterdrug units, and providing helicopter support to
    Operation Wipeout, the U.S. Drug Enforcement Agency's marijuana
    eradication effort in Hawaii.
    Eastern Pacific
        Joint Interagency Task Force (JIATF) West, U.S. Pacific Command's
    sole counterdrug agent, targets shipments of cocaine moving north by
    sea from South America to the western coast of Mexico. Pacific Command
    forces seized 2.4 metric tons of cocaine during a fiscal year 1997 bust
    involving go-fast boats.
        Currently, U.S. Pacific Command maintains an aperiodic ship
    presence in the Eastern Pacific. JIATF West analysis indicates an
    increased ship presence, with supporting maritime patrol aircraft, is
    needed to fully cover the cocaine arrival zones off the west coast of
    Mexico.
    Southeast Asia
        Thailand receives the bulk of U.S. Pacific Command's counterdrug
    support. JIATF West conducts eight BAKER TEPID exercises annually in
    Thailand. These exercises provide training to Thai counterdrug forces
    in small unit tactics, leadership, marksmanship, jungle navigation, and
    combat lifesaving. JIATF West also completed construction of the third
    and final counterdrug command center in southern Thailand, enabling
    Thai forces to more efficiently coordinate their counterdrug efforts.
    Additionally, JIATF West routinely deploys intelligence analysts to
    provide analytical support to the Drug Enforcement Agency (DEA) in
    Bangkok.
        Although Malaysia has a robust counterdrug capability, it is
    acknowledged as a transit country for heroin destined for the United
    Sates. In August 1997, JIATF West conducted the first BAKER MINT
    counterdrug training exercise with Malaysia. U.S. Pacific Command
    forces provided valuable combat lifesaving training to Malaysian
    counterdrug personnel.
        There is great potential for counterdrug cooperation with Vietnam.
    A counterdrug Letter of Agreement with Vietnam was negotiated in 1997
    and is expected to be signed in 1998. The U.S. Country Team believes
    that Vietnamese support for an increased U.S. role in counterdrug
    operations is strong.
    Operation Wipeout
        U.S. Army Pacific provides helicopter support to Operation Wipeout,
    the Drug Enforcement Agency's marijuana eradication effort in Hawaii.
    To date in fiscal year 1998, U.S. Army Pacific has assisted in the
    eradication of over 22,000 marijuana plants.
                                     ______

                         annex c. military construction
        Our top military construction requirements remain warfighting
    infrastructure and quality of life projects. Military construction and
    infrastructure are key components of Pacific Command's readiness. Much
    of the infrastructure is old and needs replacement--this is a necessary
    investment. The fiscal year 1999 U.S. Pacific Command Military
    Construction program contains 47 projects worth about $550 million
    (Figure 1).
        The Host Nation Funded Construction (HNFC) program is an excellent
    example of burden-sharing by Japan and Korea. The ``Host Nation
    Support'' line item in the fiscal year 1999 budget is specifically
    fenced for planning and design funds (P&D), which are the U.S.
    investment in this program--only 1.5 percent of the approximately $1
    billion spent by the host nations. The return on this investment is
    more than 60 to 1. The Army's role as the executive agent for
    construction in Japan and Korea is critical to provide quality
    facilities. The P&D funds which are in the Army budget are critical
    because the Governments of Japan and Korea do not pay for U.S.
    Government oversight which ensures the facilities meet U.S. operational
    requirements and quality and safety standards.
        The majority of the P&D funds appropriated support the HNFC program
    in the Pacific. Cuts in the HNFC P&D funds jeopardized the U.S.
    government's ability to sustain its surveillance and design
    responsibilities in this vital program. The Army completed one-time
    cost savings measures that cannot be continued for a second year and
    still oversee the equivalent construction work of past years. It is
    imperative that sufficient Host Nation Support funds be provided
    ($20.45 million in the Army budget and $18.45 million for the Pacific
    theater). Not doing so risks allowing the Japanese and Korean
    governments to reduce their contribution because we will be unable to
    obligate all the funds they provide.
        In addition to the construction provided by the Republic of Korea
    (ROK), Congress has funded essential facilities in Korea over the past
    3 years. New barracks, dining facilities, and support facilities have
    made a significant difference to the soldiers and airmen stationed in
    Korea. We still need military construction dollars in excess of the
    $113 million annual contribution by the ROK. We request your support
    for $59 million in fiscal year 1999 for 6 barracks projects.
        Throughout the Pacific we continue to correct the housing problem
    that our military families have endured for so long. The completion of
    replacement housing is encouraging to our Service members and families.
    This is a significant factor in the satisfaction and retention of our
    career personnel. Much of the construction budget for fiscal year 1999
    is dedicated to improving the family housing and barracks in Alaska,
    Hawaii, Korea, and California.
        Our en route infrastructure is reaching the end of its service
    life, particularly our aging Petroleum-Oil-Lubricants (POL) system.
    Many facilities that were constructed during the 1940-1950 time frame
    are in need of 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 our facilities fall into disrepair, or when we shift funds to
    perform expensive incremental or emergency maintenance on those
    facilities.

    Figure 1 to Annex C.--Fiscal year 1999 U.S. Pacific Command military
    construction and family housing

                                                                  Dollars in
                                                                    millions
    Warfighting Infrastructure:
        Consolidated Munitions Facility, Eielson AFB, AK..............  $4.4
        Replace Hydrant Fuel System, Elmendorf AFB, AK................  19.5
        Special Warfare Unit Facility, NAVACTS Guam...................   5.5
        Waterfront Consolidation Facilities, NAVACTS Guam.............   4.8
        Repair Airfield Pavement, Hickam AFB, HI......................   5.9
        Central Receiving Facility, Naval Station Pearl Harbor, HI....   9.7
        Elec Distribution System Upgrade, Naval Station Pearl Harbor,
          HI..........................................................  18.2
        Engineering Management Building, Naval Shipyard Pearl Harbor,
          HI..........................................................  11.4
        Fire Station, NAVCAMS EASTPAC, Honolulu, HI...................   2.0
        Sewer Outfall Extension, PWC Pearl Harbor, HI.................  22.9
        Steam Condensate Return System, PWC Pearl Harbor, HI..........   6.1
        Power Plant--Roi Namur Island, Kwajalein......................  12.6
        Multipurpose Missile Test Facility, Kwajalein.................   4.6
        Airframes Facility Mods (F/A-18), NAS Lemoore, CA.............   1.5
        Hangar 4 Mods (F/A-18 E/F), NAS Lemoore, CA...................   5.4
        Training Facility Addition, NAS Lemoore, CA...................   4.3
        Weapons Assembly Facility Improvements, NAS Lemoore, CA.......   9.4
        Submarine Support Facility, NSB San Diego, CA.................  11.4
        SOF Amphibious Operations Facility, NAB Coronado, CA..........   3.6
        Missile Magazines, NAWCWD China Lake, CA......................   3.2
        Central Vehicle Wash Facility, Ft. Lewis, WA..................   4.7
        Close Combat Tactical Trainer Building, Ft. Lewis, WA.........   7.6
        Consolidated Fuel Facility, Ft. Lewis, WA.....................   4.0
        Tank Trail Erosion Mitigation--Yakima, WA.....................   2.0
        Security Facility Upgrades, Bremerton, WA.....................   2.8
        Hospital Addition/Alteration, Bremerton, WA...................  28.0
        Clinic/Warm Warehouse Replacement, McChord AFB, WA............  20.0
        Disease Vector Ecology Center Replacement, NSB Bangor, WA.....   5.7
    Quality of Life:
        Replace Military Family Housing Phase 3 (46 Units), Eielson
          AFB, AK.....................................................  12.9
        Elementary School Addition and Renovation, NAVACTS, Guam......   8.6
        High School Addition and Renovation, NAVACTS, Guam............   4.5
        Replace Military Family Housing (64 Units), Schofield
          Barracks, HI................................................  14.7
        Whole Barracks Complex Renewal, Schofield Barracks, HI........  47.5
        Bachelor Enlisted Quarters, Kaneohe, HI.......................  27.4
        Bachelor Enlisted Quarters Modernization, NSB Pearl Harbor, HI   8.1
        Replace Military Family Housing Phase (150 Units), Naval
          Complex Oahu, HI............................................  29.1
        Whole Barracks Complex Renewal, Camp Casey, Korea.............  13.4
        Whole Barracks Complex Renewal, Camp Castle, Korea............  18.2
        Whole Barracks Complex Renewal, Camp Humphreys, Korea.........   8.5
        Whole Barracks Complex Renewal, Camp Stanley, Korea...........   5.8
        Dormitory, Kunsan AB, Korea...................................   6.0
        Dormitory, Osan AB, Korea.....................................   7.5
        Bachelor Enlisted Quarters, MCB Camp Pendleton, CA............  15.8
        Bachelor Enlisted Quarters, MCB Camp Pendleton, CA............  12.4
        Bachelor Enlisted Quarters, MCAS Miramar, CA..................  29.6
        Bachelor Enlisted Quarters, San Clemente, CA..................   8.4
        Replace Military Family Housing Phase (162 Units), NAS
          Lemoore, CA.................................................  30.4
                                     ______

                      annex d. security assistance program
        The U.S. Pacific Command strongly endorses a strong and responsible
    Security Assistance program. We use each element of the Security
    Assistance Program to support our regional strategy and to maximize the
    return on our investment. The U.S. Pacific Command's fiscal year 1997
    Foreign Military Sales (FMS) were over $2.6 billion. Asia's financial
    crisis, decreases in defense budgets and foreign competition are likely
    to reduce sales in fiscal year 1998. Foreign Military Financing (FMF)
    is small in the Pacific Area of Responsibility. In fiscal year 1997
    only two countries received funds, consisting of grants for demining:
    Cambodia ($1 million) and Laos ($1 million).
        The International Military Education and Training program (IMET) is
    one of our most cost-effective programs to promote peace, security,
    democracy and interoperability. IMET can pay immediate dividends, but
    the long-term returns have even more importance, promoting long-term
    professional association with future military and political leaders.
    Many key regional leaders are IMET graduates and are strong supporters
    of U.S. involvement in the region. To ensure our regional objectives
    are achieved, we must continue the strong IMET programs that we have
    been providing to friendly countries in the region.
                                     ______

               annex e. asia-pacific center for security studies
        Accomplishments.--The Asia-Pacific Center for Security Studies
    (APCSS), established in September 1995, continues to play an important
    role in the U.S. Pacific Command's theater strategy. The APCSS provides
    the opportunity and the environment to foster understanding and
    cooperative approaches to security in the Asia-Pacific region. To date,
    the APCSS has held four 12-week classes in the College of Security
    Studies with 126 future military and civilian leaders from 31 Asia-
    Pacific countries. The APCSS has also conducted 12 conferences with
    1,102 current military and civilian leaders from 50 countries. These
    multilateral approaches provide superb venues for interaction between
    key leaders from the Asia-Pacific nations.
        Facilities.--The APCSS is temporarily located in commercial
    facilities in Honolulu, Hawaii. Efforts are in progress to renovate an
    existing government building for use by the Center. This would provide
    a more cost-effective permanent facility for the Center within
    proximity to billeting and messing accommodations for attendees.
        Legislative Policy Issues.--Passage of the Waiver of Charges
    provision in the Fiscal Year 1998 Defense Appropriations Act was
    crucial to attracting participants to the Center. It acts as an
    incentive for countries to participate by waiving tuition, or
    ``platform,'' charges, as well as authorizing attendance costs of
    participants from approved Title 10 countries to be waived; this
    mirrors legislation granted to George C. Marshall European Center for
    Security Studies. Identical legislation was submitted as part of the
    fiscal year 1999 Omnibus Bill to secure permanent authorization. This
    provision imposes no increase in DOD budgetary requirements, since
    costs are paid with appropriations already available to the APCSS.
                                     ______

        annex f. command, control, communications, and computers (c\4\)
        The vast expanses of the U.S. Pacific Command's area of
    responsibility stress theater C\4\ infrastructure. The fielding of
    updated equipment at all organizational levels needs to continue, to
    include space assets. We also continue to build an information
    assurance capability, including: alternative paths, common joint
    hardware, security management tools, and training. Finally, we are
    pursuing improved capability to provide exchange of information with
    our coalition partners.
        Pacific Command is pursuing C\4\ interoperability throughout the
    theater under an umbrella effort called PACNET. This past year theater
    components adopted common automation software. By June 1998 Pacific
    Command's Joint Task Force commanders will also migrate to this
    standard. In the future, Pacific Command will integrate commercial and
    military communications systems.
        We are concerned about spectrum reallocation and potential charges
    for spectrum use in the United States. Other countries are often
    influenced by our policy. This has already led to reallocations and
    potential charges for exercises in Australia and Singapore. Further,
    systems that have been developed with old frequency allocations in mind
    may have to be retrofitted at a yet to be determined cost. Limitations
    imposed on the use of the Patriot surface-to-air missile system and the
    Joint Tactical Information Distribution System in Korea and Japan are
    examples of why we need a national spectrum strategy. This strategy
    should consider our national defense requirements and strive to
    convince other nations to align usage of their spectrum as closely as
    possible with ours for critical military systems.

        Senator Stevens. Well, we do thank you very much, and I
    regret that others are not here this morning. The two of us
    visit you so often it is almost--we ought to have this visit in
    our office, but it is good to have a record so others might see
    it if they desire to do so.
        You did mention China a little, and you mentioned the
    Indonesia situation a little. In view of what happened the day
    before yesterday, the riots in Indonesia, have you changed your
    planning as far as the presence of our forces in that region?
        Admiral Prueher. No, sir, we haven't changed our planning.
    We are doing a lot of work with Indonesia, both the Treasury
    Department and we are staying in communications with them.
        We have only periodic forces, and those numbers are very
    small that are in Indonesia, but our planning and the ships in
    the area have not changed as a result of the recent riots in
    Indonesia. Demonstrations in Indonesia is a better word for it.
        We stay abreast, we monitored that with the country team,
    we monitored that with the ABRI, with the Indonesian military,
    and stay in touch with them, but we have not redeployed any
    forces as a result of what's gone on there, sir.

                       impact of Persian Gulf deployments

        Senator Stevens. The deployments to the Persian Gulf
    region, have they strained our security in the Pacific as a
    whole?
        Admiral Prueher. As you know so well we have deployed the
    Indy carrier battle group to the Persian Gulf region, as well
    as a ARG, MEU, and a marine expeditionary unit, as well as some
    additional prepositioning ships. We have also gone from five to
    seven prepositioning ships in the gulf.
        What has occurred are opportunity costs for interacting
    with the other nations in the western Pacific that we would
    normally do with the ships, the Indy carrier battle group, and
    with the marine amphibious ready group, as well as the marine
    expeditionary unit.
        The other part that has been stressed is our ability to
    respond to a crisis in Korea, and we have backfilled that by
    deploying some F-15's from Alaska, a squadron of F-15's from
    Alaska to Korea, and we have deployed also two AC-130 gun
    ships, but our ability to respond to a crisis in Korea, should
    it come up, is stressed.
        However, in the realm of prudent risk and what we think is
    the likelihood of a conflict in Korea, it seems like a prudent
    risk to take right now in order to respond to what's going on,
    our Nation's response in the Middle East, sir.
        Senator Stevens. Iran is still within your area, is it not?
        Admiral Prueher. No, sir, Iran is in the Central Command
    AOR.
        Senator Stevens. I thought you went to the eastern side of
    the gulf.
        Admiral Prueher. We go to the eastern coast of Africa.
    There is a right-angled chunk out of the gulf that belongs to
    CENTCOM that goes from Somalia East and then north to the
    intersection between India and Pakistan.
        Senator Stevens. I have two last questions.
        Admiral Prueher. Yes, sir.
        Senator Stevens. One is, we earmarked a portion of the
    Nunn-Lugar money to see to it that the Navy, under your
    command, would have an opportunity to work with the Russian
    forces and their Far East to bring about a reduction in nuclear
    problems there----
        Admiral Prueher. Yes, sir.

                          Cooperative threat reduction

        Senator Stevens [continuing]. With regard to the
    powerplants and some of the decommissioned vessels, and also to
    a certain extent, in the overall nuclear area. How is that
    working now?
        Admiral Prueher. Senator, I think it is working well. The
    cooperative threat reduction to which the committee put $35
    million against is being run from the cooperative threat
    reduction office in OSD and the Joint Chiefs. CINCPAC, as our
    nuclear agent, has been working with them.
        The status of that is the State Department approvals have
    been acquired. There are contracts being announced that would
    go to both Russia and the Far East, and United States
    contractors in the Far East, and this is awaiting SECDEF
    approval to spend the money.
        We expect that money to be obligated within the next 2
    months, and it is all scheduled to be spent in the Russian far
    east for the purposes of that you described, to try to take
    care of the nuclear powerplants and the decommissioning of
    Russian ships.
        So it is tracking well right now. We are watching it very
    carefully, and I think it's on track for the purposes that the
    committee put the money.
        Senator Stevens. A year ago it did not seem that the
    Russians were able to put a high priority on those activities,
    in view of the problems of pay, and relocation of their forces,
    and downsizing of their systems, and we were very worried about
    the number of nuclear units, particularly on some of the
    decommissioned submarines.
        Admiral Prueher. Yes, sir.
        Senator Stevens. We made that money available last October.
    It's not been released yet, right?
        Admiral Prueher. No, sir; it hasn't been released yet, but
    I think it will get spent well and spent for the correct
    purposes, but it has not been released yet, sir.
        Senator Stevens. Have we at least had an opportunity to
    inventory the size of the problem?
        Admiral Prueher. Yes, sir.
        Senator Stevens. I am getting ready to markup another bill,
    and we do not have any indication from your Department that any
    additional moneys are necessary. They have not spent what we
    have made available so far.
        Admiral Prueher. The OSD, and we owe the committee a
    response, and I will get back as soon as we are through here to
    make sure that response gets to the committee quickly, in time
    to use it for the next markup, sir.
        The problem is a real one, the Russians are unable to
    respond to it, or appear to be unable to respond to it, the
    help is needed, and I believe it is working in the right way.
    If it is different than that I will get back to you, sir.
        Senator Stevens. Now, the admiral we met at Vladivostak was
    transferred to Moscow, and he has a really elevated position--
    --
        Admiral Prueher. Yes, sir.
        Senator Stevens [continuing]. As I understand it.
        Admiral Prueher. That's Admiral Kuriatov, who was the
    Pacific Fleet Commander, who is now the chief of staff of the
    Russian Navy.
        Senator Stevens. He was quite interested in this when we
    discussed the prospect with him. Have we followed through with
    him at all?
        Admiral Prueher. Yes, sir, we have. We have been in contact
    with him through CINCPAC and also through the CNO's office, and
    I will provide the details of that to you, sir, to make you
    more comfortable with the contacts, and make me more
    comfortable with the contacts.
        Senator Stevens. I was very uncomfortable with the sight of
    submarines sinking in their berths.
        Admiral Prueher. Yes, sir.
        Senator Stevens. Those were nuclear submarines.
        Admiral Prueher. It is a real problem, sir.
        Senator Stevens. I will get back to some more provincial
    things later. Senator Inouye.

                            Pacific force reductions

        Senator Inouye. Thank you, Mr. Chairman. About 10 years ago
    we decided that the cold war had ended, and the Soviet threat
    had disappeared, and accordingly we began reducing our force
    levels throughout the world.
        Then about 6 years ago, soon after we closed Subic, the
    chairman and I took a strange trip throughout your area of
    responsibility, at the suggestion of Defense and State, to meet
    with the chiefs of state and the chief military officers of
    countries like Australia, Indonesia, Malaysia, Thailand, the
    Republic of Vietnam, Philippines, People's Republic of China,
    Korea, Taiwan, and Japan, and the question we asked was a very
    simple one, do you want the United States to remain in this
    area or do you want us to leave. The answer in every capital
    was a clear and unmitigated, please do not leave.
        Senator Stevens. Even Beijing.
        Senator Inouye. Beijing and the Republic of Vietnam. Some
    cited the situation of Spratly, where six nations are now
    claiming these small islands because they have found oil, and
    each nation with forces numbering up to a battalion.
        Others cited the possibility of a massive arms race,
    involving the Japanese, and the Chinese, and the Koreans, and
    there were many, many reasons there. But yet we have reduced
    our Pacific forces by approximately 20 percent since that time,
    numbering over 25,000, and there is a possibility of further
    reductions in the force level. Now, what are your thoughts on
    that?
        Admiral Prueher. Senator, I think if you surveyed the same
    countries again you would find the same answer, that the
    nations there universally, and I think the PRC might demur on
    their answer a little bit right now, but the nations want the
    U.S. presence, and they want forward deployment, to see the
    commitment of the United States to the Asia Pacific region, and
    the security in that region.
        Our forward deployed forces, which number about 100,000,
    and they are represented by the capabilities of the 7th Fleet,
    the 3d Marine Expeditionary Force, the 5th and 7th Air Forces,
    the first of the 1st Special Forces Group, and the 8th United
    States Army in Korea, are manifestations, probably the most
    visible manifestations of United States commitment to security
    in the Asia Pacific region. They bring a great balance to the
    region and a sense of security that has allowed the region to
    prosper overall. They want that.
        Further, we have recently been through the quadrennial
    defense review, and reaffirmed there, and reaffirmed by the
    President's Secretary of State, the Secretary of Defense, the
    commitment to keep about 100,000 troops in the Asia Pacific
    region.
        We need them there to do this preventive defense that we
    talked about earlier, if we're going to be forehanded and
    farsighted, and be able to handle problems while they are
    modest, instead of allowing them to grow.
        Our presence is desired. I think our forces are doing it in
    a good way, as Ambassadors, as well as enforcers, not only for
    the United States, but working as partners with the nations in
    the region.

              International military education and training [IMET]

        Senator Inouye. Admiral, I am glad that you pointed out in
    the opening remarks that six of the seven largest armed forces
    in the world are located in your area of responsibility, in the
    Pacific, and that some of the more troublesome areas are in
    your area of command, such as Korea, and the possibility of
    problems in Southeast Asia, the present problems in Indonesia.
    What are your thoughts on IMET?
        Admiral Prueher. Thank you for asking that, sir. The IMET
    program, which is the international military education and
    training, is a fund by which we are able to work with the
    militaries of other nations, it is administered by the State
    Department, but it works with the militaries of other nations,
    where they can get exposed to democracies and democratic
    principles.
        In my opinion, it is one of the highest payoff, most highly
    leveraged, for relatively small amounts of money, the amounts
    of money are in the categories of $400,000, sometimes $4.16
    million, in the case of Thailand, which is the largest one in
    our AOR. They have huge payoffs with training and working with
    the military in these nations.
        I would like to give an example using Thailand because we
    have had IMET training with Thailand for quite a while. In
    Thailand, they have been a good ally for us, they have allowed
    basing for us, no questions asked, when we wanted to fly B-52's
    through there, to work in the Middle East. We have trained with
    the Thais, we have good political and military relationships
    with the Thais.
        General Mongkong is the supreme commander of the Royal Thai
    armed forces, and he, about 9 months ago, when the government
    was falling, the prime minister of Thailand was being
    disenfranchised in Thailand, General Mongkong, who is a very
    powerful person, had the opportunity and a lot of pressure from
    outside, to do a military take over, to declare perhaps marshal
    law, and to run the country with the military.
        Owing to the fact that he had been IMET trained, among
    other things, as well as the fact that he is a Thai patriot, he
    resisted these pressures and supported free elections in
    Thailand, in which Prime Minister Tron Luc Pi was elected, and
    now Thailand, as we discussed earlier, is working very hard to
    come out of their economic crisis.
        They have military security in Thailand, and they are a
    staunch United States ally. That is one example of one of the
    payoffs of IMET.
        One of the costs of IMET, I think, is in Indonesia, where
    in 1992, IMET was canceled with Indonesia by the Congress, and
    in my view, if we disapprove of what is going on in a nation,
    that is the wrong answer. We need to try to educate that
    country, the military of that country in democratic principles.
    I think we should be contacting them, not isolating them, and
    in 1996, Congress repassed expanded IMET for Indonesia, and in
    1998, Indonesia has accepted it. So that is back on a better
    track than it was. IMET is a very valuable tool.
        Senator Inouye. As you noted in your response, this program
    is under the jurisdiction of the State Department.
        Admiral Prueher. Yes, sir.
        Senator Inouye. The chairman has suggested that we should
    consider placing this under the DOD account. I realize this is
    a policy matter, and if you do not wish to respond, I
    understand. Do you think that is a good idea?
        Admiral Prueher. My opinion is that it would work well
    under DOD account, also, sir, and it works all right the way it
    is. I think it might be more cleanly administered if it were a
    DOD account, sir.

                            Ford Island development

        Senator Inouye. Finally, may I just note my pleasure in
    receiving the word of your support of the Ford Island
    development, because I say so not only as a Senator from
    Hawaii, but as a member of the Milcon Subcommittee and this
    committee.
        As you know, the dollars available for military
    construction is dwindling, and this, I believe, may be the
    model for things to come in the United States, where the
    private sector can be involved in----
        Admiral Prueher. Yes, sir.
        Senator Inouye [continuing]. Military construction. So I
    commend you and your command, and I look forward to it becoming
    a real thing.
        Admiral Prueher. Thank you very much, Senator.
        Senator Stevens. Thank you.
        Senator Cochran.
        Senator Cochran. Mr. Chairman, welcome.
        Senator Stevens. Thank you, Senator Cochran.

                              North Korean threat

        Senator Cochran. I am glad to see you again. One of the
    troubling areas in your region is the North Korean situation,
    there's an indication of instability there, in terms of the
    economy, and food shortages, and all the rest, and in spite of
    those difficult economic challenges, we see the North Korean
    military continue to, according to reports, develop offensive
    capabilities like the Nodong missile, and even to the extent
    that it may be deployed now, or fielded, rather than just under
    development.
        What can you tell us in this hearing about the nature of
    the threat to United States forces and our ships in the region,
    because of North Korea's continued upgrading of its ballistic
    missile capability?
        Admiral Prueher. Senator, the Scud missiles that North
    Korea exports and develops, as well as the Nodong missile
    create a real potential threat to our forces, as well as those
    of our allies in South Korea.
        These missiles, I am trying to stay at the unclassified
    level here, do not pose--it would be only a random threat to a
    ship, but if one draws a circle with the radius of the range of
    those missiles, they do create a problem for our forces in
    South Korea.
        So as we try to work toward reconciliation in North Korea,
    which I am encouraged about the transition of the Kim Dae Jung
    government in South Korea, the continued investment of North
    Korea in exercises and of developing this missile capability
    stays a high concern of ours that we watch very closely.

                                Missile defense

        Senator Cochran. Do you have adequate capability to defend
    the assets in your area of operations against ballistic missile
    attack?
        Admiral Prueher. The fear of missiles to defend against is
    a key issue that we need to work. The defense that we have is
    not as adequate as we would--it is not as robust as we would
    like. We have some capability to defend. We would rather have
    more.
        We keep a close eye on both the likelihood of a ballistic
    missile attack and the ability to defend. I am comfortable
    right today with that risk reward ratio; however, the incentive
    to launch a ballistic missile attack could come up in a hurry,
    in which case we would have an inadequate ability to respond to
    it, sir.
        Senator Cochran. One specific statement that you made in
    your testimony is, and I quote, ``With North Korea developing
    long-range ballistic missiles, the differences between theater
    missile defense and national missile defense are blurring,''
    and you say that ``we need to keep Pacific geographic and geo-
    political considerations in mind.'' What exactly do you mean by
    that?
        Admiral Prueher. Good question, sir. The national missile
    defense is important to all of us. The physics of creating a
    national missile defense are inhibited by the Ballistic Missile
    Treaty, and the political ideas, I think, of the Anti-Ballistic
    Missile Treaty are to put some restraint on what Russia and the
    United States do in the missile defense area.
        I think we have made great strides in theater ballistic
    missile defense. The altitudes of theater ballistic missiles
    and the speeds of theater ballistic missiles are less than
    those of the strategic missiles. So they are not completely
    separate issues.
        There are politics entwined in this, there are laws of
    physics entwined in this. I think the proper course for us to
    do at this point is to work on theater ballistic missile
    defense to the maximum extent that we can, and there is a lot
    of tradeoff, and there is a lot of benefit we can get that will
    be applicable in national missile defense if we become able to
    really work hard on that one, sir.

                            Amphibious ready groups

        Senator Cochran. One of the pressures on your assignment is
    to make sure you have the amphibious mobility in a huge
    geographical area----
        Admiral Prueher. Yes, sir.
        Senator Cochran [continuing]. To deal with threats as they
    may arise. From an operational point of view, how valuable are
    the amphibious ready groups to ensuring this capability?
        Admiral Prueher. They are of tremendous value, sir. Our
    AOR, because of its size, and because of the largely maritime
    nature, the ability to move position, carrier battle groups, as
    well as amphibious groups to the right place at the right time,
    and, again, try to outguess the situation on the part of the
    commanders in the region, is very important. This ability to
    respond is critical.
        Senator Cochran. How would a reduction in the number of
    amphibious ready groups affect your warfighting plans?
        Admiral Prueher. It would have a negative impact on it,
    sir. We have those amphibious ready groups deployed worldwide,
    some east coast, some west coast, and then, of course, we have
    one that is home ported in Japan. In our AOR we need all that
    we have, and I think it would be said by the other CINC's as
    well.
        Senator Cochran. Thank you very much.
        Admiral Prueher. Thank you, Senator Cochran.
        Senator Stevens. Senator Domenici.
        Senator Domenici. Thank you very much, Mr. Chairman.
        Hello, Admiral, it is nice to see you.
        Admiral Prueher. Hi, Senator, it is good to see you again.
        Senator Domenici. We did have a rather exciting trip that
    preceded our visit with you at your command, and I remember it
    vividly, and the exciting part was North Korea. A few things
    have happened since then, but probably the most important thing
    have been the big changes in South Korea----
        Admiral Prueher. Yes, sir.
        Senator Domenici [continuing]. Which may have a longer and
    more lasting effect on the North Korean relationship than
    things we were doing before this new president.
        First, I want to compliment you, while I did not get a
    chance to read your statement, I find your analysis of things
    to be good and so credible, and in conformity of that, I will
    read it. I just made a note to take it with me so that when I
    have time I can read it. But my staff did point out some areas
    in it that I want to commend you on.
        First of all, I want to commend you for the frankness that
    you have exhibited today, particularly on pages 24 and 26,
    regarding readiness. We are having a lot more difficulties with
    others in the military to get such frank discussions of
    readiness and quality of life.
        I am going to submit to you, and I hope it is not too
    burdensome, but five questions with reference to readiness and
    the quality of life.
        In all, with the subquestions, there might be 14 or 15, but
    I think with what we are beginning to learn from our trip to
    the Middle East about morale and the constant return to an area
    10, 15, 8 times, or 9, by military men and women, who may soon
    decide that they do not know what they are in there for, some
    of these have to do with quality of life, I hope if you do not
    have information about the quality of life that you will tell
    us you do not. I think these are important. I am going to leave
    them in the record, you can answer them.
        Admiral Prueher. Thank you, sir.
        Senator Domenici. Mr. Chairman, I might complain to you
    through this committee about the previous request that we have
    made of all three of the military branches with reference to
    quality of life, readiness, and the like, and only one has
    bothered to answer the questions at all, and that was the
    Marines, and they only answered with reference to the exit
    polling that they took.
        I would surely like to ask your staff, the committee staff
    again, to go back and repeat those questions and see if they
    cannot give us their in-depth quality of life and exit poll.
        Senator Stevens. That will be done. With those answers, I
    will have another hearing.

                            Pacific economics crisis

        Senator Domenici. Thank you very much. Let me talk a minute
    about economics. When my friend asked for your views on IMET, I
    do not hear too well out of this ear, and I thought he said
    IMF, and I was very excited, because I thought you had
    commented about IMF, and perhaps you were going to elaborate on
    it.
        I guess whether you want to give us your view on IMF
    refurbishment or not, but you have already said that the job of
    your area of responsibility is made much more difficult by some
    of the fragile economic situations in the countries that 5
    years ago were in pretty good shape, and were growing and
    prospering, that is correct, is it not?
        Admiral Prueher. Yes, sir, that is.
        Senator Domenici. I do not know if you want to answer in
    public, but maybe I will just put the question to you, you are
    good with words, and you use them appropriately.
        If I were to make a statement that in the Asian area there
    is a chance that there will be some serious revolutions or
    major civil strife because of the economic chaos that is coming
    now and the foreboding lifestyles, would you agree with that
    statement?
        Admiral Prueher. Not necessarily, Senator. I think that
    just the economic situation has increased the stresses and
    strains on the governments.
        What I would like to say is that I think that the military
    security part, if we were to exacerbate the financial strains
    that are going on now with military insecurities, also, then we
    might have some bonafide unrest in the countries that could
    occur.
        What we were trying to do with the East Asian nations, to
    the extent that we can influence it, is to continue to work
    with them to try to create a bedrock of military security where
    we can, so that the economic crises can be dealt with without
    having the additional stress of military instability.
        Our biggest concern is in Indonesia, where those stresses
    are the largest, where there is political stress, there is
    economic stress, and the military in Indonesia, I think, is
    trying as hard as they can, I have talked to General Wiranto,
    their head, and both their minister of defense and their--he
    has two jobs, minister of defense and the head of the ABRI,
    they are doing the best they can to work in a responsible way,
    but it is a very challenging and sensitive situation in which
    they find themselves, and we watch that situation very closely,
    sir.
        Senator Domenici. So are you saying--well, you did not
    agree with my statement, which I did not necessarily expect you
    to, but your job is made more difficult, because of the
    situations that are currently occurring, and which might happen
    in some of these countries.
        Admiral Prueher. Yes, sir. It has changed. With 7 to 9
    percent economic growth, a lot of the ills can be accommodated.
    Without that economic growth, the strains become greater.

                                    Wrap-up

        Senator Domenici. Mr. Chairman, I will submit some other
    questions in writing, and just take 1 minute to wrap-up.
        And this does not have necessarily anything to do with you,
    but the more I observe the difficulty that this Appropriations
    Committee is having in meeting the needs of the military, and
    where we are almost every year getting one or two major
    emergency requests, be it for Bosnia, which is at $1.91 billion
    for next year, it is not in the regular budget, it was asked
    for on top of it, and where we have had similar situations
    already in the Middle East, where big expenditures were not in
    the budget, and we were asked to pay for them on an emergency
    basis, that is breaking the budget, but not breaking it--I have
    come to the conclusion, and I expect no response from you, that
    the approach of the administration is a way to get around
    asking for more money for defense, and frankly, I think that is
    the case.
        I think defense needs more money, and I think these
    constant emergency requests are an indication that the White
    House, and those who work there, do not want to face up to the
    fact that we probably need a few billion dollars more for
    defense.
        And frankly, I do not know that we will get emergency
    designations every time they ask, and that means that defense
    is going to get hurt more, so you are going to have to run
    around trying to find that money, and I do not think that is
    fair to this committee, and I think it is an easy way out, to
    not have to bite some tough bullets.
        And, again, I am going to stay on this point until I get it
    out there and get some people over there understanding that we
    just cannot keep taking money out for deployments around the
    world, and still have a ready military and military men and
    women who want to stay in this great armed services of the
    United States. Thank you.
        Senator Stevens. Thank you. We do not expect a response to
    that, Admiral.
        Admiral Prueher. Yes, sir.
        Senator Stevens. I said we did not. Needless to say, when
    it comes to the Budget Committee chairman, it is welcomed by my
    colleague from Hawaii and I, and we will be pleased to work
    with him somehow to break this impasse. We clearly need some
    more money this year.
        I went to that ceremony on the new designation of the 172d
    Brigade. We were delighted to see that, and the concept that is
    involved there. I want to congratulate you on that.
        It does find a solution to what I called the problem of the
    Orphan Brigade in Alaska, and we are glad that it now has a
    definite assignment. Can you tell us what--you mentioned the
    scenario of the recent problems, in terms of the straits in
    China.

                             Crisis response force

        Are there any other scenarios that you envision using that
    brigade to be part of your crisis response force?
        Admiral Prueher. Well, sir, in response to Senator
    Cochran's query about the marine amphibious ready group and the
    marine expeditionary units, I think this brigade is an air-
    deployable brigade that responds to similar types of events,
    where an example would be what occurred about 8 months ago in
    Cambodia, where we responded with 530 people, they happened to
    be the special operations forces, and nine aircraft, that is
    the type of thing where a brigade like that, properly trained,
    might be a response team, something of a modest size that could
    get there quickly and could react to a noncombative evacuation,
    or events like that. It is a great utility tool to have in the
    CINC's toolbox to be able to respond, sir.
        Senator Stevens. You have the forces in Hawaii. Is this the
    only other army force at your ready command?
        Admiral Prueher. The second tier under us are, of course,
    the 8th United States Army in Korea, that really work for
    General Tilelli there, and they are dedicated to the situation
    in Korea.
        It is the ICOR in Fort Lewis, General Crocker's group, is
    under USPACOM command, but that is largely a headquarters where
    all the forces are Reserve and Guard units under ICOR. So this
    and the 25th Infantry Division are the Army units, the
    multipurpose Army unit that we would have under our command,
    sir.

                                 Okinawa update

        Senator Stevens. There is a situation now in Okinawa, I
    read a story about the status on our recent trip, which
    discussed the particular problems of relocating, what is that,
    the Futenma----
        Admiral Prueher. Futenma. Yes, sir.
        Senator Stevens [continuing]. Air strip. Is that worked out
    yet?
        Admiral Prueher. It is not worked out yet, sir. The
    Government of Japan is working a lot with the local politics in
    Okinawa to work on a replacement capability for the Futenma
    Marine Corps Air Station there.
        The plan most under discussion is a sea base facility which
    could be either a pontoon type of arrangement, a large air
    field, or a landfill, called a sea-based facility, off of Camp
    Schwab, is most frequently talked about, but this is being
    worked out with the Government of Japan and the Okinawans.
        Senator Stevens. I understand that that is to be at
    Japanese expense, right?
        Admiral Prueher. Yes, sir, it is.
        Senator Stevens. Is the current situation of Japan's
    financial condition delaying this at all?
        Admiral Prueher. I do not think it is delayed because of
    the financial situation in Japan. It is a substantial expense.
    I think the investment in the Okinawa area is something they
    are working out, but largely it ends up trying to reconcile the
    local politics in Okinawa, vis-a-vis these facilities.
        It is interesting that a couple of mayoral prefecture
    elections that were recently held, the candidate that supported
    United States presence in Okinawa was the candidate that won,
    which is a little bit of a change of tack in Okinawa with what
    we have seen in the last 2 or 3 years, sir.
        Senator Stevens. Senator Inouye, when he was chairman of
    the subcommittee, held some hearings that I attended in
    Okinawa, if you recall, and that is a longstanding dispute.
        Admiral Prueher. Yes, sir; our United States military there
    in Okinawa, with our marines there, as well as Kadena Air Base,
    as well as our Army special forces unit there, it has large
    footprint in Okinawa.
        So of the 26 items that were addressed under SACO, which is
    the Special Action Committee on Okinawa, that Dr. Perry set up,
    quite a few of those items have been completed and have been
    resolved. There are a few outstanding ones, the most difficult
    of which is the Futenma Air Base relocation, and that one is
    still working, and I think will take a few more years to work
    out, sir, but it is a longstanding issue.
        I have to tip my hat to Gen. John Baker, who is the Air
    Force leader at Kadena. He has done a great job there, and Gen.
    Frank Libutti has taken over the III Marine Expeditionary Force
    [MEF], and marines there are doing a great job of working with
    the community.
        I think what you find there is pro-American, but if it is
    like it is at home, people do not like to live in the landing
    pattern, so the basing is an issue we have to work out, sir.
        Senator Stevens. Like my State, those homes were put in
    after the field was put there, and it still is a problem.
        Admiral Prueher. Yes, sir.

                             Northern Edge exercise

        Senator Stevens. Northern Edge, my staff tells me that the
    next exercise will be a joint training and experimentation test
    bed for emerging doctrine, advanced technologies, and
    innovative concepts. Is that correct?
        Admiral Prueher. Yes, sir; the last Northern Edge that we
    did with General McCloud in Alaska, and I think you got a good
    debrief on that, where they included information, assurance
    operations in there, and about 96,000 people were involved in
    that joint exercise in Alaska.
        The ones coming up, we have forecast them to have Japanese
    participation, Australian participation in that exercise, as
    well as a joint exercise, and an experimentation test bed for
    communications and information assurance.
        Senator Stevens. Will forces under your command be
    involved----
        Admiral Prueher. Yes, sir.
        Senator Stevens [continuing]. Naval forces?
        Admiral Prueher. Yes, sir; the plan is for the 3d Fleet
    flagship to go up there and be a participant in Northern Edge.
    We have not really gelled exactly how that is going to turn
    out, but there will be naval forces involved in it, too.
        Senator Stevens. Do you have any further questions, Senator
    Inouye?
        Senator Inouye. Just one, and I would like to submit the
    rest. I understand the joint surveillance and target attack
    radar system [J-STARS] aircraft was used in exercises in your
    command at the end of last year----
        Admiral Prueher. Yes, sir.
        Senator Inouye [continuing]. And that included using the
    aircraft in support of amphibious landing exercises in Korea.
        Admiral Prueher. Yes, sir.

                                    J-STARS

        Senator Inouye. How would you assess the utility of J-
    STARS? I ask this, because it may become a matter of some
    discussion in this committee.
        Admiral Prueher. Yes, sir; J-STARS is a very useful
    platform, designed, of course, originally to look at moving
    targets, and to assess what is going on on the battlefield. It
    has become even more important as a battle space management
    aircraft to also help coordinate what goes on in the
    battlefield. It worked well in Korea, the aircraft is--we
    pushed it to deploy, we deployed it to Bosnia, we deployed it
    to the Korean Peninsula, it worked very well there, sir, and is
    a great utility to us.
        Senator Inouye. Mr. Chairman, if I may, I would like to
    submit the rest of my questions.
        Senator Stevens. Yes, sir; I have a couple of questions I
    did not ask, also.
        Senator Cochran.
        Senator Cochran. I have no further questions, Mr. Chairman.
        Senator Stevens. Admiral, it is always a pleasure to see
    you. I remember so well when we saw you just before we went
    down to the Antarctic and the book you gave me.
        Admiral Prueher. Yes, sir.
        Senator Stevens. I hope you have another book as equally
    interesting as the one that I read so faithfully on that trip.
    It is a wonderful, wonderful story. We will be contacting you
    about that problem of the $35 million, and whether there is
    going to be any incremental amount that will be necessary.
        It is highly important that we not just concentrate funds
    on areas west of the Urals--east of the Urals, particularly
    along the northern coast, and there along the Pacific Coast,
    the Bering Sea Coast, there seems to be an accumulation of
    retired or decommissioned nuclear-powered vessels in Russia,
    and we certainly do not want to see a resumption of dumping at
    sea of nuclear systems that are still capable of contamination
    in that great body of water. One-half the fisheries of the
    world are in that area of the North Pacific.
        I appreciate your courtesy of being here. We apologize
    again for the delays, and it is good to see you.

                         Additional committee questions

        Admiral Prueher. It is good to see you, too, Senator, and I
    will followup with the response to that.
        [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
                                      imet
        Question. Admiral Prueher, please discuss our military training
    with Indonesia. What kind of an IMET program do we currently have with
    Indonesia?
        Answer. Each of U.S. Pacific Command's service components train
    with Indonesia. Training is coordinated annually during the Bilateral
    Defense Discussions (BDD), an annual meeting that lays the foundation
    for shaping our military-to-military relationship. Training events with
    Indonesia are on a relatively small scale and focus at the tactical
    level. Exercises normally occur on an annual or biennial basis with
    several iterations of an exercise throughout the year.
        Due to Indonesia's uncertain political environment, all U.S.
    military training with the Indonesia Armed Forces (ABRI) in Indonesia
    was put on hold as of May 7, 1998. We anticipate that until the
    political environment in Indonesia stabilizes, future U.S. military
    activities with ABRI in Indonesia will be determined on a case-by-case
    basis by the Under Secretary of Defense for Policy.
        Congress suspended the International Military Education and
    Training (IMET) in 1992 due to the 1991 Dili incident in East Timor.
    Subsequently, Indonesia was approved for Expanded IMET (E-IMET) in
    1996. E-IMET provides training in the proper management of defense
    resources, improves systems of military justice in accordance with
    internationally recognized principles of human rights, and fosters
    greater respect and understanding of the principles of civilian control
    of the military.
        For fiscal year 1998, Indonesia was granted $400,000 for E-IMET
    training. Indonesia has agreed to participate and has requested
    training in English, medical services, information management, Law of
    War workshops, and civil-military affairs. ABRI has also requested a
    slot at the National Defense University.
        Question. What benefits are derived from having an IMET
    relationship with Indonesian Armed Forces?
        Answer. IMET's greatest benefit can be found in its ability to
    influence relations with Indonesia Armed Forces (ABRI) on important
    issues such as human rights and the role of a professional military
    under the rule of law. When ABRI trains with our troops and attends our
    courses we are able to directly expose ABRI's upcoming leadership to
    the democratic principles we hold dear. Our troops provide a model for
    how a military functions under the rule of law, and the academic
    courses we offer reinforce this same message.
        In my opinion, ABRI's commendable moderating influence in the
    recent Indonesian transition from the Suharto regime can be traced, at
    least in part, to the exposure of ABRI leaders to IMET programs.
        Question. If we don't stay engaged with Indonesia, what will be the
    likely outcome?
        Answer. Indonesia is a leading nation in Southeast Asia. Its size
    and location make it a pivotal country in maintaining regional
    stability and prosperity. Indonesia is the world's fourth most populous
    country and largest Muslim country. She sits astride the region's key
    straits--Malacca, Lombok and Sunda--which serve as Asia's primary trade
    routes for the movement of goods and energy supplies.
        Indonesia has historically exerted a moderating influence on
    regional issues. Generally supportive of U.S. interests, Indonesia is a
    leading member of the Association of Southeast Asian Nations (ASEAN)
    and a driving force behind the creation of the ASEAN Regional Forum
    (ARF). Indonesia is also a founding member of the Non-Aligned Movement
    (NAM) and a member in the Asia-Pacific Economic Council (APEC).
        Indonesia is currently in the midst of a major political and
    economic transformation. The outcome of this transformation will
    determine Indonesia's stance in international relations and many issues
    important to the United States. Failing to engage Indonesia during
    these critical times would mean losing the opportunity to influence the
    country's transformation.
        One key to influencing Indonesia is to engage the Indonesia Armed
    Forces (ABRI). ABRI is Indonesia's leading and most developed national
    institution and is now playing a decisive role in maintaining stability
    in Indonesia while directing the pace of political reform. If United
    States expects to see its positions take hold in Indonesia, it will be
    done most effectively by influencing ABRI.
        IMET is an important long-term tool to building the relationships
    the United States needs to bring influence on ABRI's emerging
    leadership. Besides building relationships, IMET exposes ABRI to how
    the U.S. military functions in a democracy, under the rule of law. IMET
    is an important tool as are carefully scripted contacts between the
    United States and ABRI forces.
        Without engagement, and particularly with ABRI, the advance of U.S.
    interests both in Indonesia and in the larger region will be
    jeopardized.
                                     china
        Question. Admiral Prueher, do you view China as a threat?
        Answer. To answer this question we must first ask, a threat to
    whom? Its neighbors certainly view China's large army and inventory of
    ballistic missiles as a potential threat. Ballistic missiles are of
    particular concern because of their ability to hold population centers
    and military installations at risk.
        China is not a threat in terms of force projection. They do not
    currently have the ability to move large numbers of troops and
    firepower across great distances. They cannot match the U.S. ability to
    fight far beyond its shores, and so are not a threat in that sense.
        We expect the People's Liberation Army (PLA) to try to attain a
    force projection capability in 15-20 years, assuming an adequate degree
    of funding. Other challenges, such as doctrine development and the
    ``professionalization'' of their military must also be watched closely.
    I expect China's PLA will become more and more professional. Their
    growth in capability will depend on good decision-making and continued
    economic growth.
        Question. What is your plan for military-to-military relations with
    China?
        Answer. Our military-to-military contacts with the People's
    Republic of China (PRC) are an important part of the overall U.S.-China
    relationship. Our military-to-military goals are two-fold: build trust
    and understanding from a position of U.S. strength, and increase
    openness. These are long-term goals that will take years to accomplish.
    As a result, we are actively seeking to include younger generations of
    military officers in the process, but the pace of our engagement does
    not need to be hurried.
        Our military-to-military game plan for 1998 includes four areas of
    emphasis: counterpart and other high-level contacts, increased PLA
    participation in multinational conferences, implementation of
    confidence building measures, and promoting functional and professional
    exchanges.
        A number of counterpart visits and other high-level contacts are
    already planned for this year. They include visits to the United States
    by GEN Zhang Wannian (Senior Vice Chairman of the Central Military
    Commission and the PLA's senior-most uniformed representative), GEN
    Wang Ke (Director of the General Staff Department), LTG Kui Fulin and
    LTG Qian Shugen (both Deputy Chiefs of the General Staff Department),
    and VADM Shi Yunsheng (Commander of the PLA Navy). From the United
    States, SECDEF Cohen, Under Secretary Slocombe, Gen Ryan, and I have
    all visited China this year.
        We encourage PLA participation in multinational conferences and
    seminars. So far this year, the PLA has participated in the Pacific
    Area Senior Officer Logistics Seminar (PASOLS), Pacific Armies
    Management Seminar (PAMS), the Asia-Pacific Military Medicine
    Conference, the South Asia Peacekeeping Conference, and the Conference
    on Military Aspects of Environmental Security. We continue to invite
    the PLA to attend the Asia Pacific Center's Strategic Studies College,
    though they have yet to accept.
        Confidence building measures (CBM) are another important part of
    our gameplan. Our CBM's include two U.S. Navy ship visits to the PRC in
    1998 and implementation of the Military Maritime Consultative
    Agreement, a formal framework to reduce the chance of miscalculation
    when our naval and/or air operations occur in close proximity. We will
    hold the first annual meeting in July 1998.
        Functional and professional exchanges hold the greatest potential
    for progress in 1998. For the first time, the PLA has agreed to send
    observers to Rim of the Pacific (RIMPAC) Exercise, Cooperative Cope
    Thunder, and Hong Kong Search and Rescue Exercise (SAREX). They are
    also actively participating in the Deputy Assistant Secretary of
    Defense (DASD) for Peacekeeping and Humanitarian Assistance (PK/HA)-
    sponsored humanitarian/disaster relief initiative. These venues, as
    well as the multilateral conferences, provide the best means of
    achieving our long-range goal of involving the younger generation of
    PLA officers.
        Question. Have you had much success in your efforts with China to
    expand those military contacts and exchanges?
        Answer. Yes. We have had some success in each of the four areas
    that define Defense Department military-to-military relationship with
    the People's Liberation Army (PLA). In all cases, the relationship has
    expanded at a measured pace with a focus on moving contacts to lower
    levels.
        Our counterpart visits and other senior-officer contacts are the
    basis upon which we build all other relationships. This component was
    re-instituted with vigor in 1996 with Minister of Defense General Chi
    Haotian's visit to the United States. In 1997, a total of sixteen
    senior officer delegations visited each country, evenly split each way.
    The 1998 program is more modest with five PLA delegations to the U.S.
    and six U.S. delegations to the People's Republic of China.
        PLA participation in multinational conferences has made significant
    progress since 1996. Last year the PLA attended half (11 of 22) of the
    conferences held by U.S. Pacific Command component commands. This year
    the PLA will easily surpass that number. More importantly, the PLA
    attendees are actively participating this year through more open
    discussions and presentations. We will continue to push for even
    greater participation in 1999.
        Confidence building measures continue with our U.S. Navy port
    visits to Hong Kong and official ship visits to mainland ports. Last
    year's visit to Qingdao was a great success, as was the first PLA Navy
    ship visit to Hawaii and West Coast ports. We have planned three U.S.
    ship visits for 1998. We are encouraging the PLA Navy to visit the
    United States again in 1999.
        Perhaps our greatest area for progress has been the Functional
    Exchanges. Foremost are the Military Maritime Consultative Agreement
    (MMCA) talks scheduled for mid-July. This series of discussions is
    designed to prevent miscalculation at sea. Other major topics include
    the Humanitarian Initiative, military aspects of Environmental
    Security, and the Defense Consultative Talks.
                             asian financial crisis
        Question. Admiral Prueher, what impact has the ongoing economic/
    currency crisis in Asia had on regional security?
        Answer. Maintaining regional security in the face of the ongoing
    crisis is key to the region's long-term development. Our analysis
    focused on the hardest hit countries: Thailand, Malaysia, Indonesia,
    Philippines, and South Korea. The immediate concern was that the
    financial crisis would lead to a security crisis. With the exception of
    Indonesia, the security situation throughout the region remains stable.
    However, the full impact of the financial ills are just now beginning
    to take effect.
        Indonesia remains particularly vulnerable to a resurgence of
    rioting and civil disturbances as shortages of food, fuel, and credit
    grip the country. We are watching this situation closely and are
    conducting appropriate planning to protect U.S. interests should a
    crisis arise.
        Over the longer term, government austerity programs will reduce the
    region's ability to provide for its self-defense. Regional security
    cooperation in fora such as the Association of Southeast Asian Nations
    (ASEAN) Regional Forum will suffer as ASEAN members focus inward on
    their economic programs. The potential for regional friction increases
    the importance of sustaining U.S. military presence and engagement
    programs.
        U.S. Pacific Command is working closely with each country to ensure
    we remain engaged and emerge from this crisis with an even closer
    relationship.
        Question. What planning are you doing for a possible non-combatant
    evacuation operation (NEO) or refugee contingencies as a result of this
    crisis?
        Answer. We have been assessing similar scenarios for some time, and
    have taken measured steps to ensure we are ready. Whenever a possible
    crisis has the potential to endanger American citizens, both the
    embassies and U.S. Pacific Command (USCINCPAC) review existing
    contingency plans and update intelligence to maximize our preparedness.
    Likewise, when a possible humanitarian emergency appears to loom on the
    horizon, we conduct a coordinated assessment of what help the United
    States could and should bring to bear, and how USPACOM could lend
    support.
        [Deleted.]
        Please be assured, we have forces ready and capable to respond to
    both such emergencies, and watch for signs they may be needed with an
    unwavering eye.
        Question. Will the crisis have an impact on how these countries
    modernize their Armed Forces, as well as their ability to share the
    cost of U.S. presence in Japan and Korea?
        Answer. The financial crisis has had a significant impact on the
    Republic of Korea's (ROK) defense modernization program, as the country
    has scaled back or postponed many of its modernization projects. Those
    major programs affected include: procurement of airborne warning and
    control system (AWACS); construction of three 1,500 ton submarines;
    purchase of coastal radar systems; and purchase of 155 mm self-
    propelled guns. With regard to burdensharing, the ROK appears committed
    to the current special measures agreement but is working with
    Washington to shift some of its contributions from dollars to won to
    compensate for a reduced dollar/won exchange rate.
        So far, the current Asian financial crisis has had little, if any,
    effect on Japan's defense modernization program. However, since the
    early 1990's, Japan's own economic problems have slowed the rate of
    growth of the military budget. Because of a government-wide austerity
    program initiated last summer, the Japan Self-Defense Force faced
    unprecedented budget cuts--over $8 billion from the remaining three
    years of its current five-year plan (1996-2000). There is concern as to
    the potential impact of a prolonged economic slump on long-term Japan
    Self-Defense Force capabilities. All signs indicate however that Japan,
    a major purchaser of U.S. equipment, will meet its remaining contract
    commitments and overall host nation support obligations.
        The financial crisis has also caused Thailand, Malaysia, Indonesia,
    and the Philippines to delay or curtail force modernization programs.
    To date, Thailand is the only one of these countries to request the
    termination of a major foreign military sale program, the purchase of
    F/A-18 aircraft.
                                     ______

                Questions Submitted by Senator Pete V. Domenici
                             asian financial crisis
        Question. We have all followed the Asian financial crisis closely,
    given its potential negative impact on the U.S. and global economy.
    However, the crisis is also generating considerable social unrest in
    the affected nations as domestic prices surge and unemployment rises in
    the wake of their currencies' collapse. Some analysts have warned that
    this unrest could lead to greater ethnic strife and even possible civil
    war unless conditions improve in the near future.
        In your estimate, how much of a security threat does Asia's
    financial crisis pose in this crucial region? Do you think there is any
    possibility of civil war in any affected Asian nation?
        Answer. With the notable exception of Indonesia, the financial
    troubles sweeping key Southeast Asian nations have ushered in a period
    of stringent defense austerity and will likely erode defense
    capabilities, but internal security mechanisms should remain intact and
    largely unaffected. Rising inflation and unemployment have increased
    discontent and domestic political strains, but serious unrest is
    generally unlikely in most of the regional states.
        Expected leadership changes should remain largely constitutional
    and devoid of civil violence or military intervention in view of the
    existing political systems in most of the affected states. Although at
    this point a civil war is unlikely, Indonesia appears headed toward a
    downward spiral of economic turmoil that probably will bring further
    leadership, political, and social change.
        Question. What can Congress do to help improve the situation--could
    approval of IMF funding play an important role in boosting confidence
    in the region?
        Answer. Approval of International Monetary fund (IMF) support can
    play an important role in boosting confidence in the region. Regional
    leaders, including key military figures, realize a drawdown of
    international support to the current crisis places regional growth and
    stability at risk. Without IMF support, economic and social conditions
    may deteriorate, military attention may be drawn to internal problems,
    and regional security cooperation could suffer.
        My recent visits to countries in the region have indicated that
    relevant defense establishments recognize the dire short-term need for
    IMF programs and realize the importance of structural Asian Financial
    Crisis reforms to long-term prosperity.
        Across the board, the militaries recognize the need to allow
    government and financial institutions to solve the current economic
    crisis. This professional willingness to ``stay in the barracks'' and
    take the IMF medicine represents a positive trend in regional political
    development, and reinforces investor confidence in Asia's long-term
    growth potential.
        Question. Is there any threat that the ongoing crisis could result
    in a broader regional conflict?
        Answer. Currently, I do not believe that there is a serious risk of
    a broader conflict stemming from the regional economic downturn for
    either South Korea or the nations of Southeast Asia. However, the
    financial crisis has made these nations feel less secure than before,
    which has increased the general desire for a strong U.S. presence in
    the region. If the countries in the region could find Asian-centered
    solutions to their mutual economic suffering, they could actually
    enhance security ties among their nations. The uncertain outlook in
    Indonesia has raised concern among its immediate neighbors. Singapore
    and Malaysia fear widespread economic disruption and refugee outflows
    because of the political and social turmoil. Both nations have
    responded with financial support and public backing for Jakarta's
    policies. It is important for the Congress to be aware of the support
    and endorsement by Asian nations for U.S. underwriting of regional
    security.
                                   readiness
        Question. What do your latest data show about retention of basic
    infantrymen, mechanics, cooks, and pilots? Is it getting better or
    worse? Is it better or worse for married personnel? With families? What
    are the socio-economic profiles of the people leaving? Staying? Or, do
    you not have these kinds of data? Would it help?
        Answer. U.S. Pacific Command (USPACOM) does not have a database to
    provide the answers to these questions. Service headquarters collect,
    track, and analyze retention data, sharing the results with USPACOM and
    the other Combatant Commanders. Retention is based on a number of
    complex factors. Office of the Secretary of Defense (OSD), the Joint
    Staff, and the Services are now conducting more detailed analyses of
    retention trends, including examination of potentially significant
    demographic groups and influencing factors. We look forward to seeing
    the results of these examinations which should lead to a better
    understanding of what drives retention and what array of compensation,
    benefits, and quality of life programs are necessary to achieve and
    maintain desired levels of retention of the right personnel.
        Question. What are the specific complaints of people leaving your
    command? What are the reasons for staying of the people who stay? Or,
    do you not get these kinds of data?
        Answer. The Services track the reasons for retention and non-
    retention of personnel. We work closely with the Services to monitor
    retention and identify any areas with the potential to negatively
    impact U.S. Pacific Command (USPACOM) readiness. At this time, USPACOM
    does not have any unique issues. The advent of the recent decline in
    retention rates with the Services has caused Under Secretary of Defense
    (Personnel and Readiness), the Joint Staff, and the Services to begin
    more in-depth examination of retention trends and projections. We await
    the results of the efforts and will engage with the Office of the
    Secretary of Defense (OSD), the Joint Staff, and the Services to ensure
    that readiness within USPACOM continues to be met.
        Additionally, the Services believe that the reduced incentive of
    the 1986 Military Retirement Reform Act's retirement compensation may
    be a partial cause of the reduced retention the Services are
    experiencing. The OSD, the Joint Staff, and the Services are currently
    studying the impact of the military retirement systems on retention.
        Question. Which of your ``quality of life'' programs are working?
    Which are not? Which generate the best pay-off in terms of retention?
    Please provide the data and analysis to substantiate your answer, or
    are you using judgement or anecdotal evidence to assess the degrees of
    success or failure?
        Answer. Though we focus heavily on quality of life issues for the
    well being and the readiness of our forces, we work with the Service
    Chiefs who are responsible for budgeting and evaluation of the
    programs. Our experiences in U.S. Pacific Command (USPACOM) are not
    unique. The Services report that anecdotal evidence suggests
    educational benefits, medical and dental health care, fitness and
    recreational activities, commissaries, and exchanges are quality of
    life programs that have a positive influence on retention. Retirement
    may be a program that is not working in terms of its influence on
    retention. We, along with the Services suspect that the 1986 Military
    Retirement Reform Act retirement system is contributing to reduced
    retention. The Office of the Secretary of Defense, the Joint Staff, and
    the Services are currently studying the impact of the reduced military
    retirement system's impact on service members' career retention
    decisions. In the view of many in our area of responsibility, with the
    exception of Korea and Hawaii, building of new housing for first-term
    enlisted is approaching a point of diminishing return for quality of
    life and retention.
        Question. Do you collect or receive data about family and substance
    abuse in your command?
        Answer. The methods for collection of family and substance abuse
    within the Pacific Theater vary by Service. The Department of Defense
    is in the process of developing a comprehensive database for Family
    Advocacy (child abuse and neglect and spouse abuse) cases. 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, are
    implementing Central Registries which have common guidelines,
    requirements, and procedures for data collection, analysis, and
    distribution. The military Services have submitted relevant data to
    DOD. Retrieval of U.S. Pacific Command (USPACOM) specific data is not
    yet possible. Commencing in fiscal year 1998, the DMDC will make such
    data retrieval possible.
        Substance abuse data is collected by each of the Component Services
    within USPACOM. The Army, Air Force, and Marine Corps collect the data
    within the theater, provide it to a Central Registry within their
    respective services, and receive a summary of the results for their
    forces. Our Navy component, Pacific Fleet (PACFLT), however, collects,
    compiles, and analyzes substance abuse data for PACFLT forces, as well
    as forwarding it to a Central Registry. Urinalysis results comprise the
    primary data collected.
        Question. What changes have been occurring in spouse, child, and
    substance abuse for the past two years? Please differentiate between
    officers and enlisted, length of service, and among major military
    specialties and PERSTEMPO rates.
        Answer. Specific data on spouse, child, and substance abuse is
    maintained by each Service. Differences in how each Service defines and
    uses the data reported make it difficult to aggregate DOD-wide. We
    understand that Office of the Assistant Secretary of Defense (Family
    Policy, Support, and Services), the Defense Manpower Data Center, and
    the Services are finalizing a common comprehensive database that will
    provide DOD-wide data on Family Advocacy by more specific demographic
    sub-groupings to include geographical areas such as U.S. Pacific
    Command (USPACOM).
        Within our area of responsibility, there has not been any
    statistically significant change in our data on these abuses. Though a
    single incident is one too many, the rate for our population remains
    small and cannot be correlated to any particular causal factor.
        Question. What is the role of the current high personnel tempo
    (PERSTEMPO) in any changes in family or substance abuse? Please provide
    copies of any analysis you have of the relationship.
        Answer. Analysis of the potential correlation between PERSTEMPO
    rates and changes in family or substance abuse has not been
    accomplished. Additionally, PERSTEMPO varies for the different
    Services. For the Navy and Marine Corps, it has not increased because
    rotational deployment patterns have remained constant. However, the
    increase in the rotational assignments within the Army and Air Force
    has increased the amount of family separation our soldiers and airmen
    are experiencing since the drawdown.
        Question. Do you have confidence that the Armed Services of DOD
    generate adequate data and analysis about readiness and quality of life
    issues?
        Answer. The Armed Services make diligent and reliable efforts to
    support the decision-makers at all levels, from theater to the
    Department of Defense and the Joint Chiefs of Staff, by providing
    timely data and analysis about readiness and quality of life issues. In
    my view, our readiness data does not yet present an actionable picture.
        Let me point out, however, that understanding and measuring
    readiness, and to a certain extent quality of life, is complex and
    difficult, particularly when information is aggregated at the theater
    and national levels. This aggregation process sometimes obscures
    pockets of lower readiness in the force, which we often hear or read
    about as anecdotes.
        Our readiness reporting systems are evolving as information
    technology improvements are adapted to the challenge of measuring and
    understanding readiness. Our senior military leadership is committed to
    improving those systems to provide a clearer picture of readiness.
        Areas where I believe we can make the greatest strides are: (1)
    refining readiness benchmarks, (2) better distinguishing between
    subjective and objective assessments (both are needed) (3) improving
    predictive tools, and (4) developing tools to link tactical readiness
    indicators to supply, maintenance, manpower, and training events.
    Finally, at the theater level, we need to find the right tools to merge
    service and joint reporting systems to give us greater fidelity in
    total theater readiness.
        Similarly, quantifying the impact of quality of life programs is
    complex and challenging. Differences in Service programs and resource
    requirements complicate comparison between Services. Through close
    coordination with U.S. Pacific Command Component and Sub-Unified
    Commanders, those quality of life issues most critical to the well
    being and readiness of our service personnel and their families are
    being monitored, examined, and addressed.
        Question. Do you have confidence that the information and analysis
    you receive is accurate and valid?
        Answer. The readiness information and analysis I receive is
    accurate and valid, though generated by an imperfect system, and
    therefore lacks sufficient depth and breadth to meet the needs of all
    decision makers.
        Our current ``readiness system'' is in fact two separate systems,
    designed at different times for different purposes. The Status of
    Resources and Training System (SORTS) measures and reports on unit
    level sufficiency of people, training, equipment and supplies. It is an
    objective system.
        The Joint Monthly Readiness Review (JMRR), a subjective system,
    assesses military capabilities in terms of broad functional areas, such
    as logistics, mobility, intelligence and communications. Because one is
    subjective and the other objective, it is difficult to get the whole
    readiness picture, except when they are tempered and augmented by
    commander's judgment.
        Among the most common reasons for questioning the products of our
    readiness system are the many anecdotes we hear. These typically
    highlight a significant unit level deficiency in a warfare capability
    which, when viewed at the theater or higher levels, is within historic
    norms. These ``pockets of `unreadiness' '' are obscured because of the
    way we aggregate data at each successively higher level. What may be
    obvious to an individual commander loses visibility when the vantage
    point is four levels higher.
        The effects of aggregation are but one aspect of readiness
    assessment in need of remedy. The Joint Staff, along with the staffs of
    the unified CINC's, are currently addressing such issues as common
    terminology and common measures of service PERSTEMPO.
        Accurately measuring and assessing readiness is a difficult task.
    Our system is not perfect, but many are trying to improve it. I have
    attached a paper that offers additional thoughts on the topic for your
    use.

                                                          May 15, 1998.
                         understanding readiness * * *
    Introduction
        High on the nation's defense agenda is the question of military
    readiness. It has been the subject of Administration and Congressional
    attention as well as extensive media coverage. But, what is readiness
    and how is it measured? This article steps outside the Pentagon's
    framework for thinking about readiness and provides a plain English
    perspective.
        What is readiness and how is it measured?
        Readiness can be defined as the nation's ability to have the right
    forces in the right place at the right time to fight the right war. It
    consists of seven things; in principle, measuring readiness in each of
    these areas is a straightforward task:
        Qualified people.--For each unit, we count the number of
    specialists on hand-pilots, infantrymen, mechanics, etc.--and compare
    those numbers to the numbers each unit needs.
        Combat-capable hardware and technology.--We compare the
    capabilities of U.S. military hardware--ships, tanks, aircraft, etc.--
    to those of potential adversaries.
        Appropriate levels of maintenance, supplies, and spare parts.--We
    track the extent to which hardware is in a ``ready to go'' maintenance
    status. In simple terms, are the ships ready for sea, can the aircraft
    fly, can the tanks shoot, and are adequate supplies and spare parts on
    hand?
        Training.--We track the amounts and types of training our forces
    have received.
        Tactics, techniques, and procedures.--We ask ourselves, ``do we
    have tactics, techniques, and procedures that fully exploit the
    capabilities of our hardware and our people?''
        Transportation and communication.--We ask ourselves if we can move
    our forces in a timely manner to wherever they might be needed and if
    we can communicate with them once they are deployed.
        Infrastructure.--We track the extent to which our bases, hangars,
    maintenance depots, fuel farms, training ranges, etc. are in an ``up''
    status, lest we erode our ability to do maintenance, train our forces,
    and keep our forces supplied.
    Readiness exists on multiple levels
        Readiness exists at tactical, operational, and strategic levels
    within our forces.
        At the tactical level, the question is: are our smallest military
    units--squadrons, battalions, ships--ready to fight? Tactical readiness
    is the responsibility of the Army, Air Force, Navy, and Marine Corps.
    The armed services give their squadrons, battalions, ships, etc., the
    people, hardware, training opportunities, and funds to attain readiness
    standards that the services define for these units.
        There are two forms of operational readiness: ``service'' and
    ``joint.''
      --Service operational readiness is the ability of the individual
            tactical units to form larger, operational-level fighting units
            such as wings, battle groups, brigades and divisions, Air
            Expeditionary Forces, Marine Expeditionary Units, etc. The
            services are responsible for providing the funds and training
            environments for this form of readiness.
      --Joint operational readiness reflects the ability of operational-
            level fighting units of the individual services to ``integrate
            and synchronize,'' i.e., to operate in cohesive, coordinated
            ways with the fighting units of other services (as well as with
            forces of other nations). This form of readiness is the
            responsibility of the unified Commanders-in-Chief (CINC's).
        Estimating the service operational readiness of units involves
    ``aggregating'' the readiness data of tactical units. The complexity in
    joint operational readiness comes when we try not only to aggregate the
    readiness data of tactical units from a single service but also
    aggregate the readiness data of operational units from two or more
    services. It is possible for our forces as a whole to be in a high
    state of readiness, even though some individual units are not at peak
    readiness.
        Strategic readiness combines tactical and operational readiness
    with all of the additional intelligence, logistics, command-and-
    control, and transportation systems needed to form a joint warfighting
    force. It also comprises the readiness of the CINC's staffs and other
    federal agencies and departments necessary to put the right forces in
    the right place at the right time to fight the right war.
        In general, strategic readiness is measured against a large-scale
    scenario, such as the nation's ability to fight and win two major
    theater wars. The Chairman of the Joint Chiefs of Staff is the catalyst
    who defines the benchmarks for strategic readiness.
        To measure strategic readiness, tactical and operational readiness
    data must be aggregated even further and combined with other data. At
    this stage, the data for the force as a whole will often obscure the
    readiness of individual units, even if they are experiencing
    significant readiness shortfalls.
        Why is measuring readiness difficult?
        There are five reasons why measuring readiness is easier said than
    done.
      --Readiness depends on the ``benchmarks'' against which we measure
            our forces, such as whether they can fight two major theater
            wars nearly simultaneously. Different benchmarks will yield
            different results.
      --Many aspects of our readiness measuring system rely on subjective
            judgments.
      --An automated system that links tactical readiness data to joint
            operational and strategic readiness data does not exist.
      --There is no simple equation for ``aggregating'' readiness data from
            one level up to the next level.
      --We also factor in ``prudent risk,'' e.g., the chances of a crisis
            occurring.
        What are the implications?
        The discussion above is perhaps a start to what may be a better way
    of understanding and measuring readiness. Clearly it needs further
    development, but this view has the potential to provide much more
    useful measurement of military readiness.
                                   readiness
        Question. Do you have confidence that complete, accurate, and valid
    information is routinely made available to decision-makers in the
    Office of Secretary of Defense and the Joint Chiefs of Staff by the
    military services and by the civilian bureaucracy?
        Answer. A system that provides complete, accurate and valid
    information implies a perfect system. We do not have a perfect
    readiness reporting system but we have a good one and it is getting
    better.
        A great deal of data relating to readiness is available. The
    challenge is to select the correct data such that it provides
    meaningful information. The Chairman of the Joint Chiefs of Staff
    recently said that he wants ``to make certain that in this increasingly
    constrained resource environment our Joint Readiness Reporting Systems
    accurately reflect our posture.'' We have taken the Chairman's ``focus
    item'' to heart, and continue to make improvements.
        We currently assess readiness through the vehicles of the Status of
    Resources and Training System (SORTS) and the Joint Monthly Readiness
    Review (JMRR), briefly described in the previous answer. These systems,
    though individually useful, were not designed to work together, and
    their merger produces a whole no greater than the sum of the parts.
        Recognizing these limitations, I believe complete, accurate and
    valid information is routinely made available to decision makers,
    though our efforts to improve its quality continue.
                                     ______

                Questions Submitted by Senator Daniel K. Inouye
                              asia-pacific center
        Question. Admiral Prueher, I understand the Authorization
    Committees are likely to eliminate your requested authority to
    reimburse poorer countries who send students to the Asia-Pacific
    Center. Can you explain the importance of receiving legislative
    authority for this?
        Answer. Public Law 105-56, Section 8094 contains language that
    allows the Center to waive reimbursement for the cost of conferences,
    seminars, and courses of instruction for participants of foreign
    countries when the Secretary of Defense determines such participation
    is in national security interests and these costs are paid with
    appropriations already available to the Center. This authority is due
    to expire September 30, 1998. Permanent authorization is being sought.
        This authority is crucial to the Center's ability to attract
    participants from both developing and developed countries in the
    region. Since it permits waiving class-related tuition or ``platform''
    charges for all participants, it acts as a strong incentive for not
    only developing, but also developed countries to attend. Participation
    by nations such as Australia, New Zealand and Japan is clearly in the
    best interests of the United States since they typically exercise a
    leadership role in the region. This authority also allows waiving
    reimbursement for personal expenses of approved developing countries,
    and therefore enhances the authority granted by 10 U.S.C. 1051.
        Identical language was previously enacted for the Center in the
    Fiscal Year 1997 Department of Defense (DOD) Appropriations Act at
    Public Law 104-208, Section 8121. The provision mirrors legislation
    previously granted to the George C. Marshall European Center for
    Security Studies in Public Law 103-337, Section 1306(b). Enactment of
    the provision imposes no increase in DOD budgetary requirements.
        Question. Admiral, how is the Asia-Pacific Center aiding you in
    carrying out your cooperative engagement strategy?
        Answer. The Asia-Pacific Center directly contributes to the U.S.
    Pacific Command (USCINCPAC) strategy by fostering understanding and
    cooperation through the study of security-related issues among military
    and civilian representatives of the United States and other Asia-
    Pacific nations. The Academic Department provides a focal point where
    military and civilian officials gather to exchange ideas, explore
    pressing issues, and achieve a greater understanding of the challenges
    that shape the security environment of the Asia-Pacific region.
        The Center is presently conducting its fifth class in the College
    of Security Studies. During the twelve-week program in the College, the
    participants build human relationships and mutual understanding that
    will strengthen the foundation for security cooperation in the face of
    significant regional challenges. These challenges include: the
    tremendous diversity of cultures, political systems, and standards of
    living; historical animosities that continue to strain international
    relations; transnational security issues such as organized crime,
    terrorism, the drug trade, severe environmental degradation, and
    migration; the growing tension between the forces of globalization and
    ethnic nationalism, now dramatized by the economic crisis in Asia; and
    the absence of formal security arrangements to coordinate national
    security strategies and policies.
        The Conference Division has conducted conferences and seminars with
    participants coming from all countries in the region. These conferences
    and seminars have addressed regional security issues ranging from
    Emerging Democracies to Environmental Issues. The conferences are
    designed to take on the emerging issues in the Asia-Pacific region and
    incorporate them into the USCINCPAC preventive defense strategy as well
    as the College of Security Studies curriculum. The program is extremely
    useful and responsive to USCINCPAC's emerging needs.
        Question. Admiral Prueher, can you update the subcommittee on the
    reconstruction of the new Asia-Pacific Center?
        Answer. Renovation of an existing Government facility on Fort
    DeRussy to accommodate the Asia-Pacific Center is proceeding on
    schedule, thanks to the February 25, 1998 restoration of fiscal year
    1998 Military Construction (MILCON) funding in the Navy's budget. This
    restoration allows us to proceed to run the center most economically
    and avoid further rental of workspace.
        Restoration of MILCON funding ensures continuation and full funding
    of the planning and design (P&D) effort. This effort began September
    30, 1997 when the basic architectural and engineering contract was
    awarded. As of May 18, 1998, 35 percent of the design effort was
    completed; the final design phase will commence July 1998.
        The Asia-Pacific Center is expected to assume responsibility for
    the Government facility from the Army by June 1, 1998.
        The demolition contract for removal of all non-load-bearing
    interior walls within the existing Government facility is expected to
    be awarded no later than September 15, 1998, with demolition completed
    by January 28, 1999. The contract for renovation, which will overlap
    demolition, should be awarded December 14, 1998.
        While total renovation is not expected to be completed until August
    2000, the renovation effort will be phased, allowing employees to
    vacate the current facility and relocate to the newly renovated
    Government facility a floor at a time. Under this phased approach, we
    will begin relocating into the building with executive and
    administrative support staffs in April 2000.
        Question. The Marshall Center has received unfavorable reports
    about its financial accountability. What steps will you take to ensure
    that you do not experience the same problems?
        Answer. We have already taken many steps to ensure financial
    accountability in Asia-Pacific Center operations. Most notable is the
    explicit incorporation of recommendations and lessons learned from
    Marshall Center audit reports during the initial Asia-Pacific Center
    implementation plan development. This planning spanned more than a year
    and involved active participation and oversight by senior U.S. Pacific
    Command (USCINCPAC) staff. It is, in fact, this close relationship
    between USCINCPAC and the Asia-Pacific Center, both geographically and
    operationally, that has fostered effective communications and an
    atmosphere of transparency and mutual support. This is an advantage not
    as readily attainable by the Marshall Center because of its distance
    from Headquarters, European Command. Additionally, we are working in
    close concert with the Undersecretary of Defense for Policy for
    management of the center.
        U.S. Pacific Command retained oversight and decision-making
    authority for all major purchases through September 1997, at which time
    the Center became its own operating budget holder. However, even with
    this reduction in USCINCPAC oversight, the Asia-Pacific Center must
    still submit all purchases above $2,500 through the Navy's Federal
    Industrial Supply Center at Pearl Harbor for review and processing.
        In contrast to the Marshall Center, the Asia-Pacific Center's scope
    of operations is narrower, since it relies on contracted versus
    government space for participant accommodations and conferencing
    facilities. This reduces government overhead and simplifies
    management's responsibilities.
        As a further safeguard, the Center implemented early on an
    aggressive Internal Management Control program that emphasizes
    continuous management training in vulnerability assessment and risk
    reduction. Management-level awareness has been raised significantly as
    a result of this systematic process review.
                            situation in north korea
        Question. Admiral Prueher, the conditions in North Korea remain
    grim because of food shortages, economic isolation, and other factors.
    Can you tell us what the current status is and what concerns this
    presents for you as Commander in Chief, U.S. Pacific Command
    (USCINCPAC)?
        Answer. The conditions in North Korea are severe. The combination
    of flood, drought, inadequate medical supplies and government
    mismanagement is causing large-scale human suffering.
        The World Food Program (WFP) estimates that North Korea must rely
    on foreign food for most needs until the fall. Its current annual
    appeal for assistance calls for 650,000 metric tons of food aid. This
    will provide subsistence level support to an estimated 7.5 million of
    North Korea's most vulnerable--about one-third of the population--
    consisting of children and those cared for in hospitals and
    institutions. The aid deliveries are being timed to meet anticipated
    needs in spring and early summer.
        My immediate concern is the instability that may stem from these
    conditions. It is difficult to predict with any degree of accuracy how
    this instability may play out. There is a wide range of possible
    outcomes--anything from no change in status to a military response,
    including an attack on the Republic of Korea (ROK). While economic
    conditions are eroding North Korean military capabilities, they remain
    formidable and have the ability to inflict heavy casualties on ROK and
    U.S. forces. We must be prepared to respond in this worst case
    scenario.
                                   landmines
        Question. Admiral, I am told the Administration is examining a new
    policy regarding landmines. Can you comment from a military point of
    view on the continued requirement for landmines--especially in Korea?
        Answer. No where else today do U.S. forces face such a credible
    threat as on the Korean Peninsula. Mines are integral to blunting a
    North Korean attack and buying time for the deployment of U.S. forces
    for reinforcement and counterattack. Without the ability to integrate
    anti-personnel landmines in planned barriers as well as hasty
    protective minefields, Combined Forces Command's plan for the defense
    of South Korea is at greater risk for ground forces' casualties. As a
    force multiplier, mines offset shortages in troops and material, buy
    time for the defender, and allow reduced force structure under the
    armistice. Additionally, the use of mines in Korea is instrumental in
    protecting the population of Seoul.
                     north korean ballistic missile threat
        Question. Admiral Prueher, recently I cosponsored a bill with
    Senator Cochran in favor of deploying a national missile defense
    primarily because of my concern with developments in North Korea. Are
    you concerned that North Korean ballistic missiles could someday soon
    reach Honolulu or Anchorage?
        Answer. [Deleted.]
        Question. Admiral, considering the difficulties with the North
    Korean economic situation, how serious a threat does the future
    development of an indigenously designed, intercontinental-range
    ballistic missile (ICBM) appear to be?
        Answer. [Deleted.]
        Despite the country's economic difficulties, long-range missiles
    are a high priority for the government and development of the systems
    will continue until they are operational. The North has openly stated
    its intention to continue its missile development program, both for
    national defense and for much needed foreign exchange.

                              subcommittee recess

        Senator Stevens. Thank you very much. The subcommittee will
    stand in recess.
        Admiral Prueher. Thanks very much.
        [Whereupon, at 11:53 a.m., Wednesday, May 6, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 1999

                                  ----------

                              MONDAY, MAY 11, 1998

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 2:02 p.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Ted Stevens (chairman) presiding.
        Present: Senators Stevens, Domenici, and Inouye.

                           NONDEPARTMENTAL WITNESSES

    STATEMENT OF SANDRA C. RAYMOND, EXECUTIVE DIRECTOR,
                NATIONAL OSTEOPOROSIS FOUNDATION
    ACCOMPANIED BY CHARLES K. SCOTT, II, COMMANDER, DEPARTMENT OF THE NAVY

                     OPENING STATEMENT OF HON. TED STEVENS

        Senator Stevens. Let me welcome all of the witnesses. There
    are a large number of organizations who have requested the
    opportunity to appear before us this year. And we do appreciate
    your interest in the bill.
        To ensure that all of you who have asked to speak get a
    chance to speak today, we have to ask that you limit your
    comments to 4 minutes. But we do have your statements, and I
    want you to know we really do go through them. Your statements
    will each be printed in the record in their entirety.
        I think many witnesses today will raise concerns about
    defense health, the total health program of the Department of
    Defense [DOD]. Senator Inouye and I are working to make sure
    that all active and retired military personnel and their
    dependents receive the best medical care we can possibly make
    available. The subcommittee will markup the 1999 defense
    appropriations bill on Tuesday, June 2nd, and your comments
    today will be considered as we seek to allocate the funds that
    are available to us this year for so many competing priorities
    for the year 1999.
        Now, let me thank you very much for coming and tell you
    that Senator Inouye is at another meeting. He will come here at
    3:15, and I will leave to go to another meeting. But we are
    going to each chair half of the session today.
        Senator Domenici, do you have any comments, sir?
        Senator Domenici. No, thank you, Mr. Chairman.
        Senator Stevens. We are glad to see you here.
        The first witness is Sandra Raymond, to be followed by
    Chief Master Sergeant Krebs. I assume someone has the schedule
    out there, so you all know what your schedule is.
        Fine, thank you very much. Good afternoon, Ms. Raymond.
        Ms. Raymond. Good afternoon, Mr. Chairman. I want to thank
    you and your colleagues for including a $10 million
    appropriation for bone disease research in the fiscal year 1997
    appropriations bill. And I will be very brief.
        I want to say that the grants that you made possible
    through your appropriation have examined the issues which are
    directly relevant and affect the very readiness of military
    personnel, DOD's most precious asset. The outcomes of the DOD
    bone research program may well change the way in which our
    fighting force is fed, is trained and receives health care
    services. This is work that has to be done by DOD.
        It never has been done by any other branch of government in
    the past, and it will not be done in the future by any other
    branch of government. Because, Mr. Chairman, unfortunately,
    many of the young people who come to military service are
    sedentary prior to entering the service. Their bodies,
    especially their bones, are not used to the kinds of intensive
    physical exercise demanded of them during boot camp. And
    consequently, they sustain numerous injuries.
        Stress fractures are the most prevalent of the injuries
    that they suffer. Both men and women in the military suffer
    from stress fractures. The minimum time away is 6 to 8 weeks.
    But fractures are slow to heal, and it can take up to 3 months.
    The bottom line is that stress fractures do not always heal.
    Untreated and repeated stress fractures can lead to a complete
    fracture.
        This type of injury contributes to a high rate of attrition
    during training. For example, the attrition rate in 1 year was
    44 percent of female Marine candidates at Quantico. But one
    training intervention of 22,000 marines showed that as much as
    $4.5 million could be saved by reducing stress fractures in the
    military. And that was only 22,000 marines.
        It has been clearly demonstrated that young women are not
    getting enough calcium and are not getting enough exercise.
    Their bones are thinning at a much earlier age than we
    previously thought. And now, in recent studies, we have learned
    that most military women do not consume enough food to meet
    their nutritional requirements. They do not consume enough
    calcium.
        These deficiencies that occur, either before entering the
    military or after entering the military, put these women at
    high risk for these fractures certainly during combat and
    throughout life. Strenuous training can also cause bone loss
    and fractures because their estrogen levels diminish with
    excessive training. And estrogen is known to be the key
    ingredient of the calcium that is absorbed into the bones. So
    the loss of estrogen causes these stress fractures, as well.
        So how the military addresses these questions regarding
    bone health is solely dependent on the bone health research
    program at DOD. Therefore, it is urgent that you continue to
    build a bone disease research program. And we ask you to
    appropriate $20 million in the fiscal year 1999 budget.

                               prepared statement

        Now, I want to turn the microphone over to Commander Scott,
    who is going to tell you firsthand how bone disease has
    interrupted his exemplary military service and how costly this
    has been to him, to his family and to DOD.
        [The statement follows:]

                    Prepared Statement of Sandra C. Raymond

        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 1999. My
    name is Sandra Raymond, Executive Director of the National
    Osteoporosis Foundation (NOF) and I am accompanied by Commander
    Charles Scott with the Department of Navy. Commander Scott
    currently suffers from multiple myeloma, a complex cancer of
    the bone marrow which invades and destroys bone. He joins me
    today to speak from a patient's perspective. We are appearing
    before your Subcommittee with the hope of realizing one common
    goal of improving bone health by reducing the incidence of
    osteoporosis, Paget's disease of bone, Osteogenesis Imperfecta,
    multiple myeloma, and other bone diseases. We 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. We also believe that we need
    research support for the special health related problems of the
    military which are not addressed by the National Institutes of
    Health budget, such as stress fractures and juvenile
    osteoporosis.
        First, on behalf of the entire bone community, we want to
    thank you, Mr. Chairman, and your colleagues on the
    Subcommittee for the $10 million you appropriated for bone
    research in the fiscal year 1997 DOD appropriations bill. It
    was truly appreciated and has been put to good use. Out of the
    $10 million appropriated, $9.7 million was awarded to fund
    grants. The remainder was allocated to the Small Business
    Innovative Research fund grants. We believe that the scientific
    community has reached an exciting threshold. The timing of this
    program and the availability of additional funds for bone
    research are fortuitous. The genes that would predict bone
    density are being discovered but we do not know what those
    genes do, how they do it or how genetic tests could be used to
    predict and prevent diseases. The Department of Defense
    resource could lead to these exciting discoveries which, in
    turn, would aid in prevention of bone diseases.
        There are many important diseases which deserve attention
    and funding under the Department of Defense budget, but we want
    to make Congress particularly aware of the bone diseases which
    frequently do not get the attention they deserve. We also want
    to educate Members on the newest revelations surrounding the
    correlations between bone disease and cancer and more recently,
    depression. What we can do to prevent and treat these diseases
    that affect our military population are questions we believe
    need to be addressed now.
        The Military Health Services System serves 8.4 million,
    including active and retired military personnel and their
    dependents. In fiscal year 1995, program costs rose to $15.3
    billion. The economic burden of health care costs from this
    range of chronic diseases is staggering. For example, the
    combined annual cost to society of medical care and lost wages
    for osteoporosis alone is estimated at $13 billion. Despite
    these overwhelming figures, osteoporosis and related bone
    diseases are preventable if measures are taken before an
    individual reaches the mid-30's--which encompasses the time
    period that many men and women spend in the military. Skeletal
    development in average healthy individuals is maximal at age 25
    in women and 30 to 35 in men.
        The increasing number of women in the military presents new
    health challenges, some of which are directly related to
    osteoporosis. In fact, a high percentage of women in the
    military are African American and very little information
    exists regarding this group of women who suffer from eating
    disorders as well as other health problems. Once bone is lost,
    it can never be fully replaced, so prevention is of the utmost
    importance. It is essential that young men and women in the
    military build up their bone mass to maximum capacity in order
    to be well equipped throughout their life span. Understanding
    the correlation between bone loss and excessive exercise,
    amenorrhea, depression, and smoking in military personnel will
    only serve to strengthen the overall readiness of the defense
    system as well as generate significant cost savings through
    reduction of stress fractures.
        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 DOD Bone Research
    Program aims to enhance military readiness by improving bone
    health of young men and women.
        One important goal of the DOD program is to enhance
    military readiness by reducing the incidence of fractures which
    incur costs and lost time, during physically intensive
    training. Bone fractures are a major problem for the military
    population. One training intervention research project among
    22,000 recruits in the U.S. Marine Corp in San Diego showed
    that as much as $4.5 million could be saved by reducing stress
    fractures. 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 there are more women in the military and women have
    lower bone mass than men which makes them more susceptible to
    fractures. Research should be direct to finding ways of
    increasing bone mass to prevent fractures.
        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 ``situational osteoporosis'' in
    that their new bones are not strong enough to sustain their new
    intended use.
        Stress fractures are a problem in 10-15 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 6-8
    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 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 or military
    men and women, we must develop the ability to predict
    susceptibility to stress fractures through studying and
    environmental influences.
        To achieve peak bone mass as a young adult 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
    biochemical forces such as weight-bearing and muscle
    development impact bone cells? How can we detect the
    microscopic bone damage that builds up during training and
    leads to stress fractures? 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. And now I'd
    like to introduce Commander Charles Scott who will explain how
    multiple myeloma, a bone disease, has affected his capacity to
    serve.
        My name is Commander Charles Scott. I am a Naval Aviator,
    Experimental Test Pilot, Aeronautical Engineer and Persian Gulf
    Veteran. In December 1996, after suffering a broken back, I was
    diagnosed with multiple myeloma which is a complex cancer of
    the bone marrow that invades and destroys bone. As a result of
    this disease I have sever osteoporosis. Each year 14,000 new
    cases of myeloma are diagnosed. The occurrence of myeloma has
    increased dramatically in the past decade. Some experts believe
    that the increase in incidence of multiple myeloma may be
    related to toxic exposure, viral links, and chemical
    pollutants. The average life expectancy from the time of
    diagnosis is three and one half years; there is no known cure.
        I demonstrate the tangible cost of bone disease to the
    military. The Navy has paid over nine million dollars to train
    me in the highly technical fields in which I am qualified. This
    investment by the tax payers of this country is in jeopardy due
    to my bone disease and cancer. We are asking for $20 million
    for bone disease research. If the research resulting from the
    DOD Bone Health and Military Medical Readiness Research Program
    could help me recover my health and put me back into a flying
    status, nearly one half of the $20 million we are requesting
    from you today could be recovered.
        By understanding the mechanisms of bone destruction in
    myeloma, we can learn how the dynamic equilibrium of bone
    damage and bone healing actually works. In myeloma patients,
    bone damage is dramatically increased but perhaps more
    importantly bone repair is almost completely blocked. Myeloma
    bone disease cripples 50,000 Americans in the prime of their
    lives. All Americans will benefit from increased knowledge of
    what can make bones heal and become stronger. Research focusing
    on the reduction of tumor burden, causative factors and better
    treatments will benefit everyone suffering the debilitating
    effects of bone disease and myeloma.
        Reduction in military readiness, our ability to fight and
    win wars, runs the gambit from the new recruit who fails to
    complete basic training due to a bone fracture to the seasoned
    veteran like me whose career is cut short by a disabling bone
    disease.
        In conclusion, it may well be that what we learn from DOD
    research will greatly contribute to bringing bone diseases
    under control because osteoporosis and other related bone
    diseases such as Paget's disease, osteogenesis imperfecta and
    multiple myeloma are serious threats to public health affecting
    an estimated 30 million Americans. These diseases cause loss of
    independence, disability, pain and, in some cases, death. Bone
    diseases affect women, men, and children of all ages. From
    infancy to the oldest old, these diseases profoundly alter the
    quality of life for millions of Americans. 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 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
    1999.
        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 without strong bones.
    By discovering how we can build bone mass to peak capacity in
    our young recruits, we will not only build strong military, we
    will build a strong nation ready to withstand the stresses of
    an extended life span. 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.

        Commander Scott. Thank you. My name is Commander Charles
    Scott. I am a Naval aviator, experimental test pilot,
    aeronautical engineer, and Persian Gulf veteran.
        In December 1996, after suffering a broken back, I was
    diagnosed with multiple myeloma, which is a complex cancer of
    the bone marrow that invades and destroys bone. As a result of
    this disease, I have severe osteoporosis. Each year, 14,000 new
    cases of myeloma are diagnosed. The occurrence of myeloma has
    increased dramatically in the past decade.
        Some experts believe that the increased incidence of
    myeloma may be related to toxic exposure, a viral link or
    chemical pollutants. The average life expectancy from the time
    of diagnosis is 3\1/2\ years. There is no known cure.
        I demonstrate the tangible cost of bone disease to the
    military. The Navy has paid over $9 million to train me in the
    highly technical fields in which I am qualified. This
    investment by the taxpayers of this country is in jeopardy due
    to my bone disease and cancer.
        We are asking for $20 million for bone disease research. If
    the research resulting from the Department of Defense Bone
    Health and Military Medical Readiness Research Program could
    help me recover my health and put me back into a flying status,
    nearly one-half of the amount we are requesting from you today
    could be recovered.
        By understanding the mechanisms of bone destruction in
    myeloma, we can learn how the dynamic equilibrium of bone
    damage and bone healing actually works. In myeloma patients,
    bone damage is dramatically increased. But, perhaps more
    importantly, bone repair is almost completely blocked.
        Myeloma bone disease cripples 50,000 Americans in the prime
    of their lives. All Americans will benefit from the increased
    knowledge of what can make bones heal and become stronger.
        Senator Stevens. Thank you very much, Commander Scott. We
    appreciate your statement. And we will try to do our best.
        Ms. Raymond. Thank you.
        Senator Stevens. There is a decreased amount available, in
    terms of outlays this year, but we will do our best. Thank you
    very much.
        Ms. Raymond. Thank you.
        Senator Stevens. Now, Sergeant Joshua Krebs, representing
    the Air Force Sergeants Association.
        Senator Inouye said he has come just because he is afraid I
    might be lonesome. [Laughter.]
        Thank you, Sergeant.
    STATEMENT OF JOSHUA W. KREBS, CHIEF MASTER SERGEANT,
                USAF (RETIRED), MANAGER, LEGISLATIVE
                AFFAIRS, AIR FORCE SERGEANTS ASSOCIATION
        Sergeant Krebs. Thank you, sir.
        Mr. Chairman, and distinguished committee members, on
    behalf of the members of the Air Force Sergeants Association
    [AFSA], thank you for this opportunity to present our views on
    funding for quality-of-life issues for fiscal year 1999.
        The most essential element in defending this great Nation
    is quality people. 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
    military members.
        We urge you to provide a raise in military base pay that,
    as a minimum, keeps pace with the employment cost index.
    Several years ago, the Congress authorized the Department of
    Defense to extend the Women and Infant Children [WIC] and Food
    Stamp programs to members serving overseas. Due to bureaucratic
    infighting between the Department of Defense and the Department
    of Agriculture over responsibility for funding of these
    programs, this benefit is still not available to the junior
    enlisted members who need it.
        AFSA asks that this committee include funding for these
    programs in the fiscal year 1999 Department of Defense
    appropriations bill.
        Last year, the Senate took the lead in getting a medicare
    subvention demonstration project, where the Health Care
    Financing Administration will reimburse DOD for health care for
    medicare eligibles, enacted into law. This project will start
    to return the often disenfranchised medicare eligible military
    retirees to the military health system. But even if fully
    implemented, subvention will only care for those retirees
    living near bases.
        This year, we urge the Senate to take the lead in providing
    an additional health care option for those over 65. AFSA
    members ask you to enact, as a minimum, a demonstration project
    to allow over-65 retirees to enroll in the Federal Employees
    Health Benefits Program.
        Continued funding for community support activities has
    never been more important. As more and more enlisted families
    see both family members working, access to quality child care,
    such as provided by child development centers, is vital. Family
    support center programs provide development preparation for the
    entire family, family support during separations, and expert
    guidance when deployed members return with their families.
        These and other family programs are critical components of
    maintaining readiness and managing the stresses of high
    PERSTEMPO for active and Reserve members and their families.
        Mr. Chairman, we have touched on a few of the areas that
    need your attention. AFSA appreciates the difficulties that you
    face, and we thank you for this opportunity to share our
    thoughts on these important issues. We trust that you will do
    what is right for enlisted members, current and future, active
    and retired, and their families.
        Thank you.
        Senator Stevens. Any questions, gentlemen?
        [No response.]
        Senator Stevens. Thank you very much.
        [The statement follows:]
                     Prepared Statement of Joshua W. Krebs
        Mr. Chairman and distinguished committee members, on behalf of the
    members of the Air Force Sergeants Association (AFSA), thank you for
    this opportunity to present our views on funding for quality-of-life
    issues that affect active, reserve component and retired enlisted
    members and their families. AFSA represents enlisted members of the Air
    Force, Air Force Reserve and Air National Guard--active, retired, and
    their family members.
        The most essential element in defending this great nation is
    quality people. At a time when the nature of military service is
    changing, when the operations tempo is extremely taxing on the quality
    of 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. 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 all military members.
                           compensation and benefits
        Military base pay is tied to the Employment Cost Index (ECI). Yet
    to save money, current law limits pay raises to the ECI minus one-half
    of one percent. Again this year the administration has requested the
    full amount required by law--further eroding the value of military
    compensation. Sir, we urge you to provide funding for a raise in
    military base pay that, as a minimum, keeps pace with the ECI. Those
    wearing a uniform, whether be it on active duty, or in the reserve or
    guard, deserve no less.
        Military members are frequently reassigned at the discretion of the
    government. Yet, despite the recent improvements in reimbursement
    rates, they still pay 26 to 33 cents of every dollar out of their own
    pockets for the cost of these moves. The situation for our most junior
    members is even more severe. We need to pay these members a temporary
    lodging expense (TLE) for their first permanent assignment move
    starting next year. These members incur the same expenses as do members
    on their second or subsequent move, yet they do not receive the same
    compensation. For example, an airman with a spouse and one child moving
    to Montgomery, Alabama, on his first move may experience temporary
    living expenses of $75 to $100 per day (for which there is currently no
    provision for reimbursement). Over a 10-day period, this could amount
    to $1,000--nearly five weeks of the airman's basic pay. TLE, which
    reimburses up to $110 per day for up to 10 days, would fully reimburse
    this airman and free his pay for other necessities.
        The commissary is consistently rated as a top non-pay compensation
    benefit, yet every few years, some group challenges the commissary
    benefit. Enlisted people count on the savings from commissary
    purchases, up to 29 percent over commercial stores, to extend already-
    stretched income--partially offsetting lagging pay raises, inflation,
    and out-of-pocket housing and moving costs. To many young enlisted
    families, elimination of the commissary subsidy would have the same
    impact as a nine percent pay cut. We need to send a strong message to
    all current enlisted members that this vital benefit will be preserved.
    This important benefit should also be extended to the guard and reserve
    on a full-time basis. These members are on call 24 hours a day, 365
    days a year to defend our country. Yet, we limit their opportunities to
    use the commissary--this is unfair and should stop!
        Several years ago the Congress authorized the Department of Defense
    to extend the Women and Infant Children (WIC) and food stamp programs
    to members serving overseas. Due to bureaucratic infighting between the
    Department of Defense and the Department of Agriculture over
    responsibility for funding of these programs, this benefit is still not
    available to the junior-enlisted members who need it. AFSA asks that
    this committee including funding for these programs in the fiscal year
    1999 Department of Defense Appropriations Bill.
                                  health care
        Last year, the Senate took the lead in getting a Medicare
    Subvention Demonstration Project (where the Health Care Financing
    Administration will reimburse DOD for health care for Medicare-
    eligibles) enacted into law. This project will start to return the
    often-disenfranchised Medicare-eligible military retirees to the
    military health service system. But even if fully implemented,
    subvention will only care for those retirees living within TRICARE
    catchment areas (near bases). This year, we again urge the Senate to
    take the lead in providing an additional health care option for those
    over-65. Include in this year's Department of Defense Authorization
    Bill, as a minimum, a demonstration project to allow over-65 retirees,
    as an option, to enroll in the Federal Employees Health Benefits
    Program. Many served our great nation in World War II and Korea.
    Frankly, many retirees feel that they ``kept the faith,'' while the
    government has not.
        For many years, health care concerns were strictly a retiree issue,
    but not anymore. As ``small hospitals'' are downsized to large clinics,
    active duty members must bear increased costs for health care for their
    dependents and must increasingly rely on DOD's TRICARE networks to
    provide health care. Not many years ago, it was very unusual for an
    active duty member to have to pay for health care for his or her
    dependents. This is a major quality-of-life issue for current military
    members and causes an unexpected financial burden for junior enlisted
    members. This same situation does not exist everywhere. For instance,
    if you are stationed in San Antonio, Texas, or Washington, D.C., this
    same level of care would be available at a military hospital. As
    military members move from location to location throughout the country,
    some are learning the hard way that there is not a consistent health
    care benefit for all beneficiaries.
        When today's military members see what is happening to their health
    care, and then hear the ``horror stories'' about what has happened to
    the health care promise made to their predecessors, they surely must
    question what will be available for them in the future. This nation
    needs to provide a uniform, comprehensive health care benefit for all
    military members and their dependents, whether on active duty or
    retired.
        In addition to expanding the health care options for Medicare-
    eligibles, TRICARE must be improved for all beneficiaries. As a minimum
    we ask that you:
      --Establish improved payment levels and procedures to physicians so
            that they will participate in TRICARE.
      --Provide viable options to TRICARE Prime. Start by restoring TRICARE
            Standard to the level it was originally intended--to cover 80
            percent of medical costs for active duty dependents and 75
            percent of the costs for retired members under age 65, and
            their dependents.
      --Restore TRICARE Standard as a second payer when members have other
            insurance. Currently, TRICARE Standard will only reimburse the
            member if the other insurance reimburses at a lower rate than
            Standard.
      --Provide health coverage, including access to the National Mail
            Order Pharmacy Program, to all military retirees and their
            dependents, regardless of age.
      --Improve customer education. The rules are confusing. Let people
            know, in the simplest of terms, how and where they can get
            medical care
                               community support
        AFSA asks for your continued support for community support
    activities. As more and more enlisted families see both family members
    working, access to quality child care such as provided by child
    development centers becomes increasingly important. Other base
    facilities like libraries and physical fitness centers provide a sense
    of community to a base and also deserve continued funding.
        As the nation's military moves from a forward-based force to a
    contingency-based 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 deployed members
    reunite with their families. These and other family programs are
    critical components of maintaining readiness and managing the stresses
    of high PERSTEMPO for active and Reserve members and their families.
    The importance of the Family Support Centers cannot be overstated, and
    they deserve full funding.
                         retirement system and benefits
        The military retirement system has changed three times--each time
    decreasing the value of the benefit. It was last changed in 1986 and
    now only provides retirement pay based on 40 percent of the high three
    years' monthly average of base pay, as compared to the previous 50
    percent at 20 years of service. What effect do the 1986 changes in
    retired pay have on current enlisted retention? The current mid-career
    retention figures seem to indicate that the affected members are
    starting to ``vote with their feet.'' It is time to relook this
    devaluation of the military retirement system and the effect it has on
    current retention and future readiness.
        As we travel throughout the country and talk to guard and reserve
    members, many ask if their increased contributions to the defense of
    this great nation are appreciated. The current guard and reserve
    retirement system has been in place for many years and served us well.
    But, as the guard and reserve forces continue to play an increasingly
    important role in our nation's defense, AFSA believes it is time to
    reevaluate the need for guardsmen and reservists to wait until age 60
    to draw retirement benefits. Perhaps a graduated retirement age, tied
    to active service as a guard or reserve member is more appropriate in
    today's environment.
        Mr. Chairman, we need to eliminate the dollar-for-dollar offset of
    military retired pay when a retiree is receiving VA disability pay.
    Please keep in mind that veterans, including career civil servants who
    served less that a full career, receive their full VA benefit, while
    those military members who served to retirement see a dollar-for-dollar
    loss of retirement pay for each dollar of VA compensation received.
    This situation uniquely targets military retirees, despite the fact
    that retired pay and disability compensation are paid for entirely
    different reasons.
        Many have questioned the cost of totally eliminating the offset
    ($1.6 billion annually) and claim that concurrent receipt would benefit
    mainly officers because officers have more retired pay to offset. This
    doesn't pass the logic test, as each unfairly sacrifices an equivalent
    percentage of retired pay. Others question the need for additional
    compensation for retirees with low disability ratings. Both positions
    beg questions of equity, fairness, and the honest intent of disability
    compensation and that of retired pay.
        Although this nation's ultimate goal should be the total
    elimination of the unfair offset between military retired pay and VA
    disability compensation, we need to, as a minimum, provide some
    ``dual'' compensation for those with the most severe disability
    ratings. These disabilities damaged the human body during service to
    the nation and, in many cases, left the individual retired military
    member unable to work.
                                   conclusion
        Mr. Chairman, we have touched on a few of the areas that need your
    attention. AFSA appreciates the difficult task that you face, and we
    thank you for this opportunity to share our thoughts on these important
    issues.
        We are very concerned that the Air Force continues to experience
    retention problems among those most experienced (more than ten years of
    service) personnel. Although not at a critical stage yet, we as a
    nation must remember the hollow force days of the late 1970's and make
    sure we never return to those days. 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 those goals by providing a
    reasonable quality-of-life for our members and their families as they
    serve our nation. Simply put, in order to keep a fit, fighting force
    for the twenty-first century, we as a nation must dedicate the
    resources to pay for it.
        Again, thank you for this opportunity to express AFSA's concerns.
    As you face the tough issues, we trust that you will do what is right
    for enlisted military members--current and future, active and retired
    and their families. They deserve no less. As always, AFSA is ready to
    assist you on matters of mutual concern.
    STATEMENT OF DAVID JOHNSON, PH.D., EXECUTIVE DIRECTOR,
                FEDERATION OF BEHAVIORAL, PSYCHOLOGICAL AND
                COGNITIVE SCIENCES
        Senator Stevens. Dr. David Johnson, Executive Director,
    Federation of Behavioral, Psychological and Cognitive Sciences.
        Thank you, Doctor.
        Dr. Johnson. Thank you, Mr. Chairman.
        Mr. Chairman, normally I speak to the subcommittee about
    the basic or 6.1 behavioral research budget, but I am going to
    spend most of my time today on a proposed cut to applied
    advanced development, or 6.2 and 6.3, research--cuts that would
    destroy the behavioral research program at the Air Force.
        Most applied and advanced development work on manpower,
    personnel and training is managed by the Armstrong Lab at
    Brooks Air Force Base in San Antonio. Behavioral research and
    development [R&D] is funded this year at $11 million. The 1999
    budget request would reduce funding to $3 million. That will
    kill the program.
        If 6.2 and 6.3 research--that is, the development of
    research in products--goes by the wayside, the 6.1 program will
    quickly follow suit, since it will be left as the front end of
    a pipeline leading nowhere. If the Air Force abandons human
    performance research, what will it lose?
        It will lose its ability to adapt personnel to new skill
    requirements, to maintain readiness in the face of an
    increasingly diverse personnel pool, to maintain strength and
    quality while continuing to downsize, to incorporate usability
    planning into new systems designs, and to meet the increasing
    demand for distributed training. It will even lose its ability
    to adapt its personnel to the changing nature of warfare. That
    is pretty fundamental, and it is a lot to lose.
        We are strongly urging the subcommittee to stop the
    devastation of the Air Force manpower, personnel and training
    R&D program. We ask the subcommittee to recommend explicitly a
    funding level of $11 million for the behavioral research
    programs of the Armstrong Lab. We ask you, in addition, to
    support the administration's request for $12.567 million for
    6.1 behavioral research at the Air Force.
        Let me turn briefly to the behavioral research budgets of
    the Army and Navy. Both of these budgets are also under stress.
    I want to thank the subcommittee for its role last year in
    saving the Army Research Institute [ARI]. Congress appropriated
    $21 million for those programs for fiscal year 1998. After
    being taxed to pay for unbudgeted activities, I understand ARI
    finally received only $18 million in this appropriation. The
    request for next year, $16.7 million, is a large cut from the
    appropriated fiscal year 1998 amount.
        We ask the subcommittee to maintain ARI at $21 million, its
    appropriated fiscal year 1998 level. We also ask that the
    subcommittee support the administration request of $39.69
    million for the 6.1, 6.2 and 6.3 behavioral and bioengineering
    programs at Office of Naval Research [ONR].
        In closing, however, it is important to mention that the
    ONR, ARI and Air Force Office of Scientific Research [AFOSR]
    budgets have been severely impacted by withholding of
    significant amounts of funds to help pay for unbudgeted, non-
    research costs, such as the cost of supporting recent efforts
    in the Persian Gulf. Those unanticipated cuts, amounting to 15
    percent in the current fiscal year for behavioral research at
    ONR, wreak havoc with research programs. We hope that the
    subcommittee will continue working to improve our means of
    responding to unplanned, costly events like the Persian Gulf
    and Bosnia.
        Thank you.

                               prepared statement

        Senator Stevens. Thank you very much. We appreciate your
    comments, and we will once again take a good look at them.
        Dr. Johnson. I appreciate that.
        [The statement follows:]
                   Prepared Statement of David Johnson, Ph.D.
        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 17 scientific
    societies and some 150 university graduate departments. The scientists
    of the Federation carry out behavioral research, including research of
    value to the Armed Services. I am here today to talk about the
    behavioral research budget requests for the Army, Navy and Air Force.
    Anticipated Air Force Cuts Are Devastating to Research
        Usually when I appear before this Subcommittee, I discuss the 6.1
    and 6.2 or basic and applied behavioral research budgets rather than
    the advanced development, or 6.3, research budget. I speak for
    university-based scientists, and most of the military work they do is
    of the 6.1 variety with some occasional 6.2 work as well. But today, in
    addition to discussing the basic research budget, I also want to say a
    few words about a very serious problem that is occurring with the
    applied and advanced development budgets for Air Force behavioral
    research. Most of this research is managed through that portion of the
    Air Force Research Laboratory that was known as the Armstrong
    Laboratory before the most recent reorganization of air force research.
    The activities to which I refer are managed at Brooks Air Force Base in
    San Antonio.
        As you know, the military research budget is structured like a
    pipeline. It begins with basic research at one end and ends with the
    production of products at the other end. The Armstrong Lab is
    responsible for developing the products that flow from manpower,
    personnel, and training research in the Air Force. Those products are
    relevant to an astonishing array of Air Force needs from weapons
    design, to improvements in simulator technology, to improving crew
    survivability in combat, to faster, more powerful, and less expensive
    training regimens--and these examples just scratch the surface of the
    kinds of products that come out of the Armstrong Lab.
        The fiscal 1999 request for Air Force research would reduce the
    appropriation for applications and advanced development flowing from
    behavioral research from $11 million to $3 million. At $11 million, the
    program pays for itself many times over both in dollars and in lives
    saved. A cut to $3 million will kill the program. The product
    development side of the behavioral research pipeline for the Air Force
    will be eliminated. It is a short step from that to eliminating the
    whole pipeline.
        This fatal cut is short-sighted in the extreme. The work being done
    at the Armstrong Lab is the only research being done anywhere today
    that will provide the knowledge base needed to address tomorrow's
    formidable Air Force manpower, personnel and training problems. We know
    there will be new skill requirements, that force diversity will
    increase, that downsizing will continue, that the demand for
    distributed training will increase, that there will be new system
    design requirements, and that the very nature of warfare will continue
    to change. This cut will assure that the people of the Air Force will
    not be prepared for these changes.
        Virtually every technique the Air Force uses to select, classify
    and train its personnel, to design its tasks, and to evaluate its
    performance can be traced directly to work either done by or supported
    by the military--much of it by the Air Force. Failure to sustain this
    investment will have a profound Air Force-wide impact on force
    capability and readiness down the road.
        This cut is analogous to choosing to stick with the F-15 and the B-
    52 because they worked in the past. No one in the military would make
    such a choice with respect to hardware. But that is the choice that is
    being made about people if this cut is upheld.
        Behavioral research and its products are at a particular
    disadvantage in the current decision-making atmosphere about military
    research because decisions about these programs are being made on the
    basis of short-term needs identified by each of the major commands.
    This atmosphere for decision making favors hardware development as a
    priority since those are the easily identifiable needs.
        The fact that behavioral research can determine whether personnel
    will be able to use that hardware is not obvious until something goes
    wrong. For example, the military and the Federal Aviation
    Administration have been partners in developing the next generation of
    terminals for air traffic control. Insufficient attention was paid to
    human factors in the early decisions about those terminals. It took air
    traffic controllers complaining that they couldn't use the terminals to
    alert officials that there are serious problems with the hardware and
    software. The effect has been that very costly retrofits are now
    underway to make the terminals usable by air traffic controllers. And
    regardless of the retrofits, the terminals will not be as usable as
    they would have been had human factors been integrated early in the
    process because the architecture of the terminals limits the range of
    ``fixes'' that are feasible. The unplanned expenditures these fixes
    have necessitated so far--and there is still a long way to go--could
    have fully funded the behavioral programs at the Armstrong Lab. This is
    the kind of problem that can be expected to occur again and again if
    the programs in question are eliminated.
        Unfortunately from a political point of view, the benefits of the
    products of behavioral research are Air Force-wide, not command
    specific. That means that no particular major command has a sense of
    ownership for behavioral research and its applications, whereas there
    is likely to be a strong advocate for any hardware development that
    will fit the immediate needs of a major command. The effect of that
    lack of a sense of ownership is obvious in the cut that is now
    contemplated. It is appropriate for Congress to take positive action on
    this problem in order to prevent the making of a mistake that will not
    easily be made right. Once the personnel who staff the Armstrong Lab
    are disbanded, the capability to do this work will simply be lost.
        We strongly recommend that this Subcommittee do all in its power to
    see that funds are restored. The behavioral research programs are
    distributed among several subfunctions. Thus, in order to assure
    restoration of the funds, specific language directing that the funds be
    restored is needed. And in order to accomplish the restoration, 6.2
    research at Armstrong would need to be funded at $50,476,000 versus the
    $40,929,000 requested, and 6.3 research would need to be funded at
    $6,928,000 versus the $6,636,000 being requested. Those amounts would
    place the programs at their fiscal year 1997 funding levels without any
    accounting for inflation. The total restoration would be $9,839,000.
        Before turning to the Army and Navy budgets, let me say that we
    support the administration request for 6.1 Air Force behavioral
    research. The requested amount is $12,567,000. Let me repeat, however,
    that without the 6.2 and 6.3 programs, the basic research budget will
    soon be in jeopardy.
        I would add that one immediate blow to basic research would come
    from the cuts at Armstrong. As part of its mission to improve manpower,
    personnel, and training, Armstrong has collected scientific data on all
    new personnel in the Air Force for many years. That data base is unique
    in the world for basic research in cognition. There is no other
    cognitive science database anywhere as complete as the one at
    Armstrong. As such, this database has been a treasure trove for basic
    researchers striving to understand how the human brain organizes and
    uses information. If that database is lost because of the cuts that are
    contemplated, the blow to the pace at which our understanding of human
    thought processes is growing will be severe.
    Proposed Cuts At the Army Research Institute Would Also Cause Serious
            Damage
        In turning to the proposed budget for the Army Research Institute,
    let me thank the members of the Subcommittee for their role in seeing
    that there is any budget at all for basic behavioral research at the
    Army. As the budget request for fiscal 1998 was being built, it
    appeared that the Army Research Institute would be eliminated. That
    initial direction was modified, and as the request came to this
    Subcommittee, a crippling cut, much like that now contemplated at the
    Air Force was requested. In the end, Congress decreased the level of
    cut and saved the program. While I understand that ARI finally received
    only $18 million of the $21 million appropriated by Congress for fiscal
    year 1998, it was, nevertheless, congressional action that saved the
    program.
        The total behavioral research request for ARI for fiscal year 1999
    is $16.17 million, another substantial cut from its currently
    appropriated amount. That combined figure represents requests of $2.47
    million for 6.1, $8.60 million for 6.2, $3.02 million for 6.3 and $2.08
    million for 6.5. We have long argued before this Subcommittee that
    behavioral research funding for the Army is much too low given that the
    Army is the most personnel intensive of the armed services. The request
    for fiscal year 1999 continues the pattern of cuts for ARI that we have
    seen in previous years.
        And once again, we ask the Subcommittee to recommend funding for
    ARI at the fiscal year 1998 appropriated level of $21 million. That
    figure would represent appropriations of $2.5 million for 6.1, $9
    million for 6.2, $4.3 million for 6.3, and $5.2 million for 6.5. Among
    its other research duties, ARI is the only research body in the armed
    services carrying out research on leadership, on sexual harassment, and
    on special training needs of soldiers for peace-keeping missions. The
    figure we are recommending that you support for 6.1 research represents
    a cut of 50 percent in unadjusted dollars from ARI's 1986 appropriation
    for basic research. If inflation is taken into account, it becomes
    clear that ARI has more than done its share of downsizing.
    Taxing Naval Research For the Cost of Unanticipated Events is Wreaking
            Havoc
        In commenting on the budget request for behavioral research at the
    Office of Naval Research, I want to raise an issue that has hit this
    budget especially hard in recent years, but that has also had
    significant effects on the research budgets of the Army and Air Force
    as well. It is characteristic of research budgets that they are paid
    out slowly over the course of a fiscal year. On the civilian side, this
    has made research budgets vulnerable when there are rescissions. On the
    military side, the research budgets have been vulnerable to unplanned
    taxation to pay for unanticipated events like Bosnia and now the
    Persian Gulf. It takes no special insight to see that inability to rely
    on a budget wreaks havoc with program planning. Funds are committed for
    work, and then those funds have to be cut back or even taken away. Good
    research cannot be sustained under conditions as uncertain as those
    that have been occurring recently.
        We support efforts to develop a fund for unanticipated events so
    that the research budgets no longer have to be raided to help pay for
    them. During the current fiscal year, for example, the ONR
    biobehavioral research budget has been reduced by 15 percent from its
    expected amount by the withholding of funds to pay for non-budgeted,
    non-research activities. Given that the anticipated budget would have
    represented essentially a freeze at the 1997 level, a 15 percent loss
    on top of that is very difficult to absorb.
        We are asking that the Subcommittee support the administration's
    requested budget for ONR. The request would maintain the budget at the
    fiscal 1997 level. For 6.1 research in bioengineering and behavioral
    research, the requested amount is $14.20 million. For 6.2 research, the
    figure is $16.55 million, and for 6.3, the request is for $18.94
    million.
        The Navy's research program in these areas is especially well tuned
    to two top naval priorities: To reduce the number of sailors needed to
    fully staff ships, and to embed training in the work site so that
    training and skills upgrading can go on on board ship at any time with
    the actual equipment used on the job. The crew size reduction research
    will greatly reduce personnel costs while the embedded training
    research will assure that U.S. sailors will be the best trained in the
    world. Impeding the progress of this research with unreliable and
    inappropriately low budgets has two undesirable effects. It assures
    that costs that could be saved will not be saved, and it unnecessarily
    limits the quality and quantity of training sailors receive. The moral
    is clear enough: To save money and increase readiness simultaneously,
    fund research.
        I thank the Subcommittee for this opportunity to present our views.
    STATEMENT OF HAROLD P. VAN COTT, PH.D., PRESIDENT,
                HUMAN FACTORS AND ERGONOMICS SOCIETY; ON
                BEHALF OF THE AMERICAN PSYCHOLOGICAL
                ASSOCIATION
        Senator Stevens. Dr. Van Cott, please.
        Dr. Van Cott. Mr. Chairman, members of the subcommittee, I
    am Dr. Harold Van Cott. I am President of the Human Factors and
    Ergonomics Society and former staff of the National Research
    Council's Committee on Human Factors. I am speaking today on
    behalf of the American Psychological Association [APA], a
    professional and scientific organization of 155,000 members and
    associates, many of whom conduct behavioral research relevant
    to the military.
        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 man-
    machine interfaces, to the efficient and safe operation of
    complex systems. Our military is facing a host of new
    challenges. Our forces are downsizing. Women are playing an
    increasingly prominent role. And an entirely new function--
    peacekeeping--has been added to the mission.
        The sophistication of weapons and information technology
    has dramatically changed the skills required of our service
    personnel. What has not changed is that success in military
    operations still depends on people, at entry level, at every
    level. The Air Force alone loses the equivalent of one fighter
    squadron a year through accidents, around 80 percent of which
    involve human error. And it is not because we do not 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 the people-ware, the humans.
        Similarly, teams and leaders are facing new demands that we
    are only beginning to understand. The situation will not
    improve without serious investment in behavioral and social
    research. And currently that investment is appalling.
        Consider that personnel and training costs account for one-
    third of DOD's budget. Yet DOD invests less than 1 percent of
    its science and technology budget in personnel and training
    research. Put another way, for every $4 we spend on equipment,
    we spend $1 to make it better. For every $4 we spend on people,
    we invest about 3 cents.
        At a time when Federal support for non-defense research and
    development is growing, APA has real concerns about declining
    Federal support for defense research. With the help of this
    subcommittee, the decline in spending on basic 6.1 research has
    been shored up, albeit at the expense of the applied end of the
    research pipeline, mainly development spending.
        APA urges the subcommittee to support, at a minimum, the
    increase to $209.4 million for all basic research in the fiscal
    year 1999 DOD request for the Air Force. This money supports
    the Air Force Office of Scientific Research, which funds basic
    research both in the Air Force laboratories and, through
    grants, to academic institutions and other contractors. APA
    supports the $12.57 million request for basic research at
    AFOSR.
        We are very concerned, however, about significant cuts that
    are anticipated for development work at Brooks Air Force Base.
    The fiscal year 1999 request for the Air Force would reduce the
    funds for applications in advanced development that come from
    behavioral research from $11 million to $3 million. The entire
    product development side of the behavioral research pipeline
    for the Air Force would be eliminated. Without product
    development, the basic research will no doubt soon be
    eliminated, too.
        What does the Air Force get from its modest investment in
    behavioral research? To cite only one example, basic cognitive
    research is being done that allows the Air Force and other
    services to incrementally fine-tune tests on which the services
    base multiple decisions: which recruits have aptitudes for
    complex technical work, who is most likely to be happy in a new
    job and not drop out, who can develop new skills.
        The Air Force--indeed, none of the services--can work with
    fewer people, with changing and complex technical jobs, without
    tools like this. The tests and the training techniques are the
    products. Failure to sustain this investment from basic to
    applied, to advance development research, will have severe
    impacts on the future. In fact, the customer is really the Air
    Force of tomorrow. That future Air Force is not one of the
    voices you hear in the clamor over short-term budget decisions,
    but Congress must ensure that its voice is heard.

                               prepared statement

        APA urges the subcommittee to include specific language in
    the fiscal year 1999 appropriation that would restore $9.84
    million to the 6.2 and 6.3 research funding at the Armstrong
    Lab.
        Last year's anticipated cut of 33 percent would have
    crippled APA's research capabilities. We are once again asking
    for your help.
        Senator Stevens. Thank you very much.
        [The statement follows:]
                Prepared Statement of Harold P. Van Cott, Ph.D.
        My name is Dr. Harold Van Cott; I am President of the Human Factors
    and Ergonomics Society, and former staff of the National Research
    Council's Committee on Human Factors. I am speaking here on behalf of
    the American Psychological Association (APA). APA is a professional and
    scientific organization of 151,000 members and associates, many of whom
    conduct behavioral research relevant to the military. This statement
    addresses two main issues of relevance to the Subcommittee: the
    continuing need to invest in psychological research in the Department
    of Defense; and the particular need to sustain support for the human
    systems programs in the Air Force.
        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.
        Our military is facing a host of new challenges. Our forces are
    downsizing; women are playing an increasingly prominent role; and an
    entirely new function--peacekeeping--has been added to the mission. The
    sophistication of weapons and information technology has dramatically
    changed the skills required of our service personnel. What hasn't
    changed is that success in military operations still depends on
    people--at every level, in every unit. The Air Force alone loses the
    equivalent of 1 fighter squadron a year through accidents, around 80
    percent of which involve human error. And it's not because we don't
    have the world's best and most highly trained aviators. It's simply
    because we've allowed hardware and software to get too far ahead of the
    ``humanware.'' Similarly, teams and leaders are facing new demands that
    we're only beginning to understand.
        The situation will not improve without serious investment 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. Put
    another way, for every $4 we spend on equipment, we spend $1 to make it
    better. For every $4 we spend on people, we invest about 3 cents!
                                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)
        At a time when federal support for non-defense research and
    development is growing, APA has real concerns about declining federal
    support for defense research. With the help of this Subcommittee, the
    decline in spending on basic, 6.1 research has been shored up, albeit
    at the expense of the applied end of the research pipeline, mainly
    development spending. We are pleased that the fiscal year 1999 budget
    would allow for significant growth in the 6.1 budgets in all three
    services.
        The 6.1 budget funds basic research to support our national defense
    needs--current and future. Right now we see 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 that 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 increase
    to $209.4 million for basic research in the fiscal year 1999 DOD
    request for the Air Force. This money supports AFOSR, which funds 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. APA supports the $12.57 million request for basic behavioral
    research at AFOSR.
        We are very concerned, however, about significant cuts that are
    anticipated for development work, mostly in the Armstrong Lab at Brooks
    Air Force Base. The fiscal year 1999 request from the Air Force would
    reduce the funds for applications and advanced development that comes
    from behavioral research, from $11 million to $3 million. The entire
    product development side of the behavioral research pipeline for the
    Air Force will be eliminated. Without product development, the basic
    research will no doubt soon be eliminated too.
        What does the Air Force get from its modest investment in
    behavioral research? To cite only one example, basic cognitive research
    is being done that allows the Air Force (and other services) to
    incrementally fine-tune tests on which the the services base multiple
    decisions: which recruits have aptitude for cooperative group work;
    which should be trained in which program; who has the skills, or could
    develop the skills, to do a new kind of job. The Air Force, indeed none
    of the services, can work with fewer people, with changing and complex
    technical jobs, without tools like this. Almost every technique the Air
    Force uses to select, classify and train its personnel, to design their
    tasks, and to evaluate their performance can be traced directly to work
    with done by or supported by the military, most of it by the Air Force.
    The tests and the training techniques are the products. Failure to
    sustain this investment, from basic to applied to advanced development
    research, will have severe impacts in the future: in fact, the customer
    is really the Air Force of tomorrow. That future Air Force is not one
    of the voices you hear in the clamor over short-term budget decisions,
    but Congress must ensure that its voice is heard. The proposed cuts
    will ensure that the programs and personnel who sustain this work will
    be gone inside a year, and those resources could not be reassembled.
        APA urges the Subcommittee to include specific language in the
    fiscal year 1999 appropriation that would restore $9.84 million to the
    6.2 and 6.3 funding at the Armstrong Lab. This would maintain the
    programs at their 1997 levels.
    Office of Naval Research (ONR)
        The Navy's current investment in basic research is $338.7 million.
    APA supports the fiscal year 1999 request for an increase to $362
    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, has been tapped to help pay for
    overseas campaigns in Bosnia. APA urges the Subcommittee to support the
    administration's request for ONR. The request would preserve the budget
    at the fiscal year 1997 level. For 6.1 research in bioengineering and
    behavioral research, the request is $14.2 million. For 6.2 research,
    the request is $16.55 million, and for 6.3, $18.94 million.
        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.
    Army Research Institute for the Behavioral and Social Sciences (ARI)
        APA is grateful for this Subcommittee's leadership in restoring
    funds to the Army Research Institute in fiscal year 1998. Last year's
    anticipated cut of 33 percent would have crippled ARI's research
    capabilities. We are once again asking for your help. Despite ARI's
    strong record in funding research essential to the training and
    performance of Army personnel, the Institute's funding continues to
    erode. The fiscal year 1999 request is $16.17 million, a substantial
    cut from its currently appropriated amount of $21.4 million. We urge
    the Subcommittee to continue support for ARI's work.
        About half of the Army's budget, some $45 billion, is spent on
    personnel. But less than $18 million is now spent on research to help
    those personnel work 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.
                          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 [NMFA]
        Senator Stevens. The next witness is Sydney Hickey,
    Associate Director of Government Relations, the National
    Military Family Association.
        Ms. Hickey. Mr. Chairman and members of the subcommittee,
    the National Military Family Association appreciates this
    opportunity to express its views.
        Contrary to much of the testimony heard this year, NMFA
    must report that information from our representatives at
    military installations around the world indicate that the
    morale of military families is not high.
        To both NMFA field representatives and headquarters staff,
    military families talk about continuing deployments; long work
    days and weeks when the service member is at home station;
    depressed pay raises; a medical system that does not work for
    many; uncertainty about a future drawdown of forces; the
    effects of outsourcing and privatization, such as reduced
    services under the new parent support program; reduced funding
    at the installation level forcing cutbacks in services, such as
    library closures; a new formula for the basic allowance for
    subsistence which robs Peter to pay Paul; housing allowances
    that continue to fall far short of housing costs; increased WIC
    voucher redemption at commissaries; no WIC program overseas;
    continuing delay in bringing military household goods shipments
    in line with the civilian industry that fellow Federal
    employees enjoy; schools for their children that are facing
    significant budget difficulties both in the DOD system and in
    the public system; military housing constantly in need of
    repairs--repairs that never seem to get done.
        Mr. Chairman, military families are a flexible and
    resilient group of people. But they see no light at the end of
    the tunnel. They also do not trust. They see their parents and
    grandparents, who served valiantly at low pay during World War
    II, Korea and Vietnam, now denied their promised employer-
    provided health care. They see a leadership who asks for
    subvention to provide such health care to this population;
    however, they know that while the DOD health care system may
    benefit from subvention, 70 percent to 80 percent of elderly
    beneficiaries will not.
        Even active duty families with long-term or chronic
    illnesses find themselves having to fight the health care
    system for their promised benefits. Beneficiaries who do not
    live near an installation with a military hospital are denied
    the opportunity to enroll in Tricare Prime, and fight
    continuing claims hassles to receive any reimbursement for
    their health care.
        Perhaps as important, the children in these military
    families, who, statistics would indicate would normally make up
    approximately half of our future force, hear the concerns of
    their parents. If the service members of today and those of
    tomorrow are to be expected, if necessary, to lay their lives
    on the line for their country, they must have the faith that
    promises made will be promises kept. Trust and loyalty, Mr.
    Chairman, are two-way streets.
        Thank you.

                               prepared statement

        Senator Stevens. Thank you very much.
        We are back from a trip overseas, where we came to the same
    conclusion. The problem of morale and what we can do about it
    will be our number one issue that we discuss in this
    subcommittee this year.
        Thank you very much.
        Ms. Hickey. Thank you.
        [The statement follows:]
                     Prepared Statement of Sydney T. Hickey
        Mister Chairman and distinguished members of the Committee, the
    National Military Family Association is, as always, most grateful for
    your continued strong support of those we serve, the men and women in
    uniform and their families.
             the state of the military family of today and tomorrow
        As the National Military Family Association (NMFA) reports on the
    state of today's military family, we believe it important to reflect on
    how the current state will affect the military family of the future. In
    the mid 1980's the Families in Blue study showed that approximately 50
    percent of the members of the Air Force at that time had been members
    of a military family in their youth. Unfortunately that same question
    has not been asked in subsequent studies of military personnel.
    However, a 1997 Department of Defense (DOD) study of military youth
    showed these children had a much higher propensity to join the Armed
    Forces than did their civilian peers. In 1996, the Navy found that 52
    percent of the new recruits Naval Training Center, Great Lakes, IL were
    the offspring of people who had served in the military. Anecdotal
    information indicates that the same is true of the spouses of current
    military members.
        NMFA submits, therefore, that pluses and minuses found in the
    quality of life of current military families has a direct affect on the
    future military family. Secretary of Defense Cohen stated in
    Congressional testimony on February 5, 1998, ``Our approach mandates
    sufficient forces and capabilities to meet today's requirement, while
    at the same time investing wisely and with vision for the future.''
    NMFA believes sufficient funding for quality of life must be invested
    to meet the needs of today's military families, realizing that the
    investment is for tomorrow as well as today. Secretary Cohen calls for
    preparing for ``an uncertain future.'' The Army's Posture Statement for
    fiscal year 1999 states, ``Soldiers are, as always, our credentials and
    our legacy. It takes time and resources to build a trained and ready
    force with the technological edge necessary for decisive victory today
    and in the future.'' NMFA believes the ``time and resources'' needed to
    build a force for ``an uncertain future'' should begin with the birth
    of each military child.
        NMFA requests that as we report on the ``State of the Military
    Family Today,'' the effects of this current state on the military
    family of the future be scrutinized as carefully as would proposals for
    research and development and procurement.
    The Military Family Today
        NMFA has been struck by the emphasis of all services on core
    values. While each service defines these values in slightly different
    ways the underlining meaning appears the same. The Army lists its core
    values as, ``Loyalty, Duty, Respect, Selfless Service, Honor,
    Integrity, and Personal Courage.'' While military family members may
    not serve in uniform, NMFA believes these core values are also
    extremely important in their lives. Families believe that the values of
    loyalty, respect, selfless service and trust is a two way street.
                Basic Pay
        The administration's request for fiscal year 1999 calls for a 3.1
    percent pay raise. The request again this year is 0.5 percent below the
    Employment Cost Index (ECI). This brings the pay gap to more than 13
    percent. From Secretary Cohen's February 5 testimony, ``* * * the
    fiscal year 1999 budget includes strong funding for military pay * * *.
    The budget supports military pay raises up to the maximum percentage
    established by law.''
        Military families are asking why someone doesn't ask for raises at
    least at the ECI level.
                Basic Allowance for Housing
        NMFA strongly supports the concept of the new Basic Allowance for
    Housing (BAH), but is concerned that without a significant plus-up in
    funding families will continue to pay 19 to 20 percent of their costs
    out of pocket. The Army's Posture Statement acknowledges that the gap
    in fiscal year 1997 was 19.4 percent and states that, ``* * * soldiers
    have the assurance that out of pocket costs for housing will not
    increase beyond present levels (under the new BAH).''
        Military families are asking why someone doesn't request that their
    out-of-pocket expenses return to the Congressionally directed level of
    15 percent.
                Basic Allowance for Subsistence
        NMFA supports the overhaul of the Basic Allowance for Subsistence
    (BAS) which will more closely reflect the costs of food. We do not
    support the funding mechanism to institute the change. Capping raises
    for those currently in receipt of BAS to provide for those who were
    not, is literally ``robbing Peter to pay Paul.''
        Military families are asking why they are the ones paying for this
    increased benefit for single service members.
                What's Left Over at the End of the Month?
        Sergeant Major of the Army Robert E. Hall, in testimony of March 5,
    refers to a private first class (E-3), married with two children and
    living off-post, as having $17 in discretionary income at the end of
    the month. A New York Times article of July 20, 1997, states that Navy
    members E-5 and below do not receive enough in housing allowance to
    cover the rental costs of a one or two bedroom apartment in San Diego,
    CA. A Master Chief Petty Officer (highest Navy enlisted rank) does not
    receive enough in housing allowance to cover the rental costs of a
    three bedroom apartment. It is no wonder that then Master Chief Petty
    Officer of the Navy John Hagan referred to the, ``significant increase
    in the population of geographic bachelors in the past several years,''
    in testimony on March 5, 1998.
        Redemption of Women's, Infants' and Children's (WIC) nutrition
    program vouchers at Commissaries continued a steady climb by increasing
    8.75 percent from 1996 to 1997. Voucher redemption is now close to $22
    million annually. Families overseas are still not able to take
    advantage of the program although DOD was given the authority to pay
    for it in Public Law 105-85. Undoubtedly the voucher redemption would
    be much higher if overseas families could participate in the program.
        A study done by the Military Family Institute (MFI) of Marywood
    University, PA cited 123,000 Letters of Indebtedness being processed on
    an annual basis by the Navy for its uniformed personnel. According to
    the same study, 35,000 Navy members had their wages garnished in 1995.
    Certainly better financial counseling (as we will discuss later) could
    improve these statistics, but financial counseling is not the answer
    for a family with $17 a month in disposable income.
        Military families are asking why Service leaders continue to
    support pay raises below the ECI, housing allowances that demand more
    out of pocket then they can afford, and a decrease in BAS that leads to
    a decrease in compensation.
                Time Away from Home
        NMFA uses ``time away from home'' to describe both increased
    deployments and longer work days and weeks. The Army has had a 300
    percent increase in deployment since 1989. The Commander in Chief,
    United States Atlantic Command Admiral Harold W. Gehman, Jr., USN,
    stated in testimony on March 4, 1998, ``* * * because we have downsized
    our military forces at the same time we are using them more frequently,
    maintaining our readiness is more difficult than during the Cold War.
    Increased operations tempo and personnel tempo is * * * causing
    retention problems in certain military specialties.'' The Commander in
    Chief, United States Pacific Command Admiral Joseph W. Prueher, USN, in
    testimony the same day stated, ``* * * people are working hard and
    there is no sign of let-up in this workload.'' And, ``* * * readiness
    for deployed forces is increasingly achieved at the expense of non-
    deployed forces.'' And ``* * * personnel shortages are the principal
    readiness concerns * * *.'' The Deputy Chief of Staff, Personnel,
    United States Air Force Lieutenant General Michael D. McGinty has also
    stated in Congressional testimony, ``High operational tempo causes
    frequent family separations and long work hours both for those deployed
    and those at home station. Families left behind feel the strain as
    well. All of these factors are wearing on our troops.''
        Navy family advocacy personnel report more and more attendees at
    their Stress/Anger Management Classes are complaining of long work
    hours and increased family separation. Chief Master Sergeant of the Air
    Force Eric W. Benken stated in testimony on March 5, ``Never in our 51-
    year history have we asked our blue suiters to do so much.''
        The Service Chiefs have all supported the budget request for an
    additional 23,512 reduction in active duty personnel.
        Military families are asking how much more is supposed to be done
    with less.
                Family Support
        Army Quality of Life Programs.--The Army Posture Statement for
    fiscal year 1999 states, ``The heart of Army family quality of life
    programs is the Army Family Action Plan (AFAP), one of our most
    effective change management processes.'' Yet funding for annual
    national AFAP conferences has been cut, so they only occur every two
    years.
        The Army Posture Statement cites education benefits as a top reason
    for soldiers to enlist and stay on active duty and states that post
    libraries support educational programs. Yet many post libraries have
    reduced services and operating hours and some have closed.
        New Parent Support Program.--The New Parent Support Program has
    received rave reviews from both professionals and military families. In
    fiscal year 1997 funding for the program (thanks to Congressional
    direction) was $20 million. In fiscal year 1998 the funding for the
    program is $4 million and the budget request for fiscal year 1999 and
    outyears is $10 million/year. The military married community is young
    and often lives thousands of miles away from their extended family. The
    New Parent Support program is intended to assist these young families
    as they become first-time parents. It is well recognized as a tested
    prevention and quality of life enhancement program. The $10 million in
    funding will only provide services for less than a year to those
    families deemed ``at risk,'' essentially stripping much of the
    prevention aspect from the program.
        Navy Family Service.--A private firm headquartered in Woodbridge,
    VA will be providing family support services to Navy families in San
    Diego, CA. NMFA remains concerned that stripping local commanders of
    direct control over family services will lead to inadequate support in
    crisis situations. We also can foresee a repeat of the New Parent
    Support Program situation. When budgets are cut, or are too tight, the
    contract will just not be funded. Even if the total contract is not
    cut, NMFA is concerned that budget constraints will decrease the
    funding available and the contractor will be forced to provide less and
    less service to fewer and fewer Navy families.
        Child Care.--The availability of child care in the Services has
    increased dramatically over the last several years. The quality of
    child care in military Child Development Centers (CDC) is second to
    none, thanks to the Military Child Care Act passed by Congress. NMFA is
    pleased to note that the services are either currently subsidizing
    Family Home Care or in the process of initiating such action. This is a
    cost effective alternative to Center care, if it is affordable for
    military families. NMFA is concerned that some of the initiatives with
    the civilian community may eventually drive up costs at on-installation
    centers more than either the Services or families can afford. The Navy
    has taken the lead on exploring civilian alternatives to on-
    installation child care. The program consists of ``buying down'' the
    cost of child care in the civilian sector to the level charged at
    installation facilities. However, the Navy is finding that paying for
    such care for infants and those under the age of three is extremely
    costly. NMFA is concerned that care for the less expensive older
    children will be ``bought down'' in the civilian market, leaving the
    installation CDC's to absorb the cost of the infants and toddlers. If
    this were to occur the costs at the CDC would soar. Since the parents
    of infants and toddlers are more likely to be lower ranking military
    members, they could not absorb any part of such a cost increase.
        Youth Activities.--NMFA has been extremely pleased to note the
    Services are taking more of an interest in youth activities and
    programs. Before and after school programs are springing up at
    installations around the world. Youth centers are aggressively
    exploring ways to proactively encourage youth participation in
    wholesome and personal growth oriented programs. However, families find
    an uneven application of these new programs among installations and
    Services.
        NMFA particularly applauds the work done in the DOD Model Community
    Programs and even more those communities, such as Naval Air Station,
    Lemoore, CA, and the Air Force Academy that plan to continue their
    activities even though funding for the Model Community Program ends
    this month. It is fitting that Lemoore was chosen to receive the first
    1998 National Performance Review Hammer Award.
        Libraries.--NMFA believes the recent spate of on-installation
    library closures, sends the wrong message. What is the message sent
    when we fully fund physical fitness centers and close libraries?
        Partnerships.--NMFA is also pleased to see some innovative
    partnering activity at some installations. Picatinny Arsenal in New
    Jersey has entered into a superlative partnership with the local
    recreation department and local schools. The civilian community has
    gained the use of sports fields and other sports related facilities,
    and the installation has received significant assistance with
    maintaining and upgrading their facilities. The installation commander
    retains control over the area and could, if necessary, restrict access.
        Commissaries.--The recent Congressional Budget Office report on the
    Commissaries which suggests ways to make the benefit more cost
    effective for the nation, proposes dividing up $50 million to the
    active forces and doing away with the subsidized benefit. Simple
    arithmetic will show that families would loose significantly under this
    proposal and one more promise to retirees would be broken. Military
    families have also been aware of a proposal from within the Pentagon
    itself to place Commissaries within the MWR category. Shortfalls in
    Commissary funding could then be made up with nonappropriated funds--
    the members' own money. While recent testimony strongly suggests that
    neither of these proposals is being seriously considered at the moment
    within DOD or the Congress, families are concerned.
        Household Goods Reengineering.--NMFA is extremely pleased with the
    current apparent results of the Household Goods Reengineering
    Demonstration at Hunter Army Airfield, GA. Reports to date indicate
    overwhelming customer satisfaction, compared to overwhelming customer
    dissatisfaction with normal DOD moves. The claim rate for damage of
    property also appears to be significantly reduced. NMFA anxiously looks
    forward to the long delayed reengineering project to be run on the East
    Coast. We will be watching the Navy demonstration in Puget Sound. While
    customer choice is to be applauded, we hope that sufficient safe guards
    for the military family will be provided. Most new military families
    are too young and inexperienced to adequately negotiate permanent
    change of station moves and the attendant problems without assistance.
    Giving a credit card to the family and sending them out on their own
    may save the government money, but it will be at the expense of the
    family.
        Financial Counseling.--The MFI study of personal financial
    management among Navy personnel raises some serious questions. The
    study shows that indebtedness is by no means limited to junior
    personnel. While it can certainly be argued that the pay of junior
    personnel could easily contribute to financial insolvency, the problem
    is much more widespread. NMFA agrees with most of MFI's
    recommendations, specifically the implementation of an effective,
    proactive Personal Financial Management Program that continues
    throughout the service member's career.
        Service members are deploying frequently and working long days and
    weeks when not deployed. They have little, if any, time to investigate
    the new tax laws on their own, or to investigate savings options
    available to them.
        Knowledgeable financial counselors can provide service members with
    up to date information regarding their financial options and encourage
    goal-oriented savings habits. For instance, NMFA wonders how many
    military families with children under the age of 17 are aware that they
    could, this very day, increase their take home pay based on the new
    Child Tax Credit.
        Military families are asking why it is when budgets get tight the
    things they value the most come under attack.
                Education of Military Children
        Military families list education as one of their most important
    Quality of Life concerns. Even when their children are settled into
    what seems to be a good educational program, parents remain anxious.
    Military parents often say, ``We think our child is doing OK now in his
    current school and would be prepared to enter the next grade here.''
    But they worry, ``How do I know he'll have the skills he needs in the
    school at our next assignment in Okinawa or Heidelberg, in San Diego,
    CA or Fairfax County, VA?''
        School Volunteers.--Military families applaud the services'
    initiatives to get their service members and civilian employees into
    the schools as volunteer mentors, tutors, and as special program help.
    Mission permitting, Army personnel interested in volunteering in local
    schools may be excused from duty for up to one hour per week. Civilian
    employees may be excused for up to 59 minutes per week without being
    charged for leave. The Navy's ``Personal Excellence Program'' enables
    sailors to visit schools on a daily basis to assist in whatever
    activities are needed.
        Department of Defense Education Activity (DODEA).--NMFA and
    military families applaud DOD's decision last year to establish
    Domestic Dependent Elementary and Secondary Schools (DDESS) on Guam in
    response to their concerns and those voiced by the Services. Schools
    started late, students will have to make-up days lost due to Typhoon
    Paka, there's no lunchroom, and classes are held in renovated aircraft
    hangars and other temporary quarters, but enthusiasm continues to run
    high. Unaccompanied tours to Guam are down as more service members feel
    secure enough about the quality of the education available to bring
    their children to Guam.
        NMFA applauds the planned expansion of the Sure Start program for
    four-year olds in 27 overseas schools over the next two years, allowing
    Department of Defense Dependents Schools (DODDS) to serve approximately
    500 more children. We support other DODEA initiatives to target
    resources to the schools and children most in need through the new
    Framework for School Improvement Support.
        NMFA supports DODEA's efforts to hold itself accountable for
    improving student achievement and reaching the goals in its Strategic
    Plan. Families are pleased that raising parent and community
    involvement in decision-making are part of that plan.
        Parents' anxiety level goes up when DODEA plans for this input and
    involvement are not implemented in a timely manner. Their anxiety level
    goes up when DODEA postpones the Parent Report Card, the one
    established means of soliciting parent input on the quality of schools.
    DODEA's plan to expand this biennial survey to include all
    stakeholders--parents, school staff, military commanders, and
    students--in DODDS and DDESS is worthy. However, no comprehensive
    survey of parents has been made since Spring, 1995. Unless a survey is
    done this spring--and no date has been set--the families who began
    their three-year overseas tour in the summer of 1995 will rotate out
    this summer without ever being asked their opinion of the schools their
    children attended.
        Parents' anxiety level goes up when they worry if their on-base
    DDESS schools will be transferred to the neighboring civilian districts
    whether as the result of privatization or of the findings of the long-
    awaited transfer study ordered by Congress in 1995. The anxiety goes up
    when they hear the news that private developers are to build new family
    housing, but that no one has asked what impact this housing--and the
    children who live there--will have on the local school system.
        Parents' anxiety level goes up when their school officials talk of
    budget cuts. Press reports this winter about DODEA budget cuts due to
    an underutilization of workyears and a failure to pay bills on time,
    have raised parent concerns in both DODDS and DDESS. Will their
    children's schools have enough resources to finish this school year and
    obtain the books and supplies needed for the start of the next year?
            dod impact aid supplement for heavily-impacted districts
        In civilian school districts (which educate most military
    children), military families' anxiety increases when their school
    officials or the local press talks of budget cuts necessitated by DOD's
    failure to pay the Supplemental funding for heavily-impacted districts
    for fiscal year 1998. For these districts, Department of Defense
    Supplemental funding in six of the last eight years has provided
    necessary funds for construction, extra teachers, or technology. These
    funds supplement Impact Aid and enable heavily-impacted districts to
    approach the level of educational opportunity available in neighboring,
    non-impacted school districts even though they do not have access to
    the same kind of tax base.
                           serving the military child
        Because our families worry about their children's ability to
    transfer from one school system to another, NMFA is pleased to note
    that civilian districts serving military children are beginning to talk
    to each other about how to make this transition easier and to serve
    these children and their families better. After sponsoring a conference
    on ``Supporting the Military Child'' at Fort Hood (TX) in June 1997,
    the Killeen School Board voted to fund start-up costs for a new
    Military Child Education Coalition. Information about this coalition
    will be provided to participants at a national conference on ``Serving
    the Military Child,'' to be held October 1998 in Arlington, VA.
    Although the organization of the conference is being spearheaded by the
    Groton (CT) school districts, all branches of the Armed Services and
    school districts from several states are represented on the planning
    committee. The conference has already attracted support from the
    Departments of Defense, Education, and Transportation and Members of
    Congress. General Henry H. Shelton, Chairman, Joint Chiefs of Staff,
    has indicated that he will participate in the opening session of the
    conference.
        Military families are saying that it's about time people started
    talking to each other about quality education for our children.
    Military Communities
        In an article in the Colorado Spring Gazette-Telegraph on January
    12, Chaplain Herb Kitchens of Fort Carson is quoted as saying, ``I'd
    never been here before, but when I drove on the post, I had a sense of
    feeling at home. The Commissary and PX are the same wherever you go,
    the chapel is the same, the gymnasium is the same.'' In the same
    article military family members sitting around a table in the Army
    Community Service center spoke of the escalating need for the community
    when deployments occur, and of the camaraderie that is key in meeting
    the ever changing demands of military life. One Staff Sergeant said,
    ``most of the time your immediate family's not here, so you have a
    structured family outside of the immediate family which is the military
    community.''
        Deputy Chief of Staff for Manpower and Reserve Affairs,
    Headquarters, United States Marine Corps, Lieutenant General Carol A.
    Mutter's March 3rd Congressional testimony stated, ``Our installations
    by their very nature are self-contained communities, communities in
    which Marines and their families live, work, go to school, shop and
    recreate.''
                                 privatization
        Privatization of family housing may increase the number of
    available housing units at the expense of the military community. NMFA
    understands the need to find an alternative to military construction
    dollars to more quickly replace the high number of substandard military
    quarters. However, the entire community, both civilian and military,
    needs to be involved as privatization decisions are made. Projects
    built on land not federally owned will create significant hardships on
    the local education authorities. Military children who live on federal
    land bring approximately $2,000 per child to their school districts.
    Military children who live on private land bring $200 to their
    districts. Even where new housing is to be located can impact local
    schools. If a significant influx of new students are expected because
    housing has been built in a certain school district, even a $2,000 per
    year Impact Aid payment will not build necessary new schools or provide
    additional transportation to existing schools.
        Will the private construction of new military housing significantly
    affect the local real estate market, and/or community transportation
    services and roads? None of these items should be a barrier to
    privatization, but they can be a barrier to good community relations if
    the entire community is not involved in privatization discussions.
        If military housing is built off the installation will services
    such as community pools, libraries and other recreational and support
    services be expected to be provided by the civilian community? NMFA
    senses in some privatization initiatives the intent to have military
    families rely solely on the civilian sector in which they reside for
    support services. Installations would essentially be turned into
    ``places of work'' rather than the focal point for military
    communities.
        Military communities are not just brick and mortar. The military
    community is people--families who band together to support each other,
    and the individuals who serve the service members and their families.
    The focal point of the military community is the installation. The
    place where service members and their families gather. The place that
    ``looks like home'' whether it may be.
                  military construction/repair and maintenance
        The Army Posture Statement reports, ``Nothing contributes more to
    our soldiers' quality of life than the conditions in which they live.''
    Yet the Army budget request is underfunded by $450 million for family
    housing.
        Secretary Cohen's February 5 testimony states, ``When adjusted for
    today's lower troop strengths, fiscal year 1999 O&M funding is well
    above levels during the 1980's.'' However, in the 1980's approximately
    20 percent less of the force was married with family members.
    Commander, United States Forces Korea General John H. Tilelli, Jr.
    stated in testimony on March 4, ``my base operations program (real
    property maintenance, security, communications, transportation, and
    food services) are strained. These funding levels only support bare
    minimum repairs to facilities. This situation does not allow me to
    resolve long-standing quality-of-life issues to the extent that our
    service members deserve and I am concerned that this underfunding will
    eventually affect readiness.''
        CMSAF Benken stated in testimony, ``Our people do not expect to
    live in luxury--they simply want the peace of mind that comes with
    knowing their family is comfortable and safe, especially when they are
    deployed.''
        Military families are asking if the condition of their on-
    installation housing and some of the privatization initiatives are a
    way to encourage them to live off base. Military families are asking if
    the focal point, the place they gather to form their community, will
    exist in the future.
    Health Care
        Tricare Prime.--As this Committee knows, health care for military
    families has been a strong focus for NMFA for over a decade. We have
    seen progress in access to care for families enrolled in Tricare Prime
    and who live in areas with a Military Treatment Facility (MTF).
    However, Tricare has done little for families who reside in an area
    without an MTF. Active duty families remotely assigned or those
    stationed at installations with small troop clinics have seen more
    problems under Tricare than under CHAMPUS. Either Tricare Prime is not
    offered where they live, or it is and their access to providers is
    limited and their costs may have increased. For those reliant on the
    civilian part of Tricare Prime, provider directories are most often
    incorrect. Families call those listed in the directory only to be told:
    the doctor is not a Prime provider and never has been; the doctor is no
    longer a Prime provider; or the doctor is not taking any new Prime
    patients.
        In the Region 11 demonstration of Tricare Prime Remote, families
    are often charged balance billing by specialists because providers will
    not join the Prime network. These families have the restrictions of
    Prime with no guarantee on what their out of pocket costs will be.
        DOD's Press Releases announced portability of Prime for active duty
    families some six months before contractors were able to fully
    implement it. Portability for retiree Prime enrollees was, according to
    DOD Press Releases, started on December 1, 1997. Yet some Tricare
    contractors are just now beginning to implement the program. Multiple
    copayments for single visits continue as does balance billing for Prime
    enrollees forced to receive inpatient care from non-Prime providers.
    Prime patients referred by their Primary Care Manager to non Prime
    specialists are paying balance billing copayment--significantly higher
    than $12 a visit.
        Retirees who do not live near a military treatment facility, or
    near a concentration of active duty families, are not offered Prime.
    Prime enrollment for overseas retirees in Europe appears to be on an
    indefinite hold and will not be available in the Pacific.
        Tricare Prime Patients Pay Lion's Share of Cost.--Exhibit A shows
    that Tricare Prime patients are paying more for their mental health
    visits than those in Tricare Standard. In fact, these military family
    members are paying between 44 percent and 55 percent of the entire
    bill. NMFA does not believe it was Congress's intent that savings in
    the military health system were to be paid by the beneficiary!
    Unfortunately, NMFA does not know how prevalent this fee structure is.
    We implore this Committee to investigate to ascertain if this phenomena
    is occurring throughout all of the Regions and for other kinds of care.
        Tricare Standard.--Those who have chosen to stay with CHAMPUS
    (Tricare Standard) are subject to preauthorization for a number of
    outpatient procedures. Unfortunately, they are totally unaware of the
    requirement. Unlike true health insurance plans which provide booklets
    to inform their patients of their plan's benefits and restrictions, the
    military health care system provides no such information. CHAMPUS
    (Tricare Standard) booklets are printed at erratic times and years
    apart. The booklets are not updated. Booklets are not mailed to
    beneficiaries. In fact, not enough are even printed for the eligible
    population!
        Dual Medicare-military Eligible Beneficiaries.--Retirees who are
    Medicare eligible because of age are locked out of the military system
    altogether. DOD received permission to institute a demonstration of
    Tricare Senior Prime (Medicare Subvention) starting in January of 1998.
    It is not yet implemented and DOD has been unable to give a fixed date
    for implementation. In the meantime World War II, Korean War and
    Vietnam retirees and survivors are dying daily. Even full Subvention,
    if authorized, will be unable to care for more than 30 percent of the
    eligible population.
        The other new program for dual Medicare-military eligibiles, called
    ``Partners Program,'' will essentially offer enrollment in a Medicare
    at risk HMO. The Department has not yet outlined what advantages, if
    any, enrollment under the ``Partners Program'' would have over simply
    enrolling in the Medicare at risk HMO.
        Tricare--Another Federal Civilian Health Care Program.--As more
    MTF's become clinics and no longer inpatient facilities, families will
    find themselves seeking more and more of their care from civilian
    providers. Tricare is rapidly becoming another federal civilian health
    care program. However, unlike plans for federal civilians Tricare
    offers limited choices for military beneficiaries. Medicare eligibles
    will be offered an HMO or no employer provided coverage. Retirees who
    do not live near a military hospital are offered only a modified fee
    for service program with inpatient copayments so high that they must
    pay for a supplemental policy. A situation not faced by federal
    civilian retirees. Active duty families do not know what their choices
    or out of pocket expenses will be from one duty station to the next.
        NMFA Health Care Proposal.--NMFA continues to believe that its
    proposal which follows is the most cost effective program. It still
    ensures medical readiness, but also offers military beneficiaries the
    same scope of choices as civilian employees and retirees.
        NMFA's Proposal consists of two elements: The Military Health Plan
    and optional enrollment in a plan within the Federal Employees Health
    Benefits Program (FEHBP). (The Proposal does not include health care
    for active duty members. NMFA believes that their health care is a
    readiness issue. We also believe that, as under current law, their
    health care should be provided free of cost to the individual no matter
    where it is received.)
      --The Military Health Plan.--The Military Health Plan would closely
            resemble what is now Tricare Prime. It would be an enrollment-
            based Health Maintenance Organization (HMO) type plan centered
            in military hospitals. When needed, military hospitals could
            contract with a Tricare Support Contract-like entity to provide
            full service health care for all enrolled beneficiaries. All
            military beneficiaries, including those eligible for Medicare
            due to age, would be allowed to enroll. NMFA envisions that
            these military hospitals would be full service community or
            teaching hospitals able to provide most necessary care.
            Practitioners would have access to a full age range of
            beneficiaries in order to keep their skills current. Unless the
            quality of care or service was noticeably inferior to other
            options, NMFA believes the vast majority of military eligible
            beneficiaries who reside near such a military facility will
            enroll in the Military Health Plan.
      --The FEHBP Option.--Military beneficiaries who do not live near a
            military hospital, or who do not wish to enroll in The Military
            Plan, would have the option of enrolling in a plan within the
            FEHBP. Active duty service members would be provided a Health
            Care Allowance (similar to the housing allowance) for their
            families. Service members whose families enroll in The Military
            Health Plan would lose their Health Care Allowance, just as
            they lose their housing allowance when living in government
            quarters.
          The Health Care Allowance for active duty service members should
            pay the beneficiary portion of a moderate cost HMO within the
            FEHBP. Service members whose families choose to buy a more
            expensive plan would be responsible for the cost differential.
            NMFA believes it imperative to provide total premium protection
            for active duty families. Service members, particularly those
            deployed, should not have to be concerned about adequate,
            affordable health care for their families.
          All other beneficiaries would pay the beneficiary share of the
            premium as do Federal Civilians. DOD would absorb the
            government share of the premium for all military beneficiaries
            as it does for all of its civilian employees.
          NMFA must admit to extreme frustration that the dialogue on this
            proposal centers solely on money. We believe that somewhere in
            the discussion should be the simple question of what kind of
            health care benefit this country should offer to military
            members and their families.
          Military families are asking the same question. Military families
            are also asking why DOD agrees it has an obligation to keep
            promises made regarding health care, but continually drags its
            feet on doing so.
    Retirement
        The majority of the active duty force today is offered a retirement
    program vastly inferior to the one enjoyed by those who are currently
    retired. These active duty members will receive 40 percent of their
    basic pay upon twenty years of service vice 50 percent and will have
    their cost of living allowances capped. This new retirement system was
    instituted shortly after significant raises in active duty pay.
    However, the pay raises have not continued. The effect of this decrease
    in retired pay has been masked by the mammoth reduction in forces. As
    the Services begin to turn from ``push you out'' to ``recruit and keep
    you'' the significance of the retired pay reduction should begin to
    materialize. Recent testimony in the Senate by military recruiters
    indicates that the reduced retirement plan is significantly affecting
    their ability to compete with private industry for quality accessions.
    Second term retention rates in some services would suggest that
    something is causing military members with substantial years invested
    in the system to rethink their career decisions.
        Is it the new retirement system? Is it the broken health care
    promises? Is it the threat to prevent retirees from exercising their
    commissary benefit?
        Military families are not asking if the promises will be kept.
    Based on current evidence they do not believe that they will.
                                   conclusion
        This country is extremely fortunate that many bright and dedicated
    individuals and their families are willing to serve their country. They
    are enduring many sacrifices to do so. Their children listen around the
    kitchen table as discussions of ``do we stay or do we go'' occur. They
    hear and experience the frustration of diminished quality of life and
    continuing threats to valued benefits. These children hear of the
    broken promises, they hear the distrust about the availability of
    benefits for their parents.
        As Admiral Prueher stated in his March 4 testimony, ``Investments
    in people and training are as important as new technology. Adequate
    funding for compensation, medical, retirement, housing and other
    quality-of-life programs is necessary to attract and retain the skilled
    personnel upon which our forces depend.''
        NMFA suggests that ``adequate'' is in the eye of the beholder.
    Increased time away from home aggravated by personnel cuts, decreased
    family support, fewer choices and increased costs for medical care,
    compensation caps, attacks on the foundation of the military community,
    substandard housing, and concern about their children's education, may
    make many military families decide to vote with their feet. Perhaps as
    importantly, it may cause the potential military family of the future
    to decide that loyalty, trust and respect are one sided. They may
    decide the military community of their great-grandfathers and
    grandfathers did not exist for their mothers and fathers and would not
    for them.
    STATEMENTS OF:
            FATHER WILLIAM L. GEORGE, S.J., ASSISTANT TO THE PRESIDENT,
                GEORGETOWN UNIVERSITY
            FATHER LEO J. O'DONOVAN, S.J., GEORGETOWN UNIVERSITY

        Senator Stevens. Father Collins and Father George, please.
        Father George. Father Collins sent me, Mr. Chairman.
        Senator Stevens. We will have to deal with what the Lord
    gives us, Father. [Laughter.]
        Father George. Mr. Chairman, Senator Inouye, Senator
    Domenici, and staff, thank you for the privilege and the
    opportunity to testify.
        I would like to ask you, as you consider your
    appropriations for this year, to give special consideration to
    advanced technologies in medicine that would help the young men
    and women in the service prevent some of their diseases, cure
    them more quickly, and get them back to their duty as quickly
    as possible. A couple of areas I would like to mention are
    diabetes and hypertension, in which we are cooperating with
    Walter Reed in deploying some telemedicine systems in homes,
    where you can monitor the patients more clearly and some of the
    diseases that can crop up with diabetes.
        The other would be that there are such advances in robotics
    and communications and computing that there is the capacity to
    develop a really good surgery for the spine. And one of the
    first persons who spoke here spoke on back injury. Well, if you
    can get in there quickly with minimally invasive stuff, instead
    of being a month out of work, you can get that person back in,
    in 3 or 4 days, perhaps, if you get it in time. That also could
    be effective in prostate and kidney types of surgeries, as
    well.
        And, finally, we as a University, cooperate and are working
    with the Lovelace Institute. And what we are working on is a
    way to prepare the lungs of soldiers in the field, men and
    women, that if they were up against a biological or a chemical
    type of event, that it would protect their lungs, and then,
    second, methods that would actually regenerate the tissue in
    the lungs, where the oxygen exchanges.
        And so I would like to ask your committee to look into that
    as carefully as possible. And I know you do. But thank you for
    the opportunity to testify, Mr. Chairman.
        Senator Stevens. Thank you.
        Mr. Cortese reminds me that we did follow your request last
    year and it was vetoed.
        Father George. By one of our alumni. I mean, yes, that is
    pretty hard to believe. [Laughter.]

                               prepared statement

        Senator Stevens. Well, we will see if we can try again.
    Thank you very much, Father.
        Father George. Thank you, Mr. Chairman. God bless you.
        [The statement follows:]

              Prepared Statement of Father William L. George, S.J.

        Mr. Chairman and Members of the Committee: We are Father
    William L. George, S.J. and Father T. Byron Collins, S.J.
    Assistants to the President of Georgetown University, the
    Reverend Leo J. O'Donovan, S.J. We appreciate the opportunity
    to submit this testimony to the subcommittee on Georgetown's
    cost reducing advanced medical technologies.
        Advance technologies have made dramatic changes in health
    care. Georgetown University and Walter Reed Army Medical Center
    have been focusing cost reducing medical advanced technologies
    that at the same time improve the quality of care. We request
    $20 million for fiscal year 1999 to be added as a continuation
    to the existing research contract DAMD-17-94-V-4015 to further
    develop and deploy these technological innovations. Two of the
    high cost areas in health care are management of chronically
    ill patients and major surgical procedures requiring hospital
    stays. We propose to target these two important areas that
    share common technological infrastructure.
        Diabetes and hypertension are two of the major chronic
    illnesses that consume billions of dollars of health care cost.
    As the population ages, we expect a dramatic increase in the
    number of chronically ill patients. These patients, though they
    are a small percentage of the entire patient population,
    account for the majority of health care costs. For diabetes
    patients, if the glucose level can be tightly controlled by
    various means, they can lead a more productive and healthier
    life with a reduced risk of further medical complications.
    Currently we are installing, in collaboration with Walter Reed
    Army Medical Center, telemedicine systems at a number of
    diabetes patients' homes to monitor their glucose levels. We
    propose to expand the technical capabilities to reach a greater
    number of patients. This home-based telemedicine system will
    also be used for patient education, patient support activities,
    and computer assisted medical intervention to avoid medical
    complications that can be very costly.
        Advances in imaging, robotics, communication and computing
    have made it possible to operate on a patient without making a
    large open incision. The application of such a technique, known
    as minimally invasive therapy, has begun to revolutionize the
    traditional therapies and surgeries. For example, the hospital
    stay will be reduced from 7-9 days to 1-2 days in the case of
    spine surgery patients, thus reducing the morbidity and
    mortality rates and the cost of care. This new surgical program
    will include surgeries in the spine, prostate and kidney. For
    our men and women in uniform, this new technique will allow
    rapid return to duty. GUMC has been developing this project
    with multiple investigators at Walter Reed Army Medical Center
    over the past two years. Requested funds will allow us to
    expand current limited capabilities for routine patient care.
    STATEMENT OF KENNETH E. QUICKEL, JR., M.D., PRESIDENT,
                JOSLIN DIABETES CENTER, BOSTON, MA
        Senator Stevens. Dr. Kenneth Quickel, from the Joslin
    Diabetes Center. Good afternoon, sir.
        Dr. Quickel. Mr. Chairman and members of the subcommittee,
    we at Joslin certainly appreciate the opportunity to be here
    today, and we are eager to report to you our current progress
    with the demonstration project that was funded last year.
        The Joslin Diabetes demonstration project will institute
    pilot programs of detection, prevention and care in two
    regions. First, in Hawaii, through Tripler Army Hospital; and
    the second, in New England, through the Veterans Administration
    System. The objectives involving and technology transfer from
    Joslin's knowledge base, utilizing telemedicine strategies in
    the Department of Defense and the VA system, to provide state-
    of-the-art care to people with diabetes.
        We would like to thank you for the funding in the 1998
    Defense Appropriations Act for the diabetes research project,
    and we would like to express our appreciation for the support
    and leadership on diabetes issues that Senator Inouye and his
    staff have provided, largely focused on the Stroup Clinic and
    Hospital in Hawaii, where we are coordinating this project.
        I would like to focus on two principal areas. First, to
    give you a very brief status report; and, second, to talk a
    little bit about the second year. The two objectives of the
    project were to screen for diabetes among Department of Defense
    and VA patient populations, and then to use innovative
    technologies to do that screening, which involves nothing more
    than shining a light in the eye. The second objective was to
    use the knowledge and the early diagnosis to implement improved
    diabetes care technologies.
        The project has now been assigned program element number
    63002 and project number 941. But September 30, 1998, we will
    have accomplished several things. The first is we will have
    completed the preliminary studies and setup of equipment and
    personnel in the New England. And we will be beginning to
    actually apply those strategies to the care of people with
    diabetes. The second is that we will have implemented phase one
    in Tripler Medical Hospital and be prepared to move on to the
    second phase at that point.
        Now, when this project was funded nearly a year ago, and
    since that time, we have spent about $1.5 million of Joslin
    Diabetes Center funds without any of the funds yet coming out.
    We have continued to push the project forward. We were not
    aware that at each stage of the Department of Defense review a
    percentage of the funds would be appropriated elsewhere. The
    bare-bones budget that we submitted last year has been
    therefore reduced to an insufficient level.
        Mr. Chairman, in order to implement this project properly
    and conduct the project in a manner that we intended, we will
    require an appropriation of $6.4 million for this project in
    1999. We believe that with that appropriation, which is
    strongly supported by all parties, we can move this forward to
    benefit the lives of people with diabetes.
        Senator Stevens. Let me make sure I understand this,
    Doctor, because I am naive, too; right? We gave you $2 million
    last year?
        Dr. Quickel. No, the appropriation last year was $4
    million.
        Senator Stevens. $4 million.
        Dr. Quickel. Yes.
        Senator Stevens. But you have not been given any of that
    yet?
        Dr. Quickel. We have not seen any money yet.
        Senator Stevens. And you have spent $2 million almost?
        Dr. Quickel. We have spent almost $2 million of our own
    funding, because we felt that to stop the forward momentum of
    this would be damaging to the project itself out of some
    confidence that the funding was going to come.
        Senator Stevens. And at each stage of this review, which is
    a peer review I take it--is that right?
        Dr. Quickel. Mostly.
        Senator Stevens. They are taking money out of it. And there
    is an overhead charge and a management charge.
        Dr. Quickel. Well, yes, there is payment for overhead
    charges, expenses of conducting the process.
        Senator Stevens. And you have got a half-a-million-dollar
    bill from VA for their participation?
        Dr. Quickel. Yes.
        Senator Stevens. Cannot you do this all yourself?
        Dr. Quickel. We have done it all ourselves to this point.
    And we have done it basically based on philanthropy and
    National Institute of Health [NIH] funding. And we are at a
    point now where it needs to be converted to a practical
    strategy that can be actually applied in the field. And because
    of the military's and the VA's interest in telemedicine, it is
    a perfect match, of taking something to them that they can use,
    and they bring something to the table that we need, in terms of
    the expertise in telemedicine.
        Senator Stevens. But if your request goes up 55 percent
    every year, you are not going to be involved in this very long,
    because we cannot afford that.
        Dr. Quickel. I understand.
        Senator Stevens. So I suggest you get together with your
    colleagues in the VA and the DOD and tell them to keep their
    mitts off your money. We will tell them, too.
        Dr. Quickel. Yes, we appreciate your help with that.
        Senator Stevens. I do not think there should be that kind
    of assessment. So unless they come to us and tell us to the
    contrary, we are going to find an arbitrary figure and limit
    the amount they can charge for oversight of these. We cannot
    afford to finance it.
        Dr. Quickel. Yes.
        Senator Stevens. And it sounds to me like they built up a
    unit in government to keep pace with what you are doing outside
    of government.
        Dr. Quickel. Right.
        Senator Stevens. And we turn to you because we thought you
    had special expertise.
        Dr. Quickel. Sure.
        Senator Stevens. We cannot stand that duplicated buildup.
    We will work with you to see what we can do. I am going to
    direct the staff to contact you and your VA and military
    counterparts, and tell us how we can limit them from invading
    this money. We want you to give us your advice, and we selected
    you because we thought you had that expertise. We did not
    intend for that money to be siphoned off by any unit of the
    government. So we will try to do our best. But we cannot raise
    you $6.4 million this year, with a budget that is less than we
    had last year. All right?

                               prepared statement

        Dr. Quickel. I appreciate that. So far, all of the money
    that has been spent is ours. And we are hoping to get this
    thing back on screen so we can continue to move forward. We
    appreciate your time and interest.
        [The statement follows:]
                 Prepared Statement of Kenneth E. Quickel, Jr.
        Mr. Chairman and Members of the Subcommittee, we at the Joslin
    Diabetes Center in Boston appreciate the opportunity to appear before
    you again this year. We are extremely eager to report to you the
    progress on the two region, two year diabetes pilot demonstration
    project Joslin proposed to you last Spring.
        The Joslin diabetes demonstration project will institute pilot
    programs of detection, prevention and care in two regions: (1) Hawaii,
    through Tripler Army Medical Center; and (2) New England through VA's
    VISN-1. The objectives involve a training and technology transfer
    exercise of Joslin's expertise utilizing telemedicine infrastructures,
    personnel and employee/patient bases of the Departments of Defense and
    Veterans Affairs.
        We at Joslin would like to thank you for the funding in the Fiscal
    Year 1998 Defense Appropriations Act for the diabetes research project
    we are participating in with the Department of Defense and the
    Department of Veterans Affairs in New England and Hawaii. We would like
    to express our appreciation for the support and leadership on diabetes
    issues to Senator Inouye and his staff, and to the majority and
    minority professional staff of the Committee for their advice and
    counsel on the legislative process and DOD interface.
        My testimony focuses on two aspects of the project: (1) A status
    report on the current year; and (2) A request for second year funding.
                      status report: first year activities
        As you recall, the two objectives of the project are (1) Screening
    for diabetes among DOD's and VA's patient populations in New England
    and Hawaii, using an innovative technology which requires nothing more
    than shining a light in the eye; and (2) Implementing improved diabetes
    prevention and care protocols for the DOD's and VA's patient
    populations in New England and Hawaii.
        We were delayed in implementation somewhat this year due to DOD's
    deliberations on where to place this project programmatically. While
    the funding flow was being cleared, we have continued to invest
    resources and develop elements of the program at Joslin. We have now
    settled those issues and are linked with TATRC, the Telemedicine and
    Advanced Technology Research Center at Fort Dietrick, Maryland.
        Significant progress has been made towards establishing initial
    pilot studies to study patients with diabetes. We have reached
    understanding, with the support of DOD and VA personnel, on
    implementation of the work plan we brought to the Committee last year.
    We are in active discussions on implementation with both Departments.
        Shortly, we will begin:
      --Three Phase I pilot projects to provide information on the expected
            magnitude of the proposed interventions and to evaluate the
            feasibility of the application of these protocols at multiple
            sites. After the Phase 1 pilot study, we will move to a Phase 2
            large-scale study on both the Joslin Vision Network (JVN) and
            the Diabetes Intensive Treatment Program (DOIT).
      --The process of developing the Phase 1 and Phase 2 studies for both
            the JVN and the DOIT Program at the DOD.
      --The process of organization and distribution of the remote access
            diabetic detection units at multiple sites.
        By September 30, 1998, we will have accomplished the following,
    despite the delay in our start date: Completion of Phase 1 studies in
    the New England area for the VA; Implementation of Phase 2 studies in
    the New England area for the VA; Implementation of Phase 1 studies at
    Tripler Army Medical Center, Hawaii; Deployment of three remote
    examination sites in New England; Initiation of the deployment of three
    remote examination sites in Hawaii; and Further maturation of the
    technology at Joslin.
                       second year plan and funding needs
        In Year 2 we will have accomplished the following objectives:
      --Provide DOD and VA diabetes patients cost-effective access to the
            benefits of annual retinal examination, diagnosis, and
            treatment as necessary to reduce the risk of vision loss;
      --Develop the utilization of a quick, efficient and easily acceptable
            method of screening for diabetes at remote sites;
      --Demonstrate efficient and effective methods to improve the
            metabolic control for patients with diabetes.
        Anticipating early implementation in November of 1997, Joslin began
    procuring the necessary equipment to carry out the project. To date,
    Joslin has expended approximately $2 million, without any reimbursement
    from Federal funds. This has been a particular challenge for a
    nonprofit institution whose annual shortfall is made up through gifts
    from foundations and private donors.
        Joslin was a little naive in the preparation of the budget we
    prepared for the current fiscal year. We were not aware that at each
    stage of DOD review and decision-making, a percentage of the funds
    available would be deducted for program management and administrative
    overhead. Nor did we anticipate several unforeseen expenses required by
    the Department of Defense. We are also now faced with a budget from the
    VA for $500,000 for the two-year period for their participation in this
    project. As a result, the bare bones budget we submitted last year has
    been reduced to an insufficient level. DOD have officials recognized
    and appreciated Joslin's plight in this regard. The DOD program
    managers have indicated that they will support a second year budget of
    $6.4 million to assure that this important initiative can proceed.
        In total, assessments by DOD and VA are projected at $2,000,000
    from the funds we had originally budgeted for this two year project.
        The supporting detail for the second year request is in the final
    stages of preparation. We are grateful that we have the programmatic
    support of DOD in our efforts. We are also very fortunate that DOD
    understands the budget and funding issues, and will support the second
    year effort at $6.4 million.
        Mr. Chairman, in order to implement this project properly, and
    conduct the project in the manner and under the terms established by
    DOD and the VA, we will require an appropriation of $6.4 million in
    fiscal year 1999.
        Mr. Chairman, that concludes my brief statement. We are pleased to
    be a part of this project with the Department of Defense and appreciate
    your Committee's support.
        I would be pleased to answer any question from you or any other
    Members of the Subcommittee.

        Senator Stevens. Senator Domenici.
        Senator Domenici. Mr. Chairman, I wonder if I could ask one
    question about diabetes.
        Senator Stevens. Please.
        Senator Domenici. Do you know, Doctor, whether in the
    military at large there is a system of screening for diabetes
    among all the members of the armed forces?
        Dr. Quickel. There is an initial screening at the time
    people enter active duty. But of course the families are never
    screened, and the dependents are never screened. And then the
    VA becomes responsible for a long period thereafter. But there
    is screening of active duty military when they first come on
    line.
        And, in fact, they are not permitted to come on line, I do
    not believe, if they do have diabetes.
        Senator Domenici. But is there a screening for those who
    have been in a long time, do you know?
        Dr. Quickel. I think it is probably screening that is very
    similar to what is done in the civilian world: when you do
    interact with the medical system, somebody will get a blood
    sugar and screen you at that point in time.
        Part of what we are proposing here, though, is a very
    simple means of screening that would be applicable--you could
    do it on annual basis, with very little expenditure.
        Senator Domenici. Senator Inouye, the reason I asked the
    question is that you and I know that, in the United States, the
    population that has the highest propensity for diabetes is the
    Indian population, and second behind that is the Hispanic. And
    it would be interesting to know if you could take a large group
    of American military who had been in for a long time, and find
    out how many were Indian, and see if they had the same high
    level, which might give us some answer as to how much is
    environmental and how much is genetic.
        Dr. Quickel. Yes.
        Senator Domenici. But he is not the fellow to ask that
    question.
        Dr. Quickel. And we are especially interested in Hawaii,
    because the civilian population of Hawaii, on the average, has
    the highest prevalence of diabetes, as a whole population.
    Although, as you know, in the Southwest, the American Indians
    are probably the highest of all.
        Senator Domenici. Thank you, Mr. Chairman.
        Senator Stevens. Thank you very much.
        Dr. Quickel. Thank you.
        Senator Stevens. At this time, I do not mean to be rude,
    but I would say do not be naive enough to spend your own money
    again. [Laughter.]
        Let us make sure they give you what we appropriated for
    you.
        Dr. Jerome Odom, the Coalition of EPSCOR States.
    STATEMENT OF JEROME ODOM, PH.D., CHAIRMAN, COALITION OF
                EPSCoR STATES
        Dr. Odom. Thank you, Mr. Chairman and members of the
    subcommittee, for the opportunity to appear in support of the
    Department of Defense Experimental Program to Stimulate
    Competitive Research, sometimes known as DEPSCoR. My name is
    Jerry Odom, and I am Executive Vice President for Academic
    Affairs at the University of South Carolina. However, today, I
    am appearing as Chairman of the Coalition of EPSCoR States.
        The Coalition supports the Defense Department's budget
    request of $10 million for the Defense EPSCoR program. However,
    we respectfully urge the subcommittee to appropriate an
    additional $15 million for this productive program. The Defense
    EPSCoR program is funded through the University Research
    Initiative. EPSCoR is a research and development program,
    initiated by the National Science Foundation. Through a merit
    review process, EPSCoR helps researchers, institutions and
    States improve their research capabilities and quality in order
    to compete more effectively for non-EPSCoR research funds.
        Based on the positive results of the National Science
    Foundation program, Congress established the Defense EPSCoR
    program in the 1995 National Defense Authorization Act. Mr.
    Chairman, some of the most important scientific breakthroughs
    and innovative technologies that have changed our modern world
    have been produced by university-based scientists and
    engineers, supported by the Defense Department's research and
    development efforts. University-based research helped to
    develop new technologies and new ideas that have made
    fundamental contributions to a strong national defense.
        I would like to cite just a few examples of some of the
    research being conducted in the EPSCoR States that support the
    Department's national defense mission. Alabama researchers are
    working on thermoelectric materials and devices for cooling
    small, microelectric components. This work will provide
    important technological components for the very small computers
    and other electronic devices of the future.
        The DEPSCoR program funded a unique molecular beam facility
    and scanning tunneling microscope at the University of
    Arkansas. Researchers believe it is possible to more carefully
    design semiconductor fabrication and to produce semiconductor
    structures with interfaces of the highest quality seen. Based
    on new concepts developed through this DEPSCoR-sponsored
    research, the Arkansas researchers expect to develop the
    fastest transistor ever.
        Engineers and scientists at the University of Louisville
    and the University of Kentucky have established an Electro-
    optics Research Institute to design cutting-edge optical
    pattern recognition systems.
        Mississippi State University's researchers, working with
    the Naval Oceanographic Office, are developing an oceanographic
    database and the tools needed to support the automated
    extraction of information from this database.
        University of South Carolina scientists, working in
    automatic target recognition, antisubmarine warfare, surface
    modelling, and simulation methods, have produced literally
    hundreds of research papers and theses. This has been widely
    recognized as one of the Navy's most successful research
    programs.
        Vermont researchers are working on a new technique to
    fabricate materials that could ultimately contribute to the
    construction of a computer which operates through optical
    signal communications, allowing very high-speech
    communications, approaching the speed of light.
        Another group in Vermont is working on electromagnetic
    radiation and wave propagation that has applications to ground-
    and foliage-penetrating radar.
        The Coalition appreciates the subcommittee's longstanding
    support for Defense EPSCoR. We recognize the tight fiscal
    constraints. But we would urge you to invest an additional $15
    million, increasing the funding to $25 million.
        Thank you, Mr. Chairman.
        Senator Stevens. Thank you very much. I appreciate your
    being with us.
        [The statement follows:]
                       Prepared Statement of Jerome Odom
        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).
        My name is Jerry Odom. I am Provost and Executive Vice President
    for Academic Affairs of the University of South Carolina. I am
    appearing today as Chairman of the Coalition of EPSCoR States and
    testifying on behalf of the states \1\ that are eligible to participate
    in the Experimental Program to Stimulate Competitive Research (EPSCoR).
    ---------------------------------------------------------------------------
        \1\ Alabama, Arkansas, Idaho, Kansas, Kentucky, Louisiana, Maine,
    Mississippi, Montana, Nebraska, Nevada, North Dakota, Oklahoma, Puerto
    Rico, South Carolina, South Dakota, Vermont, West Virginia, and
    Wyoming.
    ---------------------------------------------------------------------------
        The Coalition of EPSCoR States supports the Defense Department's
    budget request of $10 million for the Defense EPSCoR program, but we
    respectfully urge the Subcommittee to appropriate an additional $15
    million for this productive program. The Defense EPSCoR program is
    funding through the University Research Initiative (PE 61103D).
        EPSCoR is a research and development program initiated by the
    National Science Foundation. Through a merit review process, EPSCoR is
    improving our Nation's science and technology capability by funding
    research activities of talented researchers at universities and non-
    profit organizations in states that historically have not received
    significant Federal R&D funding. EPSCoR helps researchers,
    institutions, and states improve their research capabilities and
    quality in order to compete more effectively for non-EPSCoR research
    funds. EPSCoR is a catalyst for change and is widely viewed as a
    ``model'' Federal-state partnership.
        Based on the positive results of the NSF program, Congress created
    EPSCoR programs in six additional federal agencies. One of these is the
    Defense Department. The individual agency EPSCoR programs help
    researchers and institutions in participating states 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.
        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.
        DEPSCoR contributes to the states' goals of developing and
    enhancing their research capabilities, while simultaneously supporting
    the Defense Department's research goals. DEPSCoR grants are based on
    recommendations from the EPSCoR state committees and the Department's
    own evaluation and ranking. It also builds research competitiveness by
    fostering collaborations and developing human resources. Research
    proposals are only funded if they provide the Defense Department with
    research in areas important to national defense.
        DEPSCoR was originally authorized by Section 257 of the National
    Defense Authorization Act of 1995 (Public Law 103-337), which states
    that the Defense EPSCoR program's objectives are to:
      --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
      --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.
        Last year the Defense Department issued an announcement of a
    competition under the aegis of the Defense EPSCoR program. A total of
    260 projects were received from the 19 states eligible to participate
    in DEPSCoR. Following review of the individual projects by the
    appropriate research office (the Army Research Office, the Ballistic
    Missile Defense Organization, the Office of Naval Research, or the Air
    Force Office of Scientific Research) 55 projects were selected for
    funding with $16.4 million made available in fiscal year 1997. The
    average award was $295,000. Subsequently, the Department announced the
    selection of 72 additional projects for funding with $18 million made
    available in fiscal year 1998. The average of those awards was
    $250,000.
        Mr. Chairman, some of the most important scientific break throughs
    and innovative technologies that have changed our modern world have
    been produced by university-based scientists and engineers supported by
    the Defense Department's R&D efforts. University based research helped
    to develop new technologies and new ideas that have made fundamental
    contributions to a strong national defense. Among the major
    contributions over the years have been radar, nuclear power, digital
    computers, lasers, vaccines and new drugs to fight diseases that
    debilitate service personnel. Not all of the innovative discoveries
    developed in university laboratories have been as profound as these,
    but each in turn has made small contributions to maintaining America's
    technological superiority.
        As Secretary Cohen has said: ``How wisely we invest in research
    today will greatly influence the readiness of our future forces to
    succeed when called to protect our national interest.''
        I would like to site a few examples of some of the research being
    conducted in our states that supports the Department's national defense
    mission.
      --Researchers in Alabama have received funding for work on
            thermoelectric materials and devices for cooling small
            microelectronic components, work that will provide important
            technological components for the very small computers and other
            electronic devices of the future.
      --DEPSCoR funded a program in the Physics Department at the
            University of Arkansas, a unique molecular beam facility. For
            the first time it will be possible to control the growth of
            semiconductor devices, as opposed to growth by chance. Using
            new equipment purchased through DEPSCoR, these researchers
            believe it is possible to more carefully design semiconductor
            fabrication. Another piece of equipment, a scanning tunneling
            microscope, has enabled them to produce semiconductor
            structures with interfaces of the highest quality ever seen.
            Based on new concepts developed through DEPSCoR-sponsored
            research, the Arkansas researchers expect to develop the
            fastest transistor ever.
      --Engineers and scientists at the University of Louisville and the
            University of Kentucky have established an Electro-Optics
            Research institute to design cutting-edge optical pattern
            recognition systems.
      --Mississippi State University researchers working in partnership
            with the Naval Oceanographic Office are developing a knowledge
            discovery system consisting of an oceanographic database and
            the tools needed to support the automated extraction of
            information from the database. This project will aid scientists
            at NAVOCEANO in the identification and characterization of
            geologically similar regions of the ocean floor and the
            development of a prototypical system that uses acoustic imagery
            to geologically define the ocean floor.
      --Likewise, DEPSCoR-funded scientists in Mississippi are working with
            the Navy's Large Cavitation channel facility to solve problems
            Navy submarines experience when operating in the shallow waters
            of the Persian Gulf and other littoral regions, where
            uncommanded depth charges during high speed maneuvers could
            place submarines at risk.
      --Clemson University's electrical and computer engineers have created
            a focused research initiative in mobile wireless battlefield
            communications. The program is supporting research that is
            making improvements in soft-decision decoding of convolution
            codes that results in higher throughput, lower delay and
            increased reliability in communication networks on the
            battlefield. The program is not only serving DOD needs and
            meeting private sector interest but has also achieved a level
            of recognition that is attracting gifted students and producing
            graduates which make an immediate impact as future employees
            because of their excellent background in wireless networks at a
            very competitive time.
      --With the aid of DEPSCoR funding to the University of South
            Carolina's mathematicians, chemists and engineers are making
            significant contributions to defense programs in Automatic
            Target Recognition, Antisubmarine Warfare, Surface Modeling and
            Simulation Methods. The program involves more than thirty
            researchers and ten postdoctoral fellows, has produced
            literally hundreds of research papers and theses and has been
            recognized as one of the Navy's most successful research
            programs in recent years.
      --University of Vermont researchers are working on new techniques to
            fabricate materials that could ultimately contribute to the
            construction of a computer which operates through optical
            signal communications allowing very high-speed communications,
            approaching the speed of light. Likewise, others are conducting
            research for the Air Force in electromagnetic radiation and
            wave propagation with applications to ground and foliage
            penetrating radar. And a DEPSCoR-supported chemist received the
            largest grant ever given to St. Michael's college for work in
            development of alternative high energy density hydrocarbon
            fuels, propellants and explosives.
        These are a few examples of the types of activities the EPSCoR
    Coalition believes will benefit the Defense Department and should
    strengthen and expand. This is why we believe additional funds should
    be made available for fiscal year 1999.
        Given the success of the EPSCoR programs in South Carolina and
    other states, it is not surprising that we are very interested in and
    enthusiastic about the future of the Defense EPSCoR program. It has
    been our experience that the EPSCoR programs yield a return far beyond
    the original investment. EPSCoR allows the states to accomplish more
    than is possible through the regular research programs. It has helped
    South Carolina attract and retain young researchers who are able to
    demonstrate through EPSCoR support of their research, that they have
    bright futures in fields of research that are of interest to the
    Defense Department.
        At its core, DEPSCoR, in conjunction with the NSF EPSCoR effort,
    supports quality peer-reviewed research, but also builds the research
    infrastructure that improves our overall competitiveness. It
    contributes collaboration, strategic thinking and broad scale planning,
    and development of a shared research vision by the state. South
    Carolina is making good use of Defense EPSCoR in concert with and
    complementary to the other agency research initiatives.
        Mr. Chairman, on behalf of the Coalition of EPSCoR States, I would
    like to express the Coalition's support of the Defense Department's
    fiscal year 1999 request for its basic research program (functions 6.1
    and 6.2). Likewise, we believe the University Research Initiative,
    which provides essential support for researchers and scientists
    throughout the country, should be funded at the $216.3 million level
    requested in the budget.
        The Coalition appreciates this Subcommittee's long-standing support
    for Defense EPSCoR and we urge to continue that support. The Coalition
    recognizes the very tight fiscal constrains this Subcommittee faces in
    the new era of a balanced federal budget, but we respectfully request
    that you provide $25 million for the Defense EPSCoR program for fiscal
    year 1999 as the University Research Initiative.
        The Defense Department's Experimental Program to Stimulate
    Competitive Research is a wise and worthwhile investment of scarce
    public resources. It will continue to contribute significantly to
    efforts to build the scientific and engineering research efforts in
    support of national defense needs.
        Thank you for your consideration of this request.
    STATEMENT OF MARTIN B. FOIL, JR., CHAIRMAN, BRAIN
                INJURY ASSOCIATION, INC.
        Senator Stevens. Martin Foil, Chairman of the Brain Injury
    Association.
        Mr. Foil. Chairman Stevens, Senator Inouye, Senator
    Domenici, thank you very much for letting me be here this
    afternoon.
        My name is Martin B. Foil, Jr., and I come before you today
    as the father of Philip Foil, a young man with a severe brain
    injury. I serve as the voluntary Chairman of the Brain Injury
    Association. I am also the Chairman and Chief Executive Officer
    of Tuscarora Yarns in Mt. Pleasant, North Carolina.
        I receive no compensation from the Brain Injury Association
    for the programs I am testifying about here today. Rather, I do
    contribute considerable amounts of my own money to the
    Association primarily because, Mr. Chairman, we want to help
    improve the lives of persons with brain injury. And I am here
    because I care. I care about the 9 million Americans living
    with brain injury, and their families.
        The Defense and Veterans Head Injury Project [DVHIP] and
    the Violence and Brain Injury Project [VBIP] are collaborative
    efforts among the DOD and the Veterans Affairs and the Brain
    Injury Association. Together we serve not only active duty
    military personnel, of whom some 7,000 a year suffer brain
    injury, but we are an important resource to veterans and the
    civilian population, as well. Therefore, our programs are
    exemplary cases of dual-use funding.
        And I am pleased to report to you today that our
    collaborative efforts are continuing to pay off. By increasing
    the return-to-duty rate of military personnel and improving the
    efficiency of medical services provided, DOD does realize
    significant cost savings. We have many accomplishments this
    year, including expanding our patient registry, treatment and
    referral network. Our Brain Injury Resource Center, developed
    by our Association, is now available in 60 locations across the
    country, including select DOD hospitals and VA hospitals, as
    well as civilian facilities.
        Our toll free help line receives 15,000 calls a year,
    helping not only military personnel but civilians with brain
    injury and their care-givers. We have increased our prevention
    and educational programs to include Brain Building Basics, a
    violence prevention and brain injury awareness program for
    adults with low literacy skills, including incarcerated
    populations. Our Head Smart Schools Program is used in 21
    States, the District of Columbia, and educates over 130,000
    children. We have seven Head Smart community programs in the
    military.
        We are embarking on research for neuro-behavioral problems
    to help military personnel return to work. We are especially
    excited about new functional MRI technology, which helps create
    diagnostic criteria for mild and moderate brain injury, which
    are significant problems in the military. This research will be
    valuable to maintaining readiness, by discerning who is capable
    to return to active duty.
        Brain injury is the silent epidemic, the largest killer and
    cause of disability among young people. We need to do more. We
    need to help our military by continuing to be ready. We need
    your support, sirs, for $8.5 million in funding, so that DVHIP
    and VBIP and our Association can carry on our unique
    partnership.

                               prepared statement

        Thank you very much, and God bless you. I am ready to
    answer any questions.
        Senator Stevens. Thank you very much.
        There are no questions.
        Mr. Foil. Thank you very much, sir.
        [The statement follows:]
                   Prepared Statement of Martin B. Foil, Jr.
        Mr. Chairman and Members of the Senate Defense Subcommittee: My
    name is Martin B. Foil, Jr. I am the father of Philip Foil, a young man
    with a severe brain injury, and I serve as voluntary Chairman of the
    Brain Injury Association. I am also the Chief Executive Officer and
    Chairman of Tuscarora Yarns in Mt. Pleasant, North Carolina.
        I appreciate the opportunity to provide testimony regarding the
    Defense and Veterans Head Injury Program and the Violence and Brain
    Injury Project. Both programs are collaborative efforts among the
    Departments of Defense and Veterans Affairs and the Brain Injury
    Association, which address the prevention and treatment of brain injury
    in the military and civilian sectors. I respectfully request that you
    support level funding of $8.5 million for these programs.\1\
    ---------------------------------------------------------------------------
        \1\ The Department of Defense proposed $7 million for fiscal year
    1999. Thus, we are requesting an additional $1.5 million to keep our
    services available to the military and civilian communities.
    ---------------------------------------------------------------------------
        I urge your support for these programs on behalf of the Brain
    Injury Association (BIA). BIA is a national, non-profit organization
    dedicated to promoting awareness, understanding and prevention of brain
    injury. This is done through education, advocacy, research and
    community support services that lead toward reduced incidence and
    improved outcomes of persons with brain injuries.
        I receive no personal benefit or monetary gain from the programs I
    will discuss. I am providing this testimony simply because I care about
    the 9 million Americans living with brain injuries and their families.
    In compliance with Committee Rules, enclosed is a copy of my resume
    along with a statement regarding the funding that BIA received last
    year, to conduct its share of these two programs.
        My testimony will summarize some significant accomplishments that
    the DVHIP and VBIP achieved in 1997, and what we, through the BIA,
    expect for the coming year.
    Brain Injury in the United States and the U.S. Military
        The General Accounting Office (GAO) recently reported to the
    Congress that traumatic brain injury is the leading cause of death and
    disability in young American adults. In addition, between 1.5 and 2
    million individuals across the United States sustain a traumatic brain
    injury (TBI) each year. The GAO published its findings in its February
    1998 report, entitled ``Traumatic Brain Injury: Programs Supporting
    Long-Term Services in Selected States.''
        Each year, approximately 7,000 brain injury patients are admitted
    to military and VA hospitals. This number does not include personnel
    who experienced mild brain injury, concussions, or those receiving
    emergency room treatment and early release. The cost to the military
    has been estimated at $30 million annually in medical retirement
    payments.
    Defense and Veterans Head Injury Program
        The Defense and Veterans Head Injury Program (DVHIP) is a close
    collaborative program among the Department of Defense (DOD), the
    Department of Veterans Affairs (VA), and the Brain Injury Association
    (BIA). It is an integrated, multidisciplinary disease management system
    focusing on both peacetime and combat traumatic brain injury (TBI). Its
    activities span the spectrum of brain injury from prevention,
    education, and advocacy, to clinical care and clinical and laboratory
    research focused on TBI.
        The collaborative efforts of the DVHIP, contribute to our nation's
    preparedness by helping service members return to work, as well as
    provide critical support to keep families together during the difficult
    times after brain injury.\2\ It is a prime example of a dual use
    program.
    ---------------------------------------------------------------------------
        \2\ Last year at Walter Reed Army Medical Center, we achieved a 70
    percent return to work rate.
    ---------------------------------------------------------------------------
        The DVHIP's primary objectives are:
      --To ensure that DOD and VA patients with brain injury receive
            specialized evaluation, treatment, and follow-up, while at the
            same time, conducting integrated clinical and clinically-linked
            laboratory research studies that seek to define optimal cost
            effective treatment for TBI;
      --To facilitate treatment of TBI resulting from combat and training
            operations including identification and follow-up (as in our
            Vietnam Head Injury Study), as well as deployment of
            pharmacologic and other therapies that will minimize the brain
            swelling and secondary tissue injury which accounts for most of
            the morbidity after TBI.
        In an ongoing effort to fulfill these primary objectives, the DVHIP
    has developed and is in various stages of carrying out six specific
    activities: (1) Establishment and maintenance of peacetime and combat
    TBI patient registries; (2) Establishment of a regionally distributed,
    integrated, national DOD/VA TBI referral network; (3) Establishment of
    standardized patient outcome evaluations which define the short and
    long-term neurologic, cognitive, behavioral, and psychosocial
    consequences of TBI; (4) Evaluation of the effectiveness and relative
    cost efficiency of alternative TBI rehabilitation strategies; (5)
    Conduct pharmacologic trials of both neuroprotectant and symptomatic
    agents; and (6) Conduct clinically-linked laboratory projects.
    The Brain Injury Association and the DVHIP
        In close collaboration with the Brain Injury Association, the DVHIP
    has developed extensive educational programs and materials, primary
    prevention resources, and community support services. For instance, BIA
    has developed a Brain Injury Resource CenterTM (BIRC) which
    provides easy access to a multi-media computer library through a touch-
    screen monitor and program that allows users to learn about brain
    injury at a personalized pace. The BIRC combines still and motion
    video, graphics, text and sound to give users access to information
    vast enough to fill a small library. The completely interactive
    multimedia computer system is now available in over 60 locations across
    the country, including select DOD and VA hospitals.\3\ Civilian
    facilities have also purchased the BIRC for use across the nation.\4\
    ---------------------------------------------------------------------------
        \3\ Denver Veterans Affairs Medical Center, Denver, CO; Hines
    Veterans Affairs Medical Center, Hines, IL; Lyons Veterans Affairs
    Medical Center, Lyons, NJ; Madigan Army Medical Center, Takoma, WA;
    Memphis Veterans Affairs Medical Center, Memphis, TN; Minneapolis VA
    Medical Center, Minneapolis, MN; Palo Alto VA Medical Center, Palo
    Alto, CA; Portsmouth Naval Medical Center, Portsmouth, VA; Richmond VA
    Medical Center, Richmond, VA; San Diego Naval Medical Center, San
    Diego, CA; Seattle Veterans Affairs Medical Center, Seattle, WA; Walter
    Reed Army Medical Center, Washington, DC; Wilford Hall Air Force
    Medical Center, San Antonio, TX; Womack Army Medical Center,
    Portsmouth, VA.
        \4\ Baptist Hospital of Miami, Miami, FL; Brain Injury Association
    National Office, Washington, DC; Brain Injury Association of Illinois;
    Carolinas Medical Center, Charlotte Institute of Rehabilitation,
    Charlotte, NC; Christ Hospital, Chicago, IL (on loan from Brain Injury
    Association of Illinois); Crumley and Associates, Asheboro, NC;
    Harborview Medical Center, University of Washington, Seattle, WA; Hill,
    Peterson, Carper, Bee & Dietzler, Charleston, WV; Inova Center for
    Rehabilitation at Mount Vernon Hospital, Alexandria, VA; Jackson
    Memorial Hospital, Ryder Trauma Center, Miami, FL; James A. Haley VA
    Medical Center, Tampa, FL; Kennedy Krieger Institute, Baltimore, MD;
    Macomb Hospital Partial Day Program, Warren, MI; Mary Free Bed
    Hospital, Grand Rapids, MI; Mary Free Bed Hospital, Grand Rapids, MI
    (on loan from Simkins and Simkins, Northville, MI); Northwestern
    Medical Center, Chicago, IL; Nunn & Greene Law Office, Bloomington, IN;
    Ohio State University, Columbus, OH; Rehabilitation Institute of
    Chicago, Chicago, IL; Roger C. Peace Rehabilitation Hospital,
    Greenville, SC; Santa Clara Valley Medical Center, San Jose, CA;
    Shepherd Center, Atlanta, GA; St. Mary's Medical Center, Minneapolis,
    MN; State of Arizona's Council on Head and Spinal Cord Injury (3
    systems); University of California-Los Angeles (UCLA) Hospital, Los
    Angeles, CA; University of Maryland Medical Center, Shock Trauma
    Center, Baltimore, MD; University of Pennsylvania Hospital,
    Philadelphia, PA; University of Virginia Medical Center,
    Charlottesville, VA.
    ---------------------------------------------------------------------------
        The Information and Resources Department of BIA acts as a
    clearinghouse of community service information and resources. BIA's
    toll-free Family Helpline receives more than 15,000 calls each year
    from individuals whose lives have been affected by brain injury,
    including military personnel and their families. Three full-time
    information specialists are trained to answer questions, offer
    appropriate information and identify additional resources for all
    incoming callers. Last year, a DVHIP Information and Resources Training
    was held to assist specialists serving persons whose lives have been
    affected by brain injury. BIA also developed and distributed a 1997
    Information and Resource Training and Reference Manual. In addition,
    BIA designed a specialized DVHIP Case Manager Resource and Training
    Manual for use by military personnel and veterans assisting individuals
    with brain injury.
        BIA supports research in areas of brain injury that have a direct
    effect on returning military personnel to work. As cited in the
    February 1998, GAO Report to Congress, neurobehavioral problems
    following TBI are a major factor in successful reentry into the
    workforce. Working with a major university, BIA and the DVHIP supports
    a fellowship program and a significant research effort aimed at
    ameliorating this large problem. In addition, BIA and the DVHIP will be
    utilizing the functional magnetic resonance imaging technology (FMRI)
    to create diagnostic criteria for mild and moderate brain injury which
    are significant problems in the military. This research will be
    valuable to maintaining readiness by discerning who is capable of
    returning to active duty.
        BIA is currently revising and updating educational brochures which
    feature background information on brain injury, the DVHIP, and the lead
    and network DVHIP sites. The brochures will be provided to military
    veterans and personnel with brain injury as well as family members when
    they are seen at any one of the military or Department of Veterans
    Affairs Medical Centers. They will also be provided to referral sources
    in both military and civilian sectors in an effort to increase
    awareness of the DVHIP and to increase accessions to the research
    protocol.
        In the coming year, we look forward to strengthening the DOD/VA
    registry and referral network in our 24 sites, and establishing new
    sites in an effort to identify and serve more military patients. Our
    patient evaluation program will be strengthened and a TBI screening
    instrument will be developed and fielded. Randomized rehabilitation
    treatment trials and pharmacologic trials will be expanded, as will the
    supporting clinically-linked laboratory studies. Four new initiatives
    are planned to begin this year: a post-traumatic epilepsy multi-center
    therapeutic prophylaxis trial; combat training ``mild'' TBI
    performance-outcome and neuroprotection studies; a smaller
    epidemiological study of TBI outcome by gender; and the use of new
    techniques such as functional magnetic resonance imaging (FMRI) and MRI
    spectroscopy.
    The Violence and Brain Injury Project
        The Violence and Brain Injury Project (VBIP) represents a
    collaborative effort of the Brain Injury Association, the Department of
    Defense and the National Institutes of Health (NIH). The VBIP brings
    the expertise of the DOD and NIH along with the advocacy and community
    support experience of the Brain Injury Association to bear on all
    aspects of the problem of violent behavior, emphasizing a medical/
    biological approach. It is based on the hypothesis that brain injury is
    a significant risk factor for violent behavior.
        The Project has three principle components:
        (1) The VBIP Core Diagnostic Protocol, initially conducted at the
    U.S. Disciplinary Barracks at Fort Leavenworth, Kansas, includes
    standardized neurologic, neuropsychological, psychiatric, magnetic
    resonance imaging (MRI), advanced electroencephalographic, clinical and
    experimental laboratory, and psychosocial evaluations of violent versus
    non-violent inmates.
        (2) The second component involves the integration of the Brain
    Injury Association's HeadSmart injury and violence prevention
    program into the curricula of DOD dependent schools. The HeadSmart
    Schools Program is the foremost prevention initiative promoted by the
    Brain Injury Association. It is a brain injury and violence prevention
    program for elementary and preschools that teaches about brain
    development and the prevention of intentional and unintentional brain
    injuries. It provides educators with training and materials to
    integrate brain injury and violence prevention messages into their
    regular curriculum. (It is not a set curriculum in itself).
        The program is currently being used in 121 schools in 21 states
    plus the District of Columbia. We have trained 487 elementary and
    preschool educators on the basics of brain injury and violence
    prevention--affecting the education of over 130,000 children.\5\
    ---------------------------------------------------------------------------
        \5\ 1997 Sites receiving HeadSmart Trainings and other violence and
    injury prevention programs include: Be HeadSmart Military Communities
    such as Fort Bragg, North Carolina; Fort Knox, Kentucky; Fort Campbell,
    Tennessee; Fort Bliss and Fort Sam Houston, Texas; West Point, New
    York; and Wright-Patterson Airforce Base, Ohio.
    ---------------------------------------------------------------------------
        (3) The third component encompasses several family oriented
    programs, including a Parenting and Literacy Skills and Brain Building
    Basics program for inmates in local correctional systems. The VBIP
    recently completed the three-year development of the Brain Building
    Basics Program which has also been successfully implemented with non-
    incarcerated populations, focusing on persons with low literacy skills.
        In addition, VBIP established Changes, Choices, and Challenges
    (CCC), a violence prevention program that provides educators with
    integrated learning units which are designed to enhance the social,
    moral, and intellectual development of young adolescents.
        Publications completed by the VBIP include a comprehensive
    prevention manual, the Be HeadSmart Community Prevention Manual, a tool
    designed to provide information and resources to assist in the
    dissemination of the HeadSmart program; Brainy Bear's HeadSmart Habits,
    a parent-child activity book for violence and brain injury prevention;
    and a 1998 HeadSmart Schools Calendar developed from contributions from
    children at our HeadSmart Schools. The calendars present the
    comprehensive violence and brain injury prevention messages
    incorporated in the HeadSmart program.
        We look forward to building upon all three components of the VBIP
    in the coming year and expanding our prevention efforts.
    Conclusion
        In conclusion, the work of the DVHIP and VBIP is a significant
    contribution to the health and readiness of the United States military.
    We respectfully request funding to continue these important programs.
    An appropriation of $8.5 million ($1.5 million over the DOD's request)
    will represent level funding (since fiscal year 1997).
        Thank you, and God bless you!
    STATEMENT OF DENNIS M. DUGGAN, DEPUTY DIRECTOR,
                NATIONAL SECURITY-FOREIGN RELATIONS
                DIVISION, THE AMERICAN LEGION
        Senator Stevens. Dennis Duggan, Deputy Director of the
    National Security-Foreign Relations Division of the American
    Legion.
        We welcome you as a comrade.
        Mr. Duggan. Thank you, sir. And on behalf of our nearly 3
    million members, the American Legion is extremely grateful to
    you, as always, and the members of your distinguished
    subcommittee, for the opportunity to present its view with
    regard to this fiscal year 1999 defense budget.
        As we are all aware, this budget represents the 14th
    consecutive year of decline. As Americans, we do tend to take
    our secure environment for granted. Yet, as all of us as
    veterans, we do have a unique appreciation for a strong
    national defense.
        The fiscal year 1999 defense budget is currently running on
    the order of about $150 billion less than defense budgets
    during the Reagan years. As we know, the armed forces have
    incurred more than their share of spending and manpower cuts in
    order to achieve a balanced budget.
        Senator Stevens. Mr. Duggan, some people in the back cannot
    hear you. Can you move that microphone toward you, please?
        Mr. Duggan. How is this?
        Senator Stevens. Fine. Thank you.
        Mr. Duggan. In our collective view, the United States can
    and should afford a higher level of defense spending,
    especially with regard to manpower and readiness. Our current
    recruiting and retention trends are beginning to demonstrate
    that men and women, young men and women, are seriously
    questioning the value of military service. Frequent family
    deployments, diminishing health care, inadequate pay raises,
    and substandard housing are all contributing to the trend, we
    feel.
        We do congratulate you and members of your subcommittee for
    your tremendous support for a strong national defense and for
    adequate budgeting. There are just a few points, Mr. Chairman,
    we would like to emphasize. First of all, in our view, we
    believe that the current military retirement plan is broken and
    in need of a stabilized, guaranteed and better-paying plan. The
    so-called retirement formula should be scrapped and a more
    substantial plan implemented, coupled with significant basic
    pay and allowance raises.
        Without the assurance of a good military retirement plan
    and adequate health care, few will make the sacrifice, we
    believe, to serve in the armed forces.
        Second, the services are now in a compensation war with a
    strong economy. Yet there appears to be no strategy for the
    military to survive in an intense labor market. In our view,
    the only way to fix the pay problem is to change the pay raise
    process, to link military basic pay raises with full employment
    costs indices. We hope that the Senate goes along with the
    proposed 3.6 percent pay raise proposed in the House.
        And, third, the readiness of the armed forces, as we all
    believe, I think, has suffered as a result of many of these
    changes. And, finally, Mr. Chairman, as we know, the mortality
    rate of our old, World War II and Korean War veterans is
    roughly over 30,000 per month. We certainly cannot wait an
    awful lot longer, on the order of 5 to 7 years, for a real
    strong health care plan. And we ask your assistance, as you
    mentioned, for the closure of the Federal Employees Health Plan
    Benefits [FEHPB] as another alternative for military retirees
    and their dependents.
        Mr. Chairman, that completes my statement. Thank you very
    much.
        Senator Stevens. Any questions, gentlemen?
        [No response.]

                               prepared statement

        Senator Stevens. Well, we thank you for the Legion's normal
    and usual good job in reviewing what we are trying to do. We
    appreciate your advice, and keep in touch with us as we go
    along. Thank you very much.
        Mr. Duggan. Thank you.
        [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 about the fiscal year 1999 defense
    appropriations. As Americans, we tend to take our secure environment
    for granted. Yet as veterans, we have a unique appreciation for a
    strong national defense and recognize and accept the high cost
    associated with that endeavor.
        The proposed fiscal year 1999 defense budget is roughly $150
    billion less than during the Reagan presidency. Defense spending levels
    during fiscal year 1998 are about three percent of the gross domestic
    product (GDP). A decade ago it was six percent. Mr. Chairman and
    members of this subcommittee, military personnel and their families
    have incurred their fair share of spending cuts to help achieve deficit
    reduction. The American Legion believes it is now time for Congress to
    bolster defense spending with some of the monies from the projected
    surplus.
        The United States can, and should, afford a stronger national
    defense, especially with regard to quality of life and modernization.
    Quality of life and modernization are directly related to military
    readiness and have a direct impact on recruitment and retention.
    Current recruiting and retention trends are already starting to
    demonstrate that young men and women are seriously questioning the
    value of military service. Frequent family separations, diminishing
    health care, inadequate pay raises and substandard housing are
    contributing to this trend. Servicepersonnel and military retirees are
    seeing the promises of lifetime health care being broken and other
    benefits being reduced or eliminated. The American Legion believes
    military service is an awesome responsibility and a privilege that
    embody the highest form of service to the nation. Congress should also
    recognize this commitment by honoring past promises. Promises made must
    be promises kept.
                                   readiness
        The administration asserts that the fiscal year 1999 defense budget
    protects readiness. The same claim was made regarding previous defense
    budgets as well. However, 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 and continued peacekeeping operations. If the
    1998 Defense Supplemental Appropriations bill is not immediately
    passed, readiness may be reduced again. Additionally, the Army 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. These
    kinds of personnel readiness problems will begin to place our ability
    to wage high intensity conflict at risk.
                         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. Nevertheless your assistance is needed
    now more than ever. Positive congressional action is needed in this
    budget and future budgets to overcome old and new threats to retaining
    the finest military in the world. Servicemembers and their families
    have endured physical risks to their well-being and livelihood,
    substandard living conditions, and forfeiture of personal freedoms that
    most American civilians would find unacceptable. Worldwide deployments
    have increased significantly, and a smaller force has had to maintain a
    higher optempo with longer work hours and increased family separations.
        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. We congratulate
    the Congress for their quality of life enhancements contained in the
    Fiscal Year 1997 and Fiscal Year 1998 National Defense Authorization
    Acts. But more must be done now.
        Military Retirement.--In our view, the current military retirement
    plan is broken and in need of a stabilized, guaranteed, and better
    paying plan if the Armed Forces are to retain a quality force.
    Congressional tinkering with the military retirement system is likely
    leading to a decrease in combat readiness and could threaten national
    security. The American Legion has not adopted a position with regard to
    a 401(K) plan for servicemembers. Certainly, many servicemembers are
    opting out prior to retirement and others are likely to retire at their
    earliest opportunity.
        Essentially, the military has two choices: Revoke the redux-
    retirement formula to retain good servicemembers who are often taken
    for granted and/or substantially increase active duty pay and
    allowances. Knowing that a secure and adequate retirement, including
    medical care, awaits a member and family at the end of a long, arduous
    career makes the hazards of military service bearable. Without that
    assurance, few will make the sacrifice.
        The marked decline in quality of life features for the active force
    and military retirees, coupled with heightened operational tempos, will
    continue to 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 only serve to undermine the United States
    Government's effort to honor its obligations to its active and retired
    warriors.
        Full Military Pay Raises.--The Services are now in a ``compensation
    war'' with the private sector, yet have no strategy to survive in the
    competitive labor market. The military appears to be undergoing
    unacceptable retention losses. The armed forces must have high-quality
    servicemembers who can apply changing technology to combat
    capabilities. 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 continues and the economy is in full swing. A smaller
    force with a high operations tempo will be extremely retention-
    sensitive. Servicemembers 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 1999
    3.1 percent raise, which is one-half percentage point smaller than the
    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 servicemembers' 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 three 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.
        Members of the Armed Forces and their families should not be
    expected to live in unsafe or substandard housing in the United States
    or overseas. If government housing is not available on base,
    servicemembers should have the option of occupying leased government
    quarters off base. Members should not be sent into high-cost, high-
    crime areas to fend for themselves.
        Commissaries.--Any 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 pay 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. The American Legion
    opposes any effort by the Department of Defense to relegate military
    commissaries to the Services and to preserve the Defense Commissary
    Agency.
                     dod health care 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.
        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. Nine states have no
    military treatment facilities, some 39 military hospitals were closed,
    17 more downsized to clinics, a 30-percent reduction in medical
    personnel, and severe reductions in military medical funding. Certainly
    alternatives are needed such as the authorized option of military
    retiree veterans and their dependents, over and under age 65, to
    voluntarily enroll in the Federal Employee Health Benefits Program
    (FEHBP).
        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. 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 had 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
    ``enrollment fees'' and co-payments which are likely to increase over
    time. In addition, questions remain concerning provider reliability 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. Defense
            dental plans need to cover the more expensive dental
            procedures.
      --Preservation of the space-available system in military treatment
            facilities for 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.
      --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, we believe 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 G.I. Bill of Health: the use of Department of
            Veterans Affairs medical centers by nonservice-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.
        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 or, hopefully, they will be authorized to participate in FEHBP
    plans.
        Mr. Chairman, the nation has an obligation to do better. We believe
    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.
                           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 served an important
    purpose in focusing 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, in its adopted mandates, continues to support
    the force structure proposed by the Base Force strategy, namely, the
    need for the United States to 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 not realistic with
    the current force structure; especially with the diversion of division-
    sized forces in 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 structures even further. The National Defense
    Panel noted that there is insufficient connectivity between strategy
    and force structures, operational concepts and procurement decisions.
    We face an even greater array of challenges today with even further
    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 also believes the U.S. can no longer afford to
    become the world peace enforcer by dispatching forces on unbudgeted
    operations 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 the 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,
    peace enforcement and humanitarian operations do not train our combat
    forces for war.
        The administration's proposed fiscal year 1999 defense budget
    supports an active force of 1.396 million and a reserve force of
    877,000, down 23,000 and 9,000 respectively from fiscal year 1998.
    Additionally, the Quadrennial Defense Review advocates further reducing
    active endstrengths by 36,000 and those of the reserve components by
    another 42,000. 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 are having a
    negative impact on the All Volunteer Force which is imperative for a
    strong national defense.
        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 we fail to lead, our own future will
    be shaped by others.
        Mr. Chairman, this concludes The American Legion statement.
    STATEMENT OF CYRUS M. JOLLIVETTE, VICE PRESIDENT FOR
                GOVERNMENT RELATIONS, UNIVERSITY OF MIAMI
        Senator Stevens. Now we have Cyrus Jollivette, from the
    University of Miami.
        Mr. Jolivette. Good afternoon, Mr. Chairman and members of
    the subcommittee. I am privileged to be here today to represent
    my colleagues in the University of Miami.
        I submitted a written statement earlier, Mr. Chairman, that
    I ask be included in the record.
        Senator Stevens. All of the statements are included in the
    record by your appearance.
        Mr. Jolivette. Thank you, sir.
        In that statement, I mentioned several initiatives. But
    today I want to focus on one particularly involving health.
    Because I want, first of all, to state how great your interest
    is in health; it is commendable. And also to say how much my
    colleagues at the University of Miami appreciate your
    leadership in supporting various health initiatives,
    particularly in the area of cancer.
        Cancer is a scourge. It does not spare anyone, based upon
    their age, sex, ethnic background, or socioeconomic status. And
    we know that eventually basic research will lead to the
    discovery of the causes and hopefully cures for this dreaded
    disease. However, research already exists that has given us
    tools for prevention and early detection that will reduce the
    suffering from cancer until a cure can be found.
        We at the University of Miami have an approach to
    biomedical research that is applying the basic scientific
    knowledge we already obtained in the populations in clinical
    settings, which is a key component of the research at the
    University of Miami. And by applying this knowledge, we can
    reduce the morbidity and mortality and improve the quality of
    life for all.
        The resources in Miami, the University's School of
    Medicine's Sylvester Cancer Research Center and the bachelor
    treatment center and pediatric oncology project and early
    detection breast cancer program, in collaboration with Jackson
    Memorial Hospital, make this concentration of research staff,
    education and treatment one of the most unique resources in the
    Nation for confronting and fighting cancer, in our opinion.
        Ours is a unique patient database, unparalleled in the
    Nation. We utilize all of these resources, and we are in
    national clinical trials targeted towards minorities. Florida
    is a bellwether State for many things, including unfortunately
    a window to the future for disease incidence. Florida has been
    having a significant increase in some of the most common
    cancers among minority populations, including prostate and
    breast cancer. We are developing an ever-greater understanding
    of the potential and critically important areas of genetic
    differences, genetic susceptibility, genetic research, and
    genetic epidemiology in developing effective cancer prevention
    and control programs.
        These cutting-edge research technologies also allow us to
    develop successful treatment approaches for high-risk and at-
    risk populations. Working with community-based research and
    intervention strategies, University of Miami scientists have
    developed a broad array of data on the attitudes of different
    minority populations toward cancer prevention, protection and
    treatment. An understanding of these populations places us in
    the unique position to apply the tools we have already
    developed to reduce cancer incidence.
        There are several elements in our cancer program set forth
    in my statement. And I want to repeat again that the patient
    treatment and research base at the University of Miami [UM]
    Medical Center provide for the Department of Defense a high-
    quality clinical and basic research area, which is
    strategically located to serve the Nation's current and future
    military populations. Since SOUTHCOM has recently relocated to
    Miami, it will be relatively easy for the University of Miami
    to form a strategic alliance with this group to rapidly
    translate and apply our findings to the military.
        Working with high-risk populations and cancer survivors,
    two-thirds of whom are African Americans, Hispanic and other
    ethnically diverse populations, our Miami-based cancer
    prevention and control program can be of enormous benefit to
    the Nation's defense forces, which has critical needs and
    challenges in serving these populations, who are ever more the
    face of our military forces.
        Mr. Chairman, we know you will have a difficult year, and
    we hope that you will be able to assist us in this initiative.
    Thank you.

                               prepared statement

        Senator Stevens. Thank you very much. I noticed in your
    statement the statistics about breast cancer.
        Mr. Jolivette. Yes, the rate of increase in Dade County is
    over 50 percent. We are having some serious problems.
        Senator Stevens. We have seen examples in other areas of
    the country. It would be interesting to find out why. We will
    do our best.
        Thank you very much.
        Mr. Jolivette. Thank you very much, sir.
        [The statement follows:]
                   Prepared Statement of Cyrus M. Jollivette
        Mr. Chairman and Members of the Subcommittee, I appreciate the
    opportunity to present testimony on behalf of the University of Miami.
    The University is seeking your support for four initiatives within your
    purview: the South Florida Ocean Measurements Center in coordination
    with the Navy, Florida Atlantic University, and NOVA University;
    support for the University of Southern Mississippi request for a new
    fishery-oceanography research ship for research programs in the
    Southeast U.S., Mississippi, and Texas. Additionally, we ask for your
    backing for the University's Cancer Prevention, Control and Treatment
    Initiatives, and the continuation of funding for the North-South
    Center.
                        ocean measurements test facility
        The shallow water environment is an extremely difficult one. Nearly
    all naval systems are limited in performace by the severity and
    variability of conditions near the coast. Weapons systems such as
    torpedoes and ASW sonar systems were developed and optimized for the
    deep ocean and do not perform well in shallow water. Prediction of
    near-shore environmental conditions requires knowledge of the
    interactions between offshore currents, estuaries and atmospheric
    forcing.
        The unique capability of the South Florida Ocean Measurements
    Center and the partnership between academic scientists from three
    Florida universities and the Navy provides the opportunity to meet the
    significant need for science and technology development efforts in the
    near-shore environment. The Navy test range is a unique location in
    that it is the nearest approach of the continental shelf to shore along
    the entire Atlantic seaboard. University atmospheric and oceanographic
    scientists, and ocean engineers are increasing their understanding of
    the near shore acoustic environment and pursing development of AUV
    sonar and other related technologies.
        $2.75 million in continued funding is requested for this program in
    fiscal year 1999. We are convinced that this consistently funded, long-
    term partnership provides the best benefit to the scientific community
    and the Navy. By bringing together oceanographic and atmospheric
    scientists with Navy testing and cable-laying experience, this funding
    will continue to provide the Navy with science and technology
    development where the environment is observed and understood.
                         oceanographic research vessel
        The University of Miami Rosenstiel School of Marine and Atmospheric
    Science supports the proposal by the University of Southern Mississippi
    Institute of Marine Sciences for construction of a Class III
    (approximately 190-foot) research ship for the Gulf of Mexico. We agree
    that a new fisher-oceanography research ship, with the capability to
    conduct complex, interdisciplinary research in the shallow water
    regions of the Gulf Coast and Intra-America Sea, is vitually needed to
    support academic research programs.
        The ship would be operated by the existing Southeast Consortium for
    Oceanographic Research (SECOR), as part of the University-National
    Oceanographic Laboratory System (UNOLS) fleet. Membership in SECOR now
    includes three of the ship-operations institutions in the Southeast and
    Gulf, which are the University of Miami, University of Texas and Texas
    A&M. We anticipate that the University of Southern Mississippi will be
    added in the very near future.
        UNOLS is apprised of and supports the existing SECOR arrangement,
    which provides dockside facilities in Galveston, Texas, and Miami,
    Florida, and coordinates instrumentation use and marine technician
    support among SECOR members. In these times of increased competition
    for funding and increased need for affordable ship-time from non-ship-
    operating institutions, we strongly believe that only through resource
    sharing can we effectively manage costly ship operations. SECOR has the
    resources and is prepared to manage a new Class III ship on behalf of
    the Coast Guard research community. Support of this project benefits
    all academic institutions in the southeastern U.S. and the Gulf of
    Mexico.
                               north-south center
        The mission of the North-South Center is to promote better
    relations and to serve as a catalyst for change among the United
    States, Canada, and the nations of Latin America and the Caribbean. The
    North-South Center conducts programs of research, public outreach,
    education, training, and cooperative study. It publishes and
    disseminates policy-relevant information on the Americas. Its programs
    and activities also foster linkages among academic and research
    institutions, NGO's, governmental institutions both civilian and
    military, and philanthropic and private sectors throughout the
    Americas.
    The North-South Center and Hemispheric Security Issues
        The Center has been deeply engaged in promoting and sponsoring
    research and dialogue on inter-American security issues, especially
    since the onset of federal funding support in 1991. Among other issues,
    the Center has conducted an extensive research program on drug
    trafficking in the Hemisphere. It has studied and promoted dialogue on
    the crises in Cuba, Panama, and Haiti. It has engaged in research in
    civil-military relations, conflict resolution, and security
    cooperation. Among other issues, it has followed closely the Peru-
    Ecuador border conflict, in which the United States has acted as one of
    the primary ``guarantor'' powers. The Center hosted, in December 1996,
    an international conference attended by 58 scholars and government
    officials from eight countries in the Americas to assess the impact of
    that conflict on inter-American relations.
        The relocation of the U.S. Southern Command to Miami in late 1997
    has afforded an enhanced role for the Center in security issues. The
    Center figured prominently in discussions on the future of civil-
    military relations in the Hemisphere at a recent conference with key
    Latin American military officials sponsored by the U.S. Southern
    Command and the U.S. Army War College. In December 1997, the Center
    founded the ``Miami Security Roundtable'' with the cooperation of the
    University of Miami School of International Studies, the Latin American
    and Caribbean Center of Florida International University, and the U.S.
    Southern Command headquarters in Miami. Three meetings of the
    Roundtable held thus far have brought together, in an informal setting,
    thirty or more academic experts and staff members of the U.S. Southern
    Command to discuss the latest security issues in the Americas,
    including drug trafficking and transnational crime. The Center's Issues
    report on inter-American security cooperation has been well-received in
    academic and professional circles. We are currently preparing a
    monograph in the Center's Agenda paper series entitled ``Building New
    Security Relationships in the Americas: The Critical Next Steps'' for
    release in mid-May 1998 and a new Issues report on environmental
    security in the Americas, to be published in June 1998.
        To sum up, the Center is committed to advancing the state of
    security cooperation in the Americas. It serves as a bridge between
    government officials dedicated to enhancing regional security and
    academic and other civil society experts who have devoted their
    professional lives to analyzing the Hemisphere's critical security
    issues. We believe that Hemispheric cooperation on security issues can
    multiply the impact of United States policy initiatives generally and
    overcome historically profound cultural and political gaps between
    North and South.
       high priority cancer prevention, control and treatment initiative
        Cancer is the number two cause of death in America. It does not
    spare anyone based on their age, sex, ethnic background or socio-
    economic status. We know that basic research will eventually lead to
    the causes and hopefully cures for this dreaded disease. However,
    research has already given us tools for prevention and early detection
    that will reduce the suffering from cancer until cures can be found.
    The programs that we have listed as part of our initiative will apply
    these tools in a variety of settings for prevention, control, and
    treatment, especially in multi-ethnic, diverse, minority populations.
    This translational approach to biomedical research, that is, applying
    the basic scientific knowledge we have already gained to populations in
    clinical settings, is a key component of the research at the University
    of Miami. By applying this knowledge, we can reduce the morbidity,
    mortality, and improve the quality of life for all our citizens.
    Model Cancer Prevention and Control Programs
                Introduction
        The University of Miami School of Medicine and Sylvester
    Comprehensive Cancer Center provide the nation with a truly unique and
    unparalleled resource for focused basic, applied and clinical cancer
    research and treatment of multi-ethnic, diverse, minority cancer
    patients. The medical center has had a major and continuing role
    nationally in all of these areas. Additionally, because of our
    location, we play a critically important role in national clinical
    trials targeted toward minorities.
        Florida is often called the ``bellweather state'' or ``window to
    the future'' for disease incidence. The state has been having a
    significant increase in some of the most common cancers among the
    minority populations including prostate and breast cancer. We are
    developing an ever-greater understanding of the potential and
    critically important areas of genetic differences, genetic
    susceptibility, genetic research and genetic epidemiology in developing
    effective cancer prevention and control programs. These cutting-edge
    research technologies also allow us to develop successful treatments
    for approaches to high-risk and at-risk populations.
        Working with community-based research and intervention strategies,
    University of Miami scientists have developed a broad array of data on
    the attitudes of different minority populations toward cancer
    prevention, detection and treatment. An understanding of these
    populations places us in a unique position to apply the tools we have
    already developed to reduce cancer incidence. While the Sylvester
    Comprehensive Cancer Center has studies in many areas, there are major
    programs on early detection, treatment and prevention of prostate and
    breast cancer. These diseases are highly unpredictable, but tend to
    occur at younger ages and to be more aggressive in minority
    populations. The cancer activities included with this initiative will
    greatly assist the Department of Defense in accomplishing their
    mission.
        The University of Miami/Sylvester Comprehensive Cancer Center
    Prevention and Control Program includes six key elements: (1) Early
    Detection, (2) Primary and Secondary Prevention Research, (3) Special
    Populations, (4) Genetic Epidemiology and Research, (5) Molecular
    Epidemiology, and (6) the Courtelis Center for Research and Treatment
    in Psycholosocial Oncology.
        Each of these elements can contribute effectively to the needs of
    our nation's military population. The patient treatment and research
    base at the University of Miami Medical Center offers the Department of
    Defense high quality clinical and basic research which is strategically
    located to serve the nation's current and future military populations.
    Since SOUTHCOM has recently relocated to Miami, it will be relatively
    easy for the University of Miami/Sylvester Comprehensive Cancer Center
    to form a strategic alliance with this group to rapidly translate and
    apply our findings to the military.
        Working with high risk populations and cancer survivors, two-thirds
    of whom are African-American, Hispanic, and other ethnically diverse
    populations, this Miami-based program in cancer prevention and control
    can be of enormous benefit to the nation's defense forces--which has
    critical needs and challenges in serving these populations. They are
    evermore the ``face'' of our military forces. They need the potential
    of this expanded and targeted clinical research and treatment, and
    cancer prevention and control, techniques in order to carry out their
    mission as guardians of our liberties.
    The Courtelis Center for Research and Treatment
        A major component of the Miami-based initiative is the Courtelis
    Center for Research and Treatment in Psychosocial Oncology. This unique
    facility is dedicated to providing cancer patients, including and
    especially ethnically diverse and minority populations, with
    coordinated programs and services critical to effective cancer
    treatment and outcomes. The research carried out at the Courtelis
    Center, including psychological and social research, treatment, support
    services, and counseling, are recognized as being critically important
    in effective cancer treatment, as well as for cancer control and
    prevention. The Center is also engaged in cutting-edge studies on the
    role of stress in the development, prevention, and treatment of cancer.
    They have focused on the functioning of the immune system affected by
    chronic stress and other psycho-social factors on depression of the
    immune system, and ultimately their impact on cancer incidence,
    prevention, and control. These studies are recognized nationally.
        These applied clinical research and treatment initiatives should be
    of enormous potential and service to our nation's military as it
    strives to more effectively support and maintain its ethnically diverse
    population.
                Federal Funding Objectives/Requests
        Accordingly, we see the following federal participation in this
    coordinated, comprehensive cancer prevention and control initiative.
      --$5 million to more fully develop the cancer prevention and control
            initiatives especially focusing on the needs of ethnically
            diverse, minority populations given the increased incidence of
            cancer, including prostate and breast cancer, among minorities;
      --to expand the applied cancer research, clinical research,
            treatment, prevention and control strategies in six critical
            areas: (1) Early detection; (2) Primary and Secondary
            Prevention Research; (3) Special Populations; (4) Genetic
            Epidemiology and Research; (5) Molecular Epidemiology; and
            finally (6) to expand the resources and capabilities of the
            Courtelis Center for Research and Treatment.
      --to coordinate our efforts with SOUTHCOM to improve the efficiency
            and effectiveness of our military forces.
        pediatric oncology and the batchelor children's research center
    Introduction
        The Department of Pediatrics at the University of Miami School of
    Medicine and its Batchelor Children's Research Center comprise one of
    the largest academic pediatric departments in the United States, with a
    total faculty and staff of over 700. It ranks nationally among the top
    departments of pediatrics as rated by NIH peer-reviewed, competitively
    designated funding awards. In response to the rapidly growing needs in
    pediatrics, the serious shortage of quality space, and the critical
    necessity to consolidate and coordinate the vast research resources and
    facilitate effective collaboration, the University of Miami School of
    Medicine and the Department of Pediatrics are now developing one of the
    major children's research facilities in the United States--a $27
    million, 100,000 square foot complex for which private funding has
    already been secured.
        A major component of this initiative will be pediatric oncology--
    for which at least one full floor will be dedicated. This will ensure
    that there is an unparalleled, consolidated, coordinated,
    interdisciplinary research effort on pediatric oncology which will
    focus on unique and critically needed research, treatments, and
    populations.
        Indeed, among the major objectives will be the focus on what is a
    uniquely diverse multi-ethnic clinical and research patient population
    in South Florida. The Miami Batchelor Center has perhaps the largest
    and most ethnically diverse minority population in the nation--a
    population which more closely mirrors that of America's military
    population than anywhere else in the country. We work with a pediatric
    population that participates in large major national treatment
    protocols providing a critically needed, concentrated and effectively
    organized multi-ethnic, minority component not found elsewhere. The
    Batchelor Children's Research Center treats a significant percentage of
    newly-diagnosed pediatric cancer cases in the nation annually, with the
    majority coming from under-served, minority populations.
        As such, the Batchelor Children's Research Center can offer the
    Department of Defense and our nation's military an extraordinarily
    promising program of basic, applied and clinical research, training,
    and treatment, that will be especially critical and well focused for
    its current and future needs.
    Specific Objectives and Activities
                Clinical Capacity in Bone Marrow Transplantation and
                        Potential for Application in Young Adult
                        Populations
        The Miami-based project is one of the leading sites in the country
    for pediatric bone marrow transplantation including such innovative
    techniques as Cord Blood Transplantation. This project works closely
    with one of the nation's public hospitals, Jackson Memorial Medical
    Center, which has more than 7,000 births per year of largely minority
    and ethnically diverse children. The Miami team has the best potential
    nationally to provide a Transplantation Cord Blood Bank that can more
    effectively treat cancer in minority populations. The rich supply of
    stem cells in this dedicated blood supply will provide the opportunity
    of collaborating with other institutions and matching successfully
    recipients for bone marrow transplantation. There is an absolutely
    critical need for such an effective blood supply for successful
    treatment in minority, culturally diverse populations. This precious
    resource must not only be enlarged, but more effectively stored,
    genetically tested and typed, frozen, and preserved for future
    treatment needs of these ethnically diverse populations. Only a few
    institutions nationally have the potential supply and access for such
    diverse populations as the Miami team. The Batchelor Children's
    Research Center, the Department of Pediatrics, and Jackson Memorial
    Medical Center need additional resources to develop the full potential
    of this clinical research. There is, indeed, future potential for older
    teenagers and young adults, but much more work needs to be done to more
    fully examine these applications. This unique blood transplantation
    resource and research focus could be especially important to the
    children of our nation's military, also a largely ethnically diverse
    population, and ultimately, it is hoped, to the treatment of cancer of
    young adults in the military.
                       federal funding objective/requests
        We seek support for the following elements of this far-reaching
    initiative:
      --Fully-matched federal participation in an expanded basic and
            clinical research effort that focuses on the potential
            application of these cutting-edge blood transplantation
            treatment technologies in minority, ethnically diverse
            populations, and to ultimately more fully explore application
            to older children and young adults--$2 million.
      --Fully-matched federal participation in the development of the
            critically needed laboratory and blood storage facilities needs
            of the Batchelor Children's Center--$2 million.
                     breast cancer early detection program
    Introduction
        Of the 600,000 new cancer cases in females estimated to occur in
    1998, 178,700 or 30 percent will be breast cancer. One out of nine
    women is at risk of developing this disease and breast cancer remains a
    leading cause of death in women. The incidence in minority women is
    increasing at an alarming rate, while that in white women continues to
    decline. This trend has occurred nationally, but is particularly
    relevant to South Florida with its large numbers of minority
    populations.
    Background
        Breast cancer is a problem of major public health importance in
    Miami-Dade County where one out of every 8.5 cases of breast cancer in
    Florida is diagnosed. Another alarming trend is that late-stage
    disease, in which there are very few good treatments available, is
    rising at an alarming rate. It increased 32 percent in Miami-Dade
    County while decreasing 21 percent in the rest of the state. In 1995,
    33 percent of breast cancers in Miami-Dade County white women were
    diagnosed after the disease had spread to the regional lymph nodes or
    distant sites, compared to 52 percent among black women. The Early
    Breast Cancer Detection Program (EDP) is one of the finest
    demonstrations of an effective partnership between a public and private
    entity. The University of Miami School of Medicine and the Jackson
    Memorial Medical Center have formed an impressive team which has an
    extremely high profile in the community in providing services to the
    primary health care centers, and its partnership with other
    organizations. It sets the University of Miami and Jackson Memorial
    Medical Center apart from other hospitals and medical centers, and it
    is one of the reasons that these entities received the American
    Association of Medical College's Community Service Award. Since the EDP
    was instituted in 1987, it has resulted in a significant shift in the
    stage of breast cancer upon first presentation as we will describe
    later.
        However, the ability of the current EDP to meet the needs of Miami-
    Dade County is deteriorating quickly due to the lack of funds.
    Furthermore, although the EDP has two operational mammography vans,
    funds are only available to operate one of them. The waiting time for
    women seen by the EDP at some primary health care centers has increased
    to six months. There are more than 150,000 medically under-served women
    over age 40 in Miami-Dade County who are potentially in need of the UM/
    JMMC early detection program services.
        Breast cancer screening has been proven to identify early, smaller
    lesions which are more treatable and at lower cost and result in a
    higher quality of life. Medically under-severed minority women who are
    not screened for breast cancer are at extremely high risk concerning
    the rapid progression of this disease.
    Breast Cancer in Miami-Dade County
        A recent analysis of breast cancer data from the Florida Department
    of Health shows that while the percentage of late-stage breast cancer
    (at time of diagnosis) has fallen between 1981 and 1995, in Miami-Dade
    County, the percent decrease is smallest for Miami-Dade County non-
    whites. For U.S.-born, non-white women, the ``gap'' between the
    percentage of late-stage diagnosis in Miami-Dade County and elsewhere
    in Florida widened, but narrowed for non-U.S. born women of all races
    and for U.S.-born white women. Late stage disease among non-whites
    comprises an increasing percentage of breast cancer--increasing by 32
    percent, while decreasing by 21 percent in the rest of the state. The
    most frightening statistic is that 33 percent of breast cancers in
    Miami-Dade County white women were diagnosed as late stage compared to
    52 percent among black women.
    Screening in the Early Detection Program
        Since 1987, there have been 27,197 women seen through the EDP, and
    39,733 mammograms have been performed. However, because of declining
    financial support for this program, services have had to be
    dramatically reduced. For example, in 1996 4,845 women were screened,
    but this number fell by 28 percent in 1997. The number of monthly
    visits in the EDP has fallen from a high of 509 to a low of 156. This
    is particularly distressing since it is well known that detection of
    breast cancer in its early stages provides more treatment options and
    potentially curative procedures.
        While there has been both a local and national increase in the
    utilization of mammography as a tool in the diagnosis of breast cancer,
    we have noted that even in the past year, many of the women who are
    screened through the EDP have never been previously screened. This is
    especially true for minority women.
    Stage of Breast Cancer Diagnosis
        EDP data illustrate a shift from later to earlier stage cancers
    from 1987 to 1997. The percentage of minimal cancers (less than 1 cm.
    including Stage 0) detected was 45 percent between 1987-1992 and
    increased to 67 percent in 1993-1997. In contrast, the percentage of
    late stage disease cancers (Stage III and Stage IV) decreased from 15
    percent in the first time period to 7 percent in the final time period.
    Survival
        Because of the strong association between stage and survival, the
    dramatic shift to earlier stage diagnoses, with the appropriate follow
    up treatment, should result in an increased survival of EDP patients.
    Compared to the Jackson Memorial Hospital staff patients and to
    patients enrolled at the inception of the EDP program in 1987-1998,
    five year survival of EDP patients showed increases from less than 50
    percent to 75 percent.
    The Early Breast Cancer Detection Program: A Community Partnership
        The strength of the early detection program has always been the
    partnerships with the community. Beginning with the initial commitment
    of the Harcourt M. and Virginia W. Sylvester Foundation, the University
    of Miami/Jackson Memorial Medical Center, the Sylvester Comprehensive
    Cancer Center, the primary health care consortium, the American Cancer
    Society, and two retired, dedicated South Florida physicians, the EDP
    has been able to obtain significant financial support. Unfortunately, a
    significant proportion of EDP support is decreasing or has already been
    terminated.
    Population At Risk/In Need
        In 1996, there were an estimated 47,500 women in Miami-Dade County
    receiving Medicaid assistance, between the ages of 40 and 64. There
    were an additional 114,00 women in Miami-Dade County receiving Social
    Security or retirement income. Therefore, there are a total of 161,500
    women who could be considered to be in need of EDP. This large figure
    is likely to be an underestimate, since there are at least three other
    groups of women who are not considered in these calculations; the
    ``working poor,'' (i.e., women not receiving state or federal
    assistance), women 62-65 who receive Medicare, and non-residents of
    Miami-Dade County.
    Cost of Screening/Cost Effectiveness
        Several studies have shown the cost effectiveness of early
    detection/screening programs for breast cancer. Although studies differ
    on the actual cost to treat breast cancer (e.g., due to different
    locales, choices for treatment, facilities), all analyses have found
    that costs increase with later (delayed) stage at diagnosis, with
    approximately a three- to five-fold higher cost for Stage IV disease
    compared to Stage 0 disease. For example, several studies have
    estimated costs for Stage 0 disease as averaging $20,300 and increasing
    to $58,900 for State IV disease.
    Implications for Practice
        There is convincing scientific evidence that mammography and other
    screening examinations can be an effective means of secondary
    prevention: nevertheless, a review of the literature leads to an
    unequivocal conclusion that there are major differences between the
    numbers of women considered to be at risk (or in need of such screening
    services) and the numbers who receive them. The at risk/screened
    discrepancy is particularly pronounced among minority women, who are
    more likely to be economically disadvantaged and who also have higher
    mortality rates from breast cancer. The effective implementation of
    early stage strategies is extremely important in reaching the goal of
    reduced mortality from cancer in ``under-served, under-utilizing''
    populations. Increasing use of breast cancer screening in primary care
    settings and providing health delivery linkages to ensure follow up
    procedures are widely recommended in order to provide opportunities for
    those who might not otherwise be included in mass screening programs.
        The experience of the EDP suggests that it is both feasible and
    effective to reach socio-economically disadvantaged minority women,
    with low or no cost cancer screening services. This is clearly
    demonstrated by the number of women utilizing screening who have had no
    previous mammogram and by the increase of minimal cancers and the
    decrease in late stage cancers detected. Additionally, the data are
    among the first to provide information on screening of medically under-
    served minority women of differing age groups, particularly those 40-49
    years of age.
        The success of the EDP has been influenced by several factors,
    including preliminary needs assessment and initial planning, the
    development of a community based coalition, recruitment of medically
    under-served minority women through outreach strategies, ensuring
    continuity of care as well as focus on community education.
        Mammography provides an example of a proven technology for reducing
    late stage and increasing early stage breast cancer detection, and the
    University of Miami/Jackson Memorial Medical Center is effectively
    delivering this technology especially among the medically under-served.
                               budgetary request
        We are requesting $1.5 million per year for the next five years to
    support the breast cancer early detection program. With these funds we
    could increase the number of women screened from an average of 15 per
    day to 50 per day which would result in screening 12,500 per year.
    STATEMENT OF JOHN C. EKARIUS, ACTING DIRECTOR OF
                GOVERNMENT RELATIONS, UNIVERSITY OF
                MEDICINE AND DENTISTRY OF NEW JERSEY
    ACCOMPANIED BY BETTY GALLO, DEAN & GALLO, THE CANCER INSTITUTE OF NEW
                JERSEY

        Senator Stevens. John Ekarius, Vice President, University
    of Medicine and Dentistry of New Jersey, please. And you are
    accompanied by Mrs. Dean Gallo.
        Mr. Ekarius. Thank you, Mr. Chairman. Mrs. Gallo and I
    appreciate the opportunity to come before you and the committee
    this afternoon to talk about the important work that is going
    on in not only the field of cancer but in the field of
    infectious diseases, as well, and to support and laud your
    leadership in the work of providing DOD research efforts,
    particularly in biomedical research and in the areas of applied
    and basic research for DOD.
        Prior to asking Mrs. Gallo, whom you know, Mr. Chairman,
    from your efforts in the field of prostate cancer awareness, I
    would like to touch on, just a moment, on infectious diseases
    and the potential they now pose for a profound threat to
    national and international security. Changing national
    conditions, post-Cold War deployment of U.S. troops in 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.
        By the year 2000, nearly 600 million people will be
    travelling internationally, including military personnel. And
    to combat the rise of infectious diseases, the University of
    Medicine and Dentistry, which is the largest public health
    sciences university in the Nation, with campuses in Camden, New
    Brunswick and Newark, is working on a collaborative effort in
    Newark, with the International Center for Public Health at
    University Heights Science Park.
        Our key tenant there, the Public Health Research Institute,
    is already working with the U.S. Army, in collaboration, on
    infectious disease research, AIDS vaccine research, and
    providing diagnostic tools for identifying battlefield
    pathogens in the field. This strategic initiative, we believe,
    is of critical importance. It has been recognized by Senator
    Lautenberg and members of the committee last year. And we would
    ask your support for this effort.

                               prepared statement

        Additionally, the Dean and Betty Gallo Prostate Cancer
    Institute is located and proposed at the Cancer Institute of
    New Jersey, located in New Brunswick, an emerging biomedical
    research city. This Institute is New Jersey's only National
    Cancer Institute [NCI]-designated center. And I would ask, Mr.
    Chairman, for your forbearance to introduce Mrs. Gallo.
        [The statement follows:]
                     Prepared Statement of John C. Ekarius
        Mr. Chairman, I respectfully present testimony of the University of
    Medicine and Dentistry of New Jersey (UMDNJ), the largest public health
    sciences university in the nation. The UMDNJ statewide system is
    located on five academic campuses and consists of 3 medical schools and
    schools of dentistry, nursing, health related professions and
    biomedical sciences. It also comprises a University-owned acute care
    hospital, three core teaching hospitals, an integrated behavioral
    health care delivery system and affiliations with more than 100 health
    care and educational institutions statewide. No other institution in
    the nation possesses resources which match our scope in higher
    education, health care delivery, research and community service
    initiatives with state, federal and local entities.
        I appreciate this opportunity to bring to your attention two of the
    University's priority projects. The first is an initiative to create an
    International Center for Public Health that is consistent with the
    mission of the Department of Defense and its biomedical research
    agenda.
        The second is an initiative to establish a Dean and Betty Gallo
    Prostate Cancer Institute within New Jersey's only NCI-designated
    clinical cancer center, the Cancer Institute of New Jersey (CINJ).
    An International Center for Public Health at University Heights Science
            Park
        Infectious disease poses a profound threat to national and
    international security forces. The 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 a reality for our military
    personnel as well as the average U.S. citizen. By the year 2000, it is
    estimated that some 400 to 600 million people will engage in
    international travel. Because New Jersey is surrounded by eight
    international air and seaports, it is especially vulnerable to the
    spread of global infectious microbes. We have therefore proposed to
    create an International Center for Public Health as a direct response
    to this looming public health crisis.
        The Center is a strategic initiative to create a world-class
    infectious disease research and treatment complex to be located at
    University Heights Science Park, a Federal Enterprise Community
    neighborhood in Newark, New Jersey.
        University Heights Science Park (UHSP) is a collaborative venture
    of the four institutions of higher education located in Newark--UMDNJ,
    Rutgers University, New Jersey Institute of Technology (NJIT), and
    Essex County College, which trains technicians in eleven science and
    technology fields. Its partners include the City of Newark, Public
    Service Electric & Gas (PSE&G), The Prudential Insurance Company, First
    Union National Bank and Bell Atlantic of New Jersey.
        The International Center at Science Park will house three core
    tenants--the Public Health Research Institute (PHRI), the New Jersey
    Medical School National Tuberculosis Center at UMDNJ and the UMDNJ-New
    Jersey Medical School Department of Microbiology and Molecular
    Genetics.
        The Public Health Research Institute is a nationally prestigious,
    56-year-old biomedical research institute that employs 110 scientists
    and staff conducting research programs in infectious diseases,
    (including tuberculosis and AIDS), drug discovery, diagnostic
    development and the molecular pathogenicity of a broad range of
    infectious diseases. A major focus of PHRI is the development of the
    next generation of antibiotics to fight life-threatening, drug-
    resistant organisms. PHRI will relocate from Manhattan to Science Park,
    Newark.
        The University's National TB Center is one of three Model TB
    Prevention and Control Centers in the nation funded by the Centers for
    Disease Prevention Control (CDC). The TB Center will add an important
    clinical component to the International Center for Public Health, since
    many TB patients also manifest other infectious diseases.
        The University of Medicine and Dentistry of New Jersey (UMDNJ) will
    be the primary medical center linkage and academic affiliation for the
    International Center for Public Health (ICPH). Relocating our Medical
    School's Department of Microbiology and Molecular Genetics will add a
    staff of 100 to the Center's critical mass of microbiology research.
        Since we appeared before this panel last year, a major change in
    our project has occurred. In October, 1997, a Memorandum of
    Understanding (MOU) was executed between the State of New Jersey and
    the International Center. The MOU commits $60 million of State loan and
    grant funds toward development of the $78 million International Center
    for Public Health. This commitment is now being used to leverage the
    remaining $18 million from Federal and private sources.
        The International Center for Public Health will contribute to DOD's
    objectives through the research of PHRI and the National TB Center, and
    by participating in cooperative programs with foreign governments in
    the development of policies and initiatives to stem the spread of
    infectious diseases throughout the world.
        We, therefore, respectfully request $9 million from this Committee
    to support the construction of an International Center for Public
    Health at University Heights Science Park, Newark, New Jersey.
    Dean and Betty Gallo Prostate Cancer Institute
        New Jersey has the tenth highest mortality rate of prostate cancer
    in the country and ranks eighth in mortality among African Americans
    with this disease. Currently there is no available curable treatment
    for prostate cancer once it recurs.
        Because of the devastating problem of prostate cancer in New Jersey
    and the nation, the Cancer Institute of New Jersey (CINJ), the only
    NCI-designated clinical cancer center in the state, has determined that
    one of its major goals is to seek a cure for this disease. To
    accomplish this goal, the CINJ has initiated the development of the
    Gallo Prostate Cancer Institute, named after the late U.S. Congressman
    from New Jersey, Dean Gallo, who died of the disease in 1994.
        CINJ is affiliated with the University of Medicine and Dentistry of
    New Jersey (UMDNJ) and is located at our medical school campus in New
    Brunswick, New Jersey. CINJ is part of a statewide network of teaching
    hospitals providing access to the highest standard of cancer care to
    all New Jersey residents. We see abut 6,000 prostate cancer patients
    annually and this number is increasing by about eight percent each
    month.
        The Cancer Institute of New Jersey (CINJ) is the center of
    excellence for cancer treatment in New Jersey. Our team of staff
    physicians, scientists and basic science researchers recognize that
    there is no cure for prostate cancer when it metasticzes. We are
    concentrating our efforts on developing new ways to treat this
    devastating disease. Patients are enrolled in five different clinical
    trials for advanced prostate cancer. CINJ is establishing an integrated
    working group of nationally recognized experts whose work can be
    applied to prostate cancer. Through a series of focus groups, CINJ is
    bringing together the basic scientists and physician/researchers to
    educate each other to work in collaboration in order to develop new
    treatments for prostate cancer.
        The Gallo Prostate Cancer Institute will be incorporated into the
    Cancer Institute of New Jersey's statewide network of affiliated
    hospitals and providers to facilitate treatment and research so that
    patients with advanced prostate cancer may be enrolled in clinical
    trials at several locations throughout the state. This will allow for
    treatment of more patients with novel therapies and it increases our
    ability to rapidly evaluate these therapies. We are also working with
    local clinics and agencies on treatment plans for uninsured prostate
    cancer patients.
        The Cancer Institute of New Jersey has recruited investigators from
    our sister research institutes in New Jersey to study prostate cancer.
    These researchers are isolating genes involved in the development of
    prostate cancer and are initiating epidemiological studies to determine
    the efficacy of screening in African-Americans. They are also studying
    whether compounds used to prevent other tumors are effective against
    prostate cancer. Clinical trials based on laboratory experiments are
    being studied to see how cancer cells develop resistance and ways to
    make the cells sensitive to therapy.
        With the establishment of the Gallo Prostate Cancer Institute,
    collaborative research such as the projects just described will be
    expanded. Such an institute is necessary to effectively recruit
    additional nationally-recognized scientists focused on research and
    treatment of prostate cancer.
        To accomplish our goals, we have developed a five-year budget plan
    for the Gallo Prostate Cancer Institute for a total of $9.4 million. We
    expect to raise substantial funds through private, corporate and other
    resources. We respectfully seek $5 million in federal funds to
    facilitate the establishment of this important resource.
        We thank the Members of this Subcommittee for their leadership in
    supporting nationally and internationally critically-needed research
    and development initiatives. The Subcommittee is to be commended for
    its support of university research throughout the country. Your
    particular role in the support of biomedical research is especially
    recognized.
        Thank you for the opportunity to appear before you on behalf of
    UMDNJ and two of its priority projects--the creation of an
    International Center for Public Health and the establishment of the
    Dean and Betty Gallo Prostate Cancer Institute.

                               prepared statement

        Senator Stevens. Mrs. Gallo, nice to see you.
        Mrs. Gallo. It is good to see you, too, Mr. Chairman. I
    just want to say that the last time I saw you was back in
    September, when we did that short segment with Peter Jennings.
    And, basically, as you know, my husband was Congressman Dean
    Gallo, who died of prostate cancer back in 1994. And I am
    really excited about this initiative within the Cancer
    Institute, which is our only NCI-designated center in the State
    of New Jersey, to be able to create the Dean and Betty Gallo
    Prostate Cancer Institute.
        And I just want to thank you for your leadership for
    cancer, and also hopefully that, with this, you will take in
    consideration prostate cancer, considering that the funding for
    it is kind of low, and we need to kind of boost it a little
    bit. So I am hoping that we can bring some more good
    researchers into New Jersey.
        Thank you.
        [The statement follows:]

                       Prepared Statement of Betty Gallo

        I want to thank Chairman Stevens and the committee for
    allowing me to testify before you.
        I am here to speak to you about prostate cancer that took
    my husband Congressman Dean Gallo from the 11th District of New
    Jersey from me, his family, friends, his colleagues and his
    constituents. Dean had the greatest respect for his colleagues
    in the Senate, some who served with him in the House of
    Representatives.
        I am sure most of you are not aware that when Dean was
    diagnosed in February of 1992 the prostate cancer had already
    metastasize to his bone. The Prostate Specific Antigen blood
    test which in short is the PSA, has a normal range is 1-4.
    Dean's PSA when diagnosed was 883. His prognosis at the time
    was 3-6 months. When he saw the urologist in New Jersey he said
    the only thing he could do for Dean was remove his testicles.
    When Dean told me this I said I think we need to get a second
    opinion. Fortunately Dean's staff had referred one of his
    constituents that had prostate cancer to the National
    Institutes of Health. Dean went there for a consultation and
    was accepted for a clinical trial of Suramin and combined
    hormonal therapy.
        We were told by Dean's doctor at NIH, Dr. Charles Myers,
    that the removal of the testicles would not have been enough.
    Dean needed a more aggressive form of treatment. This was a
    very tough adjustment period. Dean had a PSA level drawn once a
    week in the beginning. Dean was in Washington while I was back
    in New Jersey waiting for the results. Your whole life revolved
    around the PSA count: would it go down, would it go up. Trying
    to keep positive was sometimes very tough, but Dean and I had a
    very strong love and faith that helped us through the rough
    times. With all of the combined treatment, love and emotional
    support, Dean survived 2\1/2\ years with a good quality of
    life. It was the best 2\1/2\ years of our 8 year relationship.
        I am now working at The Cancer Institute of New Jersey as a
    Fundraising Associate/Advocate. My main goal at The Cancer
    Institute is the creation of the Dean and Betty Gallo Prostate
    Cancer Institute. The Cancer Institute is naming the Institute
    after Dean because he was a tireless supporter of the people of
    New Jersey and the Congress of the United States. He believed
    in making the nation stronger by building and constant
    improvement and was instrumental in creating CINJ. Because of
    Dean being diagnosed in the advanced stages of prostate cancer,
    their efforts to cure prostate cancer are motivated by their
    memory of his excellent service. The Cancer Institute is NCI-
    designated and the only one in the State of New Jersey. The
    Institute has only been opened about 2 years and has already
    outgrown its facilities. We are currently seeing about 6,000
    prostate patients a year and the number is increasing about 8
    percent a month. There is no available curable treatment for
    prostate cancer once it recurs, and when it does, it is fatal.
        Prostate Cancer patients who are diagnosed early in the
    progression of their disease have different treatment options
    then those who are diagnosed with metastasize disease such as
    Dean was. At many cancer centers, these patients are seen at
    different places and even at different hospitals. At The Cancer
    Institute of New Jersey, we have developed an integrated
    approach, where all prostate cancer patients are seen in the
    same clinical setting, and where all physicians who are experts
    in prostate cancer review the cases together. Thus, each
    patient is followed regardless of the stage of their disease by
    various specialists, and each patient has the benefit of
    medical and surgical expertise continuously reviewing their
    progress.
        The central location of CINJ and its network of affiliated
    hospitals make CINJ care accessible to virtually all New Jersey
    residents. In addition to treatment, CINJ offers patient
    support groups to assist patients and their families cope with
    this dreaded disease. Since there is no cure for metastic
    prostate cancer the physicians, researchers and directors of
    CINJ are concentrating their efforts on developing ways to
    treat this devastating disease.
        A requirement for the designation of Clinical Cancer Center
    by the NCI is that the center establish a strong research
    component that integrates the best available medical treatment
    of cancer with nationally recognized basic researchers to find
    new cures. The CINJ is the only center in New Jersey that has
    fulfilled this requirement. The CINJ is physically located on
    the New Brunswick campus of Robert Wood Johnson Medical School.
    The medical school's nearby Piscataway campus is adjacent to
    Rutgers University, another globally recognized center of
    research. Two nationally acclaimed research centers are
    administrated jointly by RWJMS and Rutgers University. The
    Center for Advanced Biotechnology and Medicine (CABM) has
    leaders in molecular biology, including several Howard Hughes
    investigators. The Environmental and Occupation Health Safety
    Institute (EOHSI) includes a National Institute of
    Environmental Health Sciences center of excellence for the
    study of environmental toxicology.
        The study of environmental toxicology could be an important
    factor in the area of prostate cancer. I am not an expert in
    this field, but I have spoken to people who have seen cancer
    concentrated in certain areas. Prostate cancer in New Jersey
    has the highest incident rate for men. 6,900 men will be
    diagnosed this year with prostate cancer of which 1,400 will
    die from this disease. Out of 50 states, number 1 being the
    worse we are 10th in prostate cancer among the white population
    and 8th among African Americans. We are not sure if it is due
    to the way we disinfect our vegetables, feed our cows, pigs and
    chickens, process our food for shelve life, the source of our
    water, or the possible pollutes not only underground, but also
    in the air. We have become a technological society. The
    possibility that the problem with the environment has built
    over the years and is now surfacing at such an incredible rate,
    could be a primary cause of prostate cancer.
        CINJ has successfully recruited investigators from the CABM
    and EOHS specifically to study prostate cancer. CINJ has
    initiated clinical trials for prostate cancer based on
    laboratory experiments. These experiments address how cancer
    cells develop resistance and ways to make the cells sensitive
    to therapy.
        With the establishment of the Gallo Prostate Institute,
    collaborative research like the projects just described will be
    tremendously expanded. The Gallo Prostate Institute will allow
    us to focus the strengths of the CINJ on the devastating
    problem of prostate cancer in New Jersey, its surrounding
    region, and in the nation as a whole through treatment and
    research. Such an Institute is imperative to provide the
    resources to effectively recruit additional nationally
    recognized leaders in research into the study of prostate
    cancer. In order to bring together scientists of this caliber,
    all focused on prostate cancer, it is imperative to have a
    strong focused center.
        Since there is currently no effective curable treatment for
    prostate cancer once it progresses beyond the prostate, a
    concerted effort must be made to develop new treatments. This
    effort requires two approaches. The first is a comprehensive
    study of the biological characteristics of the disease at the
    basic science level. The Cancer Institute of New Jersey is
    committed to entering the national efforts on this front. We
    have obtained the technology, for example, to examine the
    expression patterns of over 10,000 genes from a single tumor
    sample, using multigene arrays. This will greatly facilitate
    collaborations between the basic scientists at the various New
    Jersey academic institutions with the clinical scientists at
    CINJ.
        The CINJ is uniquely suited to scientifically examine the
    difference in mortality between African Americans and white
    Americans with the disease, which is a major question in
    prostate cancer. New Jersey has a large population of African
    Americans at all levels of income. We can thus investigate how
    much of the disparity between the mortality of both groups is
    due to genetic predisposition versus economic status. The
    scientists at CINJ are more than capable of answering this
    question, particularly with the additional infrastructure
    support which will be available once the resources for the
    Gallo Prostate Institute are acquired.
        The proposed budget for the Gallo Institute is $9.4 million
    to be spent over a 5 year period. We expect to raise
    substantial funds through the state and other public, private,
    corporate, foundations and other resources. We therefore seek
    an allocation of $5 million to facilitate the establishment of
    this important resource for programs, research and education
    and awareness of prostate cancer. It will not be used for
    bricks and mortar.
        I want to thank Chairman Stevens and the committee again
    for allowing me to testify. The creation of the Gallo Prostate
    Institute will be a valuable tool for the State of New Jersey.
    As in Dean's case, with the help of a Nationally recognized
    Cancer Institute he was able to survive 2\1/2\ years with a
    good quality of life and continue to serve the constituents of
    New Jersey.

        Senator Stevens. Thank you very much, Mrs. Gallo.
        As a matter of fact, this afternoon, the retiring Post
    Master General will come to this building to dedicate the
    Prostate Cancer Stamp. It will be its first opening here,
    because we are trying to get greater awareness of the problem.
        Mrs. Gallo. That is great.
        Senator Stevens. And I do thank you for coming. We will do
    our best.
        Mrs. Gallo. Thank you.
        Senator Stevens. Thank you very much.
        Mr. Ekarius. Thank you, Mr. Chairman.
        Senator Stevens. Dr. Robert Rubin.
    STATEMENT OF ROBERT W. RUBIN, PH.D., PRESIDENT AND
                CHIEF EXECUTIVE OFFICER, LOVELACE
                RESPIRATORY RESEARCH INSTITUTE, NEW MEXICO
        Dr. Rubin. Good afternoon, Mr. Chairman. My name is Robert
    Rubin, and I am President and CEO of the Lovelace Respiratory
    Research Institute in New Mexico. Our 50-year-old institute is
    the basic science institute--is the only one in the country--
    dedicated to the prevention, treatment and cure of respiratory
    diseases.
        For over 40 years, we operated a Federal lab, called the
    Inhalation Toxicology Institute, for the Department of Energy.
    This national facility was dedicated to defense issues,
    centered on the biomedical effects of inhaling dangerous
    materials, such as radioactive, toxic or bioactive substances.
    Nineteen months ago, this facility was privatized, and my
    organization moved all of our scientists to the facility on
    Kirtland Air Force Base, in Albuquerque, and began the process
    of making it self-sufficient. This facility, and our Institute,
    now focus heavily on Department of Defense mission research
    projects.
        This one-of-a-kind large facility is equipped with unique
    specialty equipment and professional staff found nowhere else.
    Much of our work is defense related, and I would like to
    mention some of the most important projects now.
        We are now dedicated to the investigation and creation of
    new technology to combat the ever-growing threat of chemical,
    radiological and biological warfare on the battlefield or in
    the urban American setting. With our extensive aerosol science
    program, inhalation toxicology research group and unique
    exposure facilities, we serve the various agencies concerned
    with this growing threat.
        We work especially close with Sandia National Labs, which
    also has a mission to develop new technologies to counter these
    threats. We are also working with Los Alamos Labs to include
    their unique capabilities in this consortium.
        We propose the creation of a new organization, centered
    around Los Alamos, Sandia and Lovelace, dedicated to do a
    permanent, single-purpose research designed to counter threats
    to combat and civilian personnel posed by the introduction of
    radioactive, toxic and biological substances through the air.
    Privatization has allowed us to develop partnerships with
    industry and government to pursue this line of research, and we
    will be seeking funding to make this a permanent R&D
    organization in New Mexico.
        An example, Senator, of the type of technology we wish to
    develop and expand is a joint project with Georgetown
    University Medical School to create a hand-held drug delivery
    device, dispensing drugs, called retinoids, that our scientists
    have shown can induce lung regeneration and reverse or protect
    lung tissue from damage due to inhaled toxic substances. This
    will be of direct benefit to the soldier in the field.
        Building on this research, we should be able to mount a
    credible defense against many types of battlefield or urban
    aerosol chemical and biological threats. This $6 million
    project is of special significance to the chemical and
    biological warfare defense mission.
        We also work with the Department of Defense to study Gulf
    War Syndrome in an attempt to elucidate the possible chemical
    and physiological mechanisms that may have produced this
    illness. Such basic research should allow more rational
    treatment protocols for those individuals so affected, and
    provide data that can be used in the future to counter similar
    threats.
        Our current efforts center on a study of the role of
    silicone in the sand breathed by the Desert Storm troops, in
    combination with pathogens known to be present in the inhaled
    atmosphere in the region at the time of the action. This study
    of combinations of inhaled substances that might produce
    disease is a common theme for us and is the central mission of
    our new Environmental Protection Agency-funded National
    Environmental Respiratory Center.

                               prepared statement

        This Center will collaborate with the scientists working on
    the defense issues to obtain the critical mass of expertise and
    synergism that produces new ground-breaking research finding.
    Most of this important defense work has been made possible at
    reduced costs by the privatization process, which was designed
    to retain and nurture this unique national resource.
        Thank you.
        [The statement follows:]
                       Prepared Statement of Robert Rubin
        Good afternoon. My name is Robert Rubin, and I am President and CEO
    of the Lovelace Respiratory Research Institute. Our 50-year-old
    Institute is the only basic science institute totally dedicated to the
    prevention, treatment and cure for respiratory diseases. For over 40
    years we operated a federal lab called the Inhalation Toxicology
    Institute for the Department of Energy. This national facility was
    dedicated to defense issues centered on the biomedical efforts of
    inhaling dangerous materials such as radioactive toxic or bioactive
    substances. 19 months ago this facility was privatized and my
    organization moved all our scientists to this unique facility on
    Kirtland Air Force Base and began the process of making it self-
    sufficient.
        This one-of-a-kind large facility is equipped with unique specialty
    equipment and professional staff found no where else in the world. Much
    of our work is defense-related and I would like to mention some of the
    most important projects and how they relate to current critical
    national defense issues.
        We are now dedicated to the investigation and creation of new
    technology to combat the ever-growing threat of chemical and biological
    warfare on the battlefield or in the American urban setting. With our
    extensive aerosol science program, inhalation toxicology research group
    and unique exposure facilities we serve the various agencies concerned
    with this growing threat. We work especially close with Sandia National
    Labs, which also has a mission to develop new technologies to counter
    these threats. We proposed the creation of a new consortium of
    organizations centered around the Sandia/Lovelace relationship,
    dedicated to permanent single-purpose research designed to counter
    threats to combat and civilian personnel posed by the introduction of
    toxic substances through the air. Privatization has allowed us to
    develop partnerships with industry and government to pursue this line
    of research and we seek funding to make this a permanent R&D facility
    on or next to Kirtland Air Force Base in Albuquerque, New Mexico.
        An example of the type of technology we wish to develop and expand
    is a joint project with Georgetown University Medical School, to create
    a hand-held drug delivery device to dispense drugs called retinoids,
    that our scientists have shown can induce lung regeneration and reverse
    or protect lung tissue from damage due to inhaled toxic substances.
    Building on this research, we should be able to mount a credible
    defense against many types of battlefield or urban aerosol chemical and
    biological threats. We seek $6 million to move this technology along to
    the prototype stage.
        We also work with the Department of Defense to study Gulf War
    Syndrome, in an attempt to elucidate the possible chemical and
    physiological mechanisms that may have produced this illness. Such
    basic research should allow more rational treatment protocols for those
    individuals actually so affected and provide data that can be used in
    the future to counter similar threats. Our current efforts center on a
    study of the role of silicone (in the sand breathed in by the Desert
    Storm troops), in combination with pathogens known to be present in the
    inhaled atmosphere in the region at the time of the action. This study
    of combinations of inhaled substances that might produce disease is a
    common theme for us, and is the central mission of our new EPA-funded
    National Environmental Respiratory Center. This center will collaborate
    with the scientists working on these defense-related projects, to
    obtain the critical mass of expertise and synergism that produces new
    ground-breaking research findings.
        Most of this important defense work has been made possible at
    reduced costs by the privatization process which was designed to retain
    and nurture this unique national resource.
        I thank the Committee for allowing me to testify here today.
                                     ______

        It is proposed that the Department of Defense establish a
    cooperative agreement with the Lovelace Respiratory Research Institute
    to meet research needs related to national defense. It is also proposed
    that the Department participate in the National Environmental
    Respiratory Center, an interagency effort to understand the respiratory
    health risks of combined exposures to mixtures of airborne
    contaminants, and support other research initiatives enhancing the
    Department's ability to fulfill its national defense mission.
       the lovelace respiratory research institute has unique and proven
       capabilities for meeting important defense-related research needs
    The Lovelace Respiratory Research Institute (LRRI)
        Located in Albuquerque, New Mexico, LRRI is the nation's only
    independent, non-profit biomedical research organization wholly
    dedicated to the prevention, treatment, and cure of respiratory
    disease. LRRI conducts basic and applied research for government,
    industry, health advocacy organizations, and the public. The Institute
    is committed to reduction of the nation's large burden of respiratory
    disease by conducting research aimed at understanding causes and
    biological mechanisms, understanding and reducing risks from materials
    inhaled in the environment and workplace, and developing new strategies
    for prevention and treatment.
        LRRI's staff of 230, including 40 scientists, 160 technicians and
    support staff, and 30 postdoctoral and graduate trainees and part-time
    staff, conduct approximately $25 million annually of basic and applied,
    independent and collaborative research annually in 350,000 square feet
    of owned and leased laboratory facilities. LRRI research is funded by
    federal agencies (60 percent, largely NIH, DOE, EPA, and DOD), and
    private sources (40 percent, largely the pharmaceutical, chemical, and
    automotive industries). LRRI's research focuses in three principal
    areas: (1) causes, mechanisms, and detection of lung cancer and
    noncancer respiratory diseases; (2) treatment of respiratory disease
    and administration of drugs by inhalation; and (3) respiratory
    toxicology and health risks from inhaled air contaminants in the
    environment and workplace. The Institute is a leader in the respiratory
    health field, and is well-respected by academia, government, and
    industry alike for its objective leadership in placing health risks
    from airborne toxicants in proper perspective. LRRI has a strong record
    in inter-institutional research collaboration, is affiliated with the
    University of New Mexico, and has research liaisons with Sandia
    National Laboratories and numerous other organizations.
        LRRI leases the privatized, government-owned Inhalation Toxicology
    Research Institute facility on Kirtland AFB, which it developed and
    operated for many years for the Department of Energy. This facility is
    the nation's best-equipped center for basic and applied research on the
    health effects of inhaled materials. LRRI is committed to maximizing
    the use of this taxpayer-owned facility to meet federal research needs
    involving respiratory disease and inhaled toxicants.
    LRRI has Assisted the Department of Defense in Several Important Areas
        Over the last 30 years, LRRI has produced a large portion of the
    key information necessary to place the health risks of nuclear weapons
    production and deployment in their proper context. Administered through
    the Department of Energy, LRRI research on the long-term health
    consequences of inhaling radionuclides has provided a foundation for
    risk assessment, and the Institute's research on treatments for
    accidental inhalation exposures underpin today's therapeutic options.
    The most recent studies have determined that cigarette smoking markedly
    increases the lung cancer risk from inhaled plutonium particles, and
    developed animal models useful for studying smoke-induced lung cancer
    and noncancer disease.
        LRRI continues to conduct research to place the understanding of
    Gulf War illnesses on a stronger scientific basis. The potential
    toxicological nature of emissions from diesel-fueled tent heaters was
    characterized. An ongoing study is examining, for the first time, the
    possible long-term health consequences of inhaling very small doses of
    nerve agent. A proposal under consideration would evaluate the
    plausible, but unknown, contribution of inhaled sand dust to reported
    effects by facilitating immune disorders.
        Of importance to both training and battlefield scenarios, LRRI is
    conducting research on the toxicity of depleted uranium fragments from
    armor-piercing munitions, and earlier provided toxicity data which
    underlies present estimates of the hazards of inhaling or ingesting
    trace amounts of depleted uranium.
        LRRI's expertise in air sampling, controlled generation of toxicant
    atmospheres in the laboratory, and evaluating health effects is making
    an important contribution to the nation's chemical and biological
    defenses. LRRI has conducted research on the occupational hazards of
    working with nerve agent precursors. More recently, LRRI partnered with
    Sandia National Laboratories in research to develop new methods for
    remote detection of airborne biological agents. Together, these
    laboratories seek to refine these methods and extend the technology to
    additional chemical and biological agents.
        LRRI is also working with a small technology-based company on a
    promising new plasma-based technology for rapid and complete
    destruction of chemical and biological agents. If successful, this
    technique would avoid the current problems of other technologies
    regarding toxic residues and environmental air contamination.
        the lovelace respiratory research institute proposes to use its
      independent and collaborative resources to address current defense-
                             related research needs
    Cooperative Agreement for Conducting Toxicological Research
        It is becoming increasingly apparent to both LRRI and the
    Department of Defense that the research capabilities of LRRI are well-
    aligned with many current and likely future needs of the agency. In
    view of this alignment and the difficulties encountered in maintaining
    the Department's intramural toxicological research resources and joint
    interservice efforts, it is appropriate to consider an arrangement
    which makes LRRI's resources more readily and more broadly accessible
    by the Department. LRRI seeks to work with the agency to establish a
    cooperative agreement under which a broad spectrum of work matched to
    the Institute's resources can be readily conducted. LRRI has experience
    operating successfully under a cooperative agreement with the
    Department of Energy, and is in the process of establishing a
    cooperative agreement with the Environmental Protection Agency. Such an
    arrangement can increase the utility to the Department of the
    federally-owned resources leased and managed by LRRI.
    The National Environmental Respiratory Center: Determining Health Risks
            from Combined Exposures to Air Contaminants
        The Department's operations create numerous needs to understand and
    mitigate the respiratory health risks from inhalation exposures to
    mixtures of airborne contaminants, from sequential exposures to
    multiple contaminants, and from combinations of occupational exposures
    and non-occupational exposures, such as cigarette smoke. Similar
    concerns for environmental air pollution resulted in the establishment
    this year of a new National Environmental Respiratory Center (NERC).
    LRRI proposes that the Department of Defense take advantage of this
    activity by supporting research that addresses the Department's
    specific information needs.
        Respiratory diseases now kill one out of four Americans. Despite
    workplace standards, occupational exposures are still associated with
    numerous respiratory diseases, including allergic sensitization,
    rhinitis and bronchitis, pneumoconiosis, and cancer. NIOSH estimates
    that as much as 30 percent of chronic obstructive lung disease and
    asthma in adults may be caused by occupational exposures, and that 20
    million workers are exposed to agents that can cause these diseases.
    The national health burden for occupational asthma is estimated to be
    as high as $400 million yearly. The military and civilian workforce
    involved in meeting the Department's mission incur many of the
    respiratory health risks encountered by other workers, and the work of
    the Department also involves some unique risks.
        Present environmental and workplace air quality regulations address
    individual pollutants, or pollutant classes, one at a time. The
    scientific and regulatory communities are increasingly aware that
    estimating the health consequences of air contaminants one at a time
    often misrepresents actual risks. Multiple agents can cause the same
    effects (e.g., inflammation, cancer). Some agents amplify the effects
    of others (e.g., acid particles and ozone, radon and cigarette
    smoking). It is likely that a mixture of air contaminants, each within
    its acceptable concentration, could present an unexpected aggregate
    health risk that is unacceptable. The combined risks of smoking and
    occupational exposures are largely unknown. Our poor understanding of
    the risks of toxicant mixtures makes it difficult to identify and
    prioritize the sources or practices whose management would most
    efficiently reduce the effects.
        The Center is being initiated this year with core funding provided
    for in the EPA fiscal year 1998 appropriation. The mission of the
    Center is to facilitate and participate in a national initiative to
    understand respiratory health risks from combinations of inhaled
    airborne environmental and occupational pollutants. It is appropriate
    for the Department of Defense to participate in this activity. No
    single agency has the sole mandate for addressing the combined
    exposures problem, and the Department certainly has a stake in worker
    and public protection from combined exposures.
        The Center will perform four principal functions. First, the Center
    will conduct research aimed at understanding the respiratory health
    risks of combined exposures to multiple airborne toxicants. Second, the
    Center will establish and maintain a specialized resource for
    information on present knowledge about the effects of combined
    exposures, and related research and research resources nationwide.
    Third, the Center will facilitate communication and planning in this
    specialized area by coordinating workshops and conferences on the
    health effects of contaminant mixtures and combined exposures.
    Government and non-government research sponsors and researchers from
    numerous organizations and disciplines will be brought together to
    identify critical research gaps and optimize the use of resources.
        The Department of Defense can meet its information needs and its
    interagency responsibility in this field by participating in funding
    the Center, and by sponsoring research directed at the Department's
    specific information needs.
    Chemical/Biological Defense Research Consortium
        A key problem in the development of new technology to deal with
    chemical and biological threats is the basic multidisciplinary nature
    of the required research. Detection, mitigation, and countermeasures
    inevitably require new microelectronic devices, laser technology,
    software, analytical chemistry, aerosol science, microbiological
    expertise, respiratory physiology, inhaled drug delivery, and
    infectious disease management. No single institution is expert in all
    of these fields.
        Recognizing the importance of the chemical/biological threat, not
    only on distant battlefields, but also for internal national security,
    three New Mexico research organizations have proposed to pool their
    laboratory resources, technical experience, and intellectual
    capabilities to develop new measures to deal with these threats. LRRI,
    Sandia National Laboratories, and the University of New Mexico Health
    Sciences Center have pooled their remarkable and complementary
    resources to partner successfully on other issues, and are confident
    that their synergy can help the Department meet its security mission in
    the chemical/biological defense arena. All have previous experience in
    addressing issues key to this field.
        The functions of this collaborative research team would be to
    evaluate threats, develop new technologies, and improve existing
    technologies to identify and mitigate chemical/biological threats. Key
    themes would be remote detection of specific agents, personnel
    protection, threat elimination, and treatment of affected individuals.
    Although not yet formalized, a consortium of these research
    organizations would offer significant resources to the Department.
    Novel Treatments for Debilitating, Intractable Respiratory Disease
        The Department is faced with as large number of military employees
    and civilian workers who develop progressive, debilitating respiratory
    disease. These diseases place a large burden on the Department and
    society in terms of both financial and human costs. A portion of this
    disease burden may result from occupational exposures, probably more
    disease results from tobacco smoking, and a portion may be attributable
    to genetic predisposition. In addition, the Department is potentially
    faced with cases of debilitating lung and airway disease on the
    battlefield from chemical and biological agents.
        Severe, destructive respiratory disease is an extremely difficult
    clinical challenge. Many respiratory diseases, such as emphysema, have
    not been amenable to cure, but are treated simply to relieve symptoms
    and maintain as much quality of life as possible. Others, such as
    cancer, are possible to cure in some instances, but are generally
    intractable and typically fatal. Indeed, the overall survival rates
    have not improved for either lung cancer or emphysema.
        Together with its Senior Fellows (outstanding researchers in other
    institutions who collaborate closely with LRRI and are supported in
    part by the Institute), LRRI is conducting pace-setting research aimed
    at more effective treatments and cures of debilitating respiratory
    disease. An especially exciting example is the work of Drs. Donald and
    Gloria Massaro of the Georgetown University Medical School. Building on
    years of work in the field, these researchers have now shown that
    chronic lung disease (emphysema, in this case) can be reversed by
    treatment with analogues of vitamin A. Normal air sac structure has
    actually been restored in adult lungs with destructive emphysema, and
    work is underway with LRRI collaborators to determine the effectiveness
    of local application by inhaling the drug. Another example is the
    current work at LRRI to increase the effectiveness of anti-cancer
    treatment by delivering drugs directly to the lung and airway surfaces
    by inhalation.
        Lovelace and Georgetown now seek $6 million to extend these
    technologies for the use of the Department of Defense and other
    agencies faced with countering such new dangerous exposures. These
    funds would be used to better define the mechanism by which retinoids
    induce lung regeneration, to develop new systems to deliver drugs and
    protective agents by aerosol systems systems, and to create credible
    counter-measures to air-born toxic and biological threats.
        Supporting innovative research aimed at treating, and potentially
    curing, debilitating respiratory disease is well within the scope of
    the Department's health concerns. LRRI proposes that the Department
    support its work on restoring destroyed lung tissue and treating
    respiratory disease by inhaled drugs.

        Senator Stevens. You are asking for $6 million; is that it?
        Dr. Rubin. That is correct.
        Senator Stevens. Any questions?
        Senator Domenici.
        Senator Domenici. Mr. Chairman, I just wanted to state for
    the record and for the Doctor my congratulations and
    wholehearted support for the privatization effort. This has
    been a public facility for 40 years, for all intents and
    purposes, funded by the Federal Government. You might remember
    Randy Lovelace was one of the original doctors involved with
    space. As a consequence, this laboratory was created with
    reference toxicity of air. Over the years, it has been one of
    the leading ones.
        And I am very proud of them for taking a leap toward
    privatization--meaning that they will get business from a lot
    of different sources, built around their expertise. Doctor, I
    compliment you and your people and thank you for your
    testimony.
        Thank you, Mr. Chairman.
        Dr. Rubin. Thank you, Senator.
        Senator Stevens. Thank you very much. We appreciate it.
        Dr. Rubin. Thank you.
        Senator Stevens. Our next witness is Bobby Harnage, the
    President of the American Federation of Government Employees.
    STATEMENT OF BOBBY L. HARNAGE, NATIONAL PRESIDENT,
                AMERICAN FEDERATION OF GOVERNMENT
                EMPLOYEES, AFL-CIO
        Mr. Harnage. Good afternoon, Senator.
        Mr. Chairman and subcommittee members, my name is Bobby
    Harnage, and I am the National President of the American
    Federation of Government Employees, AFL-CIO, which represents
    some 600,000 Federal employees. I would like to begin my
    testimony by thanking the subcommittee for this opportunity to
    testify.
        And on a personal note, Mr. Chairman, I want to thank you
    for the leadership you have shown in securing passage of the
    emergency supplemental appropriation bill, which provided much-
    needed funding to DOD. There was a lot of talk that DOD would
    perhaps have to furlough or even lay off civilian employees if
    that legislation had not been passed in time. However, because
    of your experience and expertise as a lawmaker and as an
    appropriator and because of your unmatched concern for national
    security and your determination to treat Federal employees
    fairly and equitably, I knew that furloughs and layoffs at DOD
    simply would not occur.
        Finally, I thank you for your forthright opposition to the
    Freedom from Government Competition Act currently pending
    before the government affairs committee. We will work with you
    to ensure that the sponsors of this government-wide contracting
    out legislation do not complicate chances of passage of various
    appropriation bills by offering their measure as an amendment
    to such legislation.
        I discuss in detail in my written testimony AFGE's request
    that the subcommittee retain the 10-employee rule, which
    prevents the conversion to contractor performance of an
    activity or a function of DOD that is performed by more than 10
    civilian employees until a most efficient and cost-effective
    organization analysis is complete. And so I will say nothing
    more about this on this occasion except to bring our request to
    your personal attention.
        Finally, permit me to discuss the use of in-house personnel
    ceilings by DOD officials to contract out work, often at a
    higher cost because of the absence of public/private
    competition. That is not just my opinion, that is what the
    military brass say, that is what the DOD Inspector General
    says, that is what the General Accounting Office says, and that
    is what senior DOD managers tell their subordinates to do in
    the three memos I attached to my written testimony.
        Since that submission of my testimony, I have come across
    yet another personnel ceiling horror story. In a letter to the
    field from the Air Force Reserve's Assistant Director for
    Communication and Information, she writes, and I quote:

        We recognize there are limited manpower resources in the
    field for supporting new systems as they come on line. With the
    current constrained budget environment, we also recognize that
    we are unable to obtain additional civil service personnel to
    fill these shortfalls. For these reasons, we have been pursuing
    the authority and funding to hire contractors to assist you
    with more critical network management and systems
    administration requirement. Since all of these systems are
    being installed without additional personnel manpower, a
    contract vehicle was our only option to support these labor-
    intensive requirements.

        Recognizing this practice is bad for taxpayers, warfighters
    and Federal employees, your subcommittee has taken the lead on
    this issue by including a prohibition against this practice in
    recent defense appropriation bills, and we urge you to include
    it in this year's funding measure.
        Thank you for this opportunity to testify, and I will be
    happy to answer any questions you might have.

                               prepared statement

        Senator Stevens. Yes, sir. Thank you very much. I have gone
    through your whole statement, and we are going to be in touch
    with you about the A-76 questions also.
        Mr. Harnage. That would be great.
        Senator Stevens. I appreciate that.
        Are there any questions?
        [No response.]
        Senator Stevens. Thank you very much.
        Mr. Harnage. Thank you.
        [The statement follows:]
                     Prepared Statement of Bobby L. Harnage
                                  introduction
        Mr. Chairman and Subcommittee members, my name is Bobby Harnage. I
    am the President of the American Federation of Government Employees.
    AFGE represents more than 600,000 federal employees serving worldwide,
    including 300,000 employed by the Department of Defense (DOD).
        I would like to begin my testimony by thanking the Subcommittee for
    this opportunity to testify on the fiscal year 1999 Defense
    Appropriations Bill. I also welcome this opportunity to work with the
    Subcommittee in addressing the needs and concerns of DOD employees.
    AFGE members are justifiably proud of their past service in defense of
    the United States. As both Americans and federal employees, AFGE
    members take seriously their role in keeping America's defense strong
    and ready. We also know that you, Mr. Chairman, and the other members
    of this Subcommittee share AFGE's belief that the United States must
    continue to remain ready to meet any threat to the security of our
    nation.
        On a personal note, Mr. Chairman, I want to thank you for the
    leadership you showed in securing passage of the emergency supplemental
    appropriations bill which provided much-needed funding to DOD. There
    was a lot of talk that DOD would perhaps have had to furlough or even
    lay off civilian employees if that legislation had not been passed in
    time. However, because of your experience and expertise as a lawmaker
    and an appropriator, because of your unmatched concern for national
    security, and because of your determination to treat federal employees
    fairly and equitably, I knew that furloughs and layoffs at DOD simply
    would not occur. Finally, I thank you for your forthright opposition to
    ``The Freedom From Government Competition Act'' (S. 314), currently
    pending before the Senate Governmental Affairs Committee. We'll work
    with you to ensure that the sponsors of this government-wide
    contracting out legislation don't complicate chances of passage of
    various appropriations bills by offering their measure as an amendment
    to such legislation.
     upholding the competitive framework of omb circular a-76 and the ten-
                                 employee rule
        Mr. Chairman, we know that the options of contracting out,
    outsourcing, and privatization are generating more attention than ever.
    Many contractors, many senior Pentagon officials, and even some Members
    of Congress who have been around long enough to know better are eager
    to give work away to private sector firms even if it can't be proven
    that contracting out saves money.
        For AFGE and its members, however, the central issue which should
    drive the discussions surrounding the outsourcing debate is readiness--
    how we can get the most effectiveness, efficiency, and reliability for
    the taxpayer dollar invested. It would be wrong to assume that AFGE's
    only interest in these discussion 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 is made. For example, two years
    ago, 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 Indianapolis Naval Air Warfare Center.
        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. This union isn't going away.
        The fact that AFGE will retain its vigor and vitality--even in this
    era in which privatization is all the rage--by organizing outsourced
    workers allows this union to be a calm and constructive player in the
    discussions surrounding defense reform and the realization of budgetary
    economies. AFGE is not anti-privatization. We are, however,
    unreservedly and non-negotiably pro-competition. And on this principle,
    we will not cave or compromise.
        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.
        When confronted with the anxious demands of private sector firms
    eager to secure expensive new contracts and their pro-privatization
    friends in the Pentagon, it's imperative to remember that the way to
    generate efficiencies and savings is not contracting out or
    privatizing. Rather, what's key is ensuring real and genuine
    competition between the public and private sectors before any work is
    contracted out.
        We must also remember the basic difference between a private sector
    bid and a federal sector bid. A private-sector bidder offers a promise
    of performance and costs. On the other hand, a federal bidder's offer
    is based on a proven record of performance and costs (as determined by
    annual budgets). The differences between the real and the ephemeral,
    the proof and the promise, and the walk and the talk reinforces the
    need to ensure full and fair public-private competition.
        Although less extensive than the public-private cost comparison
    process under OMB Circular A-76, the ten-employee rule is an important
    mechanism in reducing wasteful contracting out. This provision, which
    has been included in recent defense appropriations bills, (a) prevents
    the conversion to contractor performance of an activity or function of
    DOD that is performed by more than ten civilian employees until a most
    efficient and cost-effective organization analysis is completed and (b)
    requires that any resulting service contracting decision be submitted
    to the Senate Appropriations Committee.
        It is precisely because the Senate Defense Appropriations
    Subcommittee takes an interest in ensuring cost-effective service
    contracting that the ten-employee rule should be retained. Although
    your panel might continue to receive service contracting reports from
    DOD through an informal arrangement with the Senate Armed Services
    Readiness Subcommittee, it would send the wrong signal to the Pentagon
    if the ten-employee rule were dropped entirely at exactly the same time
    that some DOD officials emphasize service contracting even at the
    expense of cost-effectiveness.
        Clearly, the taxpayers would not be well-served if it appeared,
    however inaccurately, that the Senate Defense Appropriations
    Subcommittee, the panel that makes the most important of all spending
    decisions, was getting out of the service contracting oversight
    business.
        Moreover, it would not be well-advised to raise the threshold for
    conducting cost comparisons from instances involving ten employees to
    those involving, say, twenty employees. We are already concerned about
    contracts being arbitrarily split up in order to avoid the coverage of
    the ten-employee rule. That problem would be exacerbated if the ten-
    employee rule devolved into, say, a twenty-employee rule. I think most
    lawmakers agree that it would be irresponsible to contract out a
    service without assurance that the taxpayers would benefit from such an
    arrangement, especially when the cost comparison process required need
    not be as comprehensive as a complete OMB Circular A-76 study.
        Further, it would be a mistake to assume that your panel's cost
    comparison safeguard is the same as the one used by the Senate
    Readiness Subcommittee, as some have suggested. As you know, your cost
    comparison requirement applies to all instances of contracting out when
    it involves more than ten employees. The Readiness Subcommittee's
    safeguard would only take effect when DOD makes a ``decision to study''
    the conversion of a function involving twenty or more employees.
        As you know, A-76 allows managers to convert commercial activities
    involving eleven or more employees to contract without a cost
    comparison process. In addition, agencies, as a result of the revised
    A-76 supplement, can obtain waivers from the cost comparison
    requirement in other situations. As your staff has suggested, securing
    a waiver from A-76's cost comparison requirement does not constitute a
    decision by DOD managers to study the conversion of commercial
    activities to contract. Therefore, in what is likely to be a
    significant number of instances, the Senate Readiness Subcommittee's
    reporting and cost comparison safeguard simply would not work.
        Of course, in those very same instances, your panel's superior
    safeguard would ensure that DOD conducts a cost comparison--one which
    would be less extensive than an A-76 study but still sufficient to
    deter against wasteful outsourcing--and then reports any resulting
    service contracting decision to the Congress. But that would only
    happen if you and your colleagues decide to retain the ten employee
    rule.
    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.
        AFGE urges the Subcommittee to reaffirm its commitment to the ten-
    employee rule.
        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 its 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 to the agency
    compiling this report. 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 Committee in
    drafting the necessary language.
       urging 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.
        In early 1994, the Office of Management and Budget (OMB) reported
    that several agencies--including the Departments of Agriculture, Health
    and Human Services, Housing and Urban Development, State, Education and
    Treasury, as well as the Environmental Protection Agency--said that
    they each could have saved several million dollars by performing
    functions directly rather than having them performed by contractors but
    did not do so because either their requests to OMB to take on the
    necessary full-time equivalents (FTE's) were refused or the agencies
    were so sure such requests would be refused that they were not even
    submitted.
        It then became apparent that DOD, the department the American
    people rely on to safeguard their future, is also experiencing in-house
    staff shortages. On March 16, 1995, the personnel directors of the four
    branches of the armed forces told the Senate Armed Services Personnel
    Subcommittee that civilian personnel ceilings, not workload, cost, or
    readiness concerns are forcing them to send work to contractors that
    could have been performed more cheaply in-house.
        Also in March 1995, GAO reported ``that the personnel ceilings set
    by OMB frequently have the effect of encouraging agencies to contract
    out regardless of the results of cost, policy, or high-risk studies.''
    And the DOD Inspector General noted in a 1995 report, ``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.''
        Moreover, I have in my possession three internal documents which
    suggest that DOD managers are instructing subordinates to manage by
    personnel ceilings and then contract out the work. The first document
    instructs managers to impose personnel ceilings and then contract out
    the work. The second document imposes a ``not to be exceeded'' ceiling
    and insists that work performed by employees under GS-12 be contracted
    out. The third document instructs Army officials to absorb civilian
    personnel reductions and offset the manpower shortages by aggressively
    contracting out.
        We shouldn't be surprised that much contracting out occurring
    because of personnel ceilings is wasteful. After all, there's no
    public-private competition. Federal employees aren't given
    opportunities to compete in such situations--simply because there
    aren't enough of them to do the work. Clearly, DOD should be required
    to manage by budgets. If it has work to do and money is authorized and
    appropriated to do that work, then DOD should be able to use federal
    employees if in-house performance is to the benefit of warfighters and
    taxpayers.
        We all know that DOD's civilian workforce is going to get smaller.
    We all know that there is going to be more contracting out. But DOD
    should not be imposing arbitrary personnel ceilings and foreclosing the
    option of in-house performance of important work, especially if
    contractors are less efficient.
        Even if not always successful, we appreciate the subcommittee's
    efforts to prevent DOD from managing by personnel ceilings by the
    inclusion of prohibitions in recent defense appropriations bills.
    AFGE'S recommendation
        AFGE strongly urges the Subcommittee to require DOD to manage by
    budgets, rather than personnel ceilings.
        Recent articles in the media have brought to the attention of
    readers the ``shell game'' which is allowing the Administration to
    claim that the federal government is getting smaller when in fact
    federal employees are only being replaced by often more expensive
    contractor employees. As The Washington Times reported recently, ``One
    of the biggest trends in federal workforce policy over the past ten or
    twenty years has been to contract out more of the government's work to
    the private sector. Many thousands of government jobs are now being
    performed by private contractors * * * (T)he workers shifted to outside
    the government remain largely unseen and uncounted.''
        If the federal government spends more than $110 billion annually on
    highly labor-intensive service contracts and the annual pay and
    retirement benefits for the federal government's own workforce of 1.8
    million executive branch employees is $108 billion, the contractor
    workforce must be quite large indeed. As The Washington Times pointed
    out, the Administration has no idea how big the contractor workforce
    really is, preferring to remain willfully ignorant. I find this
    preference to be both incredible and confounding! Is there a single
    large corporation that wouldn't even have the foggiest idea about the
    size of its contractor workforce? Of course not!
    AFGE'S recommendation
        If you, too, Mr. Chairman, are concerned about the Administration's
    ``shell game'' of hiding hundreds of thousands of government employees
    on contractor payrolls and then claiming to have reduced the size of
    government, I urge you to consider adding H.R. 887, legislation
    introduced by Representative Eleanor Holmes Norton (D-DC), to this
    year's defense appropriations bill. Her bill would simply require OMB
    to develop a government-wide system for determining and reporting the
    number of non-federal employees engaged in service contracts. That's
    the first step which must be taken if we're ever going to end the
    ``shell game'' in which the Administration wins the public relations
    war while taxpayers lose their shirts.
                                   conclusion
        Mr. Chairman, this concludes my testimony. I appreciate the
    opportunity to appear before the Subcommittee today. I would gladly
    answer any questions. AFGE looks forward to working with the
    Subcommittee as the defense appropriations bill is marked up.
    STATEMENT OF MICHAEL F. OUELLETTE, SERGEANT MAJOR, USA
                (RETIRED), DIRECTOR OF LEGISLATIVE AFFAIRS,
                NON COMMISSIONED OFFICERS ASSOCIATION OF
                THE UNITED STATES OF AMERICA
        Senator Stevens. Now we have Sergeant Major Michael
    Ouellette, Non Commissioned Officers Association of the USA.
        Yes, sir.
        Sergeant Ouellette. Good afternoon, Mr. Chairman. Mr.
    Chairman, on behalf of the 160,000 members of the Non
    Commissioned Officers Association [NCOA], we wish to thank you
    very much for the opportunity to appear before you.
        I am not going to read to you. We have submitted the
    statement. But I would like to expound a little bit on the
    comments you made earlier, when you said that during recent
    visits to the field there were considerable concern with the
    morale of the troops, military people and their families.
        And, Mr. Chairman, that is the message that the Non
    Commissioned Officers Association receives loud and clear. That
    the issue in fact in the minds of the senior non commissioned
    officer of all the services is in fact the ability to retain
    good people over the long haul. With the constant limitations
    on pay raises, the reduction in food money is causing grave
    concern within the military. That is compounded by what is
    perceived in the field to be a diminishment of the retirement
    benefits associated with that service.
        They are concerned with the costs of health care in the
    future and what the situation is going to be. They are also
    concerned with the threat of base closures that further
    minimize availability of those facilities to obtain the
    benefits. And with that kind of information from our
    membership, this morning our new President, Roger W. Putnam,
    announced that the Non Commissioned Officers Association
    considers the reform of the military retirement systems, the
    two current systems, the 1980 system and the 1986 system, to be
    the first legislative priority of the Association.
        That is, the troops out there, Mr. Chairman, see a need in
    the future to virtually buy all of the benefits associated with
    service. And, in turn, the people serving under the retirement
    systems, the playing field is not levelled. And there are many
    serving there with significantly reduced income levels
    associated with retirement.

                               prepared statement

        Therefore, the Association will be working aggressively in
    the future to try and repeal the two systems, to return to the
    old system of final base pay times 50 percent at 20 years, to
    try and encourage continued retention of people. NCOA, although
    it is concerned mainly with people programs, has to look at the
    retention and the maintenance of the institutions of the armed
    forces. And, Mr. Chairman, right now the view is so dim in the
    minds of those serving that we feel we must take a bold step to
    move forward, to try and improve the situation so that in fact,
    at the end of the service, military people, retirees and their
    families, may in fact have enough money to be able to buy the
    complete range of their military earned benefits associated
    with retirement.
        Thank you, Mr. Chairman.
        [The statement follows:]
                   Prepared Statement of Michael F. Ouellette
        Mr. Chairman, the Non Commissioned Officers Association of the USA
    (NCOA) appreciates the opportunity to present testimony before this
    subcommittee on the fiscal year 1999 Department of Defense Budget. The
    Association's comments and recommendations represent the views and
    concerns of its noncommissioned and petty officer membership and those
    of the Apprentice Division (E1-E3) and will address a wide range of
    compensation, personnel, medical care and quality-of-life issues of
    significant importance. Hopefully, this subcommittee will consider
    recommendations from an enlisted viewpoint to be of value and
    assistance during 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.
                                    prelude
        Mr. Chairman, NCOA wishes to extend its appreciation to the members
    of this subcommittee for their efforts on behalf of enlisted men and
    women of the armed forces. Military people rely on the favorable
    actions of this subcommittee to provide funding for annual quality-of-
    life improvements and this subcommittee has not failed to meet its
    obligations to those who serve. There is no question that continued
    positive funding actions by this subcommittee are paramount to the
    armed forces' ability to recruit and retain quality enlisted people to
    meet its wide-ranging mission responsibilities. At the very top of
    enlisted members' list of priorities is the ability to meet their
    financial responsibilities to financially support themselves and/or
    their families.
        NCOA understands the difficult deficit reduction climate in which
    the Congress and the armed forces must operate. The efforts of this
    subcommittee have been and will continue to be vitally important to the
    well being of the enlisted forces.
        The major point the Association wishes to make to this subcommittee
    is that the decision to maintain credible military services
    automatically carries with it a responsibility to take care of the men
    and women who comprise that force regardless. This subcommittee has
    done that in the past. Yet much more must be done to avert a manpower
    crisis.
        NCOA wishes to offer a number of pay, personnel, medical care and
    quality-of-life improvement recommendations intended to address a
    number of areas which can significantly improve the overall well-being
    of military members, retirees, their families and survivors.
                           annual military pay raise
        NCOA appreciates the support of this subcommittee to pass
    legislation in 1997 that awarded military members a 2.8 percent cost-
    of-living pay raise effective January 1, 1998. However, it must be
    noted the increase was one-half percent below inflation as measured by
    the Employment Cost Index (ECI) which was set at 3.3 percent. NCOA and
    most enlisted members of the armed forces are well aware that military
    pay raises have been capped below private sector pay growth or full
    inflation in 12 or the last 16 years. The result is that military pay,
    even with the January 1998 increase, lags a cumulative 13.5 percent
    behind that enjoyed by the average American worker performing similar
    work. With the knowledge of these facts and after sustaining months of
    family separation and the hardships associated with the multitude of
    missions of the armed forces, complicated by increasingly longer
    workdays due to force reductions and operation tempo, enlisted men and
    women feel they are being ``short-changed'' by those in control of
    their destinies.
        In 1997, the House of Representatives recognized the seriousness of
    this pay situation by including language in their version of the fiscal
    year 1998 Defense Authorization Bill that directed future military pay
    raises to be at the full ECI level. Unfortunately, this provision was
    dropped in conference and the status quo prevailed. Although NCOA
    supports full ECI pay raises and total elimination of the differential
    with civilian sector pay, the Association does not expect the Congress
    to approve a 13.5 percent pay raise in 1999 to correct the situation.
    NCOA does recommend that Congress adopt a long-term military pay raise
    plan that would resolve the problem over time. Future military pay
    raises paid annually at full ECI levels plus an additional percentage
    amount would put military members on equal financial ground with their
    civilian counterparts in future years, while at the same time,
    gradually eliminating the current estimated pay differential. NCOA
    recommends a long term plan that would increase pay by the ECI plus 2
    percent in 1999, ECI plus 3 percent in 2000, ECI plus 4 percent in 2001
    and ECI plus 5 percent in 2002.
               the uniformed services thrift savings plan (ustsp)
        This year NCOA expects a recommendation to come before Congress
    that would establish a savings plan for members of the uniformed
    services. This proposal would give those eligible to participate an
    opportunity to contribute up to 5 percent of their basic pay into a
    program referred to as the Uniformed Services Thrift Savings Plan with
    the deduction made from their pay by the servicing Defense Finance and
    Accounting Services (DFAS). Under normal conditions, such a proposal
    would appear to have considerable merit; however, NCOA is very
    concerned that such a proposal sends the wrong message or paints an
    inaccurate picture of the current financial capabilities of enlisted
    members of the military services. NCOA believes it to be highly unusual
    that at a time when annual pay raises are being capped below inflation;
    When a pay gap of 13.5 percent is estimated to exist between military
    and civilian sector pay; When commissaries are redeeming food stamps
    and WIC vouchers in the millions of dollars, the Defense Department
    would offer a proposal that strongly suggests that military people,
    particularly enlisted people, can afford to save money.
        Since the original proposal made only those who entered military
    service on or after August 1, 1986, eligible to participate, NCOA
    believes the main intent was to provide a program to supplement the
    retirement system for military members who began service on August 1,
    1986. The financial impact of that system is itemized on Enclosures 1
    and 2. There can be no doubt the 1986 retirement system will impose a
    wide range of financial penalties on those serving under it. In the
    interests of military services' ability to recruit and retain military
    people until retirement, NCOA recommends the retirement system be
    improved from its current version rather than initiate a new program
    when similar civilian savings and tax deferred programs already exist
    for those who can afford to take advantage of them.
                             housing and facilities
        Last year in testimony to this subcommittee, NCOA supported a
    Defense Department proposal to change the manner in which Basic
    Allowance for Quarters (BAQ) and Variable Housing Allowance (VHA) were
    paid. The one allowance system went into effect on January 1, 1998, and
    hopefully will provide military families with a sufficient amount of
    money to cover the cost of adequate housing wherever assigned.
                               tuition assistance
        Last year Congress instructed DOD to standardize the Tuition
    Assistance Program for all services. The military services have
    responded to guidance and have changed its program to mirror each
    other. However, NCOA has received information that the services are
    finding it difficult to fully fund the program from within their
    existing budgets. NCOA is very concerned that an inability to fully
    fund this important recruiting incentive and professional develop
    program will result in a reduction of the benefit across all of the
    services. The military services now provide participants with a maximum
    annual tuition assistance benefit of $3,500. It is extremely important
    to provide adequate funding to maintain that level of benefit
    especially when higher education opportunity while in service is used
    as a recruiting incentive. This is clearly a funding requirement that
    must be fully supported by this subcommittee. NCOA recommends this
    subcommittee include appropriate tuition assistance funding levels in
    order to provide equity throughout the services and level the education
    opportunity ``playing field'' for all eligible members of the military
    services.
                            military retiree issues
        NCOA has a number of retired force issues and concerns it wants to
    bring to the attention of this subcommittee. Both of the issues are
    direct funding requirements, however, the issue of Concurrent Receipt
    will more than likely be debated in another committee. Both issues are
    vitally important to military retirees.
      --Retired Pay Cost-Of-Living Adjustment (COLA).--NCOA appreciates the
            efforts of this subcommittee to provide a 2.1 percent COLA to
            military retirees effective January 1, 1998. Nonetheless, NCOA
            remains extremely concerned that last year's congressional
            activity included suggestions by some that the Consumer Price
            Index (CPI) overrates inflation. The Association believes this
            debate will continue into 1998. NCOA urges this subcommittee to
            continue to resist retirement or COLA proposals that would
            reduce the value or purchasing power of military retired pay.
      --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 equity. Retired pay and VA compensation are
            made for two distinctively different reasons. Yet, should a
            military retiree be adjudicated to be disabled by the VA, there
            continues to be a dollar for dollar offset in the payment of
            benefits. NCOA urges this subcommittee to work toward reducing
            or eliminating the current VA disability offset to military
            retired pay at least for the 100 percent or most severely
            disabled.
                             military medical care
        Mr. Chairman, availability and access to military health care or
    alternative options that are needed to protect the medical care needs
    of military beneficiaries. Surveys of Coast Guard people and their
    families consistently show that medical care along with adequate pay,
    inflation protected retired pay and commissary availability are the top
    concerns of the military community. In fact, with base and hospital
    closures and reductions in medical personnel, the increasing lack of
    no-cost health care is a major concern to active and retired personnel
    alike. Enlisted people, both active and retired, suffer the greatest
    impact because of their lower pay levels which cause them to place a
    greater value on the benefit.
        Currently more than 58 hospitals have been closed as part of the
    Base Realignment and Closure Commission (BRAC) or other actions.
    Services have been cut back at many of the hospitals remaining open and
    many of them have been and continue to be downgraded to clinic size.
    Hundreds of thousands of retirees and their 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 and are not stocked or are
    restricted for issue to active duty beneficiaries only.
        The TRICARE Program has been in development or implementation for
    nearly a decade, yet the TRICARE-Prime still does not cover certain
    parts of the United States. For example, in California where the
    military managed care system has been in place the longest, there are
    still areas without TRICARE Prime networks. However, despite the lack
    of established networks, the TRICARE-Standard/CHAMPUS option should be
    available. Unfortunately, the CHAMPUS Maximum Allowable Chare (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 in the best interests of medical
    readiness. The Association also supports making full use of the
    military treatment facilities and TRICARE networks as primary
    providers. However those retirees (Medicare-eligible) 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:
      --Medicare Subvention.--NCOA is pleased that Congress passed
            legislation last year providing authority to provide a Medicare
            Subvention demonstration project at six sites across the United
            States. Although this action was a major step forward, the
            Association is greatly concerned by loss of military medical
            care access for the many Medicare eligible military retirees
            residing outside the confines of the demonstration test sites.
            Therefore, NCOA strongly supports the immediate implementation
            of the Medicare Subvention concept across the United States in
            order to provide immediate relief and to minimize the great
            injustice being done to all Medicare eligible military retirees
            who have lost earned health care benefits.
      --FEHBP as an Option.--NCOA supports offering the Federal Employees
            Health Benefit Program (FEHBP) as an option to Medicare
            eligible military retirees, their families and survivors.
            Additionally, the Association also supports offering this
            option to TRICARE-Standard eligible beneficiaries residing
            outside of TRICARE-Prime catchment areas. Although not an issue
            that can be acted upon by this subcommittee, in the best
            interests of Coast Guard retirees, NCOA urges the subcommittee
            members to support any legislative effort to direct DOD to
            restore TRICARE-Standard or CHAMPUS as originally intended by
            Congress or authorize FEHBP as an option for all military
            retirees and their families.
      --Medicare Part B Enrollment Penalty Waiver.--NCOA urges the
            subcommittee members to support the enactment of any
            legislation to waive the 10 percent per year Part B Medicare
            late enrollment penalty for military retirees whose access to
            the military health care system has been curtailed because of
            base closures or implementation of TRICARE-Prime.
      --Mail-Order Pharmacy Program Expansion.--Another legislative item
            that would be most beneficial to all military retirees would be
            the expansion of this program beyond just those affected by
            BRAC actions. NCOA urges the subcommittee members to support
            legislation to expand the DOD mail-order pharmacy program to
            include all military retiree, regardless of age, status or
            location. The availability of this program would be a great
            benefit to Medicare eligible military retirees even if Medicare
            Subvention or FEHBP legislation were not passed.
                             survivor benefit plan
        Because of the efforts of Congress last year, military retirees who
    enroll in the Survivor Benefit Plan (SBP) can now withdraw from the
    program during the first year following the two-year anniversary date
    of their retirement. NCOA continues to recommend a legislative change
    to SBP which would permit 30-year paid-up coverage.
                                  commissaries
        NCOA constantly receives inquiries from enlisted people, both
    active-duty and retired, concerning the continued availability of this
    very important non-pay benefit. 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 a the value of the benefit is not eroded and
    services are not reduced. The Association, however, is not confident
    that a decision to privatize the benefit would result in a reduction in
    the value of the benefit. Therefore, NCOA appreciates the past efforts
    of this subcommittee to protect the availability of the commissaries
    and urges the members to maintained required appropriated fund levels
    to protect the non-pay benefit as being in the best interests of the
    enlisted communities.
                            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 any legislative effort and urges this
    subcommittee to provide funding that 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 full-payment of benefits due under the Ready Reserve
            Mobilization Income Insurance Protection (RRMIIP).
      --Provide long-term, low-interest loans or Federal grants to self-
            employed Reservists who suffered significant financial
            penalties as a result of their participation in Operation
            Desert Shield/Storm and other contingencies for which selected
            reserve members are involuntarily activated.
      --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
    community and the armed forces in general is to send a signal that
    Congress will provide some stability in pay and benefits. Last year,
    the House of Representatives attempted to make full ECI pay raises
    mandatory. Although that particular effort failed, there were numerous
    improvements. For instance, Congress passed legislation that reduced
    out-of-pocket medical costs for military families assigned to isolated
    areas. They made improvements in Hazardous Duty Pay and Family
    Separation Allowance (FSA) and even gave military members a new
    Hardship Deployment Pay. A Retiree Dental Plan, although non-
    subsidized, became a reality. Still there remains uncertainty in the
    minds of military people. Even with the legislative gains achieved by
    military people, they still seem only to remember the attempted threats
    to their benefits.
        The insecurity caused by this constant churning of threats to
    benefits creates an environment of stress that takes a real toll on
    national security. Military people simply must be given opportunities
    to respect and participate in change instead of living in constant
    dread and fear of loss.
        NCOA appreciates the opportunity to present a number of enlisted
    views in testimony before 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.

        Senator Stevens. Thank you.
        I think you are right. I think that you should note when we
    were over in the Kuwait area, we ran into just a hailstorm of
    comments about the retirement system, based upon an Internet
    piece that they showed to us, which was spurious. There is just
    a lot of information out there that goes to the Internet. And
    these guys and gals out there have got time to look at that and
    to read them. They are about the only ones I know that have
    time to read them. But, at any rate, they do read them. And
    they were really hot about the question of retirement.
        So, we are going to have to do something about correcting
    that misconception. But the trouble is we are dealing with a
    myth. Because the information that is out there about what
    happened to the retirement is wrong. We have not changed the
    retirement this last year. That is what that article said.
        Senator Inouye and I are going to take a look at that and
    see what we can do. We appreciate your statement.
        Do you have any comments, Senator?
        Senator Inouye. I think it should be pointed out that
    tomorrow morning we are having a special meeting with the
    Secretary of Defense. And this will be on the top of the
    agenda.
        Senator Stevens. One of the agenda items we have is how to
    deal with this false information about what happened to the
    retirement benefits. And we also have to do as you say, we have
    to do something about the inconsistencies of the systems that
    are out there. At least we ought to be dealing with the facts
    and not with false statements. Thank you.
        Sergeant Ouellette. Mr. Chairman, thank you very much. And
    when it all comes down to the decisions, it is the soldier and
    the marine, with their faces in the mud, and the sailors at
    sea, and those people that really go through it that provide
    the level of security needed by this country. And we just
    simply have to take care of those people.
        Senator Stevens. We have to keep the promises we make.
        Sergeant Ouellette. That is right.
        Senator Stevens. There is no question about that.
        Thank you very much.
        Sergeant Ouellette. Mr. Chairman, thank you very much.
        Mr. Inouye, nice to see you.
    STATEMENT OF RONALD VAN NEST, CERTIFIED REGISTERED
                NURSE ANESTHETIST, AMERICAN ASSOCIATION OF
                NURSE ANESTHETISTS
        Senator Stevens. Our next witness is Ronald Van Nest, the
    American Association of Nurse Anesthetists.
        Mr. Van Nest. Mr. Chairman, thank you for the opportunity
    to testify before this committee today. My name is Ronald Van
    Nest, and I am a Certified Registered Nurse Anesthetist, a
    CRNA. For the last 3 of my 30 years in the Navy, I was a member
    of the American Association of Nurse Anesthetists Federal
    Services Committee, while holding the position of Nurse
    Anesthesia Consultant to the Navy's Surgeon General. I am a
    recently retired Captain in the Navy Nurse Corps.
        I am testifying today on behalf of the American Association
    of Nurse Anesthetists, the AANA, which represents more than
    27,000 CRNA's, including over 600 that serve in our armed
    forces. My testimony today will make three points and one
    request. The points are that nurse anesthetists are inexpensive
    to educate, inexpensive to maintain, and we provide safe
    anesthesia service.
        The request is that you look into the current anesthesia
    staffing models in the military, which we consider wasteful.
    First, I would like to thank this committee for its continued
    support of the efforts of the Department of Defense to recruit
    and retain qualified nurse anesthetists. AANA thanks this
    committee for your support of special pay programs for CRNA's,
    and strongly recommends their continuation as an important
    recruitment and retention tool.
        Nurse anesthetists, while providing virtually the same
    service as physician anesthesiologists, are far less costly for
    the services to educate. Data indicates that as many as 10
    highly qualified CRNA's may be educated for the cost of
    training an anesthesiologist. The services have also saved
    resources by spending far less in bonus money to retain CRNA's.
    The nurse anesthetist and a physician start anesthesia training
    at the same time. In 8 years the CRNA will have received
    $69,000 in special pay, while the anesthesiologist will have
    received $253,000.
        It is true, however, that cost-effectiveness means nothing
    if the quality is not there. Let me stress that numerous
    studies have shown that there is no significant difference in
    the outcomes between the two providers. The Department of
    Defense could provide even more cost-effective care if it
    utilized its providers more appropriately. There is no reason
    that CRNA's should be supervised or co-assigned with
    anesthesiologists in a wasteful ratio of 1 to 1 or 2 to 1.
    These ratios amount to nothing less than very expensive
    featherbedding.
        I would like to take this opportunity to alert you to
    another related issue that may be coming before your committee.
    As you may know, the Health Care Financing Administration
    [HCFA] recently proposed a rule that would defer to State law
    on the issue of physician supervision of nurse anesthetists.
    AANA strongly supports this rule. However, legislation has been
    introduced by Senator Faircloth to prohibit HCFA from
    implementing this rule.
        We have reason to believe that there may be an attempt to
    attach this legislation to an appropriations bill. And it may
    come before the members of this committee for consideration.
        AANA strongly recommends that you resist any attempts to
    attach this legislation to any appropriations bill, and that
    the States be allowed their right to regulate our practice.

                               prepared statement

        AANA thanks this committee again for its support of
    military nurse anesthetists, and I will be happy to answer any
    questions you may have.
        [The statement follows:]
                     Prepared Statement of Ronald Van Nest
        The American Association of Nurse Anesthetists (AANA) is the
    professional association that represents over 27,000 certified
    registered nurse anesthetists (CRNA's) in the United States, including
    over 600 CRNA's in the military services. The AANA appreciates the
    opportunity to provide testimony regarding CRNA's in the military. We
    would also like to thank this committee for the help it has given us in
    assisting the Department of Defense (DOD) and each of the Services to
    recruit and retain CRNA's.
                    current status of crna forces in the dod
        Nurse anesthetists have been the principal anesthesia providers in
    combat areas in every war the U.S. has been engaged since World War I.
    Military nurse anesthetists have been honored and decorated by the U.S.
    and foreign governments for outstanding achievements, resulting from
    their dedication and commitment to duty, and competence in managing
    seriously wounded casualties. In World War II, there were 17 nurse
    anesthetists to every one anesthesiologist. In Vietnam, the ratio of
    CRNA's to physician anesthetists was approximately 3:1. Two nurse
    anesthetists were killed in Vietnam and their names have been engraved
    on the Vietnam Memorial Wall. During the Panama strike, only CRNA's
    were sent with the fighting forces. Nurse anesthetists served with
    honor during Desert Shield and Desert Storm. Military CRNA's continue
    to provide critical anesthesia support to humanitarian missions around
    the globe in such places as Somalia, Haiti and Bosnia.
        In all of the Services, maintaining adequate numbers of active duty
    CRNA's is of utmost concern. For several years, the number of CRNA's
    serving in active duty has consistently fallen short of the number
    authorized by DOD as needed providers. Current statistics on the number
    of active-duty CRNA's for fiscal year 1998 are detailed below:

                 NUMBER OF ACTIVE DUTY CRNA'S--FISCAL YEAR 1998
    ------------------------------------------------------------------------
                                     Authorization   Inventory     Shortage
    ------------------------------------------------------------------------
    Army...........................           276           232          -44
    Navy...........................           134           133           -1
    Air Force......................           233           230           -3
                                    ----------------------------------------
          DOD Total................           643           595          -48
    ------------------------------------------------------------------------

                           how crna's save dod money
        The practice of anesthesia is a recognized specialty within both
    the nursing and medical professions. Both CRNA's and anesthesiologists
    (MDA's) administer anesthesia for all types of surgical procedures,
    from the simplest to the most complex, either as single providers or in
    a ``team care setting.'' Patient outcomes data has consistently shown
    that the anesthesia provided by solo CRNA's is of the same high quality
    as that provided by CRNA's who work with anesthesiologists, or that
    provided by solo anesthesiologists. CRNA's and MDA's are both educated
    to use the same anesthesia processes in the provision of anesthesia and
    related services.
        While both types of health care professionals can provide the same
    or similar services, CRNA's cost the military much less to educate and
    to retain. In the first place, it costs the military significantly less
    to educate a CRNA as an anesthesia provider compared to the cost of
    educating an anesthesiologist. Second, a physician draws thousands of
    dollars in additional bonuses that illustrate they are significantly
    more expensive to retain.
    Training costs are less
        The most substantial educational difference between CRNA's and
    anesthesiologists is that prior to anesthesia education, MDA's receive
    medical education while CRNA's receive nursing education. However, the
    anesthesia part of the education is very similar for both providers.
    CRNA's and anesthesiologists are both educated to use the same
    anesthesia processes in the provision of anesthesia and related
    services. However, the cost to educate nurse anesthetists is
    significantly lower than the educational costs for physician
    anesthesiologists. Becoming a CRNA takes an average of 30 months
    additional education beyond the nurse's baccalaureate education, while
    becoming an anesthesiologist takes a minimum of 8 years beyond the
    baccalaureate degree. But if you compare just the cost of the
    anesthesia portion of their educational programs, CRNA education is far
    more cost-effective than physician education. Data from the 1992 AANA
    Council on Accreditation survey of nurse anesthesia programs indicates
    that the average annual program cost per student nurse anesthetists is
    $11,741. The total cost for 30 months of CRNA education would therefore
    be approximately $29,352 ($11,741 per year  2.5 years).
    According to a letter received by AANA from HCFA in 1990, the average
    annual residency program cost per medical resident was $84,837. The
    total cost for a four-year anesthesiologist residency would therefore
    be approximately $339,400 ($84,837 per year  4 years). AANA
    estimates that at least 10 CRNA's can be educated for the cost of
    educating one anesthesiologist. With the shorter training period, the
    10 CRNA's will each be in practice for several years before the one
    anesthesiologist completes his/her residency.
    [GRAPHIC] [TIFF OMITTED] T02MY11.000

    Non-MD bonuses are less than physician bonuses
        In addition to the decreased cost of training a nurse anesthetist,
    the bonuses received by CRNA's in the military are significantly lower
    than those received by military physicians.
                The Incentive Special Pay for Nurses
        In the early 1980's, once military CRNA's reached the grade of
    major with 12-14 years service, they could expect their salary and
    fringe benefits to match that of the average employed CRNA in the
    civilian workforce. By the 1990's, due to significant increases in
    civilian CRNA, military pay and fringe benefits were no longer
    comparable to the average employed civilian CRNA. According to a March,
    1994 study requested by the Health Policy Directorate of Health Affairs
    and conducted by DOD, a large pay gap existed between annual civilian
    and military pay in 1992. This study concluded that ``this earnings gap
    is a major reason why the military has difficulty retaining CRNA's.''
    In order to address this pay gap, in the fiscal year 1995 Defense
    Authorization bill Congress authorized the implementation of an
    increase in the annual Incentive Special Pay for nurse anesthetists
    from $6,000 to $15,000 for those CRNA's who are no longer under service
    obligation to pay back their anesthesia education. Those CRNA's who
    remain obligated will receive the $6,000 ISP. In addition, DOD has
    standardized the payback obligation across all the Services, which
    allowed for fair implementation of this increase.
        AANA thanks this Committee for its assistance in securing this
    increase in the annual ISP. AANA strongly recommends the continuation
    of the annual ISP for CRNA's, which recognizes the special skills and
    advanced education that CRNA's bring to the DOD health care system.
                Board Certification Pay for Nurses
        Included in the fiscal year 1996 Defense Authorization bill was
    language authorizing the implementation of a board certification pay
    for certain non-MD health care professionals, including advanced
    practice nurses. AANA is highly supportive of board certification pay
    for all advanced practice nurses. It is clear that the concept of board
    certification pay comes from the physician model, which was implemented
    as an incentive for physicians to attain the highest level of
    competency and certification. The establishment of this type of pay for
    nurses recognizes that there are levels of excellence in the profession
    of nursing that should be recognized, just as in the medical
    profession.
        While many CRNA's have received board certification pay to date,
    there are many that remain ineligible. Since certification to practice
    as a CRNA does not require a specific master's degree, many nurse
    anesthetists have chosen to diversify their education by pursuing an
    advanced degree in other related fields. But CRNA's with masters
    degrees in education, administration, or management are not eligible
    for board certification pay since their graduate degree is not in a
    clinical specialty. Many CRNA's who have non-clinical master's degrees
    either chose or were guided by their respective services to pursue a
    degree other than in a clinical specialty. Many feel that diversity in
    education equates to a stronger, more viable profession. CRNA's do
    utilize education and management principles in their everyday practice
    and these skills are vital to performance of their duties. To deny a
    bonus to these individuals is unfair, and will certainly affect their
    morale as they work side-by-side with their less-experienced
    colleagues, who will collect a bonus for which they are not eligible.
    In addition, in the future this bonus will act as a financial
    disincentive for nurse anesthetists to diversify and broaden their
    horizons.
        AANA encourages DOD and the respective services to reexamine the
    issue of awarding board certification pay only to CRNA's who have
    clinical master's degrees.
                Comparison to Physician Bonuses
        Even with the implementation of an increased ISP and the addition
    of a board certification pay, CRNA's remain cost effective anesthesia
    providers for DOD. Nurse anesthesia students receive no bonus money at
    all while attending anesthesia school. Then, CRNA's receive only $6,000
    per year in ISP, and an average of $2,500 in board certification pay
    while under payback service obligation for four years. After their
    payback is completed, nurse anesthetists are eligible for a $15,000
    annual ISP bonus, with a continuation of the board certification pay.
    The alternatives to CRNA's, physician anesthesiologists, are eligible
    for four different bonuses. Physicians are eligible for a $5,000 annual
    variable special pay upon entering residency. After their four years of
    residency, they immediately are eligible for an additional $15,000
    special pay, and a $33,000 physician ISP annually. Upon passing board
    certification (usually about 18 months after residency is completed),
    an additional $2,500 in board certification pay is added to the bonus
    total (See Appendix One for breakdown of total). All of this bonus
    money is paid to physicians annually while they are still under a
    payback service obligation.
        In the first eight years of service alone, the result is a wide
    disparity in the amount of bonus dollars paid to physician
    anesthesiologists ($253,500) compared to the amount paid to CRNA's
    ($69,000).
       how more effective utilization can save money without sacrificing
                                quality of care
        In light of the fact that it costs less to educate CRNA's, that
    nurse anesthetists draw minimal bonuses compared to physician
    anesthesiologists, and that numerous studies show there is no
    significant differences in outcomes between anesthesia providers (See
    Appendix Two), it is clear that CRNA's are a cost-effective anesthesia
    provider for the military. From a budgetary standpoint, it is vitally
    important to utilize these high quality, cost-effective anesthesia
    providers in appropriate ratios with their physician anesthesiologist
    counterparts. ``Over-supervision'' is not only unproductive, it is
    financially wasteful and unnecessary.
        During World War II, there were 17 CRNA's for every one
    anesthesiologist (17:1). In Vietnam, the ratio was approximately three
    to one (3:1). Currently the military is operating with much narrower
    ratios of CRNA's to anesthesiologists. As recently as last year, the
    Army was functioning with two CRNA's to every anesthesiologist (2:1);
    in the Air Force, the ratio was even narrower at approximately 1.6:1;
    and the Navy was at the level of nearly one CRNA for every one
    anesthesiologist (1:1).
        Such practice models are generally unheard of in the private
    sector, even in locations where CRNA's practice with little or no
    autonomy. In most civilian hospitals, the practice ratios run
    approximately 3 or 4 CRNA's to every one anesthesiologist (3-4:1). The
    practice ratios could be increased in military treatment facilities
    from their current levels to a more cost-effective level of 3-4:1, with
    no sacrifice to quality of care.
        The U.S. military services do not require anesthesiologist
    supervision of CRNA's. There are many military medical treatment
    facilities throughout the world which have military CRNA's as their
    sole anesthesia providers, and this practice arrangement has not had a
    negative impact on the quality of anesthesia care. Increasing numbers
    of anesthesiologists in the military has resulted in practice models
    with wasteful practice ratios. There continues to be proposals in all
    Services for increased supervision of CRNA's, with attempts by
    physician anesthesiologists to place unnecessary supervision language
    into local military treatment facility policies which would require
    strict adherence to a practice model of one CRNA to every one
    anesthesiologist.
        A practice model requiring a 1:1 ratio for the provision of
    anesthesia would not only be financially wasteful, but even more
    importantly, the Services would lose mobilization effectiveness by
    requiring two anesthesia providers where autonomous CRNA's have
    previously provided anesthesia safely and effectively for over 100
    years. This military standard is based on the need of the Services to
    provide a wide range of health care with as few providers as necessary
    during mobilization to remote or isolated locations. Historically,
    CRNA's have always worked independently at such locations; therefore,
    there is no basis for requiring supervision of CRNA's when they then
    return to more urban facilities. A predetermined ratio of supervision
    should not become part of the practice environment. The supervision of
    CRNA's should be based on the experience of the anesthesia care
    providers (both CRNA and anesthesiologist), the mission of the medical
    treatment facility, and the complexity and type of surgical procedure.
        The ability to function autonomously in remote locations is
    required of all military CRNA's. It is the promise of this independence
    that draws many to military anesthesia service. Therefore, any attempt
    to adopt an anesthesia practice standard that would require that an
    anesthesia care team consisting of a CRNA and a supervising
    anesthesiologist to deliver all anesthesia would not only undermine
    mobilization effectiveness, but it would also prove detrimental to the
    morale of military CRNA's and would undermine attempts by the Services
    to recruit highly motivated individuals.
        AANA recommends that this Committee direct DOD to maintain the
    mobilization effectiveness of CRNA's by enforcement of the current
    practice standard of autonomous anesthesia care by CRNA's in all
    locations, with practice ratios of 3-4:1. This ratio is more cost-
    effective, with no sacrifice of quality of care.
                                   conclusion
        In conclusion, the AANA believes that retention and the appropriate
    utilization of CRNA's in the Services is of critical concern. There is
    a deficit of 48 CRNA's in fiscal year 1998. Many active-duty CRNA's are
    suffering from ineffective practice models. The efforts detailed above
    will assist the Services in maintaining the military's ability to meet
    its peacetime and mobilization medical mission in a cost-effective
    manner without sacrificing quality of care. We thank the Committee for
    its support of CRNA's. For further information, please contact Greta
    Todd, AANA Associate Director of Federal Government Affairs, at 202/
    484-8400.
        Pursuant to clause 2(g)(4) of the Rule XI of the Rules of the House
    of Representatives, the American Association of Nurse Anesthetists
    (AANA) and the witness representing AANA, Ronald Van Nest, disclose the
    following federal grants:
        The Council on Accreditation of Nurse Anesthesia Educational
    Programs, which is a subsidiary of the American Association of Nurse
    Anesthetists, was awarded a grant from the U.S. Department of
    Education, Funds for the Improvement of Post Secondary Education
    program in the following amounts:

    October 1, 1994...............................................  $104,059
    October 1, 1995...............................................   108,529
    October 1, 1996...............................................   113,529
    October 1, 1997.........................................................

                                                      APPENDIX ONE
    ----------------------------------------------------------------------------------------------------------------
                        Timeline                         CRNA                     Anesthesiologists
    ----------------------------------------------------------------------------------------------------------------
    End 1st year....................................         $0  $5,000 Variable Special Pay.
    End 2nd year....................................          0  5,000
        Mid-year: End nurse anesthesia program.               0  ...................................................
         Begin CRNA payback.
    End 3rd year....................................  \1\ 6,000  5,000.
                                                      \2\ $2,50
                                                              0
    End 4th year....................................      6,000  5,000.
        End Residency. Begin Anesthesiologist             2,500  ...................................................
         payback.
    End 5th year....................................      6,000
                                                          2,500  5,000.
                                                                 15,000 Additional Spec. Pay.
                                                                 33,000 physician ISP.
    End 6th year....................................      6,000
                                                          2,500  5,000.
                                                                 15,000.
                                                                 33,000.
        Mid-year: physician passes board............             2,500 Board Cert. Pay.
    End 7th year: End CRNA payback..................     15,000
                                                          2,500  12,000 Increased VSP.
                                                                 15,000.
                                                                 33,000.
                                                                 2,500.
    End 8th year....................................     15,000  ...................................................
        End physician payback.......................      2,500  12,000.
                                                                 15,000.
                                                                 33,000.
                                                                 2,500.
                                                     ---------------------------------------------------------------
          Total bonuses cost to DOD.................     69,000  253,500
    ----------------------------------------------------------------------------------------------------------------
    \1\ ISP.
    \2\ BCP.

                                     ______

                                  appendix two
    No Significant Differences in Anesthesia Outcome by Provider: Synopsis
    of Available Published Information Comparing CRNA and Anesthesiologist
                          Patient Anesthesia Outcomes
        Patients and health care institutions have an interest in
    information concerning the quality of care given by health care
    providers.
        Nurse anesthetists have been providing quality anesthesia care in
    the United States for more than 100 years. In administering more than
    65 percent of the anesthetics given annually, CRNA's have compiled an
    enviable safety record. No studies to date that have addressed
    anesthesia care outcomes have demonstrated that there is a difference
    in patient outcomes based on the type of provider.
      --In a study mandated by the U.S. Congress and performed by the
            National Academy of Sciences, National Research Council, the
            report to Congress states: ``There was no association of
            complications of anesthesia with the qualifications of the
            anesthetist or with the type of anesthesia.'' (House Committee
            Print No. 36, Health Care For American Veterans, page 156,
            dated June 7, 1977.)
      --A study concerning anesthetic-related deaths from 1969-1976 by
            Albert Bechtoldt, Jr. and the Anesthesia Study Committee,
            published in the North Carolina Medical Journal in April 1981,
            stated on page 257 that: ``Therefore, when we calculated the
            incidence of anesthetic-related deaths for each group which
            administered the anesthetic (Figure 2,) we found that the
            incidence among the three major groups (the CRNA, the
            anesthesiologist and the combination of CRNA and
            anesthesiologist) to be rather similar. Although the CRNA
            working alone accounted for about half of the anesthetic-
            related deaths, the CRNA working alone also accounted for about
            half of the anesthetics administered.''
      --The Stanford Center for Health Care Research conducted a 17-
            hospital intensive study of institutional differences. A report
            of the study stated that: ``Thus, using conservative
            statistical methods, we concluded that there were no
            significant differences in outcomes between the two groups of
            hospitals defined by type of anesthesia provider.'' See Forrest
            WH Jr. ``Outcome--The Effect of the Provider,'' at page 137 in
            Hirsh RA, et al (eds): Health Care Delivery in Anesthesia.
            1980. Philadelphia: George F. Stickley Company.
      --A 1994 legislatively mandated study by the Minnesota Department of
            Health looked at the provision of anesthesia services by
            anesthesiologists and certified nurse anesthetists. The
            resulting assessment of the existing studies determined that
            there are no studies, either national or Minnesota-specific,
            that conclusively show a difference in patient outcomes based
            on type of anesthesia provider.
      --The Center for Health Economics Research (CHER) completed a report
            in January 1988 for the Health Care Financing Administration
            (HCFA). The purpose of the report was to assist HCFA in the
            development of a fee schedule for CRNA direct Medicare
            reimbursement, effective January 1, 1989. CHER is an
            independent Boston-area based research organization that
            analyzes and evaluates federal health programs. As part of the
            report, CHER conducted a review of the literature concerning
            anesthesia quality. CHER addressed the question of whether the
            quality of anesthesia care varies by the type of anesthesia
            provider.
          As part of its literature review, CHER reviewed three studies
            which have explicitly examined anesthesia outcomes by provider
            type. The CHER researchers concluded that ``none of the studies
            detected significant differences in anesthesia outcomes among
            nurse anesthetists versus anesthesiologists.'' The CHER
            researchers stated that anesthesia outcomes between CRNA's and
            anesthesiologists ``have not been shown to differ.''
        The U.S. House of Representatives Committee on Armed Services
    Report on H.R. 1748, the Department of Defense Authorization Act for
    Fiscal Year 1988-89, commented on a proposed change in the supervision
    of nurse anesthetists in the military services that would require
    anesthesiologist supervision. The committee stated that: ``From the
    quality of care standpoint, the committee is not aware of any data that
    suggests that nurse anesthetists need a higher level of supervision
    than they currently have. If such data exists, the committee would be
    very interested to review it.''
        At pages 208 to 209, the report stated that: ``The committee
    understands that the current practice in the civilian, as well as
    military, medical care systems is that a nurse anesthetist must be
    supervised by a physician. Under the change proposed within the
    military, a nurse anesthetist would be required to be supervised by an
    anesthesiologist.
        ``The committee is extremely skeptical that such a policy change
    makes sense from a patient care, quality of care or medical readiness
    standpoint. In terms of patient care, the requirement that an
    anesthesiologist supervise every anesthetist would mean that many
    anesthesiologists would be forced to provide less patient care. Some
    small hospitals that currently have only one nurse anesthetist and no
    anesthesiologist would lose their anesthesia capability altogether
    under this proposal.''
        In concluding the discussion of this subject, the House committee
    said that the adoption of a change in policy that would require
    anesthesiologist supervision of nurse anesthetists must be supported by
    compelling reasons, with full explanation and supporting data.
        The practice of anesthesia has become safer in recent years due to
    improvements in pharmacological agents and the introduction of
    sophisticated technology. Recent studies have shown a dramatic
    reduction in anesthesia mortality rate to approximately 1 per 250,000
    anesthetics.
        In 1990, the Center for Disease Control (CDC) intended to conduct a
    research study on morbidity and mortality in anesthesia. Following a
    review of the anesthesia data, the CDC concluded that morbidity and
    mortality in anesthesia was too low to warrant the study.
        In a 1988 book, Mark Wood of the St. Paul Fire and Marine Insurance
    Company summarized a St. Paul study of its anesthesia-related claims.
    St. Paul studied the leading medical liability allegations that St.
    Paul-insured anesthesiologists and CRNA's reported between 1981 and
    1985. The data consisted of all claims, including pending and closed
    claims. St. Paul concluded that ``nurse anesthetist loss experience is
    very similar to that of anesthesiologists * * *.'' See Wood, MD,
    ``Monitoring Equipment and Loss Reduction: An Insurer's View,'' in
    Gravenstein JS, Holzer JF (eds): Safety and Cost Contained in
    Anesthesia. 1988. Stoneham, Mass.: Butterworth Publishers.
        From 1988 to 1995, St. Paul has returned nearly $24,000,000 in
    premiums to its insured CRNA's because the loss experience was
    substantially better than St. Paul originally predicted. Further, St.
    Paul stated in a July 1995 publication: The St. Paul Medical Services
    Nurse Anesthetist Update, that ``nurse anesthetists insured by St. Paul
    will experience an average countrywide 7 percent decrease in their
    medical professional liability insurance rates in 1995.
        AANA General Counsel Gene A. Blumenreich of Nutter, McClennen and
    Fish, LLP, Boston, Massachusetts has concluded that while the fact that
    there is no difference regarding the quality of care rendered by
    anesthesiologists and CRNA's ``may be surprising to the less
    knowledgeable, an understanding of the nature of anesthesia would lead
    one to expect this. The vast majority of anesthesia-related accidents
    have nothing to do with the level of education of the provider.''
    Blumenreich GA, Wolf BL. 1986. ``Restrictions on CRNA's imposed by
    physician-controlled insurance companies.'' AANA Journal 54:6:538-539.
        The most common anesthesia accidents are lack of oxygen supplied to
    the patient (hypoxia), intubation into the esophagus rather than the
    trachea and disconnection of oxygen supply to the patient. All of these
    accidents result from lack of attention to monitoring the patient, not
    lack of education. In fact, the Harvard Medical School standards in
    anesthesia are directed toward monitoring, which reiterates the basic
    point: Most anesthesia incidents relate to lack of attention to
    monitoring the patient, not lack of education.
        As Mr. Blumenreich has stated: ``Anesthesia seems to be an area
    where, beyond a certain level, outcome is only minimally affected by
    medical knowledge but is greatly affected by factors such as attention,
    concentration, organization and the ability to function as part of a
    team; factors toward which all professions strive but which no
    profession may claim a monopoly.'' Id.
        CRNA's offer a cost-effective alternative to all-physician care in
    the field of anesthesia. Anesthesia is an appropriate specialty for
    either nurses or physicians. The evidence to date is compelling and
    comprehensive that CRNA's provide safe, quality anesthesia care.
    Patient outcome is similar regardless of whether the anesthesia
    provider is a CRNA or an anesthesiologist.

        Senator Stevens. Thank you very much.
        Senator Inouye.
        Senator Inouye. Is it correct that of all the medical and
    surgical cases requiring anesthesia in this country, 85 percent
    are handled by nurse anesthetists?
        Mr. Van Nest. I cannot support that number, Senator. I have
    heard varying numbers. One number that the AANA uses is about
    65 percent of all the anesthesia rendered in rural hospitals is
    done by nurse anesthetists. We are roughly around 50 percent
    nationwide on anesthesia service. A lot of the service,
    however, that is rendered by an anesthesiologist is co-rendered
    by a nurse anesthetist, either in a supervisory or in a
    collaborative relationship. So there is a lot of anesthesia
    being administered by nurse anesthetists that may also be
    considered rendered by an anesthesiologist.
        Senator Inouye. What would be the national ratio between
    nurse anesthetists and M.D. anesthesiologists in hospitals?
        Mr. Van Nest. I am speaking for myself on this answer at
    this moment. The membership in the American Association of
    Nurse Anesthetists and the membership in the American Society
    of Anesthesiologists is roughly the same. We are very close,
    within a couple of thousand members, to the best of my
    knowledge.
        Senator Inouye. Thank you.
        Senator Stevens. Thank you very much.
    STATEMENT OF CHARLES L. CALKINS, NATIONAL EXECUTIVE
                SECRETARY, FLEET RESERVE ASSOCIATION
        Senator Stevens. Our next witness is Charles Calkins, of
    the Fleet Reserve Association.
        Mr. Calkins. Mr. Chairman, Senator Inouye, thank you for
    the opportunity to present the Fleet Reserve Association's
    priorities regarding personnel issues for fiscal year 1999.
        I also wish to express appreciation to you and members of
    the subcommittee for your strong support of the men and women
    serving in our uniformed services. Thanks to your efforts, they
    have seen significant quality-of-life improvements. Our country
    and its uniformed services face many challenges, not the least
    of which is turmoil in distant parts of the world that
    threatens our national interests. Inadequate defense funds,
    insufficient manpower, declining recruiting and retention
    rates, widening pay comparability, crumbling infrastructure,
    and disenfranchised older retirees add to these challenges.
        These and other issues are addressed in our complete
    statement and, in the interest of time, I will focus only on
    several key points.
        Compared to 1989, DOD funding in fiscal year 1999 will have
    dropped approximately $40 billion. This reduction helped to
    balance the budget, generate a projected surplus, and free up
    money for other government programs. Notable is an increase by
    next year of over $208 billion, compared to 1989, in Department
    of Health and Human Services funding.
        Keeping in mind the challenges discussed above, it seems
    those most deserving of consideration in the reallocation of
    government spending are the men and women who are now sharing
    the sacrifices and hardships of serving in the armed forces. In
    addition to these major challenges, additional personnel cuts
    are planned--not because the workload has decreased, but
    because money saved from the personnel account is sorely needed
    for procurement and modernization.
        Next year's mission demands will be greater than in 1998,
    and the Navy can ill afford to lose 18,000 more personnel, as
    recommended in the Quadrennial Defense Review [QDR]. And the
    Marine Corps should not be mandated to further reduce manpower
    below pre-1998 levels.
        Annual military pay raises always trail 15 months behind
    the applicable employment cost index [ECI]. And each year the
    pay gap grows wider. Hopefully Congress has not forgotten the
    need, when in 1981 we had to raise the pay of its senior
    enlisted members. At that time, many were voting with their
    feet.
        The Fleet Reserve Association [FRA] urges larger pay
    adjustments to narrow the pay gap in accordance with the latest
    full ECI data immediately prior to the effective date of the
    pay raise, and a gradual pay increase for senior enlisted
    personnel to bring it to a level commensurate with their
    leadership roles.
        Regarding health care, improvements are needed in Tricare.
    And a major priority is the test of the Federal Employees
    Health Benefit Program option for older beneficiaries.
    Confusion over the three military retirement plans is a concern
    for our sea services leaders, and all uniformed service members
    are pondering career decisions. Second- and third-term
    enlistees--and we are finding that first-termers--are also
    discovering that the retirement program they may look forward
    to provides significantly less financially than the previous
    two programs. Yet they must pay the same amount for health care
    for themselves and their families.
        The FRA believes Congress should repeal the 1986 Military
    Retirement Reform Act or redux.

                               prepared statement

        Mr. Chairman, Senator Inouye, the FRA shipmates appreciate
    your untiring commitment and support of personnel now serving
    and those who have served in the past. Thank you.
        [The statement follows:]
                    Prepared Statement of Charles L. Calkins
                                  introduction
        The FRA is a Congressionally-chartered organization of nearly
    160,000 enlisted Sea Service personnel who are now serving, or have
    served in the U.S. Navy, Marine Corps, and Coast Guard. The Association
    has been the ombudsman for the three services' active, reserve, and
    retired components since 1924. Most members are senior enlisted
    personnel who have served in one to three wars and have 20 to 30 (or
    more) years of honorable service.
        The Association's three staff members who are responsible for
    preparing this statement are Sea Service veterans with more than 100
    years of combined experience including active duty stints and time
    working military issues and programs on Capitol Hill. They take this
    opportunity to warn Congress of the pending damage to the Nation's
    defense establishment if the fiscal year 1999 defense budget is
    approved in its present form.
                    military readiness is now at code yellow
        It's impossible to ignore the many indicators spelling out the
    challenges facing the United States and its Armed Forces. In addition
    to inadequate funds and a very unsteady world, insufficient manpower is
    causing concern, recruiting and retention are worsening, pay
    comparability is widening, optempo continues to plague perstempo,
    infrastructure is quickly deteriorating, retired service members are
    up-in-arms for being ``disenfranchised'' at medical treatment
    facilities, commissaries are under constant threats of closure or
    privatization, and the list goes on.
        In this statement, FRA will briefly address most of these topics
    plus others of concern to its membership. (Additional information
    relating to these views is available on request from Retired Navy
    Master Chief Joe Barnes, FRA Director of Legislative Programs, at 703-
    683-1400 x 312.)
                                    manpower
        The Chairman of the Joint Chiefs of Staff, said it best, ``The
    reality of our current tempo is that we are doing more operations with
    a smaller force.''
        Since the Department of Defense (DOD) convinced Congress that the
    so-called ``peacetime'' Armed Forces need but a ``few good men and
    women,'' operation tempos have significantly increased. The
    ``downsizing'' of manpower strengths has led to longer deployments, as
    well as family problems, instability, stress, and falling retention
    numbers, to name a few.
        Take a look at the Navy's situation. When things were ``hot''
    between the United States and USSR, only about 25 percent of the force
    was deployed at one time. Today, according to Vice Adm. Daniel Oliver,
    Chief of Naval Personnel, it's 30-33 percent forward deployed with 50-
    60 percent underway on any given day. With the trouble spots in the
    Middle East apparently here to stay, the Navy's mission demands will be
    greater than in fiscal year 1998 and it can ill-afford to lose 18,000
    more personnel as recommended in the Quadrennial Defense Review (QDR).
        In a recent visit to Naval installations in the Virginia Tidewater
    area, FRA National President Robert Beese found discontent among
    submariners fearing that further manpower reductions will adversely
    effect their mission, yet the QDR recommends reducing the Navy's
    submarine force from 73 boats to 50. However, the Navy plans to have 75
    submarines operational in fiscal year 1999. Currently, submarines are
    deployed 50 percent of the time with 25 percent forward deployed.
    (Beese recommends that more members of Congress should visit the boats.
    Arrangements may be made through the Navy or FRA.)
        The Marines were deployed less during the Cold War years than now.
    Despite indications that optempo would be reduced in fiscal year 1999,
    Marine land forces plan to be involved in 28 joint exercises, the same
    number as in fiscal year 1997, and 66 training exercises, five (5) more
    than scheduled for fiscal year 1998. The Marines are expected to do
    this with 1,800 less personnel than in fiscal years 1997 and 1998.
        FRA states unequivocally that the Navy and Marine Corps should not
    be mandated to further reduce manpower strengths below pre-fiscal year
    1998 levels.
                                   recruiting
        The good news for fiscal year 1997 was that the Armed Services met
    their quality and numerical goals. The bad news is that it was done
    with smoke and mirrors. The Pentagon reduced the original requirements.
    Quality is assessed at a 60-90 percentile of accessions scoring in the
    upper half of the military's entrance exams, but the services just eked
    past the lower figure at the 63 percent level down from 74 percent in
    1992.
        Recruiting will be tougher for fiscal year 1999. The propensity of
    youths interested in serving their country in uniform has dropped from
    26.2 percent in 1991 to 20.7 percent in 1996. The economy is doing
    especially well and civilian employment is there for anyone searching
    for a job. Especially alarming is the fact that except for educational
    benefits, there are fewer reasons for today's youth to enlist in the
    military.
        Even pay and compensation fails to influence a single prospect's
    decision to join one of the Armed Forces. The consensus is that the
    military does not fairly treat its people (not surprising to military
    retirees) and most do not believe the military takes better care of its
    people than civilian employers. Last, but certainly not least, the
    bitter reality that the military fails to fulfill promises to its
    retirees (and veterans), results in fewer trusted family members or
    mentors encouraging the Nation's youth to seek a tour of duty in the
    Army, Navy, Marine Corps, Air Force, or Coast Guard.
        What's the answer? More funds to beef up recruiting programs.
    Additional monies will provide extra recruiters to canvass for
    prospective accessions, help to bolster recruiters' morale, relieve
    family tensions, and buy more positive advertising. This will help
    ``sell'' the nation's mothers and fathers, aunts and uncles,
    grandfathers, and grandmothers, and hopefully spark the interest of
    young people to consider donning the military uniform.
        DOD spends an average of $7,000 to access one recruit. If Congress
    should see fit to add more dollars to attain the Services' goals, then
    the money is wisely spent, thus assuring our citizens that they have
    the best and brightest of the Nation's youth manning the ramparts after
    effective training to achieve the highest state of combat readiness.
                                   retention
        The Navy predicts tougher retention times in the near future and
    the following analysis supports this contention.

                                                          NAVY
                                                      [In percent]
    ----------------------------------------------------------------------------------------------------------------
                                                                                           Second
                                                                        First termers     termers      Third termers
    ----------------------------------------------------------------------------------------------------------------
    Prior.............................................................           38             54                62
    Current...........................................................           30.8           48.4              57
    ----------------------------------------------------------------------------------------------------------------

        Even the Air Force has fewer experienced and trained personnel
    staying on board for longer tours of duty. Its retention rates look
    like this:

                                                      [In percent]
    ----------------------------------------------------------------------------------------------------------------
                                                                       First termers  Second termers   Third termers
    ----------------------------------------------------------------------------------------------------------------
    Prior...........................................................              61              82              97
    Current.........................................................              58              72              94
    ----------------------------------------------------------------------------------------------------------------

        Most significant is the loss in second term service members who
    have the most influence on the young first termers. They are small unit
    leaders expected to replace more senior enlisted members in the out
    years. With more retirements coming on line, second and third termers
    are needed even more than during the mid-1980's and early 1990's. The
    military loses a fraction of its high state of readiness with each
    departure.
        Retention is down for a number of reasons: better paying jobs in
    the civilian sector for trained personnel; excessive time away from
    family; questionable career choice due to the drawdown; lack of
    promotion opportunities; loss of confidence in senior leadership; job
    dissatisfaction; shortfalls in personnel budget (PCS and SRB delays);
    and erosion of retirement benefits.
        The attrition rate among young men and women prior to completing
    their first enlistment is also troubling. About one-third drop out for
    one reason or another. The military must develop a better program to
    screen applicants. FRA recommends enactment of legislation allowing the
    military to review juvenile records of those seeking to join its ranks.
        For example, 24,604 of 39,496 of one military service's accessions
    for 1996 required either drug or moral waivers. Some officials are
    convinced that these youths will repeat similar offenses for which they
    were granted waivers prior to the end of active service.
                               pay and allowances
        FRA is grateful for the enhancement of a number of compensation
    items in the Fiscal Year 1998 National Defense Authorization and
    Appropriations Acts. Most noteworthy were the consolidation of the
    quarters and housing allowances, an increase in hazardous duty
    incentive pay, special pay for certain hardship duty locales, bonuses
    in lieu of special pay for enlisted members extending certain overseas
    tours, etc. However, FRA was disappointed that Congress ``reformed''
    the subsistence allowance.
        Pay.--Last year FRA provided a chart depicting how the
    Administration, et al., determines annual military pay raises which are
    always 15 months behind the applicable Employment Cost Index (ECI).
    Every year the gap comparing military pay with civilian wages, grows
    wider, and it now stands above the 13 percent mark.
        Also included in last year's presentation was an additional chart
    depicting the decline in the ratio of pay between a senior petty
    officer/noncommissioned officer and a recruit seaman/private. Prior to
    the All Volunteer Force the ratio was 4.6:1. It is now 2.6:1,
    indicating nearly a 44 percent decline. In pursuit of a justification
    for the decline, which is not indicative in the commissioned officer
    pay grades, FRA heard many excuses. Most prevalent was that junior
    personnel need more pay because they're married, have children, are on
    food stamps, in receipt of WIC, can't afford civilian rental and other
    costs including auto insurance, etc.
        FRA firmly believes military personnel in the junior ranks should
    be paid adequate pay and allowances, but not at the expense of their
    senior enlisted leaders.
        Hopefully, Congress hasn't forgotten that it had to raise the pay
    of its senior enlisted service members in 1981 above that authorized
    for other pay grades. Petty officers and non-commissioned officers in
    those pay grades were voting with their feet. The Navy did not have
    enough experienced petty officers to take its ships to sea. The Army
    was deeply concerned that its forces had become ``hollow''. Is Congress
    aware that the same problem is beginning to eat away at the senior and
    mid-level enlisted ranks?
        FRA has turned on the caution light. The annual cry and hue for
    more junior enlisted pay is again heard however senior enlisted are not
    included.
        Basic allowance for subsistence (BAS).--As stated above, FRA is
    extremely disappointed with Congress capping future BAS payments for
    career enlisted personnel in order to better compensate non-career
    junior personnel. The Association finds this unacceptable, not because
    the latter group is not deserving of recognition, but that the law
    plays one against the other.
        Sea pay.--For the past two years FRA surveyed Navy senior enlisted
    leaders as to their thoughts concerning payment of sea pay to junior
    enlisted personnel (E1-E3) serving aboard naval vessels whose more
    senior crew members are authorized sea pay. The Association has
    received a strong affirmative, particularly from those petty officers
    (and many officers) who serve or have been deployed aboard ship for 6
    months or more. The idea came from a 1995 visit, in connection with the
    Defense Science Board Task Force on Quality of Life, aboard the U.S.S.
    Kitty Hawk and U.S.S. Anchorage.
        Recommendations.--In view of the above statements on Pay and
    Allowances, FRA recommends the following Congressional actions.
      --Narrow the pay gap between military pay and civilian wages by
            increasing military pay in accordance with the latest full ECI
            growth immediately prior to the effective date of the pay
            raise.
      --Gradually increase senior enlisted personnel basic pay to a level
            that is more commensurate with their leadership roles.
      --Revise Section 602 of Public Law 105-85 to provide equitable
            increases in BAS for all enlisted personnel.
      --Adopt sea pay for pay grades E1 thru E3 for those members assigned
            duty aboard U.S. naval vessels deployed for 30 days or more.
        Action taken on behalf of these recommendations should include
    authorizing and appropriating additional funds without directing the
    Services to meet the obligation under current funding policies.
                                  health care
        FRA has joined with The Military Coalition (TMC) in its request for
    enhanced health care programs for uniformed services personnel. In a
    statement prepared for the subcommittees having oversight of the
    military's health care program, TMC seeks improvements in TriCare,
    adoption of a Medicare subvention program for those over-65
    beneficiaries unable to access military treatment facilities, a
    widespread pharmaceutical drug mail-order program, and a Federal
    Employees Health Benefit Program (FEHBP) test program for over-65
    beneficiaries who have no access to MTF's or Medicare-contracted HMO's.
                                  commissaries
        Commissaries are part of the military compensation package. The
    system has been around long enough to become a permanent part of the
    military's benefit package, especially for those who endure a career in
    the Armed Forces.
        Nevertheless, the privilege to use or operate the commissaries has
    been under continual scrutiny since the early 1970's. It's either close
    the stores, privatize them, and/or increase the surcharge.
        Currently, commissary operations are subsidized by Congressional
    appropriations, and rightly so. The subsidy funds operating costs that
    include pay for the stores' employees. It was Congress that mandated
    the services to provide pay and benefits to the workers at identical
    wage scales afforded federal employees.
        FRA urges Congress to continue to authorize and appropriate
    sufficient funds to maintain the commissary program at the current
    level of service to its customers.
                 transition and relocation assistance programs
        Efforts may be underway to abolish the Transition Assistance
    Program (TAP) and the Relocation Assistance Program. The reason given
    is that there is no longer any use for them. FRA disagrees.
        First, the ``drawdown'' in military manpower strengths may continue
    into fiscal year 1999, despite FRA's opposition. As long as that threat
    hangs over the heads of our uniformed personnel, there is a compelling
    need for TAP.
        Even if the ``drawdown'' is stopped for fiscal year 1999, FRA
    believes the military services have an obligation to reward their
    honorably discharged members with a program assisting in returning them
    to civilian life.
        The Relocation Assistance Program is not, nor was it ever intended
    to be related to TAP. It's a program assisting service members
    transferred to new bases. Many of the younger members, particularly
    those with families, welcome the assistance when moving to a new base
    where everything is unfamiliar.
        FRA urges Congress to fully fund both programs so that they may
    serve those who serve or have served the Nation in uniform.
                              military retirement
        Confusion over the three military retirement plans is causing
    concern for the many uniformed service members contemplating a career
    in the Armed Forces. Those entering the military after September 8,
    1980 will soon be eligible for retirement. They probably know that the
    computation of their retired pay will produce lower payments than those
    received by their comrades-in-arms whose entry dates were prior to the
    1980 date.
        Service members with dates of entry after July 31, 1986, now second
    and third term enlistees, are discovering that the retirement program
    they may look forward to provides less financial rewards than those
    enlisting prior to the 1986 date and, again, prior to 1980 date. They
    question whether further commitment as a member of the active forces is
    worth the additional years of sacrifices and hardships.
        If the post-1986 members stay, they face reduced pay over those
    retiring earlier, however they must pay the same amount for the
    military's health care (TriCare) for themselves and their families.
        FRA believes Congress should repeal the Military Retirement Reform
    Act, Public Law 99-348, of July 1, 1986. Its effect on retention in the
    Armed Forces is now becoming clear. FRA predicts that this will get
    worse if Congress fails to take positive action to make military
    retirement more attractive to the post-July 31, 1986 accessions.
        Additionally, FRA recommends that Congress provide equitable cost-
    of-living adjustments (COLA's) to all military retirees reduced only by
    the month retired, not the year.
                               concurrent receipt
        Many words have been written advocating the concurrent receipt of
    non-disability military retired pay and veterans' compensation without
    reduction in either payment. To date, Congress has seen fit to ignore
    this injustice and the issue continues to be a ``hot potato'' for both
    the National Security/Armed Services and Veterans Affairs Committees.
        This distinguished Subcommittee is familiar with the issue and
    legislation introduced by Rep. Michael Bilirakis of Florida. There are
    three bills, each covering a broader number of recipients. FRA supports
    all three but realizes the costs associated with two of the bills are
    prohibitive. Therefore, the Association urges the adoption of H.R. 44
    with a cost of $42 million per year. The legislation addresses the need
    to supplement the income of the most disabled of military retirees.
                               survivor benefits
        FRA salutes Congress for enacting the ``Forgotten Widows''
    legislation. It should offer a bit more dignity to these ladies as well
    as some financial relief. The task now is for DOD and the military/
    veterans organization to disseminate the word on how to apply. Upon
    receipt of this information, FRA will give it widespread distribution
    throughout the Association's membership.
        There are two additional ``fixes'' FRA wishes Congress to address
    for fiscal year 1999. The first concerns surviving souses of service
    members formerly in receipt of Dependents Indemnity Compensation (DIC)
    who lost it upon remarriage. A few years ago these spouses were
    authorized resumption of payments if their subsequent marriage
    terminated upon death or divorce. The Association seeks this
    subcommittee's support in urging the Committees on Veterans' Affairs to
    reauthorize and fund receipt of DIC payments to these spouses. (38 USC
    applies.)
        The second issue is authorization for a paid-up option in the
    Survivor Benefit Plan (SBP). Currently there is considerable discontent
    with SBP premiums-for-life provisions. Once the participant reaches a
    more senior year in life, he/she questions the value in continuing the
    plan. More serious attention is brought to the issue when the covered
    spouse attains the age of 62. For most participants, once the spouse
    becomes eligible for Social Security benefits, the 55 percent-of-
    retired-pay promise drops to 35 percent.
        In a July 1996 DOD study of SBP, it was discovered that the
    government's statutory contribution of 40 percent has dropped to 26
    percent. FRA believes there is justification to seek an amendment to
    SBP (10 USC 1447-1460) to offer the retiree-participant a paid-up plan
    once he or she attains the age of 70, or pays premiums into the plan
    for 30 years, whichever occurs first. (The Association is in support of
    the position advocated by The Military Coalition (TMC) on this issue.)
                 uniformed services thrift savings plan (ustsp)
        FRA strongly supports encouraging personnel to save money for
    future financial needs, however the Association is opposed to the
    proposed USTSP plan because it is flawed. Despite assurances that the
    proposal is for all military personnel, junior enlisted service
    members, for the most part, will not be able to participate. Money is
    tight, particularly for those who are married.
        As a representative of enlisted Sea Service personnel, FRA has
    received only a few requests from its members urging support of the
    plan. Other considerations prevent the Association from seeking the
    enactment of the proposal and FRA will be pleased, if requested, to
    share them with the Subcommittee.
                          montgomery gi bill and veap
        In 1996 legislation was enacted authorizing service members
    enrolled in the Veterans Educational Assistance Program (VEAP) to
    enroll in the Montgomery GI Bill (MGIB), a more generous plan. The law
    provided that members with active VEAP accounts on October 9, 1996
    would be eligible to take advantage of the conversion opportunity.
    However, a legal interpretation of the law later required members to
    still have money in the account in order to be considered ``active.''
    This disenfranchised thousands of members who had been counseled by the
    services to withdraw the funds in their accounts.
        Many of the Association's members have expressed frustration over
    the issue. Since the counseling was in error, FRA seeks the
    Subcommittee's support in the allocation of additional funds in the
    Veterans' Affairs budget with an authorization in order to expand the
    number of members who may convert.
                         navy and marine corps reserve
        Most issues addressed above also apply to the Reserve enlisted
    members of the Navy and Marine Corps, and somewhat to the Coast Guard.
    FRA also recommends your favorable consideration of the following
    proposals.
      --Amend the IRS Tax Code to authorize tax deductions for un-
            reimbursed expenses involved in travel and transportation to
            and from Reserve drill sites.
      --Require that the States not calculate remuneration for Reserve
            services when computing unemployment compensation.
      --Authorize a test of unlimited commissary privileges for Reservists
            and, if successful, authorize full time access.
        The Navy, Marine Corps, and Coast Guard Reserves add greatly to the
    capability and combat readiness of their respective services.
    Maintaining their well-being and combat readiness in recognition of
    their contributions to today's demanding optempo is a must. Every
    taxpayer dollar to fund the reserve components provides a three-fold or
    greater return on the investment.
                                   conclusion
        Mister Chairman, FRA Shipmates wish to express their sincere
    appreciation to you and members of the Subcommittee for your tremendous
    support of the men and women serving in 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.

        Senator Inouye [presiding]. I thank you very much, sir. I
    can assure you that the committee's concern echoes yours. We
    are very much concerned about retention and recruiting. Signs
    are beginning to show that we may be headed for trouble down
    the road.
        Mr. Calkins. Well, I just had a discussion with our new
    MCPON this morning over at our headquarters. And he has had
    roughly 20 audiences since he has been in office. And his
    comment to me was: Chuck, please help us do something, because
    we have really got a problem. And like he said, it is coming
    not only from the second-and third-termers, but from the first-
    termers, as well. They are taking a look down the line.
        And we would appreciate any help you could give us on that,
    Senator.
        Senator Inouye. Thank you very much.
        Mr. Calkins. Thank you.
    STATEMENT OF ANN KOLKER, EXECUTIVE DIRECTOR, OVARIAN
                CANCER NATIONAL ALLIANCE: OVAR'COMING
                TOGETHER
        Senator Inouye. May I now call upon Ms. Ann Kolker,
    Executive Director, Ovarian Cancer National Alliance.
        Ms. Kolker, welcome.
        Ms. Kolker. Thank you, Senator. Thank you very much for the
    opportunity to testify at this important hearing. And thank
    you, Senator Inouye and other members of the committee, for
    including, and last year increasing, critically needed funds
    for ovarian cancer research in the Congressional Special
    Interest Research Program.
        I am Ann Kolker, a founder, and now the Executive Director
    of the Ovarian Cancer National Alliance. The Alliance was
    formed last summer, and it is the creation of leaders from the
    growing number of ovarian cancer groups across the country.
    These groups united to establish an umbrella organization, the
    Alliance, in order to have a coordinated effort that will put
    ovarian cancer policy, education and research issues squarely
    on the national agenda.
        Our statement today marks our first public appearance here
    in the Senate.
        I also serve as the consumer representative on the
    integration panel of the DOD Ovarian Cancer Research Program.
    As you and other members of the committee are aware I am
    certain, the Ovarian Cancer Research Program is still in its
    first funding cycle. So there is not a track record yet for
    this program as there is for the Breast Cancer Research
    Program, for example. We look to the success of that effort to
    inform the expansion of the Ovarian Cancer Program.
        On behalf of the Alliance, I have a straightforward
    message: Ovarian cancer research has, to date, been drastically
    underfunded. It is urgent that policymakers dramatically expand
    resources devoted to this disease. The goal must be to increase
    in a significant way the ovarian cancer survival rate, which is
    so poor that this disease has the unwelcome distinction of
    being the deadliest of the female cancers.
        Ovarian cancer is indeed life threatening. More than 50
    percent of the women who have it die within 5 years of
    diagnosis. That is because unfortunately, in at least 70
    percent of cases, women are not diagnosed until the cancer has
    reached an advanced stage, when it is often too late to cure.
    But, as with other cancers, when women are diagnosed in early
    stages--which occurs in less than one-quarter of the cases--the
    5-year survival rate is over 90 percent. And I was very
    fortunate to be diagnosed in this stage.
        The key to improved survival is of course early detection.
    And for ovarian cancer, a critical component of earlier
    detection is a better understanding of key scientific aspects
    of the disease. But this will only happen if research is
    substantially increased. The creation of the Ovarian Cancer
    Research Program several years ago, and last year's expanded
    appropriation of $10 million, were important steps in that
    direction.
        Today we ask you to consider a significant funding increase
    for the program. It is essential to build on the work that is
    just underway and to bolster research on a disease that each
    year kills one-third as many women as breast cancer but
    receives less than one-tenth the dedicated research dollars in
    the DOD budget.
        Our goal, as a part of this research, is to develop a
    screening tool that is reliable and affordable and easy to
    administer. There is no screening tool for ovarian cancer in
    the way that there is for cervical cancer, breast cancer and
    prostate cancer. And until this is done, early detection of
    ovarian cancer will continue to elude too many women and their
    families. Thousands and thousands of women will needlessly die.
    It is our strong hope that the research funded through this
    important program will ultimately yield a screening instrument.
        The 183,000 women currently living with ovarian cancer, our
    sisters, our daughters, our granddaughters, and the millions of
    at-risk women around the country, and all of our families look
    to your support for increasing the resources dedicated to this
    lethal disease.
        Thank you very, very much.

                               prepared statement

        Senator Inouye. Thank you very much, Ms. Kolker.
        At this moment, the Department of Defense Medical
    Department is in the process of developing a simple, reliable
    screening process.
        Ms. Kolker. We hope this happens in an expeditious way.
        Senator Inouye. Thank you very much.
        Ms. Kolker. Thank you.
        [The statement follows:]
                        Prepared Statement of Ann Kolker
        Thank you very much for the opportunity to testify at this
    important hearing.
        I am Ann Kolker, a founder and now executive director of the
    Ovarian Cancer National Alliance: Ovar'coming Together. The Alliance,
    formed last summer, is the creation of leaders from the growing number
    of ovarian cancer groups across the country. These groups united to
    establish an umbrella group, the Alliance, in order to have a
    coordinated, professionally managed effort that will put ovarian cancer
    policy, education and research issues squarely on the agenda of
    national policy makers and leaders in women's health. This statement,
    which addresses the importance of the Department of Defense Ovarian
    Cancer Research Program to our community, marks our first public
    appearance here in the Senate.
        I also serve as a consumer representative on the Integration Panel
    of DOD Ovarian Cancer Research Program (OCRP). As members of the
    Committee are aware, the OCRP is still in its first funding cycle. This
    means there is no track record yet for the ovarian cancer program, as
    there is for other research efforts supported through the Congressional
    Special Interest Research Program. Many of us in the ovarian cancer
    community are aware of the success of the Breast Cancer Research
    Program. We look to that effort to inform the expansion and development
    of the ovarian cancer program.
        On behalf of the Alliance, I have a straightforward message:
    ovarian cancer research has to date, been drastically under funded. It
    is urgent that policy makers dramatically expand resources devoted to
    this disease. The Alliance is grateful to this Committee for including
    $10 million for ovarian cancer research in the Congressional Special
    Interest Research Program for fiscal year 1998. However, there is a
    critical need for more funds in the coming year. We must make an all
    out effort to increase, in a significant way, the ovarian cancer
    survival rate--which is so poor that this disease has the unwelcome
    distinction of being the deadliest of the female cancers.
        Ovarian cancer is life threatening: more than 50 percent of the
    women who have it die within five years of diagnosis. That is because
    in at least 70 percent of cases, women are not diagnosed until the
    cancer has reached an advanced stage, when it is often too late to
    cure. In these all too common cases, the fatality rate is an alarming
    80 percent. But when women are diagnosed in first stage, which occurs
    in less than one-quarter of cases, the five year survival rate is over
    90 percent. I was fortunate to be diagnosed in this stage.
        There is of course, more than one reason for these sobering
    statistics. Let me talk first about the one that this committee is in a
    position to address. Scientific research is drastically under funded.
    Knowledge about key aspects of ovarian cancer is so limited that
    diagnostic tools are too often imprecise and there is no simple,
    reliable screening mechanism for the general population. As is the case
    with other cancers, the key to improved survival is early detection.
    But for ovarian cancer--there are no early detection tools that work
    for the general population. These life-saving measures will only be
    found when more research funding is made available.
        The creation of the Ovarian Cancer Research Program several years
    ago, and last year's expanded appropriation of $10 million, were
    important steps, in that direction. Today we ask you to consider a
    significant funding increase, in order to build on the work that is
    just underway in the Ovarian Cancer Research Program, and to bolster
    research on a disease that each year kills one-third as many women as
    breast cancer, but receives less than one-tenth the dedicated research
    dollars in the DOD budget.
        An ultimate goal of the Alliance is to prevent ovarian cancer. But,
    until this happens, an immediate priority is to increase the research
    dedicated to advancing scientific understanding. This in turn, will
    lead to a substantial increase in the early detection rate--
    particularly if the research community can identify bio and other
    markers that will improve diagnostic tools and result in the
    development of a reliable screening mechanism, as simple and accessible
    as the Pap smear is for cervical cancer, the mammogram for breast
    cancer or the PSA test for prostate cancer.
        We know that the incidence of ovarian cancer is not nearly as great
    as breast, cervical or prostate cancer--the one good thing going for
    ovarian cancer. However, experience has shown us that early detection
    saves lives: the introduction of the Pap smear, and the use of
    mammography--even with their limitations--have dramatically improved
    early detection of cervical and breast cancer, and spared many people
    with these terrible diseases the early death sentence that 75 percent
    of women with ovarian cancer face.
        For the Alliance, the development of a screening device that is
    affordable, reliable, and easy to administer is a top priority. Until
    this is done, early detection will continue to elude too many women and
    their families. Thousands and thousands of women will needlessly
    continue to die. It is our strong hope that the research funded through
    this important program will ultimately yield such an instrument.
        I don't want to leave the committee with the impression that the
    only reason for the very low rate of early detections is the dearth of
    research. Another critical factor is the limited awareness of the
    disease's subtle symptoms in the general medical community. Because it
    is not a common disease--affecting only 1 in 55 women--it is not ``on
    the screen'' of many internists and family physicians--the doctors who
    first see women who report abdominal discomfort, bloating, bleeding or
    some of the other common, but vague, symptoms. As a result, doctors
    often misinterpret these symptoms--telling their patients that their
    complaints ``come with the territory of middle age'' or referring them
    to gastroenterologists. All the while of course, the cancer is
    advancing, and the woman's chances of being treated in time to be cured
    diminish. Gaining the attention of the medical community about ovarian
    cancer will also help to increase early detection, and ultimately
    improve survivor outcome.
        Another reason for the high mortality rate is that women themselves
    are not sufficiently aware of this disease. And even women with more
    explicit risk factors--women who have never had a child, or who have a
    strong family history of ovarian, breast or colon cancer--for example--
    cannot be assumed to be alert to the disease. This awareness problem is
    compounded by the fact that the symptoms may be subtle, such as
    unexplained fatigue, loss of appetite, nausea or constipation, and not
    necessarily unique to ovarian cancer. Broad-based public education
    programs will go a long way to inform women that when that when these
    symptoms persist over time, or changes in their bodies tell them
    ``something is definitely wrong, '' they must request testing for
    ovarian cancer, as well as for the litany of intestinal maladies that
    they are usually tested for. In short, increased awareness among both
    physicians and consumers should lead to more early stage diagnoses, and
    improved survival over time.
        Those of us working with the Alliance are aware that there is vital
    research on many aspects of ovarian cancer taking place at cancer
    centers and in the private sector across the country. Indeed, without
    the dramatic advances that have been made in the past few years in
    treating ovarian cancer, many women, including myself, would not be
    around, or certainly, would not have active lives. For ``a new lease on
    life'' we are grateful to those who have conducted the research and
    trials that have led to improved therapies. We urge that as research is
    expanded to new areas, the important efforts to develop more effective
    treatments for advanced stage and treatment resistant disease continue
    to move forward.
        In the past couple of years some new monies--both public and
    private--have been designated for ovarian cancer research. An infusion
    of new funds--particularly from this committee--has expanded the
    avenues of inquiry that can be pursued--and that is an exciting
    development. However, as we all know, much more remains to be done. It
    is essential to gain a better understanding of key scientific aspects
    of ovarian cancer, in order to increase dramatically the percentage of
    cases diagnosed in early stage, when the prospects of survival are very
    high, and to prevent recurrence, which plagues so many women.
        Thank you for your attention to this important women's health
    issues. The 183,000 women currently living with ovarian cancer, our
    sisters, daughters and granddaughters, the millions of at-risk women
    around the country, and all of our families look to your support for
    increasing the resources dedicated to this lethal disease.
    STATEMENT OF CHARLES C. PARTRIDGE, COLONEL, USA
                (RETIRED), NATIONAL MILITARY AND VETERANS
                ALLIANCE
        Senator Inouye. Our next witness is Colonel Charles C.
    Partridge, Legislative Counsel, National Association for
    Uniformed Services.
        Colonel Partridge, welcome, sir.
        Colonel Partridge. Thank you very much, Senator Inouye, for
    the opportunity to testify before this committee.
        The National Association for Uniformed Services and the
    National Military Veterans Alliance's primary concern is the
    current problems in medical care with the Department of
    Defense. And I know that this committee, over the past 5 years,
    has increased spending for the Defense Health Program nearly a
    billion dollars over what was requested by the Department of
    Defense. We appreciate your support in that. We also appreciate
    the support of this committee for medicare subvention, which is
    being developed now as a demonstration program.
        Our problem today is that even when all of these programs
    are put into effect, there will still be some 40 to 50 percent
    of military beneficiaries who will have no benefit. They will
    have no access to the military hospitals even when medicare
    subvention is fully in place, or they live in a location where
    they cannot access a military hospital. Because at age 65,
    under the current law, military retirees are the only Federal
    employees who lose their guaranteed employer-provided benefit.
    At age 65, they have no guarantees. If they can get in a
    military hospital, if the space is there, if the drugs are
    there, of course they get them. Otherwise they do not.
        We think medicare subvention will help, but it will not be
    the full solution. We think the complete solution is enacting
    the Federal Employees Health Benefit plan for military
    retirees, particularly those over 65. With the enactment of
    this program nationwide, it would provide access to all
    beneficiaries. They would have a benefit just as Federal
    civilians have from the time they enter the service until the
    time they leave it. Now they do not have that.
        The Senate Armed Services Committee has taken a step in the
    right direction. They have a provision in the current defense
    bill that would provide for a demonstration of the Federal
    Employees Health Benefit Program. The problem is it is too
    small and it is underfunded. And what we would like this
    committee to do is to add something like $100 million for the
    purpose of carrying out this program this coming year. And
    then, if we could add $100 million a year for the next 4 years,
    we believe that would be a good start toward solving this
    problem.
        That concludes my statement, Senator Inouye. If you have
    any questions, I would be glad to answer them.

                               prepared statement

        Senator Inouye. Well, my concerns are your concerns. And I
    believe that promises made must be kept.
        Colonel Partridge. Thank you, sir.
        Senator Inouye. Colonel, we will do our best.
        Colonel Partridge. Thank you.
        Senator Inouye. Thank you very much, sir.
        [The statement follows:]
                   Prepared Statement of Charles C. Partridge
                                  introduction
        Mr. Chairman and distinguished members of the Committee, NAUS and
    the National Military and Veterans Alliance 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 Alliance includes 15 military and veterans organizations. These
    organizations represent over 3,500,000 members of the seven uniformed
    services, officer and enlisted, active duty, reserve, National Guard,
    retired and other veterans plus their families and survivors. These
    organizations whose top priority is a strong national defense are
    listed below:

    Naval Enlisted Reserve Association
    American Military Retirees Association
    American Retirees Association
    Gold Star Wives of America
    Korean War Veterans Association
    Military Order of the Purple Heart
    Military Order of the World Wars
    National Assn. for Uniformed Services
    Naval Reserve Association
    Non Commissioned Officers Assn.
    The Retired Enlisted Association
    Society of Medical Consultants to the Armed Forces
    Tragedy Assistance Prog for Survivors
    Veterans of Foreign Wars

        Medical care along with adequate pay and inflation protected
    retired pay and commissaries are the top concerns of the military
    community. With base and hospital closures and reductions in medical
    personnel, the increasing lack of available health care continues to be
    a major concern to active and retired personnel alike.
        We want to thank the committee for its long standing interest in
    Military Health Care and for its support for the Federal Employees
    Health Benefits Program for military retirees.
                                   background
        The military health system has several missions, first and foremost
    is caring for active duty troops and maintaining military medical care
    readiness, readiness training and contingency operations as well as
    providing care for active duty family members; continuing to provide
    promised, lifetime medical care to military retirees, and their family
    members. To carry out these missions, top quality personnel to staff
    military medical units, hospitals and clinics are essential. These
    personnel are attracted to military medicine through the Uniformed
    Services University of the Health Sciences, the U.S. Health Profession
    Scholarship Program and quality graduate medical education programs
    sponsored by the various military medical services. Each is an
    important element of the system and are all linked together.
        A military medical system is necessary to support not only the
    present active forces but also to meet future requirements. To attract,
    maintain and properly certify highly qualified medical professionals
    requires assuring them that they will have a complete range of patients
    with varied health problems to include older retirees. They can't be
    adequately trained treating only young (average 23) service members and
    young family members. This means it is imperative to maintain a strong,
    vibrant, capable direct care system.
                                    current
        The direct care system coupled with TRICARE Prime, Extra and
    Standard along with Medicare Subvention and increased cooperation
    between DOD and DVA should result in adequate care for all eligible
    beneficiaries. Unfortunately, military personnel are increasingly being
    disenfranchised and DOD has not yet developed a plan that will provide
    an adequate health care option for all DOD beneficiaries. In addition,
    the TRICARE system is flawed. Some of the problems and recommendations
    for solving them follow:
        A DOD study found that TRICARE administrative costs are far too
    high. Each Managed Care support contract proposal costs millions of
    dollars, each winner can expect a protest from the losers costing more
    millions. More money is being spent on medical administration and less
    on the patient. We believe this committee should direct a review of
    alternative means of procuring private sector healthcare to supplement
    the Military healthcare system. Pending that review, current contracts
    in the Western regions which will soon require recompeting should be
    extended. The extension would provide badly needed program stability
    before starting another round of contracting.
        While we support expanding TRICARE Prime beyond catchment areas,
    some areas are too sparsely populated to create networks. If the
    TRICARE Standard benefit were adequate, beneficiaries in those areas
    could still be served. However, the CHAMPUS Maximum Allowance Charge
    (CMAC) is too low. The CMAC should be linked to the service benefit
    plan of the Federal Employees Benefits Program plan benefit as Congress
    originally directed, rather than the Medicare rate. DOD has also
    reduced the value of TRICARE Standard/CHAMPUS when it is used as second
    payer to other insurance. When CHAMPUS/TRICARE Standard is used as a
    second payer it is based on ``benefits-less-benefits'' rather than a
    ``coordination of benefits'' basis. As a result beneficiaries usually
    receive no benefits from CHAMPUS as second payer. The coordination of
    benefits method should be restored and legislative provisions put in
    place to keep it.
        The TRICARE Point of Service (P.O.S.) option for enrollees in the
    Prime program is too expensive at $300/$600 deductibles and 50 percent
    copay. The P.O.S. option should be changed to the TRICARE Standard
    rate, $150/$300 and 25 percent copay. We have seen no evidence of abuse
    of the P.O.S. option and believe that the standard deductible and
    copays are enough to prevent frivolous use. Further, there should be no
    requirement to obtain advance authorization to use the P.O.S. option.
        The VA is a TRICARE subcontractor in some regions. Currently,
    copays are the same whether beneficiaries use the VA or civilian
    providers. Military personnel believe that VA hospitals/clinics should
    be given the same status as MTF's for TRICARE purposes and that copays
    be waived if beneficiaries obtain their care at VA hospitals and
    clinics.
                      medicare reimbursement (subvention)
        We welcome the Medicare reimbursement demonstration project which
    is authorized at six sites in 10 locations. We hope that the program
    can be rapidly expanded to serve more beneficiaries at more sites and
    full implementation expedited. According to the GAO (GAO/T/HEH5-97-84
    Feb 97) no more than 75,000 of the 1.2 million Medicare eligible
    beneficiaries can be accommodated by military treatment facilities even
    after the program is fully expanded throughout the United States. DOD
    expects to care for additional Medicare eligibles in the TRICARE
    Networks; however, it is clear that all Medicare eligibles will not be
    served and that another option is needed. We will address this issue
    later.
                         medicare subvention ppo option
        Last year Medicare reform legislation also provided for the first
    time for a Medicare Preferred Provider Option demonstration project.
    Unfortunately, the DOD/Medicare Subvention agreement allows only a test
    of an HMO option which DOD plans to do through the TRICARE Seniors
    program. We believe the PPO Option should be added to the DOD/Medicare
    demonstration project. This has the potential for the biggest benefit
    to DOD and the largest savings to the Medicare Program. It would be a
    more acceptable option to retirees than the TRICARE Partners or
    Affinity program that will be part of the Subvention demonstration.
                                  fehbp option
        DOD has not yet submitted a plan that would provide a health care
    option for all military beneficiaries. Furthermore, when they do so we
    expect it to be in the form of demonstrations, tests and phases that
    will take three or more years to fully implement. It will probably be
    10 to 12 months after legislation is enacted before the first military
    retiree is enrolled in the Medicare subvention test, and as pointed out
    earlier even when fully implemented in 3 years or so, very few retirees
    will have access. We need an option that can be implemented next year.
    We believe that the best, most cost effective option is authorizing
    retirees to participate in the Federal Employees Health Benefits
    Program (FEHBP). With this Committee taking the lead, retirees could
    begin receiving care in the FEHB Program in 1999. Several bills have
    been introduced during this Congress to deal with this issue. Senators
    Strom Thurmond, Paul Coverdell and Lauch Faircloth have introduced S.
    1963, which would provide the Federal Employees Health Benefits Program
    beginning next year. Costs are controlled by capping the program at
    $100 million for fiscal year 1999 and increasing by $100 million per
    year until it reaches $500 million in 2003. At about that time some DOD
    demonstration programs should begin to open up for participation and
    military FEHBP participants would have the option of leaving FEHBP for
    one of the DOD programs. Our estimates indicate that some 30 percent of
    retirees would select the FEHBP option. The death rate of older
    military retirees, especially those of WWII and Korea is close to 3,000
    per month. They need access to health care now, not five to seven years
    from now when it would be too late. Now is the time to act. We must not
    continue to allow the decline in availability of medical care to
    disenfranchise military retirees and their families.
              uniformed services university of the health sciences
        The Alliance thanks this committee for its strong support for
    providing necessary funding for the continued operations 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 that the U.S. Health Profession Scholarship Program. We urge
    you to continue your support for this school which is a national
    resource.
                             retiree dental program
        The unsubsidized Retiree Dental Program which recently began
    enrolling retirees has already signed up over 100,000 military
    families. The program should be reviewed as we obtain experience this
    year to determine what adjustments in benefits should be made to meet
    the needs of beneficiaries and remain cost effective to them.
                 uniformed services family health plan (usfhp)
        The nine Uniformed Services Treatment Facilities continue to treat
    military beneficiaries through their USFHP which is a very popular
    program. They use the same fee structure as TRICARE providers. The
    Facilities offer the only DOD sponsored program that is keeping the
    military healthcare promise by guaranteeing care to Medicare eligible
    military beneficiaries fortunate enough to live near them and obtain
    care there. We thank this committee for its support for the USTF's in
    the past and urge you to continue to support their operation.
                                    closing
        Mr. Chairman, the National Military Veterans Alliance thanks you
    and this subcommittee for holding this hearing and we urge immediate
    action to enact FEHBP legislation now, so that military beneficiaries
    can begin enrolling and receiving care in fiscal year 1999.
    STATEMENT OF JAMES M. CROWLEY, PH.D., EXECUTIVE
                DIRECTOR, SOCIETY FOR INDUSTRIAL AND
                APPLIED MATHEMATICS, ON BEHALF OF THE JOINT
                POLICY BOARD FOR MATHEMATICS
        Senator Inouye. Our next witness is Dr. James Crowley,
    Executive Director of the Society for Industrial and Applied
    Mathematics, Joint Policy Board for Mathematics.
        Dr. Crowley. Thank you, Senator Inouye, for the opportunity
    to comment on the fiscal year 1999 appropriations for the
    Department of Defense.
        Today, I would like to address DOD's investment in basic
    research, or 6.1 research as it is known to DOD. As I noted in
    my written statement, I worked for DOD in various scientific
    capacities for 22 years, so I am very familiar with the
    importance of basic research to the defense mission. I have
    seen firsthand how the results of basic research are
    incorporated into defense technologies and systems for the
    ultimate benefit of our defense forces, the American taxpayers,
    and our national security.
        I am very concerned, Senator, that the buying power of
    DOD's support for basic research has dropped dramatically in
    recent years--by 18 percent since 1994. And I included a chart
    in my written statement that shows this.
        Moreover, these funding levels are well below historical
    levels of investment in defense basic research. Those past
    investments played a critical role in enabling today's DOD to
    meet the Nation's defense needs through superior and cost-
    effective military technologies.
        The reduced budgets have had a staggering effect on the DOD
    research agencies' ability to maintain the strength of their
    programs. For example, in the mathematical and computational
    sciences, the scope of promising research that DOD has
    identified as relevant to its mission has been curtailed, and
    whole thrusts of research have had to have been eliminated in
    some programs. The opportunities lost are not insignificant.
        The funding erosion in DOD's basic research programs must
    be stemmed if we are going to achieve our national security
    objectives in the future. We urge the subcommittee to begin
    restoring the buying power of defense basic research by fully
    funding DOD's request for basic research. We must start
    reversing the downward funding trend. And enacting the
    relatively modest proposed increase for fiscal year 1999 would
    be a crucial first step.
        Let me say a few words about what basic research means to
    DOD. You are no doubt aware of the importance of long-term
    fundamental research. I would also point out that some of the
    research supported through the 6.1 account is not as long term
    as you might think. In many cases, university researchers have
    been brought in for special expertise to help resolve real-time
    scientific and technical challenges.
        And this raises a critical point: by engaging the Nation's
    research universities in defense-related problems, DOD ensures
    itself access not only to today's researchers and the latest
    discoveries, but also to graduate students, whose involvement
    in defense-related research helps guarantee the production of
    mathematicians, scientists and engineers who can contribute to
    meeting defense needs in the future, to tackling long-term
    research problems and being able for DOD to call on more
    immediate ones.
        I have given several examples in the testimony, and time
    will not permit me to go through all of them. I have given just
    a few from one area of research in the written statement, but
    there are countless others from all areas of science and
    engineering which show the critical nature of research to
    improvement and cost-effective technology for national defense.
        I appreciate the opportunity to talk to you, and I hope you
    will remember the critical importance, but sometimes hidden
    impact, of basic research on defense capacities.
        Thank you, Senator, and I am glad to answer any questions
    you might have.
        Senator Inouye. Dr. Crowley, I thank you very much. We have
    one problem. It is easy to sell applied research, because most
    people can see the end product. You should help us sell basic
    research. If you have any ideas on how we can convince our
    colleagues, please share it with us.

                               prepared statement

        Dr. Crowley. I would be happy to do that.
        I think the basic research that is supported by the DOD
    agencies is different from, in some ways, basic research in
    other areas, in that as mission agencies, the areas chosen for
    basic research are those that do have an impact on DOD needs.
    And so I think it is important to maintain the basic research
    because it will feed into technologies in the future.
        Senator Inouye. Thank you very much, sir.
        Dr. Crowley. Thank you, Senator.
        [The statement follows:]
                     Prepared Statement of James M. Crowley
        Good afternoon, Mr. Chairman and Members of the Subcommittee. Thank
    you very much for this opportunity to comment on fiscal year 1999
    appropriations for the Department of Defense. I am James Crowley,
    Executive Director of the Society for Industrial and Applied
    Mathematics (SIAM) in Philadelphia. I speak on behalf of the Joint
    Policy Board for Mathematics (JPBM), which is a collaboration of three
    professional societies, including SIAM, the American Mathematical
    Society, and the Mathematical Association of America. These
    organizations have a combined membership of over 57,000 mathematical
    scientists and educators whose concerns encompass fundamental and
    interdisciplinary research in mathematics; the applications of
    mathematics to science, engineering, industry, and business; and
    mathematics education at all levels.
        Today I would like to address DOD's investment in basic research,
    also known in DOD budgetary parlance as 6.1 research. Let me start by
    noting that from 1988 to 1994, while I was an officer in the Air Force,
    I served as the Director of the Mathematical and Information Sciences
    Directorate at the Air Force Office of Scientific Research (AFOSR),
    then as Assistant Chief Scientist at the Air Force Systems Command at
    Andrews AFB, and then as Manager of the Applied and Computational
    Mathematics Program at the Defense Advanced Research Projects Agency
    (DARPA), so I'm very familiar with the importance of basic research to
    the defense mission. I've seen first-hand how the results of basic
    research are incorporated into defense technologies and systems for the
    ultimate benefit of our defense forces, American taxpayers, and our
    national security. Furthermore, DOD's 6.1 activities are an essential
    component of maintaining the United States' world leadership in
    mathematics, science, and engineering research.
        The buying power of DOD's support for basic research has dropped
    dramatically in recent years--by 18 percent since fiscal year 1994, as
    you can see from the chart I've included below. Moreover, these funding
    levels are well below historical levels of investment in defense basic
    research. Those past investments played a critical role in enabling
    today's DOD to meet the Nation's defense needs through superior and
    cost-effective military technologies.

                                          DOD SUPPORT FOR BASIC RESEARCH (6.1)
                       [In millions; constant dollars determined using OMB's latest GDP deflator]
    ----------------------------------------------------------------------------------------------------------------
                                                                                 Fiscal year--
                                                         -----------------------------------------------------------
                                                                                                    1998      1999
                                                            1994      1995      1996      1997    estimate   request
    ----------------------------------------------------------------------------------------------------------------
    Current dollars.....................................    $1,167    $1,227    $1,099    $1,032    $1,042    $1,111
    Constant 1992 dollars...............................     1,111     1,138       997       958       907       948
    ----------------------------------------------------------------------------------------------------------------

        The main point I would like to make today, Mr. Chairman, is that
    the funding erosion in DOD's basic research programs must be stemmed if
    we're going to achieve our national security objectives into the
    future. We urge the subcommittee to begin restoring the buying power of
    defense basic research by providing DOD's request of $1.11 billion for
    the 6.1 account in fiscal year 1999. You will note from my chart above
    that the requested amount does not even bring funding up to the
    constant dollar value of last year's basic research budget. But we must
    start reversing the downward funding trend, and enacting the relatively
    modest proposed increase for fiscal year 1999 would be a crucial first
    step.
        Let me say a few words about what basic research means to the DOD.
    First of all, maintaining a robust long-term basic research program is
    essential to ongoing efforts to develop new technologies, improve
    existing ones, and employ them as effectively as possible in the
    service of national security.
        Secondly, some of the research supported through the 6.1 account is
    not as long-term as you might think. In many cases--and I'm thinking
    just of cases involving the mathematical sciences, which I know best,
    but this is no doubt true for other areas as well--university
    researchers have been brought in for special expertise to help solve
    real-time scientific and technical challenges faced by military
    personnel, the defense laboratories, or DOD contractors.
        And this leads me to perhaps the most critical point here. By
    engaging the Nation's research universities in defense-related
    problems, DOD ensures itself access to top researchers and the latest
    discoveries in pursuit of its R&D objectives. Not just today's
    researchers but the next generation as well. The support DOD provides
    for graduate students in defense-related research areas helps guarantee
    the production of mathematicians, scientists, and engineers who can
    contribute to meeting defense needs in the future.
        I would again refer to my first-hand knowledge of how valuable it
    is for DOD to maintain a productive relationship with universities for
    the reasons I've cited. At DARPA especially it is a specific goal to
    seek out academic researchers who can help solve defense-related
    problems and link them up with their counterparts in DOD laboratories
    and in industry to tackle both short- and long-term problems.
        The defense agencies that sponsor basic research--the Army Research
    Office (ARO) and the Office of Naval Research (ONR), as well as AFOSR
    and DARPA--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.
        The spending cuts in basic research have had a staggering effect on
    these agencies' ability to maintain the strength of their programs. In
    the mathematical and computational sciences, the scope of promising
    research that DOD has identified as relevant to its mission has been
    curtailed and whole thrusts of research have had to be eliminated in
    some programs. The opportunities lost are not insignificant.
        I'll mention the impact on another agency that is especially
    relevant to the mathematical sciences--the National Security Agency.
    The NSA is the Nation's largest employer of mathematical scientists,
    and of course its in-house research activities are highly classified.
    In 1984, NSA initiated a competitive grants program to support
    unclassified academic research in several mathematical fields,
    including cryptography, which, I'm sure you know, is important in the
    making and breaking of codes. The establishment of the program was a
    response to a sharp decline in the number of Americans earning advanced
    degrees in the mathematical sciences. Although that number has
    stabilized, U.S. citizens still earn less than half of the mathematical
    doctorates awarded by U.S. institutions. Yet the purchasing power of
    NSA's external grants program has been dropping steadily during the
    1990's; its budget will have declined by 50 percent in real terms
    between fiscal year 1990 and fiscal year 1998.
        Finally let me illustrate my remarks about DOD's investment in
    basic research and its contributions to the national defense with some
    examples. You are no doubt familiar with how quickly advances in
    computer hardware are developed and incorporated into the state-of-the-
    art--computer speed doubles every one and a half years, for example.
    Less well known but equally important is the fact that new and improved
    mathematical algorithms, which are the basis of all computer software,
    also contribute to this remarkable trend. In fact, the fanciest
    computer hardware would be useless without equally sophisticated
    advances in mathematical modeling and algorithm development. Let me
    cite a couple of cases in which DOD support has facilitated
    breakthroughs in this area:
      --Research during the past 25 years has led to the development of
            mathematical techniques underlying computer programs that can
            easily manipulate geometric objects. The techniques are now
            embedded in a wide range of applications, including the high-
            performance computers used in aircraft design and other modern
            CAD/CAM packages that make rapid prototyping and computer-aided
            design possible. One unexpected use of these techniques is in
            film animation, as demonstrated in the widely popular movie,
            ``Toy Story''. But these same tools are being used by defense
            contractors to cut the development time and cost for new
            aircraft and other major DOD purchases.
      --Mathematics can be used to model, or predict, how radar waves
            behave when scattered off of surfaces such as aircraft bodies.
            But the resulting equations are complicated, and getting
            computers to solve them is not a straightforward process.
            Advances in the development of computational algorithms that
            can solve these equations are enabling the design and testing
            of stealth technology in simulation--that is, on computers--
            before any actual fabrication begins. The modeling of radar-
            wave scattering continues to be a challenging mathematical and
            computational problem, and we are just starting to see how
            powerful the resulting tools can be.
        The potential impact of mathematical modeling and computational
    simulation on meeting the needs of DOD expands with advances in
    computers and in mathematics itself. For example, a recent DOD
    initiative in modeling, simulation, and control of fabrication
    processes for thin films promises to deliver new, more reliable and
    economical processing techniques for critical thin films. Thin films of
    semiconductor material have many uses in electronic components. Thin
    films of super-conducting material could lead to compact, high
    performance microwave filters for wireless and aerospace
    communications. But thin films are not easy to manufacture. Small
    variations in the composition or shape of the material can render a
    component useless. Getting machines to process thin films smoothly,
    evenly, and without variations at the microscopic level is a challenge
    that is being addressed with the application of mathematics. The strict
    requirements can be met with intelligent manufacturing using predictive
    computer models and model-based control of the manufacturing processes.
    To achieve this will require considerable research in mathematical
    techniques, including mathematical modeling and development of new
    numerical methods.
        I hope these examples demonstrate how basic research is an
    essential component of the defense enterprise. This concludes my
    testimony today. I truly appreciate this opportunity to talk to you
    about the impact of defense basic research. Again, thank you, Mr.
    Chairman. I'm pleased to answer any questions you might have.
    STATEMENT OF DAVID A. WHISTON, D.D.S., PRESIDENT,
                AMERICAN DENTAL ASSOCIATION
        Senator Inouye. Our next witness is Dr. David A. Whiston,
    President, American Dental Association.
        Welcome, Dr. Whiston.
        Dr. Whiston. Thank you very much, Senator Inouye. It is a
    pleasure to be here.
        As you mentioned, my name is Dave Whiston. I am President
    of the American Dental Association [ADA]. I practice dentistry
    across the river, in Arlington, Virginia. I appreciate the
    opportunity to be here.
        I would like to talk just briefly about two specific items.
    One is the flexibility of being able to offer multi-year
    contracts to military dental officers. And the second is the
    unique quality of military dental research.
        I want to thank you, first, though, Senator, and the
    subcommittee, for the great support you have given us over the
    past several years relative to pay parity issues--specifically,
    special pay issues and the accession bonuses. That was a great
    start on the recruitment side of the equation, where we have
    had some problems. Now we would like to address the retention
    side of the issue. We are having great problems with retention
    of Federal dental officers.
        In fact, now we are short in access of 300 offices. The
    projection over the next several years by DOD is that the
    shortage will double. And what we are seeing now is that after
    10 years, we are only seeing a retention rate of 26 percent.
    After 20 years, it is only 13 percent. And DOD's most
    conservative estimates indicate it should be at least 3 times
    that 13 percent level.
        It used to be, in 1982, the average Federal dental officer
    would remain in the service 11.8 years. Less than 15 years
    later, in 1996, they only stay in about 7 years. So there are
    some real problems, some real shortages that we see, much of it
    related to income, comparable income of Federal officers versus
    private practitioners.
        But the net effect is that of active duty personnel, one of
    seven are non-deployable for dental reasons. One of seven
    active duty personnel are non-deployable because of dental
    problems. What we would like to see, to impact this side of the
    equation, is at least the flexibility to be able to offer
    multi-year contracts, preferably 4-year contracts, to Federal
    officers, so that we could impact the retention side of the
    equation.
        We respectfully request an $8.6 million addition to the
    fiscal year 1999 budget, to be able to offer these multi-year
    contracts.
        On the dental research side--and just to briefly
    characterize that--military dental research is dental research
    that is not duplicated anywhere in the private sector. We are
    talking about dental research aimed at specific dental field
    equipment, research aimed at developing materials which are not
    environmentally sensitive, and which would impact the statistic
    now, which is a pretty glaring one, which is that 16 percent of
    all active duty personnel, 16 percent each year, must be
    evacuated for dental reasons.

                               prepared statement

        So, we realize you have great demands, specific demands, in
    the defense budget for critical defense dollars, and we
    understand that, but in order to address the recruitment and
    retention side of the equation and the preparedness side,
    relative to evacuations, we respectfully request your
    consideration of the $8.6 million relative to the flexibility
    of offering multi-year contracts, and $4 million in fiscal year
    1999 for the purposes of specific military dental research,
    again, to impact on that non-deployability side of the equation
    as well as the evacuation side of the equation.
        Thank you very much, Senator, for the opportunity to be
    here today.
        [The statement follows:]
                     Prepared Statement of David A. Whiston
        On behalf of the American Dental Association (ADA), thank you Mr.
    Chairman for the opportunity to testify on the fiscal year 1999
    Department of Defense (DOD) appropriations. I am Dr. David A. Whiston,
    the President of the ADA and a practicing dentist in Arlington,
    Virginia.
        The ADA is a professional organization that represents
    approximately 143,000 licensed dentists (75 percent of the profession)
    in the United States. The ADA seeks to advance the art and science of
    dentistry, and to promote high-quality dental care and the oral health
    of the public.
        Over the years the ADA has maintained a close liaison with the
    federal dental services which include all three Service branches, the
    Public Health Service, and the Veterans Administration. The Association
    is proud to represent the needs of our nation's federal dental
    officers.
        Mr. Chairman, I am here today to address two areas of concern for
    military dentistry: dental corps officer multi-year contracts, and
    military dental research funding.
    Dental Corps Officer Multi-Year Contracts
        I commend this committee for the support it has provided federal
    dental officers. As you know, in the past two years the Congress has
    approved special pay raises and an accession bonus to alleviate severe
    recruiting and retention problems that exist in the Army, Navy, and Air
    Force dental corps, as well as the Public Health Service.
        Retention of military dental officers is a readiness concern for
    the Services. A 1997 study by the Office of the Assistant Secretary of
    Defense (Health Affairs) shows that retention is decreasing for every
    year group of dental officer. The aggregate retention has declined to
    26 percent at ten years of service and 13 percent at 20 years. The
    ideal force profile calls for 40-50 percent retention at 10 years and
    30-35 percent retention at 20 years.
        In 1982, a military dentist served an average of 11.8 years. In
    1996, the expected length of service slumped to 7.4 years. The high
    turnover rate contributes directly to a shortage of dental officers and
    causes turbulence in force management. Currently the Services' Dental
    Corps are short approximately 300 officers from the DOD authorized
    level. The study projects that this shortfall will grow dramatically to
    between 400 and 700 dentists in the next few years if nothing is done.
        Maintaining the authorized number of military dentists,
    particularly experienced personnel, ensures dental readiness of
    America's Armed Forces. The 1994 Tri-Service Comprehensive Oral Health
    Survey found 92 percent of military personnel required some form of
    dental care. An average of one out of seven active duty service members
    at the end of fiscal year 1996 were determined to be non-deployable due
    to dental problems. A recent symposium at Fort Hood, Texas, identified
    the lack of access to routine dental care as the number one health
    concern of soldiers.
        If declining rates of retention continue, it will lead to
    shortfalls in the availability of active duty dentists for deployment.
    This would impact directly on the provision of dental care for troops
    in garrison operations, conflict situations, and peacekeeping missions.
        The primary causes for retention problems are the lack of pay
    comparability with the private sector. In 1982, a military dentist
    earned approximately 82 percent of the reported income of private
    sector dentists. By 1996, that percent had dropped to 51 percent. This
    large pay gap exists throughout the career span of a military dentist.
        The 1997 Defense Authorization Act and Defense Appropriations Act
    provided funds to increase dental officer special pay for junior grade
    dental officers with less than 10 years of service. That legislation
    also provided for an accession bonus of $30,000 for new dental
    officers. While it is too early to ascertain the full impact of the
    increase and the bonus, preliminary evidence suggests the accession
    bonus will improve recruitment in the coming years.
        The 1998 Defense Authorization Act increased special pay rates for
    mid-career officers and provided for the use of multi-year contracts
    similar to those used for physicians as a retention and force
    management tool. Although no funds were provided for these two pay
    proposals, their passage provides the three Services (and the Public
    Health Service) a valuable tool to improve recruiting and retention
    problems.
        Mr. Chairman, the use of multi-year contracts for critical
    specialists will help the Services to obligate dentists for up to four
    years. Experience with the Medical Corps has demonstrated the success
    of these contracts. The Services need an additional $8.6 million in
    fiscal year 1999 in the military pay appropriations account (Army: $2.3
    million; Navy $1.6 million; and Air Force $4.4 million) to offer these
    multi-year contracts to its oral surgeons, orthodontists,
    periodontists, and endodontists.
    Military Dental Research
        The mission of military dental research is to maximize and maintain
    operational readiness. This is accomplished by performing research and
    development to improve both preventive and interceptive care prior to
    deployment and forward dental care and management of maxillofacial
    injuries.
        Army and Navy dental research programs conduct basic and applied
    research and development to produce products for use in military
    environments that are not duplicated by civilian research and
    development efforts. The U.S. military dental research laboratories,
    the U.S. Army Dental Research Detachment (USADRD) and the Naval Dental
    Research Institute (NDRI), are located at the Great Lakes Naval
    Training Center, Illinois. They focus on R&D of new technologies that
    reduce lost duty time caused by dental disease or trauma in military
    populations.
        Areas of research emphasis include: epidemiology of dental disease
    and trauma, rapid diagnostic aids, new preventive technologies,
    improved dental field equipment (smaller, lighter, and lessened power
    requirements), dental materials that are insensitive to operational
    environments, and technologies to reduce the morbidity and mortality of
    oral and maxillofacial trauma.
        Mr. Chairman, on an annual basis 16 percent of deployed personnel
    experience a dental emergency requiring evacuation from their military
    unit, and 1 percent sustain oral and maxillofacial trauma. Studies have
    shown that the annual dental emergency rate during the Vietnam War was
    157 dental emergencies per 1,000 soldiers. During Operation Desert
    Shield/Desert Storm the annual rate of dental emergencies was 100 per
    1,000 Marines ashore. A recent RAND study (Army Medical Support for
    Peace Operations and Humanitarian Assistance (1996)) reported that
    military dentists were some of the busiest of all providers in recent
    humanitarian missions. As much as 20 percent of all outpatient visits
    were for dental care.
        These emergency rates occur in every deployment and operational
    environment and are unacceptable to line commanders. As you know,
    deployed personnel with severe oral pain and/or infection cannot
    perform military duties and may require evacuation to receive
    appropriate dental treatment. Evacuation from remote and isolated sites
    can be costly to the military and degrade operational readiness. The
    need for dental research and development to address dental readiness is
    therefore paramount.
        Unfortunately, the military biomedical R&D community undervalues
    this impact, as evidenced by disproportionate reductions in dental R&D
    funding and personnel authorizations. Army dental research funding
    decreased from $3.6 million in 1991 to $0.865 million in 1997. Program
    funding ceased in fiscal year 1998 and $677,000 had to be allocated
    from other medical research programs to support on-going dental
    research. This represents an 82 percent funding reduction since 1991.
    The Army laboratory has also experienced a 45 percent reduction in
    authorized personnel since 1991.
        Navy dental research funding has faced similar reductions--from a
    high of $2.2 million in 1994 to $1.1 million in 1998. This represents a
    50 percent reduction in just four years. Since 1992, Navy dental
    research has also experienced a 33 percent reduction in authorized
    personnel (from 57 to 38). These funding and personnel levels are
    absolutely inadequate to accomplish the mission of military dental
    research.
        Mr. Chairman, let me tell you of just a few of the significant
    dental research projects that Army and Navy dental researchers are
    working on.
      --Dental field equipment is being developed to reduce the size,
            weight, and electrical requirements of the deployed dentist
            while increasing treatment capability. Research projects
            include fabricating and testing of an electric handpiece dental
            field operating and treatment system, construction and testing
            of a portable solar panel to recharge the battery for a dental
            handpiece located in the Dental Emergency Field Set, and
            evaluation of radiographic images captured on a digital sensor
            and displayed on a laptop screen.
      --Field expedient dental materials are being developed that are less
            sensitive to degradation during storage due to environmental
            factors such as heat, cold, and humidity.
      --Single-dose, controlled release analgesics, antibiotics and
            vaccines for use in deployed environments and to accelerate the
            return to duty of battlefield casualties are being developed.
      --Gum or powder that prevents plaque buildup and thereby reduces
            dental disease for deployed troops who are not able to perform
            proper oral hygiene is also being developed.
      --Research projects related to determining the rates of dental
            emergencies and dental trauma during deployment and determining
            the rates of oral and maxillofacial trauma in personnel serving
            in airborne and armor units are ongoing.
      --A new smokeless tobacco cessation program has been developed and
            will evaluate the impact on readiness.
        Mr. Chairman, dental emergencies and trauma significantly impair
    operational readiness and sustainability. Increased dental research
    funding is needed to improve preventive and interceptive dental care
    prior to deployment, to improve forward support dental care, and
    management of oral and maxillofacial injuries. The Army and Navy needs
    $4 million in fiscal year 1999 ($2 million for the Army Dental Research
    Detachment and $2 million for the Naval Dental Research Institute),
    which is $2 million above fiscal year 1998 appropriated amounts, to
    continue these valuable dental research programs.
    Conclusion
        The ADA recognizes the multitude of funding priorities Congress
    must reconcile, but believes that the requirements spelled out in this
    statement are urgently needed to maintain the oral health and readiness
    of military personnel. Funding for multi-year contracts will help
    insure a stable dental corps, improve recruiting and retention, and
    better balance pay inequities. Improved funding for dental research
    will help decrease dental emergencies and trauma significantly with the
    resultant improvement in operational readiness and sustainability. The
    Association respectfully requests that this subcommittee support the
    program enhancements discussed above.

        Senator Inouye. Doctor, where did you get those statistics
    on one out of seven are non-deployable?
        Dr. Whiston. One out of seven non-deployable is a statistic
    that I was given at the American Dental Association. My
    understanding is that it is from DOD. But I can get you the
    numbers on that.
        Senator Inouye. I am certain the committee would appreciate
    that.
        [The information follows:]
                          Letter From David A. Whiston
                                                          May 20, 1998.
    The Honorable Daniel K. Inouye,
    Ranking Member, Senate Appropriations Committee, United States Senate,
            Washington, DC.
        Dear Senator Inouye: Thank you for the opportunity to appear before
    the Defense Subcommittee to highlight the need for appropriations for
    multi-year contracts for dental corps officers and increased funding
    for military dental research. Funding for these programs is important
    for the future of military dentistry and, more importantly, the
    readiness of our active duty forces.
        You asked for the precise source of two statistics quoted in my
    statement. The following are those cites:
      --``An average of one out of seven active duty service members were
            determined to be non-deployable due to dental problems.''
            (Office of Secretary of Defense for Health Affairs Study,
            1997); and
      --``Studies have shown that 92 percent of military personnel require
            some form of dental care.'' (1994 Tri-Service Comprehensive
            Oral Health Survey).
        I greatly appreciate your interest and offer to work with the
    American Dental Association to improve the oral health care of our
    troops. Toward that end, our ADA Washington Office staff will contact
    your staff for appropriate follow-up.
        Thank you very much.
                Sincerely,
                                      David A. Whiston, D.D.S.,
                                                             President.

        Senator Inouye. I did not realize it was that bad.
        Dr. Whiston. Yes, it is significant. It really is. Ninety-
    two percent, Senator, of all active personnel have dental
    needs. And those can be addressed. But the ability to address
    those needs is decreasing as the retention problem increases.
    So we could see an increase to that one of seven.
        Senator Inouye. Ninety-two percent require dental care?
        Dr. Whiston. Yes, 92 percent, of some type.
        Senator Inouye. They are not watching the TV Crest ads?
        Dr. Whiston. Right. You are right. [Laughter.]
        Yes. They have not listened to some of your suggestions
    over the years, Senator.
        Senator Inouye. We would like to work with you to see how
    we can help in reducing these numbers.
        Dr. Whiston. Thank you very much.
        Senator Inouye. These are terrible.
        Thank you very much.
        Dr. Whiston. Thanks for the opportunity, Senator.
    STATEMENT OF JEAN LOU CHAMEAU, DEAN OF ENGINEERING,
                GEORGIA INSTITUTE OF TECHNOLOGY, ON BEHALF
                OF THE ASSOCIATION OF AMERICAN UNIVERSITIES
        Senator Inouye. Our next witness is Dr. Jean Lou Chameau,
    Dean of Engineering, Georgia Institute of Technology.
        Dr. Chameau.
        Dr. Chameau. Senator, members of the committee, my name is
    Jean Lou Chameau, and I am the Dean of Engineering at Georgia
    Tech, in Atlanta. Georgia Tech is the largest engineering
    school in the country, graduating more than 2,000 engineers
    every year.
        I am testifying on behalf of the Association of American
    Universities, AAU, representing 62 research universities in the
    country; and the National Association of State Universities and
    Land-Grant Colleges, representing almost 200 public
    universities in the country.
        You have copies of my written testimony, which I will
    briefly summarize. I think it is more than fair to say that the
    technologies critical to winning the Cold War and America's
    successful campaign during Desert Storm owe their allegiance to
    university-based defense research. There are many examples,
    including semiconductors, phased-array radar for
    intercontinental ballistic missile defense, laser guidance
    systems, stealth design, and so on.
        These technologies make a difference for people in the
    field. A very good example was given when the global
    positioning system, or GPS, saved the life of Air Force Captain
    Scott O'Grady, after his F-16 was shot down over Bosnia.
        In my University, Georgia Tech, we conduct a significant
    amount of research that contributes to the defense mission. For
    example, Tech engineers are using acoustic-electromagnetic
    waves in new ways to detect both metallic and nonmetallic land
    mines. We are also developing what is called a smart T-shirt.
    It is basically a T-shirt with optical fibers, very cost
    efficient, about $25 to $30 to produce. And we provide medical
    personnel the ability to monitor a soldier's condition,
    including vital signs.
        University research also helps address emerging security
    issues such as terrorism, biological and chemical agents, and
    cybersecurity. There are many areas in the areas of
    telecommunications, miniaturization and other technologies. The
    DOD funding of university research concentrates in fields where
    advances are most likely to contribute to national defense and
    also to the mission.
        The DOD accounts for 60 percent of the Federal funding to
    electrical engineering, 55 percent for computer engineering and
    sciences, 41 percent for materials research. The DOD
    contribution to educating the next generation of engineers and
    scientists should not be underestimated. The DOD supports 45
    percent of federally funded graduate students in electrical
    engineering, 25 percent in mathematics, 48 percent in aerospace
    engineering. Our students get research training and become
    highly qualified scientists and engineers of the future, who
    are going to work at academia, industry, DOD, and Federal
    laboratories.
        The Department's budget for fiscal year 1999 provides a
    total of $1.1 billion for defense in 6.1 basic research. This
    represents about a 6.6 percent increase over last year.
    Similarly, there is an expected $3 billion budget for applied
    research, an increase of about 0.8 percent. We believe these
    budget projections will lead to a realistic and appropriate
    estimate of what will be needed to carry out a strong research
    program.

                               prepared statement

        Finally, DOD basic research funding has been used several
    times in the last few years to provide offsets for unrelated
    new expenditures. And we hope your subcommittee will not use it
    this year for this purpose.
        Thank you very much.
        [The statement follows:]
                     Prepared Statement of Jean Lou Chameau
        Mr. Chairman and members of the subcommittee: Thank you for the
    opportunity to testify today. My name is Jean Lou Chameau, and I am
    Dean of Engineering at the Georgia Institute of Technology. Georgia
    Tech is the largest engineering school in the country, graduating
    annually in excess of 2,000 engineers. I am testifying on behalf of the
    Association of American Universities, representing 62 premier research
    universities in the United States and Canada, and the National
    Association of State Universities and Land-Grant Colleges, representing
    195 public institutions of higher education across the United States.
        My purpose this morning is to talk about the scientific and
    technological breakthroughs that have resulted from university research
    supported by the Department of Defense (DOD). I will emphasize how
    important these breakthroughs are to our national security and
    readiness for future military conflicts. I will also talk about the
    importance of DOD Basic and Applied Research to key academic
    disciplines; to fundamental discoveries in science, engineering and
    mathematics; and to the training of the next generation of scientists
    and engineers. Finally, I will briefly review the recent history of
    funding reductions in these programs, and I will urge that these
    programs not receive additional cuts, either to offset supplemental
    fiscal year 1998 appropriations, or in the regular fiscal year 1999
    appropriations process.
        As you know, Basic and Applied Research are funded under program
    elements 6.1 and 6.2 in the Research, Development, Testing and
    Evaluation section of the Department of Defense appropriation. The
    Army, Navy, Air Force and the ``Defense-wide'' account under the Office
    of the Secretary all receive separate appropriations for these
    programs. Universities play the largest role in basic defense research,
    receiving more than 60 percent of this funding (program element 6.1).
    They also receive substantial funding for applied defense research and
    advanced technology development (program elements 6.2 and 6.3,
    respectively).
               breakthroughs from dod-funded university research
        Many crucial defense technologies have emerged from fundamental
    research conducted on university campuses. Among these are: radar,
    nuclear power, digital computers, semiconductor electronics, lasers,
    fiber optics, night vision, vaccines and drugs for malaria and other
    tropical diseases, inertial guidance, the Global Positioning System,
    stealth and other advanced materials, computer networking (ARPANet,
    forerunner of the Internet), and computer-based visualization systems
    for training and for planning and conducting operations.
        As just one example, the remarkable usefulness of the Global
    Positioning System (GPS) was dramatized by the rescue of the Air Force
    Captain Scott O'Grady after his F-16 was shot down over Bosnia in June
    1995. The portable GPS receiver in his life vest allowed rescue
    helicopters to land at his hidden position and rescue him in a few
    minutes despite hostile troops nearby. One of the key technologies that
    makes GPS possible, the ultra-precise atomic clock, was created in the
    1950's by university researchers intent on studying Einsteinian space-
    time relativity (advances in satellite technology, miniaturization, and
    mathematics were also necessary). Atomic clocks improved during the
    1960's, and in 1973, DOD decided to develop GPS. The system of 24
    satellites needed for GPS was launched between 1989 and 1993.
        The Georgia Institute of Technology (GIT), including the Georgia
    Tech Research Institute (GTRI), received approximately $84 million in
    Department of Defense grants and contracts in 1997. These funds involve
    a full range of activity from basic research through developmental,
    test and evaluation work. Some of the highlights of this research in
    the basic science and engineering disciplines at Georgia Tech include
    the following projects:
    Molecular Design Institute
        The Office of Naval Research (ONR) supports molecular synthesis and
    processing research, making it possible to tailor new materials, atom
    by atom, to achieve a desired set of properties. This molecular
    manipulation at the atomic level into material nanostructures is
    fundamental research important for meeting future Navy requirements for
    sophisticated surface and underwater vessels, weapons and equipment.
    Georgia Tech is one of two centers in the country currently involved in
    this advanced research.
    Acousto-Electromagnetic Sensor for Locating Land Mines
        The Army Research Office currently sponsors basic research at
    Georgia Tech in the area of land mine detection. The objective of this
    project is to investigate new, innovative techniques for detecting and
    locating both metallic and non-metallic land mines. Presently, non-
    metallic land mines are almost impossible to detect with existing
    systems. Georgia Tech electrical engineering researchers are now
    investigating a technique that uses both acoustic and electromagnetic
    waves in a synergistic manner to detect these mines. Land mine
    detection is a high priority for DOD and this work should lead to new
    methodologies for protecting U.S. troops from these deadly devices.
    Intelligent Turbine Engines
        At Georgia Tech the Army sponsors a five-year program that
    investigates the use of modern control approaches to improve the
    performance of gas turbines that are employed in helicopters and tanks.
    This research program investigates control approaches that will reduce
    the number of needed compressor stages. In parallel efforts, we are
    using control approaches to improve the performance of the gas
    turbine's combustor by reducing the frequency at which the combustion
    process unexpectedly extinguishes and reducing the volume required for
    complete combustion. It is expected that the improvements provided by
    this program will reduce the gas turbine's fuel and improve its
    reliability.
    Conformal Aperture Velocity Sonar/Conformal Active Sonar System
        The goal of the CAVES/CACTISS program at Georgia Tech, sponsored by
    the Office of Naval Research, is to revolutionize submarine SONAR
    systems and implementation philosophies. The Conformal Aperture
    Velocity Sonar (CAVES) system consists of a hull mounted, large
    aperture, broad band receiving SONAR system that will greatly enhance a
    submarine's ability to make detections in open water and in shallow
    water environments. The Conformal ACTIve Sonar System (CACTISS) is a
    hull mounted, large aperture, broad band transmitting sonar system that
    will work in conjunction with CAVES to provide a submarine with the
    capability to communicate with the battle group, hunt mines, and jam
    enemy torpedo sonars. Following a successful test of small aperture
    CAVES and CACTISS arrays in late 1996, preparations are now underway
    for full aperture CAVES and CACTISS arrays to be tested at quarter-
    scale at the Navy's Intermediate Scale Measurement System located at
    Lake Pend Oreille, Idaho in March 1999.
    Active Control of Combustion Instabilities in Missiles
        The Air Force supports a three-year effort at Georgia Tech to
    investigate the use of secondary fuel injection to ameliorate unstable
    combustion processes. Instabilities in missile combustion systems have
    hindered the development of practically every missile system to date
    (and many other propulsion systems) and resulted in program delays and
    cost overruns. By use of a novel fuel injector, developed and patented
    under this Air Force program, we are demonstrating that using properly
    timed secondary fuel injection can prevent and/or eliminate these
    undesirable instabilities, thus preventing future programs delays and
    cost overruns.
    Army Rotorcraft Center of Excellence
        The Army is a sponsor of Georgia Tech's Rotorcraft Center of
    Excellence operated by the School of Aerospace Engineering. This center
    is the largest of 3 national Centers of Excellence in rotorcraft
    technology and supports work important to the missions of each of the
    defense services operating rotorcraft vehicles. The center performs
    research on aerodynamics, aeroelasticity, dynamics, engines, composite
    materials, structures, flight mechanics, controls, and put it all
    together in systems design and engineering education.
                      being prepared in an uncertain world
        With future threats to national security so uncertain, maintaining
    technological superiority will require a strong continuing research
    effort. The armed forces today not only must be ready to fight in
    conventional regional wars like the Gulf War; they also must be ready
    to undertake peacekeeping missions in hostile situations and to defend
    against unconventional threats such as terrorism, biological and
    chemical agents, and computer sabotage.
        DOD-sponsored university research is an important source of new
    knowledge and innovative solutions to these problems. Incremental
    adaptations of existing weapons and equipment are not necessarily
    suitable in the new world situation. University researchers are
    investigating new approaches to assist likely future missions--for
    example, small, highly mobile units operating in ambiguous situations
    far from their bases.
        Rapidly developing computer-based information technologies, coupled
    with advanced sensors, promise to revolutionize warfare. University
    scientists and engineers are working to exploit the information
    revolution faster and better than the rest of the world. Research now
    being conducted on campus into new visual reality and computer
    visualization technologies will permit future U.S. forces to dominate
    the situation with superior information and communications. DOD
    currently provides more than half the federal funding of university
    research in computer sciences and electrical engineering.
        At least 100 million land mines are buried in 62 countries,
    hindering regional stability and endangering U.S. troops on
    peacekeeping missions. DOD supports university research into novel
    approaches, such as using new combinations of sensors and nonlinear
    signal processing techniques to improve detection of land mines, and
    using advanced acoustics and neural network signal processing
    techniques to locate mines under sediment in shallow water.
                  investing in american science and technology
        Supporting university research benefits DOD in many ways. It
    produces important advances in knowledge. It helps keep top scientists
    and engineers involved in defense research. Not least, the students who
    get hands-on research training become the highly qualified scientists
    and engineers of the future who go on to work in academia, industry,
    and federal laboratories.
        DOD is the third largest federal funder of university research
    (after the National Institutes of Health and the National Science
    Foundation). The funds are awarded under competitive merit review
    procedures to assure high quality. Nearly 350 universities and colleges
    sponsor DOD research and development.
        Unfortunately, last year, the science and technology budget at DOD
    hit a 35-year low, after adjusting for inflation. Basic research is
    down by $350 million in just the last five years. I am concerned that
    the scientific and engineering communities will find resources drying
    up for promising areas of inquiry. In particular, I am concerned about
    the effect that shrinking funding will have on those disciplines that
    are most heavily funded by the Department, since other sources may not
    easily be found to keep these disciplines healthy.
        DOD's funding of university research is concentrated in fields
    where advances are most likely to contribute to national defense. As a
    result, DOD accounts for 60 percent of the federal funding for
    electrical engineering, 55 percent for computer engineering and
    sciences, 41 percent for metallurgy/materials engineering, and 33
    percent for oceanography.
        DOD also supports a high percentage of graduate students in
    relevant field--45 percent of federally funded graduate students in
    computer engineering and sciences, 25 percent of those in mathematics,
    48 percent in aerospace engineering, 42 percent in electrical
    engineering, and 30 percent in metallurgy/materials engineering. These
    graduate students go on to meet America's need for a trained and
    scientifically literate workforce, whether in the military, the
    government, in defense and civilian industry, or in academia.
        The Department's budget request would provide a total of $1.11
    billion for Defense 6.1 (basic research) programs in fiscal year 1999,
    including programs funded under the Office of the Secretary of Defense,
    as well as Navy, Army, and Air Force research programs. This represents
    an increase of 6.6 percent over the final funding level for fiscal year
    1998. According to the Department's RDT&E Programs (R-1) report,
    applied research would receive a total of $3.02 billion, an increase of
    0.8 percent over fiscal year 1998.
        I believe these budget projections represent a realistic and
    appropriate estimate of what will be needed to carry out a vigorous
    research program in the coming year, and I hope you will approve them
    in the fiscal year 1999 appropriation.
        Finally, I understand that this committee may be called upon to
    identify offsets for a supplemental appropriation in the near future.
    DOD basic research funding has been used several times in the last few
    years to provide offsets for unrelated new expenditures, and I hope
    your subcommittee will not use it this year for this purpose.
        Thank you again for the opportunity to testify, and I would be
    happy to answer any questions you may have.

        Senator Inouye. Thank you very much, Dr. Chameau. I note
    one of the problems you cite is the 100 million land mines
    found in 62 countries. Is the Georgia Institute of Technology
    working on this at this time?
        Dr. Chameau. Yes. We have a major program to detect land
    mines using acoustical and electromagnetic waves.
        Senator Inouye. What is the status now?
        Dr. Chameau. The status of those programs are that I think
    there is a very high likelihood that you could have some
    prototype available within a year.
        Senator Inouye. Within a year we should have something that
    could be used in the field?
        Dr. Chameau. Yes.
        Senator Inouye. We look forward to that, sir. Thank you
    very much.
        Now may I call upon Chief Master Sergeant Mark Olanoff,
    United States Air Force Retired, the legislative director of
    the Retired Enlisted Association.
    STATEMENT OF CHIEF MASTER SERGEANT MARK H. OLANOFF,
                USAF (RET.), LEGISLATIVE DIRECTOR, THE
                RETIRED ENLISTED ASSOCIATION
        Sergeant Olanoff. Thank you, Senator Inouye. I would like
    to thank you and Senator Stevens for allowing the Retired
    Enlisted Association to testify before your subcommittee, and
    we represent over 100,000 members active reserve and retired
    and their families, and in my statement I have detailed a lot
    of the different programs we requested you look at for fiscal
    year 1999, but I am going to concentrate on military health
    care because that is our number 1 concern, but I just wanted to
    reflect back very quickly to what Mr. Dugan said from the
    American Legion.
        It is very ironic that we have already transferred $150
    billion out of the defense budget and now we have to come to
    you to lobby to put money back. It is just sad that we have to
    do that, and maybe next year and some of the future years we
    can look at some of these programs and try to fund them before
    we transfer all the money after we close the bases instead of
    after the fact.
        As I said, Senator Inouye, our number 1 priority is health
    care, and due to the downsizing of DOD budgets, and as well as
    the impact of the base realignment and closure on military
    retiree communities, finding access to health care is our
    number 1 priority.
        This trend of military treatment facilities either being
    downsized in staff or closed due to BRAC creates confusion
    among retirees that reside in those given areas where to access
    health care, receive their prescription drugs, and what
    happened to the promise of the health care that we were told
    when we decided to make the military a career?
        The question is how can we answer these and plan on
    providing health care for retirees now and in the future? You
    might recall last year I testified before the committee and
    stated that providing the Federal employee health plan, which
    is the same plan that Congress has, and their staff, to
    military retirees is one part of the overall solution, which is
    treated as our number one legislative priority.
        We appreciate the support of you and the other Members in
    this room that supported the medicare subvention test program,
    but as I am sure you are aware, that has been delayed due to
    requirements of the Health Care Finance Administration and site
    locations, but hopefully in September this program will start.
        As we anticipate, the success of this program TREA knows
    that this program fully implemented will only resolve
    approximately 33 to 40 percent of the over 1.2 million that are
    over 65 years old, and I have attached a GAO report in my
    testimony that states that the military treatment facility
    capacity is only another 75,000.
        Therefore, to continue meeting the needs of the rest of the
    program we ask you to support one of the bills that is out
    there, Senate bill 1334, of which Senator Bond from Missouri is
    the sponsor, and it currently has 64 cosponsors. Many of the
    people on this committee are cosponsors of that bill.
        And, as was alluded to earlier, the Senate mark came up
    with a test and also a couple of other provisions, a three-
    prong approach, but the funding in that is not enough. It is
    only $60 million.
        And we ask that you and this committee come up with a way
    to try to expand on Senator Bond's original bill, which would
    only have two locations, and we think that if we could have at
    least six locations then maybe we would get a better
    demonstration, or at least we would know how the program works.
    To have what the Senators recommended is a step in the right
    direction, but we think we need more than that.
        As you are aware, Secretary Cohen is considering two more
    rounds of BRAC in 2001 and 2005, so we want that now to test
    the Federal Employees Health Benefits Program [FEHBP] in order
    to meet the challenge of providing health care to our military
    retirees for the future.

                               prepared statement

        Again, Senator Inouye, I would like to thank you very much
    for allowing the Retired Enlisted Association to provide their
    views.
        Senator Inouye. Sergeant, I can assure you that at
    tomorrow's special meeting with the Secretary this will be an
    item on the agenda.
        Sergeant Olanoff. Thank you, Senator.
        Senator Inouye. Thank you, sir.
        [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, Technical Sergeant David Pahl, U.S. Air
    Force (Ret) and Auxiliary President Ethel Hale, and over 100,000
    members and auxiliary, we appreciate the opportunity to present
    testimony to this subcommittee concerning the fiscal year 1999 National
    Security 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 problems
        With the continued down sizing of the Department of Defense (DOD)
    budget and the impact of Base Realignment and Closures (BRAC) in
    military retiree communities, retirees are having increasing difficulty
    in accessing health care. This has lead to a decrease in staff in
    military treatment facilities (MTF) to meet the needs of the retiree
    community. Further, the amount of ``Space Available'' care has been
    curtailed due to these reasons.
        As you are no doubt aware, military retirees over the age of 65 are
    forced out of the CHAMPUS/TRICARE system onto Medicare. The only other
    access for health care is through ``Space Available'' care at MTF's for
    retirees over the age of 65. Today, these Medicare eligible retirees
    are left wondering where they will receive their health care.
        Retirees who live in non-catchment areas or areas affected by
    limited access to health care due to TRICARE limitations need
    alternatives for their health care needs. This group of retirees should
    not lose their benefits because of where they decide to live.
        You know about the promise of guaranteed lifetime health care for
    military personnel upon 20 years of active duty service or at age 60
    for Reserve or National Guard service. This is and was a very powerful
    recruiting inducement. Many of our members want to know where the
    benefits are now?
        Many military retirees feel as if the government lied to them. They
    believe that their promised benefits have been taken away purely for
    political reasons. I would like to speak for all retirees right now and
    offer some solutions to the health care problem.
                               solution 1--fehbp
        There is legislation pending in both the Senate and House to create
    a demonstration program to allow Medicare-eligible military retirees to
    enroll in the Federal Health Employee Benefits Program (FEHBP), H.R.
    1766 and S. 1334. TREA supports this program as another option to
    improve access to health care for military retirees. Our retirees have
    stated that they are willing to pay for the opportunity to enroll in a
    quality health care program, FEHBP. This is the same health care system
    that covers all Federal employees, including members of Congress and
    their staffers. Military retirees are the only group of Federal workers
    who lose their employer sponsored health care benefit when becoming
    eligible for Medicare. Why should there be a difference if an employee
    wears a uniform or a suit? We want equality.
        According to the definition by the Department of Veterans Affairs,
    all enlisted retirees are considered ``indigent veterans'', because no
    enlisted retiree receives a gross retirement of more than $26,481 (for
    1 dependent). This has been used as an argument against the FEHBP
    Demonstration. However, many of our enlisted retirees have successful
    second careers, by taking advantage of benefits like the G.I. Bill for
    college. We understand that health care is not ``free'' and we are
    willing to pay for greater access. But many of our retirees did not
    have all of the retirement options (for example IRA's, Roth IRA's,
    Education IRA's, 401K's, mutual funds, etc). I want to speak for them
    right now and Congress provide FEHBP as one choice to access care.
               solution 2--full implementation of dod subvention
        TREA would like to express its sincere thanks to the Senate for
    supporting the Medicare Subvention demonstration program with the
    Department of Defense. We now would like to see the program expanded to
    a nation-wide program. Many of our Medicare-eligible retirees 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. Allowing as many Medicare-eligible military retirees to use
    Medicare at MTF's will provide retirees yet another option for health
    care. Though this is not the complete solution to the health care for
    military retirees, because it would only meet the needs of 33 percent
    of the 1.2 million retirees over 65.
                     solution 3--medicare part ``b'' waiver
        H.R. 598 and S. 912, which are pending in both the House and
    Senate, authorizes the waiver of the penalty for not enrolling in
    Medicare Part ``B'' for Medicare-eligible military retirees. Retirees
    were counseled not to enroll in Part ``B'' because it would not be
    necessary because they resided near MTF's to access their free health
    care. These retirees should not be punished with late enrollment fees
    due to the fact that the local MTF has closed. The issue must be
    addressed now as the Secretary of Defense is planning two additional
    rounds of BRAC for 2001 and 2005.
        We believe that the small investment for DOD Subvention and FEHBP
    along with the waiver of enrollment 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.
           reasons dod is accountable to correct health care problems
        Mr. Chairman, the time has come to hold the Department of Defense
    accountable for the current state of military retiree health care. The
    Fiscal Year 1997 Defense Authorization Act Report, to accompany S.
    1745, directed DOD to conduct a study on the cost and feasibility of
    FEHBP to military retirees over 65 no later than March 1, 1997.
    Further, the Fiscal Year 1998 Defense Authorization Act Conference
    Report Section 712, directed the Secretary of Defense to prepare a plan
    for the expansion of TRICARE Prime not later than March 1, 1998. Also,
    Section 752 provides a Sense of the Congress that Congress and the
    President shall take steps to address the availability of health care
    for such retirees within two years. Further, the fiscal year 1998
    Defense Appropriations Conference Report directs the Defense Department
    to submit a report no later than March 1, 1998 on its plans for all
    phases of Medicare Subvention. Also, the Secretary of Defense in
    consultation with the Office of Personnel Management is required to
    submit a legislative proposal to implement a limited FEHBP
    demonstration program. As these deadlines pass, we are still waiting
    for DOD to meet these report deadlines. Now, is the time for action.
        I am sure that you are aware of the lawsuit that has been filed in
    the Federal District Court in Florida regarding military health care.
    The initial ruling allows two enlisted military retirees who enlisted
    prior to June 7, 1956 (effective date of space available health care)
    to sue the government under the Little Tucker Act. This Act allows each
    retiree to collect damages of $10,000. Also, a ruling will be made to
    determine if this lawsuit can be expanded to a ``class action
    lawsuit''. If this lawsuit is upheld, billions of dollars will be
    needed for the millions of military retirees or their survivors. Is
    this the proper method to solve disputes over promised retirement
    benefits? I hope not or more lawsuits will occur. Mr. Chairman, where
    are these studies and proposals? It is time for accountability,
    oversight, the end of report language, Sense of the Congress, studies,
    committees and other rhetoric. We want action now.
        DOD has stated that it would not be opposed to a limited test of
    FEHBP in Non-Prime areas. GAO Testimony by Stephen P. Backhus on
    February 27, 1997 (GAO/T-HEHS-97-84) page 3 states ``Between 1987 and
    1997, the number of older retirees increased by about 75 percent, to
    1.2 million; and they are projected to outnumber active-duty personnel
    in the future. These changes has significantly reduced the availability
    of care for retirees in DOD facilities''. Further, GAO Report HEHS-97-
    134 to the Chairman and Ranking Member of the National Security
    Personnel Subcommittee page 2 states ``Finally, relatively few retirees
    (about 75,000) could be accommodated by subvention at military medical
    facilities because of facility capacity and financial constraints''. On
    page 9 ``the basis of the number of retirees living near military
    facilities with sufficient capacity to operate a subvention program, we
    estimated that about 75,000 older retirees could participate nationwide
    if the subvention program was offered at all but DOD's smallest
    hospitals''. Although DOD expects to care for additional Medicare
    eligibles in the TRICARE Networks, it is clear that all Medicare
    eligibles will not be served and that another option is needed.
        We believe that the solution for the problems surrounding retiree
    health care lie in a combination of FEHBP and DOD Subvention. 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. Finally, the two largest veterans organizations, The American
    Legion and The Veterans of Foreign Wars have resolutions supporting our
    position.
                              retiree dental plan
        This program has been very popular, however, DOD did not provide
    for the opportunity for beneficiaries to enroll in a plan that would
    cover bridges, crowns, and dentures. Since many older retirees need
    these types of dental procedures, recommend DOD be directed to bid a
    plan that will include them. Also, spouses of military retirees are not
    allowed to enroll in the new dental plan unless the military sponsor
    enrolls. Some military retirees use the VA for their dental benefits
    and do not need to enroll in the Retiree Dental Plan. TREA requests
    Congress recommend legislation that corrects this inequity.
                               concurrent receipt
        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 legislation pending in
    the Senate (S. 657) which would address this inequity by allowing
    partial restoration of retired pay. Many of our retirees are severely
    disabled and unable to work. Is it fair that their retirement pay is
    therefore reduced? No other disabled retired veteran has such an offset
    of their retirement pay, only the military retiree.
                          survivor benefits plan (sbp)
        Current law requires a survivor of a military retiree to have their
    pension 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. Last year, legislation was signed into law which gave
    service-members the opportunity to withdraw from the SBP. By
    withdrawing, however, one losses the guarantee of a pension for their
    survivor. Presently, there is a bill in the House of Representatives
    (H.R. 3107) that will provide a paid up policy for military retirees
    who have paid SBP premiums for 30 years and reach age 70, whichever is
    later. TREA recommends adoption of SBP ``paid up'' premiums.
                               other ``benefits''
        During the deliberations of BRAC, the impact of military retirees
    does not seem to be a very important issue. Secretary Cohen has already
    been ``Lobbying'' for more Base Closures to re-invest in modernization.
    What about the military retiree who rely on base facilities for health
    care? Why does DOD wait for bases to close and then try to solve the
    health care problem? We believe a plan must be in place to resolve
    retiree health care before a base closes. 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. This benefit was canceled in the Fiscal Year
    1998 Defense Authorization Act. We believe to attract and maintain a
    viable reserve component that mobilization insurance is an important
    ingredient to retain quality citizen-soldiers. Further, TREA recommends
    that active and retired reserve component members be authorized to
    travel ``Space-A'' unrestricted. We believe if a seat is available and
    not filled, then reserve component members and their spouse should be
    permitted to fly (CONUS and Overseas). We are not advocating any
    changes to the current ``Space-A'' priority system. Finally, TREA
    supports FEHBP for personnel on active duty tours (either Title 10 or
    Title 32 Active Guard Reserve) as many of these full-time reserve
    component personnel are not located near a MTF.
                                   conclusion
        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. We believe a combination of TRICARE, DOD and VA Subvention
    and FEHBP will solve the access problem for all military retirees. Lets
    fix this problem now so we can all move on to the other important
    issues that must be solved.
        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.
    STATEMENT OF JANE WEISENBERG, VICE PRESIDENT COMMUNITY
                PROGRAMS, CHILDREN'S HOSPITAL AND HEALTH
                CENTER, SAN DIEGO, CA
        Senator Inouye. Our next witness is the vice president of
    Community Programs, Children's Hospital and Health Center, San
    Diego, Ms. Jane Weisenberg. Welcome to the committee.
        Ms. Weisenberg. Thank you, Senator, for this opportunity to
    testify today in support of the Marine Corps new parents
    support program, and thanks to this committee for its generous
    support of this program over the past 5 years.
        Your recognition of this project as worthy of Federal
    support has helped thousands of military families by providing
    a program whose aim is to prevent the suffering of domestic
    violence and child maltreatment and abuse. There continues to
    be a critical need for family support programs for military
    personnel.
        Military families face uniquely stressful and uncertain
    times. Military service members tend to be younger, more likely
    to be married, and receive lower pay than their civilian
    counterparts. Military families lead a transient existence.
    Most move at least every 3 years, ripping the military family
    from the support network of friends and relatives that civilian
    families rely on to get through tough times.
        The long absences of spouses, lengthy cruises, battlefield
    exercises, and peacekeeping missions, add to familial stress.
    Because military families are separated from their extended
    families they lose a wealth of knowledge and support regarding
    raising their children. The new parents support program offers
    parenting classes, such as Daddy's Baby Boot Camp to help new
    parents learn the necessary skills to care for a child, and the
    new parents support program has professional, experienced
    nurses and social workers who can visit the home to help
    families learn what they need to do to raise a child in a
    nurturing, caring environment.
        The new parents support program was developed and modeled
    from a demonstration project at Camp Pendleton, run by
    Children's Hospital in San Diego. Some aspects of the program
    are available to all new parents, and other services are
    targeted at families identified to be at high risk, or who have
    a known instance of child abuse.
        New parents support program was made a part of the
    coordinated community response, a comprehensive U.S. Marine
    Corps system to address family violence. Since 1992, Children's
    Hospital in San Diego has offered new parents support programs
    at all U.S. Marine Corps bases, including Yuma, 29 Palms,
    Barstow, El Toro, Tustin, Camp Pendleton, MCRD, Miramar, Camp
    Lejeune, New River, Cherry Point, Parris Island, Beaufort,
    Quantico, Henderson Hall, Okinawa, Iwakuni, and your own
    Kaneohe Bay.
        Programs of this nature play an integral role in the
    military readiness by ensuring the stability of military
    families. We are requesting continued support for the new
    parents support program. We are requesting $5.6 million for the
    Marine Corps new parents support program in the fiscal year
    1999 appropriations bill.
        We would also like to go on record as being supportive of
    the other new parents support programs at the other Armed
    Services. New parent support programs have worked well, and we
    strongly urge that all new parents support programs be
    adequately funded.

                               prepared statement

        Thank you, Mr. Chairman, and if you are interested in
    participating or observing any of our programs I would be happy
    to arrange that.
        [The statement follows:]
                     Prepared Statement of Jane Weisenberg
        Mr. Chairman, my name is Jane Weisenberg and I am the Vice
    President Community Programs at the Children's Hospital and Health
    Center in San Diego, California. Thank you for the opportunity to
    submit testimony for the record regarding the New Parent Support
    Program. At the outset, I would like to thank the Committee for its
    generous support for this project over the last five years. Your
    recognition of this project as worthy of federal support has helped
    military families since the program's inception in 1993.
    Critical Need
        There continues to be a critical need for family support programs
    for military personnel. Military families face uniquely stressful and
    uncertain times. Military service members are younger, more likely to
    be married, and receive lower pay than their civilian counterparts.
        Military families lead a transient existence which also contributes
    to the problem of domestic violence. Most move at least every three
    years, ripping the military family from the support network of friends
    and relatives that civilian families frequently rely on when times get
    tough. The long absences of spouses, lengthy cruise, battlefield
    exercises or peacekeeping missions, add to familial stress. Because
    military families are separated from their extended families, they lose
    a wealth of knowledge and support regarding raising children. The New
    Parent Support Program offers parenting skills classes, home
    visitations and helps to establish support networks to fill this void.
    United States Marine Corps Program
        The New Parent Support Program was developed and modeled from a
    demonstration program at Camp Pendleton, California, run by the
    Children's Hospital Center for Child Protection in 1990. It
    subsequently was made a part of the Coordinated Community Response, a
    comprehensive U.S. Marine Corps (USMC) system to work with family
    violence. The program was brought to the attention of Congress in 1992,
    and the decision was made to establish and staff the program at all 18
    USMC major bases and to test its viability for other branches of the
    Service. Since 1993, the New Parent Support Program has been
    successfully implemented on all 18 major USMC base:

    Yuma, AZ
    29 Palms, CA
    Barstow, CA
    El Toro, CA
    Tustin, CA
    Camp Pendleton, CA
    MCRD, San Diego, CA
    Albany, GA
    Kaneohe Bay, HI
    Camp LeJune, NC
    New River, NC
    Cherry Point, NC
    Parris Island, SC
    Beaufort, SC
    Quantico, VA
    Henderson Hall, VA
    Okinawa, Japan
    Iwakuni, Japan

        Since this time, services have also expanded to include new
    installations such as Miramar, California.
        The New Parent Support Program uses a combination of nurses and
    social workers to provide comprehensive home visitation services to
    families identified at risk for abuse and/or neglect. Additionally,
    infant parenting and child education classes are offered to all
    personnel located at each base. Home visitors provide support and
    advocacy and link client families to military and civilian adjunct
    services. The New Parent Support Program delivers three levels of
    service:
        Level 1.--Level 1 services are community based primary prevention
    activities including parent education classes, infant education
    classes, support groups, playmorning, and a wide variety of site-
    specific specialty classes tailored to meet the individual needs of
    each site. Any active duty service member or family member of the
    military community is eligible for Level 1 services. Average
    participation is 9.8 persons/activity, and over 30 percent of the
    families participating in the standard 18 week parent education
    curriculum had both mother and father attending the classes.
        In addition to the community-based primary prevention activities,
    the New Parent Support Program also offers primary prevention Level 1
    home visits by a registered nurse to all pregnant women on each
    military installation. Level 1 home visits begin in the third trimester
    of pregnancy and may continue until six months post partum. Any risk
    identified during these home visits automatically elevates the Level 1
    family to on-going Level 2 or 3 services.
        Level 2.--Level 2 services provide case-specific prevention for
    families identified as ``at risk'' or ``high risk: for abuse and/or
    neglect including both spousal abuse and child maltreatment. These
    families may be referred to NPSP by a military agency such as the
    Family Service Center or the Family Advocacy Program or they may be
    self-referred. Level 2 intervention includes home visitation services
    by both nurses and social workers, case management, parent education
    classes, support groups, and referrals to appropriate military and
    civilian resources.
        Level 3.--Level 3 services are prevention and intervention services
    for families with a known incident of either child maltreatment and/or
    spousal abuse. Level 3 services for active duty service members may be
    mandated by the service member's military command. The intervention
    with these families includes all the components of Level 2 services as
    well as the development of a safety plan, victim advocacy, and
    appropriate coordination with the Family Advocacy Program. All NPSP
    clients have access to their home visitor by beeper 24 hours a day,
    seven days a week.
        The fifth year evaluation suggests that appropriate families are
    being referred to the program. During 1997, 3,228 Marine Corps families
    received home visitation services and 15,441 referrals were made for
    these families to community-based support services. In addition, the
    families are responding positively--of 6,415 requests for service, 49
    percent of the families agreed to participate. That is a relatively
    high engagement rate for a program of this type.
    Children's Hospital of San Diego
        For 15 years before the military's involvement in the New Parent
    Support Program, Children's Hospital of San Diego successfully
    sponsored a similar program throughout San Diego County. The program
    was then started as a pilot demonstration project at Camp Pendleton.
    The Camp Pendleton program was designed to furnish a broad range of
    clinical, educational, in-home, and counseling services to eliminate
    the potential clauses of child abuse. This resulted in a two-year
    cooperative effort between the Children's Hospital of San Diego and the
    U.S. Marine Corps. Then in 1992, the Children's Hospital was
    competitively awarded the contract to extend the Camp Pendleton model
    worldwide. To date, the program has met with exceptional success.
        Children's Hospital's Center for Child Protection has long had a
    reputation as a center of excellence for dealing with prevention and
    treatment of child abuse and neglect. Because of the long-standing
    relationship between the Children's Hospital, the Marine Corps and its
    widespread recognition as a center of excellence for pediatric care,
    the hospital is uniquely qualified to continue this fully implemented
    program.
    Need for Congressional Support
        Tremendous pressures are placed upon military families today. Large
    numbers of families of active-duty personnel, young spouses and very
    young children, are often living in communities, isolated from their
    extended families and frequently the services of the installation where
    the service member works. The need continues for programs aimed at
    assisting these families to cope with such pressure. Advocacy programs
    of this nature play an integral role in military readiness by ensuring
    the stability of military families during uncertain times, and should
    receive priority consideration by Congress. Unlike most existing
    military child protection programs which focus on child abuse after it
    happens, the New Parent Support Programs are aimed at preventing the
    abuse and providing family support for families at risk.
        Congress has generously provided support for the Marine Corps New
    Parent Support Program for the last five years. In light of this
    Subcommittee's previous support for the New Parent Support Program and
    for other family advocacy initiatives, we are requesting $5.6 million
    for the Marine Corps New Parent Support Program in the fiscal year 1999
    Appropriations Bill to advance and continue these vital programs for
    the U.S. Marine Corps. Mr. Chairman, I would also like to go on record
    as being supportive of the New Parent Support Programs of the other
    Armed Services. The hardships of military life does not only affect the
    Marine Corps, but the honorable men and women in the other services as
    well. The New Parent Support Programs have worked well and we strongly
    urge that all of the New Parent Support Programs be adequately funded.
        Thank you, Mr. Chairman, for your consideration of our request.

        Senator Inouye. I can assure you that the problem you have
    cited is high on our agenda. We are well aware that the men and
    women who serve spend about half their time away from their
    homes either on exercises or deployed missions overseas or in
    training centers, and we are also well aware that the
    conditions of employment are not the most conducive to family
    tranquility. It is one of the most frustrating and aggravating
    problems we have, but I can assure you we will do our best.
        The chairman and I are the dinosaurs of the Senate. We
    served in World War II at a time when about 5 percent of
    military personnel had dependents. Today, over 65 percent of
    our men and women have dependents. That is a big difference,
    and we are trying our best to maintain the high caliber of
    personnel that we enjoy at this moment, and we are afraid that
    if we do not do something about it now we may lose it. I thank
    you very much.
        Ms. Weisenberg. Thank you, Senator.
    STATEMENT OF MILDRED BROOKE, VICE PRESIDENT, J&E
                ASSOCIATES
        Senator Inouye. Our next witness is Mildred Brooke, vice
    president, J&E Associates.
        Ms. Brooke. Good afternoon. My name is Mildred Brooke. I am
    the vice president of operations at J&E Associates,
    Incorporated, a privately held management consulting firm. I
    want to thank you for the opportunity to appear before the
    subcommittee and for the support that you and the other Members
    of the subcommittee have given military families, particularly
    those at-risk families that I will discuss.
        Our professional staff at J&E provide services
    internationally that address a broad range of human service
    needs through Government agencies at the local, State, and
    national levels. We are currently working in partnership with
    the Departments of the Army and the Navy on their family
    advocacy programs. I wish to focus my remarks today on the
    Department of Defense child abuse prevention program known as
    the new parents support program.
        Senator Inouye, I know you are very familiar with the new
    parents support program because you were instrumental in
    securing the initial funding for the program in 1992 and have
    given support for the program as it has expanded since that
    time. We thank you for that leadership, and call upon you once
    again, as we need that leadership now more than ever, as I will
    explain.
        At present, we operate the new parents support program at
    29 Army installations worldwide as opposed to the originally
    planned 50 installations, and until the dramatic reduction in
    the current fiscal year funds we also provided the program at
    16 Navy bases, but that has been reduced to 5.
        My comments today are in support of restoration of funds in
    1999 to the prior years level. Unfortunately, in fiscal year
    1998, the funding level which had been provided by this
    subcommittee in 1995, 1996, and 1997 was not provided, thereby
    resulting in an 80-percent reduction in overall dollars, which
    seriously crippled the program at most sites and ended it at
    others.
        Although DOD has notified us that some additional moneys
    will be available in 1998, it is still inadequate to maintain
    the program in the quantity and at the quality which Congress
    has supported in the past. In the Armed Services, six children
    of every 1,000 are subjected to child abuse each year. This
    equates to 8,000 documented cases each year and does not
    include all the children who suffer from neglect.
        The new parents support program is based on a practical,
    successful model for preventing family violence. The program
    targets expectant parents and families with children under the
    age of 6 years. Services are provided through home visits,
    education classes, support groups, and structured playtimes for
    parents and children. The program is particularly critical for
    young military parents, who are often separated from their
    families and friends during times of stress.
        I am requesting that the subcommittee again demonstrate its
    support for the program at the level that will ensure that all
    families with need and those at-risk children that are
    victimized by the unique stresses to which their parents are
    subjected be restored to the funding level at which it was
    previously of $20 million.
        If the funding remains at the projected level, $10 million,
    it is predicted the program will serve only 10,000 families a
    year, in contrast to the more than 60,000 families who
    voluntarily participated in 1997.
        One approach to adapt to this reduction is to limit the
    services to families with children under the age of 1 year,
    instead of the current requirement for under 6 years.
        Unfortunately, this approach will miss the military
    families who may be in greatest need of the program. National
    data supplied by the Department of Health and Human Services
    shows children are at the greatest risk for child abuse in
    their first year of life for civilian families, but in military
    families, 3- to 4-year-olds are the most vulnerable to child
    abuse.
        I would like to close my comments today by noting that the
    military families being served by the new parents support
    program have come to our staff and to their commanders to
    express how disheartened they are by the recent reduction in
    services as a result of the funding cuts. On behalf of these
    young parents, I ask that you give fullest consideration to
    restoring the funding of this proven program to its prior years
    level of $20 million, which would include the $5.6 million
    earlier mentioned.

                               prepared statement

        Thank you for this opportunity today, and I am prepared to
    answer your questions.
        Senator Inouye. I can assure you, Ms. Brooke, that I will
    do everything possible to see that the funds are restored.
        Ms. Brooke. Thank you very much.
        [The statement follows:]
                      Prepared Statement of Mildred Brooke
        My name is Mildred Brooke, Vice President of J&E Associates, Inc.,
    a privately-held management consulting firm that was founded in 1985.
    J&E has focused its efforts in providing direct mental health,
    substance abuse, and social services to vulnerable populations in need
    of assistance. Today, we provide services internationally and address a
    broad range of human service needs through government agencies or
    private firms at the local, State, and national levels. We currently
    have contracts with the Departments of the Army and Navy to provide an
    array of family advocacy services. Among the programs for which we
    provide management and professional staff is a highly regarded,
    effective child abuse prevention program known as the New Parent
    Support Program, or NPSP. At present we operate the NPSP at 29 Army
    installations worldwide. Until a reduction in the funds available for
    the NPSP led to staffing cutbacks, we also provided staff for the
    program at 16 Navy bases--a number that has since been reduced to 5.
        My comments today are in support of a restoration of funds that
    were cut from the NPSP in this year. Before fiscal year 1998, the NPSP
    was funded at $20 million and was available to families at most
    military installations with large populations of young children. At the
    beginning of fiscal year 1998, funding for the NPSP was cut by a full
    80 percent, all but crippling the program at many sites and ending it
    at others. Although $6 million has since been added to the fiscal year
    budget, the NPSP will simply not meet the objectives it was designed to
    meet unless the funding levels Congress has supported in the past are
    restored.
        So that you can appreciate why funding for the program should be
    restored to the $20 million level, let me begin by telling you a bit
    about the NPSP and what military family members think about the
    program. I will then explain how the budget cuts made in fiscal year
    1998 have impacted the program and how services will be affected if the
    budget for the program is left at $10 million for fiscal year 1999.
        The NPSP--Who it Serves, How, and Why.--Across the Armed Services,
    6 children out of 1,000 are subjected to child abuse, equating to more
    than 8,000 substantiated cases of child abuse per year. The NPSP, a
    program which exists in some form in all four Services, is based on a
    practical, successful model for preventing family violence, in
    particular violence against children. As designed the program targets
    expectant parents and families with children under the age of 6 years
    and provides support, referral, information, and educational services.
    This is especially critical taking into consideration the fact that new
    parents in the military are often isolated from friends and families
    who might otherwise provide them with support. In the Army and Navy
    alone, the program provided services to more than 66,000 participants
    from military families.
        By working closely with families who participate voluntarily in the
    NPSP, the highly trained licensed nurses and clinical social workers
    who staff the NPSP can identify at-risk families and provide a variety
    of interventions designed to decrease the risk of abuse in these
    families. The interventions included as part of this program include
    home visits, parenting and infant care classes, support and therapy
    groups, developmental play groups, and other activities, including
    referrals to additional military and civilian services. Through these
    activities, the NPSP staff helps these families learn to cope with
    stress, isolation, post-deployment reunions, and the everyday demands
    of parenthood. This contributes to a measurable reduction in the
    frequency of child abuse among participating families. Although the
    focus of the program is on children and families, the program also
    helps to decrease the incidence of spousal abuse in military families.
        Like all programs for military families, the NPSP must be tailored
    to meet the needs of each military community participating in the
    program. For example, at one installation served by one of my company's
    New Parent Support teams, groups for teenage mothers were established
    to meet a special local need. Where language is a concern, our staff
    has offered classes and materials in both English and Spanish.
        The NPSP meets unique needs, however, every effort is made to
    coordinate with existing programs and services. For example, at one
    installation, infant care classes are offered as a joint effort of the
    NPSP and the Red Cross. Across installations, the NPSP works in tandem
    with the Family Advocacy Program (FAP), the DOD program with overall
    responsibility for preventing family violence, complementing and
    expanding the FAP's prevention services. The program is particularly
    valuable in reaching and assisting families who live in isolated
    communities and face tremendous pressures. These families, often young
    and inexperienced, have a high risk for abuse and/or neglect. In 1997,
    J&E determined that 18 to 20 percent of the Army families receiving
    home visits by the NPSP had a documented incident of child and/or
    spousal maltreatment, as determined by the Army's Case Review
    Committee. For these families, the home visits were designed to
    emphasize safety, build skills and knowledge, improve problem solving,
    and reduce isolation. When we examined all cases that received home
    visits from our staff in 1997, J&E staff found that approximately 60
    percent of the cases across Army installations worldwide were
    documented as being ``at risk'' or ``high risk'' for abuse and/or
    neglect. Clearly, these data indicate the seriousness of abuse and
    neglect in military families and demonstrate a documented need for
    services such as the NPSP.
        What Do Military Families Say About the NPSP?.--As the contractor
    for the Department of the Army's NPSP effort, J&E has sought feedback
    on the usefulness of the program from participating families. Some
    examples we have received are as follows:
        Eighty percent or more of the family members at three military
    installations who participated in infant care classes in late 1997
    rated the class as ``excellent''. At two installations where parenting
    classes were offered in Spanish, in excess of 90 percent of the
    participants rated these classes as ``excellent''.
        Participants, when asked to write about their experiences with the
    NPSP home visits and parenting classes, uniformly wrote glowing reports
    about the staff and program benefits. Their comments included the
    following:
        ``I feel that breaking down how an argument starts between a couple
    with some ``hands on'' examples helps the couple understand how to
    prevent arguments.''
        ``The home visitor has been a big help to me and my wife.''
        ``The home visits gave me a chance to verbalize my concerns and
    fears.''
        ``During my husband's long deployment to Bosnia, I had many
    questions and worries about our first child, an infant of 4 months. I
    turned to the NPSP for help and they came to my home for one-on-one
    parent conferences.''
        ``I think the program was very helpful to my family and myself at a
    time when we really needed help.''
        ``I wish I would have taken this class earlier.''
        ``I really enjoyed being part of this class. I learned more about
    parenting and being patient.''
        ``That is something I really needed to learn.''
        The Impact of the Fiscal Year 1998 Budget Cut.--As you can image,
    the NPSP was substantially scaled down from its planned scope when its
    budget was slashed by 80 percent at the beginning of 1998. To
    illustrate, the Army's program was originally designed to serve 39 Army
    installations, with expansion to 50. However, due to funding cuts, it
    now serves 29 sites, with only modified services available. We are no
    longer able to provide the full complement of staff needed for each
    team (social workers, nurses, and administrative staff) despite the
    number of families needing services at each installation. Most program
    teams at each installation are staffed at levels below that which is
    required. Because of lack of funding, the NPSP staff now make less
    frequent home visits, and provide fewer classes. In addition, certain
    culturally-specific services have been eliminated. In short, the very
    activities that have made the NPSP a success are being undermined.
        What Can We Expect in Fiscal Year 1999.--The future of the NPSP
    depends in large part on Congress' commitment to the program. If
    Congress demonstrates, as it has in the past, that it does not want
    military children to be victimized by the unique stresses to which
    their parents are subjected, it will restore funding for the NPSP to
    the pre-1998 level of $20 million. The NPSP will once again be a model
    program for child abuse prevention and proof of our nation's commitment
    to the well-being of military families. If, on the other hand, funding
    is left at $10 million, the NPSP will only be able to serve
    approximately 10,000 families per year, in contrast to the 60,000
    families who voluntarily participated in the program in 1997. One plan
    under discussion to achieve this dramatic reduction in services is to
    limit services to families with children under the age of one rather
    than under the age of six. This plan, simply stated, is a fix that
    focuses on dollars rather than on the reality of child abuse in
    military families.
        In civilian families, national data show that children are at
    greatest risk for child abuse during their first year of life, and the
    most frequent form of child abuse is neglect. However, in military
    families, data collected before the NPSP became widely available showed
    that three- and four-year-olds are at greater risk of abuse, and
    physical abuse is the most common form of abuse.\1\ (See following
    graphs.) As a nation, do we really want to operate a program to protect
    one group of military children from child abuse and turn our backs on
    another larger group of children whom we know to be at even greater
    risk? I don't believe we do and trust that you will prove that we do
    not.
    ---------------------------------------------------------------------------
        \1\ U.S. Department of Health and Human Services, Child
    Maltreatment: Reports from the States to the National Center of Child
    Abuse and Neglect, 1993.
    ---------------------------------------------------------------------------
        Closing.--I would like to close my comments today by noting that
    participants in the NPSP--military families with young children--are
    disheartened by the funding cuts to the program. They are writing
    letters in support of the program and are phoning their respective
    Commanding General's hotline to express concerns. At one installation
    where we operate the NPSP, participants have offered to volunteer their
    services to help keep the program available. The comments of one young
    mother at one of our Army sites captures what these families feel. She
    said, ``I don't understand how a program like this cannot be funded
    when it's such a big asset to the parents and children of this
    installation. (The installation) is in desperate need of a program like
    this.''
        Thank you for this opportunity to address the committee today.
        [GRAPHIC] [TIFF OMITTED] T02MY11.001

        [GRAPHIC] [TIFF OMITTED] T02MY11.002

    STATEMENT OF MASTER SERGEANT MICHAEL P. CLINE, (RET.),
                EXECUTIVE DIRECTOR, ENLISTED ASSOCIATION OF
                THE NATIONAL GUARD OF THE UNITED STATES
        Senator Inouye. Our next witness is Master Sergeant Michael
    P. Cline (Ret.), executive director, Enlisted Association of
    the National Guard of the United States.
        Sergeant Cline. Good afternoon, Senator Inouye. We thank
    you for allowing us to participate in these hearings. We are
    honored to be able to present the views of our members on the
    efforts of this committee.
        Mr. Chairman, I must report to you that the relationship
    between the Active Army and the Army National Guard is still
    not fixed. Although the Army has made some attempts to
    alleviate the shortfalls of the Army National Guard, there
    still remains a significant shortfall in fiscal year 1999
    appropriations of $634 million.
        Why do we feel that there is a continuing problem? Look at
    the recently passed fiscal year 1998 emergency supplemental
    appropriations. The Army National Guard started out with $5.9
    million in additional operations and maintenance funding in the
    original bill. It received only $175,000 in the final bill. The
    Air National Guard began with $975,000 for operation and
    maintenance. It received nothing in the final bill. The House
    Security Committee recently completed its work on the fiscal
    year 1999 defense authorization bill. The estimate for the Army
    was increased by 4,800 positions, while the Army Reserve full-
    time manning was increased by 1,000 positions. The Army
    National Guard was cut by 4,516 positions.
        April figures show that the Active Army and the Army
    Reserve cannot meet current end strength requirements.
    Attrition rates for the Active are about 36 to 37 percent,
    while the Army National Guard is above current end strength
    levels, with an attrition rate of only 17 percent.
        Where is the rationale for increasing the Army and Army
    Reserve while making deep cuts in the Army National Guard? Its
    costs are significant to send and train soldiers and to have
    them replace existing soldiers just does not seem feasible.
        The Army National Guard's 1999 budget shortfalls total $634
    million, $184 million in the pay and allowances account, and
    $450 million in OPTEMPO accounts. This shortfall represents
    less than 1 percent of the total Army's budget.
        Mr. Chairman, I realize that the budget resolution means no
    additional funds. I believe the Army National Guard shortfall
    can be divided from other forces. Historically, the Army funds
    OPTEMPO high, but only executes 71 percent. That remaining 29
    percent of their funding is more than enough to make up for the
    Army National Guard's shortfall.
        As you are aware, the Army has not been able to maintain
    end strength suffering, from an attrition rate of above 36
    percent. The Army Reserve has had the same problem. The Army
    National Guard continues to maintain its end strength at only
    that 17 percent attrition rate. The Army's personnel account
    can easily afford to lose funding. The Army National Guard's
    shortfall can be derived from the personnel funding the Army
    does not need anyway.

                               prepared statement

        Mr. Chairman, Senator Inouye, you fought hard last year to
    get the Army to play fair with the Guard, and we appreciate
    your efforts and hope you will continue to fight on behalf of
    the men and women of the National Guard. Unfortunately, the
    problem is still with it. The Association of the National Guard
    and members of The Military Coalition voice support for the
    legislative agenda of The Military Coalition. I would like to
    thank you, Senator Inouye, and the chairman for giving us this
    opportunity to testify.
        [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.
        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 deploy around the world. The National Guard must have adequate
    funding to fully train its soldiers and airmen and protect them from
    harm. The Guard must be adequately prepared and resourced to complete
    its varying assigned missions and avoid degrading criticism from its
    adversaries. 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 peacetime 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 1999
    appropriations. Once again, the President's budget submission contains
    budget information that will bankrupt the Army National Guard and
    completely destroy its ability to perform its mission. The fiscal year
    1999 budget for the Army National Guard (ARNG) will only pay
    approximately 71 percent of its requirements--requirements that were
    decided upon and validated by the Department of the Army, not by
    National Guard officials.
        The ARNG's 1999 budget shortfalls total $634 million. $184 million
    is in the pay and allowances (P&A) accounts and $450 million is in
    operations and maintenance (O&M) accounts.

                                                                 In millions
                                                                  of dollars

    P&A (Pay and Allowances):
        Military Schools and Special Training.........................   156
        Recruiting and Retention Bonuses..............................    18
        Active/Guard/Reserve Pay......................................    10
                            -----------------------------------------------------------------
                            ________________________________________________
          Total P&A...................................................   184
                            =================================================================
                            ________________________________________________
    O&M (Operation and Maintenance):
        Surface OPTEMPO...............................................   110
        Real Property Maintenance.....................................    98
        Depot Maintenance.............................................    94
        Information/Telecom Management................................    73
        Medical Support and AT/IDT Supplies and Services..............    75
                            -----------------------------------------------------------------
                            ________________________________________________
          Total O&M...................................................   450
                            =================================================================
                            ________________________________________________
          Total Unfunded Requirement..................................   634

        This budget request fails to provide sufficient funds to maintain
    minimum readiness levels. Failure to fund Army National Guard O&M and
    P&A accounts will have a detrimental impact on ARNG readiness,
    recruiting, retention and the ability to perform both state and federal
    missions. This shortfall is forcing National Guard NCO's to choose
    between attending schools needed for promotion or staying with their
    units to mentor junior enlisted troops. Inadequate funding of Schools
    and Special Training accounts decreases unit readiness, reduces
    promotion capabilities and diminishes retention rates.
        A shortfall in the Bonuses funds limits the recruiting market and
    diminishes retention rates. Not fully funding active Guard and Reserve
    pay does not support the Quadrennial Defense Review's programmed
    strength for the ARNG and forces the ARNG to begin separation
    procedures as well as limiting the ability to support traditional
    National Guard soldiers.
        The shortfall in Surface OPTEMPO funds does not fund later
    deploying units. Real Property Maintenance underfunding will permit
    only limited emergency repairs, will allow deterioration of ARNG
    facilities and will contribute to the increase in the maintenance
    backlog of equipment. Unserviceable equipment awaiting Depot
    Maintenance adversely impacts training and readiness. Lack of funding
    for Depot Maintenance decreases the pool of available serviceable
    assets for both mission and training requirements and jeopardizes
    Division redesign plans. A funding shortfall in the Information/Telcomm
    Support account means that the ARNG cannot maintain basic information
    structure; the Reserve Component Automation System cannot be supported.
    The Miscellaneous Med/Tng Support, Supplies and Svcs account needs
    funding for medical supplies, medical screening and training support
    programs to ensure combat readiness.
        The National Guard's eight combat divisions are the hardest hit
    since the budget funds a small portion of their operating tempo
    requirements. These divisions are providing many of the Guard elements
    deploying to Bosnia, while active Army divisions that receive the
    highest funding priority spend much of their time at home station. The
    guys who are being funded to go overseas are staying home, and the guys
    who are being funded to stay home are going overseas.
        In recent years, budget requests have not adequately funded ARNG
    readiness accounts, including O&M and P&A. This inadequate funding,
    represents only 1 percent of the Total Army budget.
        The current fiscal year 1999 funding level for the ARNG will not
    maintain the minimum readiness level necessary to fulfill our
    obligation to National Defense. National Guard Bureau has broken out
    the items/program that will benefit from each additional $50 million
    plus-up in funding provided by Congress:
    $50 million add-on
        Fully funds Active Guard/Reserve (AGR) personal pay
        Fully funds schools for the Enhanced Separate Brigades
        Provides 50 percent of the funding needed for Special Training for
    the Enhanced Separate Brigades.
    $100 million add-on
        Early Deployers and Activating units are funded to 100 percent
        Schools are funded for Echelon Above Division FA units
    $150 million add-on
        ARNG Bonus program will be fully funded
        Late deploying units will be funded to 75 percent of Department of
    Army (DA) requirements
        Medical Support will be funded to 71 percent of DA requirements
    $200 million add-on
        Increases Real Property Maintenance funding to 49 percent
        Funds emergency repairs
        Depot Maintenance funding to non-deploying units will be increased
    to 17 percent
    $250 million add-on
        Increases funding of information technology to 50 percent. Basic
    infrastructure and connectivity will be maintained, but technology
    upgrades will not be paid
        Money would also be used for Annual Training and IDT training
    support, contract services and supplies
    $300 million add-on
        Fully funds the Late Deploying units
    $350 million add-on
        Funds 57 percent of Divisional unit MOSQ and Leadership Development
    Requirements
    $400 million add-on
        Increases funding to non-deploying units' Depot Maintenance,
    bringing it up to 42 percent of DA requirements
    $450 million add-on
        Increases funding for Information Technology to 75 percent of DA
    requirement, allowing for systems upgrades and limited replacement of
    equipment
    $500 million add-on
        Funds 80 percent of other contract Medical Services and Supplies
    for ARNG activities
        Increases funding for schools for Divisional units and for Special
    Training for Enhanced Separate Brigades and EAD-FA units
    $550 million add-on
        Fully funds Schools and Special Training requirements
        Increases Depot Maintenance funding to 61 percent
        Allows for limited upgrades and repairs to ARNG equipment
    $600 million add-on
        Increases Real Property Maintenance funding to 80 percent
        Depot Maintenance funding to non-deploying units increases to 44
    percent
    $634 million add-on
        Fully funds the ARNG unfunded requirements in the fiscal year 1999
    budget
        Increases Depot Maintenance to non-deploying units to 50 percent
        Funds Medical Support (physicals, screening) to 100 percent
        Funds Training Support to 80 percent
        Funds other Supplies and Services to 84 percent
                                      rcas
        The President's budget requested adequate funds to field the
    Reserve Component Automation System (RCAS) for fiscal year 1999. Last
    year, cuts in funding to RCAS were made during the appropriation
    process, but were added back in at a later time. EANGUS asks that the
    President's budget request be maintained on this item as the
    legislation moves through Congress. In addition, supplementary funding
    is needed to institute distance learning programs.
                                      mlrs
        In its first combat deployment in Operation Desert Storm, the
    Multiple Launch Rocket System (MLRS) dominated the artillery
    battlefield. 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 force. MLRS is a mission in which the Army National Guard can
    reasonably be trained and prepared quickly 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 budget request for fiscal year 1999
    contained no MLRS Launchers--the unfunded request is for the National
    Guard only. Eight of the ten MLRS battalions the Guard does have were
    congressional add-ons. $150.4 million in additional appropriations to
    the Army's procurement account is necessary to add an MLRS battalion to
    the Army National Guard in fiscal year 1999. Although there are plans
    to downsize battalions to 3 times 6 (18 MLRS), resulting in an
    additional 9 units per battalion which will cascade down, additional
    funding will not be wasted. So many MLRS units are needed that any add-
    on in fiscal year 1999 would be a valid request.
                           engagement skills trainer
        The Engagement Skills Trainer (EST) is an interactive weapons
    simulator that integrates leading-edge technology in computers, audio
    visual systems and lasers. The result is a relatively low-cost system
    that allows full training in weapons marksmanship and judgmental
    firearms training by military and law enforcement users on an
    international basis. The obvious advantages of this system are reduced
    live ammunition and range operation costs, virtual elimination of
    safety and environmental risks and reduced ``dead'' time in travel to
    and from live fire ranges. The fidelity of the interactive targets and
    scenarios provide trainees with ``real world'' situations involving use
    of force options without risk to trainees, live trainers or bystanders.
        The Army National Guard is currently fielding the EST in two
    configurations: a full twelve-lane EST with a focus on training
    collective (squad level) tasks, and a four-lane configuration with a
    focus on individual skills and tasks. The training value of the EST for
    the individual combatant/section/crew and squad has been validated
    throughout the ARNG and fully supports the strategic vision for
    training in the 21st century. The accelerated ammunition reductions
    within the U.S. Army ($40 million a year) place a renewed urgency on
    fully fielding the National Guard with the EST. The current fielding
    plan is to place a four-lane trainer in most Army Guard armories
    throughout the U.S. and place the full EST at larger sites and training
    centers.
        Several Army Guard units have established arrangements informally
    with local law enforcement agencies for co-use of Guard simulator
    systems to conduct needed law enforcement training. This Community-
    Based Simulation Training Strategy envisions the Army National Guard
    continuing to field the EST in consonance with the Army's validated
    requirement and training strategy. This concept draws upon the
    ``Community-Based Defense Force'' mission of the National Guard. Local
    law enforcement will work out individual agreements with the local Army
    Guard unit. It is envisioned that this program will grow into a
    national program involving all Reserve Component forces.
        The concept of this Community-Based Simulation Training Strategy
    entails funding for approximately $5 million to allow for the
    establishment of a valid pilot program across an appropriate spectrum
    of locations in the nation. At approximately $48,000 per system, this
    would allow for fielding 104 lane trainers in various communities and
    states. After system fielding and implementation of the pilot program,
    a report will be generated showing actual cost savings for the Guard
    and law enforcement participants in the program. The results are
    expected to illuminate the need for completion of the fielding of the
    remaining systems over the next four years.
                               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.
        Below are the unfunded requirements for the ANG for fiscal year
    1999:
                                                                 In millions

    Miscellaneous ANG Equipment:
        F-16 Targeting Pods.......................................   160.5
        Data Links for F-16, A-10, F-15, B-1......................    64.951
        Night vision capability...................................    20.931
        Improved aircraft survivability...........................    50.005
        Training systems..........................................    12.810
                        --------------------------------------------------------------
                        ____________________________________________________

          Total Miscellaneous Equipment...........................   309.197
    F-16 A/B Service Life Extension...............................    18.000
    Real Property Maintenance.....................................    24.000
    Depot Maintenance.............................................    26.000
    Real Property Maintenance Backlog Reduction...................    26.000
                        --------------------------------------------------------------
                        ____________________________________________________

          Total ANG fiscal year 1999 Unfunded Priorities..........   403.2

        The ANG F-16's require a targeting pod to fulfill current
    Precision-Guided Munitions requirements. Recently, several low-cost
    targeting pods have been produced that could dramatically increase
    capability at a relatively low initial cost. These pods would improve
    ANG combat capability and contingency support availability.
        Data Links for F-16's, A-10's, F-15's and B-1's are needed to save
    soldier's and airmen's lives by preventing fratricide and enhancing
    situational awareness while providing accurate combat ID capabilities.
    Links also provide access to data for battle participants, giving them
    target/threat information and intelligence.
        Night Vision capability consists of: Night Vision Goggles; F-15
    Night Vision Imaging System; HC/C-130 Night Vision Imaging System
    program and the HC-130 AN/ARS-6 Personnel Locator System. Night Vision
    is the key to sustained 24-hour combat operations and is essential for
    successful combat execution, lethality and survivability. Night Vision
    is also essential for minimizing search time and providing quick,
    positive identification in search and rescue missions.
        Improved Aircraft Survivability includes: the Electronic Warfare
    Management System; the Mega Data Transfer Cartridge; C-130 Cockpit
    Armor; the HC-130 Integrated Electronic Warfare System and Fighter
    Engine Modernization.
        Training Systems consist of: new A-10 Unit Training Devices
    (simulator); F-15 Full Mission Trainers; video recording system for the
    B-1 and Automated Squadron Management System.
        The Service Life Extension Program for F-16A/B Aircraft is required
    on 24 F-16A/B aircraft in order for them to last through 2005. Many of
    these aircraft have already exceeded their programmed service life of
    4,000 hours. This repair/modification requires $8.64 million of
    Aircraft Procurement and $9.6 million of Operation and Maintenance, ANG
    funding.
        At $86 million for fiscal year 1999, the ANG Real Property
    Maintenance budget will be insufficient to meet the urgent
    requirements. Backlog of Maintenance of Repair will be $643 million at
    the end of fiscal year 1999 based on current funding. $24 million is
    urgently needed to repair severely deteriorated airfield pavements,
    upgrade infrastructure at joint use airfields, bed down new mission
    requirements and correct fire and safety deficiencies. $26 million is
    urgently needed for repair of roofs, exterior walls, windows and doors.
    It would also be used to repair heating, ventilating, electrical, water
    and sewer systems.
        The ANG Depot Maintenance account for fiscal year 1999 needs an
    additional $26 million to eliminate deferred aircraft, engine and
    support equipment maintenance.
                                      c-17
        The C-17 is essential to the Air Force's ongoing modernization of
    its air mobility forces and is key to meeting the nation's strategic
    mobility requirements for the 21st century. The C-17 possesses the full
    range of capabilities that will meet critical DOD and national needs;
    long range, outsized and oversized cargo, the ability to operate on
    simple and congested runways, efficient on-load and off-load, airdrop
    and excellent defensive systems. It will replace capacity lost as C-
    141's retire. The burdens placed on U.S. strategic mobility forces will
    not become less demanding in the future. In fact, the potential demands
    of peacetime engagement, the likelihood of smaller-scale contingencies
    worldwide, and the increased possibility of confronting nuclear,
    biological, and chemical threats all pose challenges for mobility
    forces. The current acquisition plan for the C-17 will severely hamper
    our nation's strategic mobility forces. Additional funding to provide
    for fielding of the first C-17 to the ANG is necessary sooner than
    planned. Aging C-141's are 40 years old and have suffered from overuse.
    Enlisted Aircrews' lives are at risk, as well as the pilots of these
    aged aircraft.
                               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.
                                    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 National Guard has the necessary 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 and the 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 National Guard is family. Americans at their best. The
    National Guard--Protectors of Freedom. 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 1999
    funding requirements for the Army and Air National Guard.

        Senator Inouye. I know this is one of the most vexing
    problems we face at this time. I was hoping this matter could
    be resolved by now, but apparently it will be with us for a
    long, long time.
        Sergeant Cline. If I could add something, Senator Inouye.
    It has been our association's belief that end strength and
    force structure is an issue of the officers. We normally let
    them take care of that business, but things have gotten so bad.
        When we are only facing 13 percent OPTEMPO in our eight
    divisions, that means the tank commander gets to drive his tank
    13 miles a year. How do we expect somebody to be ready to go in
    harm's way when they cannot meet their OPTEMPO requirements,
    and it is the enlisted guy who is out there in the forefront in
    the Army doing the job.
        Senator Inouye. And yet they expect you to do it.
        Sergeant Cline. Yes, sir. Thank you, sir.
        Senator Inouye. Thank you very much.
    STATEMENT OF CMDR. VIRGINIA TORSCH, MSC, USNR, THE
                MILITARY COALITION
    ACCOMPANIED BY CMDR. MIKE LORD, JAGC, USN (RET.), THE MILITARY
                COALITION

        Senator Inouye. Our next witness is Commander Virginia
    Torsch and Commander Mike Lord, The Military Coalition.
        Commander Torsch. Thank you, Senator Inouye. I am going to
    go ahead and present it, but I have got backup here if I need
    it.
        On behalf of The Military Coalition, I would like to
    express our deepest appreciation to the chairman and
    distinguished members of this subcommittee for holding these
    important hearings and for allowing us to present our concerns.
        The Military Coalition is committed to making Tricare a
    better health care plan and has been working with DOD and with
    Congress to remedy some of the problems even as we pursue other
    more comprehensive fixes to the military medical care system.
        This subcommittee has been very instrumental in ensuring
    that many of these problems have been resolved, at least
    ameliorated, and the coalition would like to express its
    deepest appreciation for the committee's role.
        One of the most critical steps towards restoring equity in
    the health care benefit for older retirees was taken last year,
    with the enactment of legislation for a medicare subvention
    test in the Balanced Budget Act of 1997. The coalition deeply
    appreciates the subcommittee's leadership in getting this
    important legislation enacted and is optimistic the test will
    prove that subvention is a win-win provision for all concerned.
        However, the coalition is concerned that many subvention
    supporters believe subvention is the solution. This is not the
    case at all. In fact, even when Tricare Senior is expanded
    Nationwide, medicare subvention, when combined with DOD's level
    of effort, will only benefit medicare-eligible beneficiaries
    residing in the catchment areas of major military hospitals,
    which is at best about 30 to 40 percent of the medicare-
    eligible uniformed services population.
        Next to lifetime health care commitment, an additional
    option must be provided to the have-nots and lock-outs, and
    that is to offer those medicare-eligible uniformed
    beneficiaries who cannot benefit from Tricare Senior the
    opportunity to enrol in the Federal Health Employment Benefit
    Program. We realize that one of the principal arguments being
    made against FEHBP-65 is its price tag to the beneficiary.
        This was not a concern the coalition took likely, and
    before concluding that FEHBP-65 would be a viable option for
    beneficiaries, we conducted a health care cost survey in 1996.
    That survey revealed that 32.5 percent of enlisted retirees 65
    and older, and 41.8 percent of officer retirees 65 or older
    would be economically better off with FEHBP than under their
    current health care coverage. That represents a significant
    population who would benefit from enrolling in the Federal
    Health Employments Benefits Program.
        While the coalition would prefer to have FEHBP-65 enacted
    Nationwide, we recognize that the limited test may be necessary
    to take the guesswork out of the low cost of this option. We
    are therefore delighted that the Senate Armed Services
    Committee completed its draft of the uniformed 1999 defense
    authorization bill last week. They included a three-prong test
    of additional options for medicare-eligible uniformed services
    beneficiaries.
        The test provides medicare-eligible retirees the
    opportunity to enroll in the Federal Health Employments Benefit
    Program at two sites, the opportunity to buy into a medicare
    supplemental insurance program for a premium to be determined
    by the Defense Department which would not exceed 75 percent of
    the FEHBP premium at two other sites, and the option to
    participate in the Department of Defense mail order pharmacy
    program subject to copayments and other charges deemed
    appropriate by the Secretary of Defense at two other sites.
        The only change to this provision we ask this committee to
    consider is to expand the FEHBP portion of the test to perhaps
    include more sites.
        Enactment of this Senate provision should not be too
    problematic for DOD, since last year in a report to Congress
    Dr. Edward Martin, the Acting Assistant Secretary of Defense
    for Health Affairs, indicated DOD would support a limited test
    of FEHBP-65. The coalition is anxiously awaiting DOD's
    proposal, but it is concerned that DOD is dragging its feet in
    developing the plan.
        Timing is critical, because the Office of Personnel
    Management indicates that even with FEHBP-65 legislation
    enacted this summer, enrollment for the demonstration cannot
    begin until November of 1999, with implementation in January
    2000. It would be a travesty if the test slipped beyond that
    date.
        It is truly ironic that, despite their many sacrifices,
    retired service members lose their military health insurance at
    age 65. Please keep in mind those hit hardest are the retirees
    who fought in World War II, Korea, and Vietnam, and then won
    the Cold War. They have saved the Government many, many
    billions in reduced defense spending every year. These retirees
    have already paid the premiums for equal coverage not just in
    money but in service and sacrifice, including many who paid the
    ultimate sacrifice.
        Mr. Chairman, the coalition respectfully requests and
    strongly recommends that this committee include funding in its
    markup of the fiscal year 1999 defense appropriations bill to
    conduct the three-pronged demonstration of FEHBP-65 for
    medicare supplemental with the expansion of the pharmacy
    benefit as provided by the Senate fiscal year 1999 Defense
    Authorization Act.

                               prepared statement

        Mr. Chairman, once again, thank you for this opportunity to
    address the subcommittee. This concludes my testimony.
        Senator Inouye. Thank you very much, Commander. You spoke
    of a 1996 survey on health care. Can you share a copy of that
    survey with us?
        Commander Torsch. Certainly, sir.
        Senator Inouye. We would appreciate that very much.
        Commander Torsch. Thank you very much.
        Senator Inouye. Thank you.
        [The statement follows:]
                  Prepared Statement of Cmdr. Virginia Torsch
        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 this important hearing.
    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
    Gold Star Wives of America, Inc.
    Jewish War Veterans of the United States of America
    Marine Corps League
    Marine Corps Reserve Officers Association
    National Guard Association of the United States
    National Military Family Association
    National Order of Battlefield Commissions
    Naval Enlisted Reserve Association
    Navy League of the United States
    Naval Reserve Association
    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 and has not received any federal
    grants, and does not have nor has had any contracts with the federal
    government.
                                  introduction
        The Military Coalition (TMC) has been privileged to observe the
    design and implementation of Tricare from a front row seat over the
    last few years. The Coalition was delighted to have the opportunity to
    participate in the development of the Tricare benefit package and to
    provide extensive comments on the Tricare rules and regulations. Open
    dialogue between the Office of the Assistant Secretary of Defense for
    Health Affairs (OASD/HA) and the Coalition has allowed actual
    beneficiary experience to be part of the daily evaluation of the
    program as Tricare has been implemented throughout the country. The
    Coalition is very committed to making Tricare a better health care plan
    for all participants and has been working vigorously with DOD and
    Congress to remedy some of the problems with the program, even as it
    pursues other more comprehensive solutions to the problems burdening
    the military medical care system.
        It is important to note, however, that despite the progress in
    fixing some of the problems with Tricare, to be addressed shortly,
    there are still significant issues that must be resolved. These issues
    include a lack of a uniform health care benefit, low reimbursement
    levels, slow claims processing and others to be detailed later in this
    statement.
                            improvements in tricare
        In general, Tricare Prime, the HMO piece of Tricare, is relatively
    consistent with other managed care programs. With some notable
    exceptions, Tricare Prime has been well received in areas surrounding
    Military Treatment Facilities (MTF's). The Coalition has closely
    followed Congress's and DOD's progress in trying to improve the Tricare
    program, and would like to note some positive fixes to Tricare and to
    the military health care benefit in general over the last year.
        Medicare Subvention Test.--One of the most critical steps toward
    restoring equity in the health care benefit for older retirees was
    taken last year with the enactment of legislation for a Medicare
    subvention test in the Balanced Budget Act of 1997. The provision calls
    for a test of Medicare subvention (to be known as Tricare Senior) for
    three years at six sites around the country to include: Keesler AFB,
    Biloxi, MS; Ft. Carson and the Air Force Academy, Colorado Springs, CO;
    Madigan Army Medical Center, Ft. Lewis, WA; Naval Medical Center, San
    Diego, CA; Dover Air Force Base, Dover, DE; and a joint site including
    Brooke Army Medical Center and Wilford Hall Medical Center, San
    Antonio, TX, Ft. Sill, Lawton, OK; and Sheppard AFB, Wichita Falls, TX.
    The Coalition deeply appreciates this Subcommittee's leadership in
    getting this important legislation enacted and is optimistic that the
    test will prove that subvention is a win-win provision for all
    concerned.
        Despite this successful outcome, the Coalition remains concerned
    that the demand for enrollment in Tricare Senior will far exceed the
    capacity. Congress has only allocated $50 million in Medicare funding
    for fiscal year 1998, which will cover approximately 10,000 additional
    beneficiaries at the test sites. Although a considerably larger number
    will receive care in the test facilities because DOD has agreed to
    continue its prior level of service to Medicare-eligibles without
    reimbursement, there is considerable uncertainty as to the maximum
    program capacity. The Coalition is also concerned that beneficiaries
    who became Medicare-eligible before December 1, 1997, but who never
    used a uniformed services health care facility as a Medicare-eligible
    beneficiary before that date are ineligible to participate in the test.
    Many of these individuals never used an MTF because they could not get
    appointments or did not require medical care. It is not fair to
    penalize these individuals by forever denying them the opportunity to
    enroll in Tricare Senior. The Coalition recommends that when Medicare
    subvention is implemented nationwide, all Medicare-eligible uniformed
    services beneficiaries be allowed to enroll in Tricare Senior
    regardless of any prior usage of the military health care system.
        Expansion of Tricare Prime Outside of Catchment Areas.--Last year
    the Coalition expressed concern that Tricare Prime needed to be
    expanded to all areas where there are significant numbers of uniformed
    services beneficiaries (including retirees) and where there are
    sufficient numbers of civilian providers to establish a civilian
    network of providers under Prime or Extra (like base closure sites).
    The Coalition is pleased to see that Section 712 of the Fiscal Year
    1998 Defense Authorization Act requires that DOD prepare a plan to
    expand Tricare Prime to noncatchment areas. The Coalition is urging DOD
    to implement this plan as soon as feasible.
        Waiver of Deductibles, Copayments and Annual Fees for Family
    Members of Active Duty Members Assigned to Remote Duty Locations.--The
    Coalition has also been concerned that active duty members assigned as
    recruiters, ROTC instructors, full-time advisors to reserve units, or
    to duty stations outside Tricare Prime catchment areas do not have the
    option of enrolling their family members in Tricare Prime with the
    lower co-payments. These families have been unfairly burdened with the
    higher cost of care under Tricare Standard. Therefore, the Coalition
    was pleased to see that Section 712 of the Fiscal Year 1998
    Authorization Act also allows the Secretary of Defense to evaluate the
    feasibility and cost-effectiveness of either providing a health care
    stipend or a reduction in Tricare Standard cost-sharing for family
    members of these active duty members. It is our hope that DOD will make
    a decision and implement this plan in a timely manner.
        The Coalition was also pleased that Section 731 provides a
    transitional program that requires DOD ensure active duty members
    assigned to remote locations have the same timely access to care as
    those who are assigned closer to a military treatment facility. DOD
    must allow active duty members to receive care under Tricare Standard
    (CHAMPUS) without any copayments or deductibles until Tricare Prime
    becomes available to that area.
        Portability and reciprocity for Tricare Prime enrollees.--The
    Coalition expressed concern last year that Prime enrollees could not
    transfer their enrollment from one Tricare region to another, or get
    care in a different Tricare region than the one in which they were
    enrolled. The Coalition is very pleased to see that DOD has issued a
    policy memorandum implementing portability of Prime enrollment, both
    for active duty family members and for retirees. The Coalition is
    aware, however, that there are still a few problems in actually making
    Prime fully portable, and we are urging DOD Health Affairs to work out
    these problems as quickly as possible. The Coalition is also urging DOD
    to speed up its efforts on reciprocity of care between Tricare regions.
                            concerns remain however
        Although great strides have been made by DOD and Congress in fixing
    some of the more egregious problems with Tricare, the Coalition remains
    concerned about problems we noted last year that still have not been
    addressed. These problems are detailed in Attachment A, and we urge
    this Committee to work with the Senate Armed Services Committee to
    implement our suggested fixes.
        The one problem we do want to concentrate on however, is that
    Tricare does not provide a uniform health care benefit for all military
    beneficiaries, particularly for those who are Medicare-eligible.
    Earlier the Coalition expressed its appreciation and optimism about
    Medicare Subvention. There is no doubt that it is a critical step
    toward honoring the health care commitment. Having said that, the
    Coalition is concerned that many Subvention supporters believe
    Subvention is ``the solution.'' This is not the case at all. In fact,
    even when Tricare Senior is expanded nationwide, Medicare Subvention,
    when combined with DOD's level of effort will only benefit Medicare-
    eligible beneficiaries residing in the catchment areas of major MTF's.
        The stark reality is that Subvention will only accommodate a
    maximum of 30 percent to 40 percent of Medicare-eligible uniformed
    services beneficiaries. Thus, to honor the lifetime health care
    commitment, another option must be provided.
        Before turning to the Coalition's specific recommendation, it's
    important to address a myth shared by the American public--and many in
    Congress--that uniformed services retirees have better-than-average
    health care benefits. This is an unfortunate misperception from decades
    ago. In fact, as indicated in the following charts, DOD is the largest
    single employer in the country, but ranks in the bottom 11 percent of
    large American employers (10,000 or more employees) in terms of the
    health care coverage it provides to Medicare-eligible uniformed
    services retirees.
        The 1997 Hay Benefits Report (one of the nation's most respected
    benefits survey firms), indicates even smaller firms substantially
    subsidize Medicare supplemental insurance for their retirees. As shown
    below, the larger the firm, the greater the subsidized benefit.

                            EMPLOYER-FUNDED HEALTH COVERAGE (FOR MEDICARE-ELIGIBLE RETIREES)
    ----------------------------------------------------------------------------------------------------------------
                                                                                         Firm size
                                                                     -----------------------------------------------
                                                                       <0.5K  0.5-1K   1-5K    5-10K   10K+     All
    ----------------------------------------------------------------------------------------------------------------
    Firms Surveyed..................................................     121      69     190      55      91     526
    Percent Providing at Least Some Subsidy.........................      71      78      79      85      89      80
    Percent Paying at Least 50 Percent of Premium...................      67      70      71      85      85      74
    ----------------------------------------------------------------------------------------------------------------
    Note: DOD Falls within Bottom 11 percent of Large Firms Nationwide.

    Source: 1997 Hay Benefits Report.

        A more appropriate comparison is to pit DOD Medicare-supplemental
    coverage for military retirees with that offered by the largest
    corporate employers to their retirees and what the federal government
    provides all other federal retirees, except those from the uniformed
    services. As the following chart demonstrates, uniformed services
    retiree health coverage is a very distant last.

                                         ``BIG FIVE'' CIVILIAN RETIREE COVERAGE
    ----------------------------------------------------------------------------------------------------------------
                                         Employer
                 Employer                Prem Pmt     Family           Retiree Cost Share         Other Benefits \1\
                                        (percent)  Deductibles
    ----------------------------------------------------------------------------------------------------------------
    GM................................         80        $600   0...............................  Rx, D, V.
    Ford..............................        100        $250   20 percent/$500 Cap.............  Rx, D, V.
    IBM...............................        100        $250   20 percent......................  Rx, D, V.
                                                                ($340 INP)......................  (0 INP)
    Exxon.............................         95        $500   20 percent/$2,500 Cap...........  Rx, D.
    Fed Gov't (Civ)...................         72     ( \1\ )   Nominal.........................  Rx, D.
    Fed Gov't (Mil)...................          0     ( \2\ )   ................................  None. \3\
    ----------------------------------------------------------------------------------------------------------------
    \1\ Often Waived.
    \2\ Retiree Pays Everything, Medicare Doesn't.
    \3\ Some get Space-A care; civilian plans cover all retirees.

    Rx--Prescriptions; D--Dental; V--Vision.

        As the Coalition has testified before, we are convinced that the
    fair, equitable and cost effective solution is to offer those Medicare-
    eligible uniformed service beneficiaries the opportunity to enroll in
    the Federal Employees Health Benefits Program (FEHBP-65). In this
    regard, Mr. Chairman, the Coalition is extremely appreciative of this
    Subcommittee's effort to have DOD submit FEHBP-65 test legislation to
    Congress this year. Although we are extremely reluctant to settle for
    less than nationwide implementation of FEHBP-65, we recognize that a
    test is the only way to dispel the numerous misperceptions about the
    potential dire consequences of opening FEHBP to the uniformed services
    community. For example:
      --Estimates by the Congressional Budget Office (CBO) that FEHBP-65
            nationwide carries a price tag of about $1.7 billion annually;
      --Assertions that adding uniformed services beneficiaries to the
            FEHBP could have an adverse impact on the premiums paid by
            federal civilian participants;
      --Predictions that service beneficiaries would increase their
            consumption of Medicare benefits;
      --Concerns that the lack of an elderly and infirmed patient base in
            military hospitals could impair medical readiness; and
      --Speculation that FEHBP would be unaffordable for enlisted members
            and other low income beneficiaries.
        The Coalition does not agree that any of these concerns should be
    show-stoppers and would like to discuss them in turn.
                   taking the guesswork out of fehbp-65 costs
        We turn first to what we believe are grossly overstated CBO cost
    estimates. For example, in doing its analysis, the CBO ignored several
    health care options available to uniformed services beneficiaries which
    the Coalition believes would militate against their participation in
    FEHBP-65. In arriving at its $1.7 billion cost estimate, CBO assumed
    that 70 percent of the 1,300,000 eligible beneficiaries would
    participate in FEHBP-65 if offered. This estimate ignores:
      --The 30-40 percent of the Medicare-eligible uniformed services
            population who would be accommodated by Medicare Subvention
            (including DOD's level of effort);
      --The estimated 10 percent who are enrolled in Medicare at-risk
            Health Maintenance Organizations (HMO's) and would likely
            remain in these programs;
      --The additional 17 percent who already participate in FEHBP or
            private sector insurance plans that are equal to or better than
            FEHBP. (Source 1997 GAO Report);
      --Others who have access to VA facilities--a trend that could
            increase if VA Subvention is enacted; and
      --Inertia and cost-conscious decision-making. Human nature being what
            it is, many retirees are likely to be satisfied with the status
            quo because of cost concerns or an aversion to shifting to a
            new program.
        In its analysis as shown below, the Coalition assumed a
    conservative 32 percent would participate in Subvention.
    [GRAPHIC] [TIFF OMITTED] T02MY11.003

        Thus when Medicare subvention, Medicare at risk HMO's and private
    sector coverage are considered, the residual population of FEHBP-
    eligibles is 533,000. The Coalition also considered data from a 1997
    GAO report that indicated about 30 percent of the Service beneficiaries
    have Medigap supplemental policies and would likely switch to FEHBP.
    Further, TMC assumed that an additional 100,000 beneficiaries without
    supplemental insurance would also participate--for a range of potential
    costs of $280 million to $452 million annually--far less than the CBO
    estimate.
                     no impact on federal civilian premiums
        Since a separate risk pool would be established, there would be no
    impact on federal civilian premiums, while 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 are only 70 cents
    for every dollar of premiums paid. CBO estimates that for individuals
    age 65 and older who are not eligible for Medicare--a phenomenon more
    prevalent among federal civilian retirees than military--FEHBP insurers
    pay out $2.50 for every dollar of premiums paid.
                       medicare impact will be negligible
        The CBO estimate incorporates two assumptions about retiree
    behavior: (1) service retirees will forego care in MTF's to take
    advantage of their Medicare benefit supplemented by FEHBP; and (2)
    enrollment in FEHBP in non-prime areas will result in increased use of
    Medicare by beneficiaries (because if they are paying premiums for
    FEHBP, they might as well get their money's worth).
        The first prediction is tied to CBO's inability to recognize
    (because of scoring groundrules) that when combined with Tricare Prime,
    Tricare Senior will accelerate the demise of Space A care and force
    retirees to use Medicare. Thus, the Medicare impact will occur without
    FEHBP.
        There is no empirical data to substantiate CBO's second assumption.
    A test of FEHBP-65 will eliminate the guesswork.
                               medical readiness
        This misconception about FEHBP-65 stems in part because of DOD
    concerns that FEHBP, if offered to all retirees, would erode the
    patient base that is critical to medical readiness. In fact, there will
    be no impact on readiness because Medicare Subvention (Tricare Senior)
    will provide all the patients needed to meet the clinical training and
    professional experience needs of physicians, corpsmen and other
    ancillary medical personnel.
                            the affordability issue
        This is not a concern the Coalition took lightly, and before
    concluding that FEHBP-65 would be a viable option for its
    beneficiaries, the Coalition conducted a health care cost survey in
    1996. That survey revealed that 32.5 percent of enlisted retirees 65
    and older and 41.8 percent of officer retirees 65 and older would be
    economically better off with FEHBP than under their current health care
    coverage. That represents a significant population who would benefit
    from FEHBP. The proof is in the pudding and a test would help
    corroborate the survey results.
        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 1998 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 appropriate funding to allow 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.
        For the last two years, the Coalition has been working assiduously
    with Congress to get legislation enacted for FEHBP-65. In early 1997,
    Representative Moran introduced legislation for FEHBP-65 nationwide
    (H.R. 76) and Senator Warner introduced the Senate companion bill (S.
    224). However, because of the less than enthusiastic support accorded
    to those bills by Congress and DOD, the Coalition believes the only way
    to convince the skeptics is to conduct a test of FEHBP-65 along the
    lines spelled out in S. 1334. This bipartisan bill, which now has 58
    cosponsors (236 for its House companion bill, H.R. 1766), would
    authorize a demonstration of FEHBP-65 in two geographic areas--one
    including a Tricare Prime area with military treatment facilities and
    the other without such facilities--and would include no more than
    25,000 Medicare-eligible service beneficiaries in each area. In other
    words, approximately 50,000 beneficiaries would be given the
    opportunity to enroll during the demonstration and, based on the
    participation rate, accurate data could be derived to predict the cost
    of extending the program nationwide. CBO has scored this initiative as
    costing about $68 million each year. The cost would actually be less
    the first year because DOD's share of premiums would be paid for only
    nine months rather than a full year. If need be, for better data
    collection, the test could be conducted at more than two areas, while
    controlling costs by limiting the opportunity to participate to the
    50,000 beneficiaries contemplated by S. 1334.
        The demonstration proposed by S. 1334 is consistent with guidance
    in the Fiscal Year 1998 Defense Appropriations Act which directed DOD
    to submit FEHBP test legislation to Congress this year. This should not
    be too problematic for DOD because last year in a report to Congress,
    Dr. Edward Martin, the Acting Assistant Secretary of Defense for Health
    Affairs, indicated DOD would support a limited test of FEHBP-65 in non-
    Prime areas. The only difference between S. 1334 and Dr. Martin's idea
    is S. 1334 would conduct the demonstration in a Tricare Prime catchment
    area. We agree with the approach in S. 1334 that the only way to get
    meaningful data is to put FEHBP in a head-to-head contest with Tricare
    Senior to see how many beneficiaries would opt out of care in an MTF to
    enroll in FEHBP. It's our guess that there will always be more
    applicants for Tricare Senior than the system can accommodate. But,
    with FEHBP to fall back on, DOD could fulfill its commitment to
    servicemembers in a reasonable way.
        It is truly ironic that, despite their many sacrifices, retired
    servicemembers lose their military health insurance at age 65. Please
    keep in mind that those hit hardest by Congress' and DOD's inaction are
    the retirees who fought in World War II, Korea and Vietnam and then won
    the Cold War. The latter victory alone is saving the government many,
    many billions in reduced defense spending every year. These retirees
    have already paid the premiums for equal coverage, not just in money,
    but in service and sacrifice, including many who paid the ultimate
    sacrifice. FEHBP-65 is needed to cover their widows as well.
        The Coalition is anxiously awaiting DOD's proposal, but is
    concerned that DOD is dragging its feet in developing the plan. Timing
    is critical because the Office of Personnel Management indicates that
    even with FEHBP-65 legislation enacted this summer, enrollment for the
    demonstration cannot begin until November 1999 with implementation in
    January 2000. It would be a travesty if the test slipped beyond that
    date.
        Mr. Chairman, the Coalition respectfully requests and strongly
    recommends that this committee include funding to conduct a
    demonstration of FEHBP-65 in its markup of the fiscal year 1999 Defense
    Appropriations Bill.
                           other health care concerns
        The Coalition would like to briefly mention two other concerns that
    are closely related to the Tricare program. First, the almost 400
    percent increase in premiums last year for the Continuing Health
    Benefits Program essentially leaves military beneficiaries without an
    affordable COBRA benefit. The Coalition strongly recommends the
    premiums for CHBP be reduced to a more affordable level for uniformed
    services beneficiaries leaving military service.
        Second, DOD's insistence that all health care programs, including
    dental plans, carry the Tricare name, has created confusion for many
    beneficiaries. The Coalition is especially concerned about the retiree
    dental plan which is totally unrelated to the Tricare program. This
    plan is not subsidized by DOD, but is paid for entirely by the retiree.
    Further, the dental plan is open to retirees of all ages, including
    those who are eligible for Medicare. However, the Coalition has
    received numerous complaints that health care benefits advisors and
    even some DEERS employees have told Medicare-eligible beneficiaries
    they could not participate in the retiree dental plan because it was a
    Tricare plan and therefore only open to CHAMPUS-eligible beneficiaries.
    The Coalition requests that this Committee work with the Senate Armed
    Services Committee to exert pressure on DOD to drop the Tricare name
    from this dental plan so that Medicare-eligible beneficiaries are not
    inadvertently discouraged from participating in this very important
    program.
                                   conclusion
        In conclusion, The Military Coalition is cognizant that many of the
    initial problems with Tricare (especially the Prime program) resulted
    from growing pains as Tricare was implemented throughout the country.
    This Committee has been instrumental in ensuring that many of these
    problems have been resolved or at least ameliorated, and the Coalition
    would like to express its deepest appreciation for the Committee's
    role.
        Nevertheless, Tricare remains seriously flawed in that it does not
    provide a uniform health care benefit for all military beneficiaries.
    This fundamental flaw must be remedied through Congressional action as
    soon as possible with enactment of a test for FEHBP-65. The Coalition
    is also very concerned about the increasing difficulty that both the
    Prime and Standard programs seem to be having with locating and
    retaining quality health care providers. The Coalition urges this
    Committee to take immediate measures to strengthen both the Tricare
    Prime and Standard (CHAMPUS) options so that Tricare becomes a viable
    health care benefit.
        Mr. Chairman, in closing, we wish to express our profound
    appreciation to you and this Subcommittee for the opportunity to
    present our views on these critically important topics. We will be glad
    to answer any questions you may have.
                                     ______

                                  attachment a
                             tricare prime problems
        Tricare does not help Medicare-eligible beneficiaries residing
    overseas. These individuals are in a Catch-22 situation. They cannot
    enroll in Tricare Prime because they are no longer eligible for CHAMPUS
    and they cannot use Medicare because that program does not operate in
    foreign countries. Their only alternative is to rely on space available
    care in the military hospitals which is becoming increasingly difficult
    to find since many overseas medical facilities have been closed.
    Unfortunately, Medicare subvention will not help these beneficiaries.
        In addition to the problems faced by Medicare-eligible retirees
    overseas, the Coalition is also concerned by the delay in allowing
    CHAMPUS-eligible retirees to enroll in Tricare Prime overseas. The
    Coalition recommends that DOD Health Affairs expedite the enrollment of
    these individuals.
        Tricare Prime enrollees who do not reside in a catchment area and
    are unable to enroll with a military primary care manager (PCM) have a
    different Prime benefit than those enrollees residing in catchment
    areas who have a military PCM. This situation has been further
    exacerbated by the alternative financing method which will be
    implemented in Tricare Regions 1, 2 and 5. Tricare Prime enrollees in
    noncatchment areas are assigned to civilian PCM's and receive most of
    their care in the civilian Prime network with copayments for all visits
    and services, while enrollees in catchment areas have a greater chance
    of being assigned to a military PCM's and receiving care in MTF's with
    no copayments. The alternative financing method further encourages a
    military commander to ensure that his Prime enrollees (those assigned
    to a PCM in his facility) receive first priority for care in his MTF
    since he now assumes financial risk for these Prime enrollees. This
    incentive could potentially lock out any Prime enrollee with a civilian
    PCM from receiving care in the MTF. The Coalition is concerned that the
    alternative financing method considerably worsens the lack of a uniform
    health care benefit, by effectively creating two distinct Tricare Prime
    plans--an MTF Prime, where enrollees receive most of their treatment in
    MTF's with no co-payments; and a civilian Prime, where enrollees
    receive their care through civilian providers with the requisite
    copayments.
        Although the House mark of the Fiscal Year 1998 Defense
    Authorization Act included report language expressing concern over the
    alternative financing method and requesting DOD test this method in
    only two Tricare regions before extending it throughout the rest of the
    country, the final Authorization Act did not address this issue. The
    Coalition recommends a thorough evaluation of the alternative financing
    methodology to determine its impact on the uniformity of the Tricare
    Prime benefit before allowing DOD Health Affairs to expand this
    methodology to the rest of the Tricare regions. The Coalition also
    requests the Committee's assistance in ensuring that Prime enrollees in
    noncatchment areas have the same equal opportunity for care in an MTF
    as a Prime enrollee in a catchment area with a military PCM.
        Access standards for Tricare Prime are still not being met in most
    Regions. The Coalition continues to document numerous instances in most
    Tricare Regions where access standards for time and for distance have
    not been met. A June 1996 GAO report on Tricare noted that DOD did not
    have a system for tracking access data. The GAO report stressed that
    such a system was extremely important for measuring how well Tricare is
    meeting this key performance goal. Recent briefings from DOD officials
    on their new quality assurance and utilization management contracts
    have not reassured the Coalition that DOD will measure access data
    through this new contract. The Coalition recommends DOD establish a
    method of tracking access data as recommended by GAO. The Coalition
    also requests DOD be directed to give immediate attention to all
    reports of access problems.
        Tricare Prime enrollees are still occasionally charged Tricare
    Standard fees by some civilian health care providers such as
    anesthesiologists and pathologists. These providers are not part of the
    Tricare Prime network, but are sometimes part of the health care team
    at a civilian hospital that is part of the Tricare Prime network.
    Tricare Prime enrollees should not be subjected to these ``hidden''
    fees. If an enrollee receives care from a civilian hospital that is
    part of the Tricare Prime network, the enrollee should pay only the
    Tricare Prime co-payment of $11 a day and no more.
        Tricare managed care contractors have acknowledged the problem and
    for the most part have tried to ensure that all those who deliver care
    to Prime enrollees participate in the Prime network. The Coalition
    still believes, however, that DOD Health Affairs should revise its
    regulations to stipulate that if an enrollee receives care from a
    civilian hospital that is part of the Tricare Prime network, the
    enrollee will only be subjected to the Tricare Prime co-payment of $11
    a day.
        Tricare Prime enrollees are still occasionally being referred to
    non-network providers, thus invoking point of service charges which
    include a $300 deductible and a 50 percent copay. The point of service
    charges have also been applied when a Prime enrollee has been seen by a
    network provider who happens to be on call that day, but is not the
    enrollee's primary care manager, even though the enrollee did not
    request to be seen by that provider.
        DOD and the contractors have acknowledged the problem and have made
    great progress in correcting it. However, the Coalition believes a more
    permanent solution would be to have a Tricare Prime enrollee sign a
    form that he or she is knowingly choosing to exercise the point of
    service option and realizes the higher copayments and deductibles he or
    she will incur. This will eliminate situations where the Tricare Prime
    primary care manager mistakenly refers the enrollee to a non-network
    provider.
        Tricare Prime enrollees are paying the lion's share of the cost of
    mental health services. The Coalition was appalled to learn that Prime
    enrollees are paying 44 percent to 55 percent of the allowed amount for
    mental health outpatient visits in some Tricare Regions. At the end of
    Attachment A is a copy of a provider's explanation of benefits. On
    pages one and two are the reimbursement rates for active duty and
    retired Prime enrollees. The total allowed amount for the visit is $45.
    Tricare pays $25 of that for an active duty Prime enrollee, and the
    enrollee pays the rest ($20). For a retired Prime enrollee, Tricare
    pays only $20 and the retiree must pay $25. Pages three and four show
    the provider's reimbursement and beneficiary copayment for a Tricare
    Standard beneficiary. Note the provider receives $102 per visit and the
    active duty beneficiary pays $15.30 per visit and the retiree $20.40
    per visit. The copayments under Tricare Standard for both active duty
    and retired beneficiaries are less than under Tricare Prime.
        The Coalition urgently requests that an investigation of the
    prevalence of this sort of disparity in payment be conducted for other
    areas of the country, and for other health care services. The Coalition
    does not believe it is the intent of Congress that Prime enrollees pay
    almost half of the cost of mental health care.
        DOD has not established an effective Ombudsman Program in every
    Tricare Region. The Coalition has received numerous complaints that
    beneficiaries are having a difficult time getting through to the
    Tricare Service Center or Health Benefits Advisor to get questions
    answered about Tricare benefits, or to resolve Tricare Standard
    (CHAMPUS) claims. Frequently, beneficiaries become so frustrated they
    call various Coalition associations in desperation because they feel
    they have no other place to go to get their questions answered. The
    Coalition strongly recommends that DOD be directed to establish an
    Ombudsman office staffed by independent parties (not DOD or the managed
    care contractor) in every Tricare region to serve as the advocate for
    the beneficiary.
        Improve quality control oversight of Tricare managed care support
    contracts, to include better monitoring of patient satisfaction,
    assessment of clinical outcomes, oversight of provider networks, and
    adherence to access standards in addition to utilization management.
    The Coalition remains concerned that DOD continues to focus on
    utilization management as the mainstay of its quality control program,
    while overlooking other equally important measures of quality such as
    adherence to access standards, patient satisfaction and most
    importantly, clinical outcomes. The Coalition recommends a continued
    evaluation of DOD's progress in implementing a more complete quality
    control program.
        The Coalition continues to hear about problems with Tricare Prime
    network providers. Directories of Prime providers are still not
    accurate--in some cases the provider either does not accept Prime
    patients (and never did), or has closed his practice to new Prime
    patients; the offices of some network providers are located in
    undesirable, and even unsafe, parts of town; and there have been
    reports of a dearth of Prime providers, especially specialists. The
    Coalition is particularly concerned even though standard CHAMPUS rates
    are the same as Medicare for most health care services, most of the
    Tricare managed care support contractors have negotiated Tricare Prime
    reimbursement rates with network providers that are even lower than
    Medicare. Although providers are not happy with the discounted rates,
    most providers have accepted them. However, in the last year, some
    major provider groups have dropped out of Tricare Prime (including a
    250-member provider group in Colorado and the entire provider network
    of the Medical University of South Carolina), and we are concerned this
    trend may accelerate. The Coalition urges Congress to take immediate
    steps to increase the reimbursement rates for Prime providers in order
    to attract and retain quality health care providers.
                    problems with tricare standard (champus)
        Tricare Standard (CHAMPUS) reimbursement levels are still much too
    low to attract quality health care providers. There are also
    unreasonable delays in reimbursement for Tricare Standard (CHAMPUS)
    claims. The Coalition has continuously expressed its concern over the
    low CHAMPUS reimbursement rates. Beneficiaries have reported that in
    the more rural areas, (and increasingly even in urban areas), where
    providers do not depend on a military patient base, health care
    providers have become increasingly unwilling to accept Tricare Standard
    (CHAMPUS) patients at all.
        It is difficult to estimate the impact of the lower rates on access
    to care. Although the Secretary of Defense has the authority to waive
    the CHAMPUS Maximum Allowable Charge (CMAC) if it is affecting access,
    the Tricare Support Office (TSO) has never requested such a waiver,
    claiming it has never adequately documented access problems. However,
    this is akin to a self-fulfilling prophecy because the TSO only reviews
    CHAMPUS claims where the only data provided are from those physicians
    or other health care providers who are willing to accept Tricare
    Standard reimbursement levels. The TSO does not document how far the
    beneficiary may have had to drive to find a provider, how many times he
    was turned away before he was able to find a provider; or what rates
    are charged by providers who refuse to accept Tricare Standard.
        The low reimbursement rates are just part of the problem. By
    themselves, low rates may not be a deterrent to care. However, low
    rates combined with the ``hassle'' factor in filing claims and delays
    in reimbursements have proven to be too much in some cases for health
    care providers who now simply refuse to accept CHAMPUS patients at all.
    The Coalition has also received numerous complaints from its members
    who, when filing their own CHAMPUS claims, had to resubmit the claim
    two or three times before receiving payment.
        Although the Fiscal Year 1998 Defense Authorization Act has a
    provision directing DOD to make CHAMPUS reimbursement rates more
    consistent with Medicare, the Coalition has heard that DOD is delaying
    implementation of this provision. The Coalition would like a definitive
    date as to when DOD is going to increase substandard CHAMPUS rates to
    the level of Medicare.
        Another significant problem that must be addressed is the delays in
    reimbursements. The Coalition urges Congress to exert pressure on DOD
    to simplify the claim form and exercise greater oversight to
    significantly reduce unwarranted delays in reimbursements.
        The Coalition was very pleased to see that Section 737 of the 1998
    Defense Authorization Act eliminated DOD's policy that required all
    providers to file CHAMPUS claims. We are particularly pleased with
    DOD's prompt compliance.
        However, allowing beneficiaries to resume filing their own claim
    forms has presented yet another problem. Several years ago DOD required
    non-availability statements (NAS) for certain outpatient procedures.
    The outpatient NAS requirement was repealed on September 23, 1996. In
    its place pre-authorization for these procedures, and others that have
    subsequently been added, was instituted. Since DOD does not even print
    enough Tricare Handbooks for the beneficiary population, much less send
    them out to beneficiaries, family members have no indication that they
    must get pre-authorization for certain procedures. The Coalition has
    heard from beneficiaries with substantial unpaid claims. These
    beneficiaries have sought care from nonparticipating Tricare providers
    (as is their right under the Tricare Standard option), paid the bill,
    submitted their claim to Tricare, only to be told that since pre-
    authorization was not sought, the procedure will not be covered. This
    has not only affected families who live near military hospitals, but to
    families stationed in remote areas.
        The Coalition understands that it is normal practice for employers
    or insurance companies to provide covered beneficiaries with
    information regarding the benefits and limitations of their health care
    plans. Thus we believe that if DOD intends to subject Tricare Standard
    beneficiaries to restrictions on their receipt of health care, at the
    very least it should provide them with up to date Tricare Standard
    Handbooks.
        The enforcement of the 115 percent billing limit in cases of third
    party insurance, has resulted in loss of reimbursement to
    beneficiaries. Last year, DOD's policy of employing the 115 percent
    limit in the case of third party reimbursement had the effect of
    shifting CHAMPUS' payment approach from ``coordination of benefits'' to
    ``benefits less benefits.'' Before the 115 percent limit was enforced,
    a third party insurer would pay first, then CHAMPUS would pay the
    balance up to what CHAMPUS would have paid had it been first payer. Now
    that the 115 percent limit has gone into effect, CHAMPUS will not pay
    anything if the third party insurer paid an amount in excess of the 115
    percent billing limit. So if a third party insurer would pay 80 percent
    of a physician's bill of $500 (or $400), but CHAMPUS would only have
    paid 115 percent of its maximum allowable charge of $300 (or $345),
    CHAMPUS will pay nothing toward the balance of $100 that the patient
    must pay. Under the previous ``coordination of benefits'' method,
    CHAMPUS would have paid the difference as long as it did not exceed the
    amount payable under CHAMPUS. We have repeatedly expressed our concern
    that the shift in policy unfairly penalizes beneficiaries with other
    health insurance plans. CHAMPUS reimbursement amounts have been
    steadily decreasing over the years, and almost all other civilian
    insurance plans are more generous than CHAMPUS in their payments to
    providers.
        The House mark of the Fiscal Year 1998 Defense Authorization Act
    contained report language that urged DOD to enforce a requirement that
    health care providers charge CHAMPUS beneficiaries no more than 115
    percent of CMAC rate, or that CHAMPUS continue to pay for health care
    services when paying as second payer to other health insurance under
    DOD's previous policy. Unfortunately the committee report was not
    addressed in the final Act. The Coalition recommends this issue be
    revisited in the Fiscal Year 1999 Defense Authorization and
    Appropriation Acts to include statutory language to re-establish
    ``coordination of benefits'' as the DOD payment methodology.
        The Tricare Standard (CHAMPUS) catastrophic cap out of pockets is
    still $7,500 for retirees, which is much higher than other civilian
    fee-for-service plans which traditionally set limits between $2,000 and
    $3,000. The Coalition strongly recommends this cap be reduced to
    $3,000.
        Beneficiaries who choose Tricare Standard still have to obtain non-
    availability statements from the MTF before seeking inpatient care from
    civilian providers. While the Coalition recognizes that DOD is trying
    maximize savings in Tricare by encouraging the use of military
    providers, beneficiaries who incur the higher costs associated with
    Standard do so because they either want complete freedom of choice of
    providers or cannot get into Tricare Prime. The Coalition strongly
    recommends that all NAS requirements be eliminated for Tricare
    Standard.
    STATEMENT OF DR. DONALD S. BURKE, MEMBER OF LEGISLATIVE
                TASK FORCE, AMERICAN SOCIETY OF TROPICAL
                MEDICINE AND HYGIENE
        Senator Inouye. Our next witness, Dr. Donald Burke, member
    of the Legislative Task Force, American Society of Tropical
    Medicine and Hygiene.
        Dr. Burke, welcome, sir.
        Dr. Burke. Thank you, Senator Inouye. I am here to
    represent the American Society of Tropical Medicine and
    Hygiene, a society of 3,000 researchers and tropical medicine
    practitioners in the United States. The Department of Defense
    medical research programs play a critical role in our Nation's
    infectious disease efforts as you know, sir. Working with other
    U.S. institutions, our military institutions have worked to
    help us understand, diagnose, and treat infectious diseases
    such as malaria, dengue fever, cholera, AIDS, and diarrheal
    diseases.
        There are two particular aspects I want to take these
    moments to emphasize. The first are the overseas laboratories
    of the U.S. military, the fixed facilities in Thailand,
    Indonesia, Egypt, Brazil, Kenya, and Peru. These labs are
    strategically located in regions of the world where the threats
    from infectious diseases are genuine. They serve as critical
    sentinel alerting stations.
        The DOD has recently initiated a disease surveillance
    system for emerging diseases worldwide. However, the current
    funding for this program has not been sufficient to meet the
    needs of this program. The Tropical Medicine Society urges the
    committee to provide an estimated $7 million in new research
    and development funds that will allow the DOD to fully develop
    and operate this surveillance network.
        Another problem is that these laboratories have not had
    attention to their infrastructure. In the last 2 years the Navy
    Medical R&D Command had a 40-percent reduction in their
    investment in their overseas laboratory infrastructure dollars.
    These overseas laboratories are too important to be allowed to
    deteriorate.
        The second major area of emphasis is in vaccine research
    and development. Vaccines are the single most cost-effective
    means for protecting U.S. military against infectious diseases
    during deployment. A number of vaccines have been successfully
    developed by the military, and there is excellent progress on
    some, like malaria, dengue, and good work being done on AIDS.
        However, a number of promising vaccines such as
    meningococcis, hantavirus, and hepatitis E vaccines are in the
    pipeline but are not being pursued for lack of funding. The
    Tropical Medicine Society urges the subcommittee to provide
    sufficient resources to move these vaccines into clinical
    trials. These trials will impact not only military
    preparedness, but will advance public and private interests as
    well.
        Let me conclude by saying that the Tropical Medicine
    Society requests your continued support of the DOD infectious
    disease research program. This is a critically important area,
    given the resurgence of emergent new diseases. However, there
    are many areas of unmet need and opportunity still to be
    addressed.

                               prepared statement

        With the shrinking U.S. military, coupled with the need to
    respond to conflict anywhere in the world, it is more important
    than ever to preserve this combat readiness. Like other
    military research, medical research cannot easily be restarted
    when the need arises.
        Thank you very much, sir.
        [The statement follows:]
                     Prepared Statement of Donald S. Burke
        Mr. Chairman and members of the Committee, thank you for the
    opportunity to testify today. My name is Donald Burke and I am a
    Professor of International Health in the School of Hygiene and Public
    Health at Johns Hopkins University. I am pleased to present testimony
    on behalf of the American Society of Tropical Medicine and Hygiene
    (ASTMH) in support of Department of Defense (DOD) medical research
    programs.
        ASTMH is a professional society of 3,500 researchers and
    practitioners dedicated to the prevention and treatment of infectious
    and tropical infectious diseases. The collective expertise of our
    members is in the areas of basic molecular science, medicine, vector
    control, epidemiology, and public health. ASTMH has had the privilege
    of testifying before this Subcommittee on several occasions, and we
    hope that our recommendations are helpful to you in determining the
    annual funding levels for DOD's infectious disease research programs.
        DOD medical research programs play a critical role in our nation's
    infectious disease efforts. Working with other U.S. public health
    agencies, DOD scientists at the U.S. Army Research Institute for
    Infectious Diseases (USAMRIID), the Walter Reed Army Institute of
    Medical Research (WRAIR), and the U.S. Naval Medical Research Institute
    (NMRI) are helping us to better understand, diagnose, and treat
    infectious and tropical diseases such as malaria, dengue fever,
    cholera, AIDS, and diarrheal diseases.
        The threat these diseases pose to U.S. military personnel is not
    new. During the Vietnam War, two-thirds of hospital admissions were due
    to infectious diseases. More recently, twenty-nine percent of soldiers
    deployed in Somalia in 1993 got malaria, making it the number one cause
    of all hospital admissions in Somalia. U.S. soldiers will continue to
    be deployed in regions of the world where the threat of infectious
    disease exists.
        Military medical research has, over the years, been very successful
    in providing the armed forces with a series of new vaccines, new
    prophylactic drugs, and other preventive medicine measures. However,
    emerging infectious diseases are a continuing threat to military
    effectiveness during deployments. Infectious disease research support
    by DOD continues to be essential to protect our fighting men and women
    from infectious diseases through the development of vaccines and
    preventive medicines, and to enable infected personnel to return to
    duty through the development of effective therapies.
        These programs also fill a critical need by helping to identify
    endemic and epidemic disease threats throughout the world, assisting
    not only U.S. military needs but other U.S. health and humanitarian
    needs as well. DOD technical expertise is consistently sought as
    organizations such as the World Health Organization and the Pan
    American Health Organization are faced with new infectious disease
    outbreaks around the globe.
    Sentinels Around the Globe
        I would like to take a moment to focus on one aspect of the U.S.
    military infectious disease research program which deserves special
    mention--the overseas laboratories. The U.S. Army and the Navy
    currently support six overseas laboratories in Thailand, Indonesia,
    Egypt, Brazil, Kenya, and Peru. These labs are strategically located in
    regions of the world where the threat from existing and emerging
    infectious and tropical diseases is the greatest. They serve as
    critical sentinel stations alerting both the military and public health
    agencies to dangerous infectious disease outbreaks and increasing
    microbial resistance. Because they are located close to the source,
    laboratory personnel can be mobilized to respond quickly to potential
    problems. For example, recently a U.S. Navy scientist responded to a
    call from the World Health Organization during an outbreak of severe
    hemorraghic fever in Kenya. This laboratory in the region had been
    conducting research on Rift Valley fever and could respond quickly and
    effectively to provide assistance to local authorities with diagnosis,
    prevention and control measures.
        A recent report by the Institute of Medicine (IOM) entitled,
    ``America's Vital Interest in Global Health'', highlights the
    leadership role the U.S can play in expanding the scope of global
    surveillance efforts. The report cites the cost-effectiveness of
    surveillance as well as the devastating cost of our failure to support
    global disease surveillance in the face of emerging infectious
    diseases. The IOM recommended that the U.S. take advantage of existing
    field research laboratories and expand their scope and linkage to other
    global health organizations. U.S. technical expertise and
    communications advantages makes us uniquely suited to play a leadership
    role in this effort. In fact, the DOD has recently initiated a disease
    surveillance system for emerging infectious diseases with the Walter
    Reed Army Institute of Medical Research acting as the communications
    hub linking the six overseas laboratories. However, the current funding
    for this program has not been sufficient to meet the needs of a global
    surveillance system. Therefore, ASTMH urges the Committee to provide
    the estimated $7 million in new research and development funds needed
    to allow DOD to fully develop and operate a global disease surveillance
    network. This will provide the necessary resources to properly
    implement an effective program of epidemiologic and preventive medicine
    research for a number of major infectious disease threats, such as
    malaria, cholera, viral hemorrhagic fevers including dengue, Rift
    Valley fever, yellow fever, and Machupo, the hantaviruses, tropical
    fevers such as Venezuelan equine encephalitis and Orapouche, and
    serious parasitic diseases such as systemic leishmaniasis.
        The military's overseas laboratories also play an important role in
    collaboration with U.S. research institutions including academia,
    industry, and government agencies. Having the fixed facilities, field
    sites, and staff makes it possible to maximize our infectious and
    tropical disease research efforts. These collaborations are important
    not only for expanding our knowledge and understanding of infectious
    diseases, but also for providing hands-on training for students,
    investigators, and local health authorities. In many cases, these sites
    have ensured that productive projects could be carried out.
    Collaboration between the Walter Reed Research Unit in Rio de Janeiro,
    Harvard School of Public Health scientists, the Naval Medical Research
    Institute detachment in Lima, Peru, and the University of Texas at
    Galveston School of Medicine has resulted in important advances in
    malaria research and in improved international infectious disease
    surveillance capabilities.
        It is important to mention that while the DOD overseas research
    laboratories play an essential role in our basic, clinical and
    epidemiological infectious diseases research efforts, we must not
    forget to provide funding for overhead--the infrastructure needed to
    support research programs. In the last two fiscal years, the Naval
    Medical Research and Development Command has had a 40 percent reduction
    in support for overhead costs in Navy overseas medical research
    laboratories. These overseas laboratories are too important to be
    allowed to deteriorate.
    Vaccine Development
        Vaccines are the single most effective and cost-effective means of
    protecting military personnel from infectious diseases during
    deployment. DOD research facilities have unique expertise, experience
    and capabilities in developing vaccines and conducting vaccine trials.
    They are currently conducting clinical trials on a number of promising
    experimental vaccines. These include vaccines for dengue fever,
    malaria, shigella, and AIDS. In addition, a number of promising
    vaccines, such as meningococcal B, hantavirus, and hepatitis E
    vaccines, are in the pipeline but are not being pursued due to a lack
    of funding. ASTMH urges Subcommittee members to provide sufficient
    resources to move these vaccines to clinical trials. These clinical
    trials will not only impact military preparedness but will advance
    existing public/private vaccine development partnerships.
        One of the most critical and complex areas for vaccine development
    is malaria. Malaria infects 300-500 million people annually and kills
    an estimated 2.1 million people every year. As it continues to spread
    and drug-resistant forms become more frequent, new drug and vaccine
    development is critical. DOD research has already resulted in the
    development of two new drugs for the prevention and treatment of
    malaria, Mefloquine and Halofantrine. Research on vaccine development
    is moving forward quickly. In fact, collaborative vaccine development
    efforts between WRAIR and a private pharmaceutical company have moved
    to the clinical testing phase and the results are promising. This
    research has produced the first vaccine which has protected volunteers
    from mosquito-born malaria infection. Researchers with the NMRI are
    also at the forefront of efforts to develop a DNA vaccine against
    malaria.
        Scientists from NMRI and WRAIR are also working with scientists
    from the Institute from Genomic Research to sequence the genome of
    plasmodium falciparum, the most common human malaria parasite. DOD has
    indicated that it will invest as much as $8 million over five years in
    the project. Understanding of the genome is central to our ability to
    develop an effective DNA malaria vaccine.
        We are making progress but we cannot move forward without the
    involvement of military scientists and a sustained funding commitment.
    Conclusion
        The ASTMH requests your continued support of DOD Infectious
    Diseases Research programs. This is critically important given the
    resurgent and emerging infectious disease threats which exist today.
    The DOD programs are essential to advancing our war on infectious
    diseases and to protecting America's military forces. We are pleased
    that the Administration's request for infectious disease research
    programs does not cut current funding levels. However, as indicated in
    our testimony, there are many areas of unmet need and opportunity.
    Failure to act now will only result in health care cost increases for
    the military and threaten future troop deployments.
        With a shrinking U.S. military, coupled with the need to respond to
    conflict anywhere in the world, it is more important than ever to
    preserve combat readiness. Like other military research, medical
    research cannot easily be restarted whenever the need arises.
        Thank you for your consideration of our requests. I would be
    pleased to respond to any questions.
                                     ______

                             disclosure information
        The American Society of Tropical Medicine and Hygiene (ASTMH) has
    received the following federal support:
        National Institutes of Health (1997), $7,000.
        Purpose: To support travel expenses of selected outstanding young
    investigators from developing countries, allowing them to participate
    in the Society's annual scientific meeting.
        U.S. Army (1996), $15,000.
        Purpose: To support travel expenses of selected outstanding
    investigators from developing countries, allowing them to participate
    in the Society's annual scientific meeting.
        National Institutes of Health (1996), $7,000.
        Purpose: To support travel expenses of selected outstanding
    investigators from developing countries, allowing them to participate
    in the Society's annual scientific meeting.

        Senator Inouye. May I ask, what is shigala?
        Dr. Burke. Shigala is one type of diarrhea that can cause
    bloody diarrhea. It is very common in persons who are in
    tropical countries, sir.
        Senator Inouye. And what is Rift Valley Fever?
        Dr. Burke. That is a hemorrhagic fever not unlike the Ebola
    in terms of its clinical manifestations, but it is transmitted
    by biting insects.
        Senator Inouye. And Machupo?
        Dr. Burke. That is another one of the hemorrhagic fevers.
    These are all the emerging disease threats that are considered
    a real problem when you put people into tropical disease areas,
    particularly in Africa, and the U.S. military has particular
    expertise in these diseases, what with the facility at Fort
    Dietrich.
        Senator Inouye. Is there coordination between the military
    and, say, NIH?
        Dr. Burke. There is a good degree of coordination. The
    military tends to focus more on the international disease
    threats and the more severe disease threats that might be
    encountered by military personnel. The NIH tends to focus more
    on the domestic population disease threats. There is a lot of
    collaboration, particularly on diseases like malaria.
        Senator Inouye. Thank you very much, doctor.
    STATEMENT OF HOLLY E. HAZARD, EXECUTIVE DIRECTOR, DORIS
                DAY ANIMAL LEAGUE
        Senator Inouye. Our next witness is the executive director
    of the Doris Day Animal League, Ms. Holly Hazard.
        Ms. Hazard. Thank you, Senator Inouye. I am going to
    synopsize my comments to make my comments as brief as possible.
        In the 1960's the Air Force acquired a colony of
    chimpanzees for testing space travel before any American
    astronaut went into space. The Air Force, which has not used
    chimpanzees for space research since 1970, has leased them to
    various laboratories and has now decided to either retire the
    animals to a sanctuary, or to transfer them to yet another
    research facility through a competitive bidding process. There
    are currently 142 chimpanzees under the Air Force's care.
        The U.S. Congress authorized this divestiture of the
    chimpanzees in the 1997 National Defense Authorization Act. The
    humane community is working diligently to place a bid on these
    animals. The Center for Captive Chimpanzee Care, directed by
    Jane Goodall and others, has been formed for the specific
    purpose of offering these chimpanzees a new life.
        The center envisions a place where chimpanzees can learn to
    interact in social groupings without enclosures and to live out
    the rest of their lives as best a chimpanzee can in a captive
    environment. We have secured architectural plans and are
    looking for an appropriate site and acquired an executive
    director.
        We have managed to raise $1,195,000 in the last 6 months,
    some of it in a challenge grant, and I have just learned that
    the Doris Day Animal Foundation has agreed to add another
    $100,000 to this pot, but this amount, although staggering in
    the realm of the nonprofit world, is woefully short of the
    amount needed to successfully bid and provide a secure future
    for these animals.
        Meanwhile, the bidding process has been fraught with bias
    and inequities that tipped the process significantly in favor
    of the status quo. We have been given conflicting information
    as to who owns the $10 million building that was financed by
    the Federal Government and in which many of the chimps are
    housed on Holloman Air Force Base.
        The Air Force Base has referenced $1.2 million in
    endowments that supposedly accompany some of these animals
    specifically for their retirement. However, the funds, which
    are maintained by the Coulston Foundation, the current leasee,
    have been placed in an irrevocable trust and will not be
    transferred with the chimpanzees, according to the Air Force.
        The humane community may be forced to bid on these animals
    against a bidder who has already been awarded Federal money for
    their lifetime care, but which will not release the funds.
        The humane community wants to do what is right by these
    animals. To do so will stimulate research into how best to care
    for other captive chimpanzees. It will provide a model
    sanctuary as recommended by a recently convened NIH-sponsored
    NAS commission on the care of captive chimpanzees and also by
    the Speaker of the House of Representatives, but the humane
    community cannot do it alone.
        We did not capture these animals. We did not perform
    research on these animals. We did not warehouse them. However,
    we are willing, indeed we are excited to work in a public-
    private partnership to solve this problem, but we cannot do it
    without your help.
        The Air Force has given us until June 3 to present a
    proposal. It is unlikely we can meet our fund-raising goal by
    this deadline, although we are doing all we can.
        The United States Government must take some of the
    responsibility for these products of its progress. These
    chimpanzees should not be auctioned to the highest bidder. They
    are not old jets or broken tanks.
        On behalf of our 200,000 members and supporters and the
    hundreds of thousands of humane citizens organized with other
    animal protection organizations we are asking this committee to
    appropriate one-half of the money needed for the chimpanzees'
    lifetime care, or $8 million for fiscal year 1999.
        Thank you.
        Senator Inouye. I must confess to you that this is a
    problem that we have not coped with too often. Is this doctor
    for real, the one that you quote, this Dr. Coulston?
        Ms. Hazard. Yes.
        Senator Inouye. Is he for real?

                               prepared statement

        Ms. Hazard. I have not met him personally. I have only seen
    videotapes of his comments. He is actually, unfortunately all
    too real.
        Senator Inouye. I can assure you that I will urge my
    colleagues to read your testimony very carefully.
        Ms. Hazard. Thank you very much, Senator Inouye.
        [The statement follows:]
                     Prepared Statement of Holly E. Hazard
        As John Glenn proudly comes forward to serve his country once again
    in a flight into space, we are reminded of the risks that he and others
    took, the caliber of the man, and of all of his subsequent
    accomplishments.
        However, there are some space veterans who have been ignored by the
    media and the American public for the past 35 years. No one speaks of
    their heroism, their sacrifice, and certainly not of their bright
    future. These are the ``Chimpmonauts'' and their descendants, currently
    under the ownership of the U.S. Air Force, and leased out to a private
    biomedical research laboratory. These 142 chimpanzees, who share 98.4
    percent of our DNA, are the survivors and descendants of an original
    colony of 65 infants who were taken from their families in the jungles
    in Africa. Brought to the United States, they were trained to explore
    the safety of space travel prior to manned flight.
        In November 29, 1961, five-year old Enos was launched into space
    inside a Mercury Capsule. Due to a malfunction, Enos was given an
    electric shock for every correct maneuver he made, a reward-punishment
    system that contradicted over a year of training. Rather than alter his
    behavior, Enos endured the shocks and performed the flight tasks he
    knew were right. The test flight took Enos on a two-orbit ride and
    landed him alive. This qualified the system for manned flight, and the
    following year John Glenn orbited the earth three times.
        The Air Force, which has not used the chimpanzees for space
    research since 1970, has leased them to various laboratories, and has
    now decided to either ``retire'' these animals to a sanctuary or to
    transfer them to yet another research facility through a competitive
    bidding process.
        The United States Senate authorized this divestiture under the 1997
    National Defense Authorization Act, which states that the Air Force
    must employ a competitive negotiated bid process for the animals and
    must divest itself of the primate research complex at no cost to the
    Air Force. It is not clear whether this financial stipulation applies
    to the chimpanzees themselves or not.
        The humane community is working diligently to place a bid on these
    animals. The Center for Captive Chimpanzee Care, directed by Dr. Jane
    Goodall and others, has been formed with the specific purpose of
    offering these chimpanzees a new life. The Center envisions a place
    where chimpanzees can learn again to interact in social groupings, with
    outdoor enclosures, and live out the rest of their years as best a
    chimpanzee can in a captive environment.
        We have secured architectural plans, are looking for an appropriate
    site and have hired an Executive Director. We have managed to raise
    $1,195,000 in less than six months, but this amount, although
    staggering in the realm of the nonprofit world, is woefully short of
    the amount needed to successfully bid and provide a secure future for
    the animals.
        Meanwhile, the bidding process has been fraught with bias and
    inequities that tip the process significantly in favor of the status
    quo. We have been unable to obtain specific medical, experimental and
    social information on each chimpanzee or to view property associated
    with the chimps' care that may be available through the divestiture. We
    have even been given conflicting information as to who owns the $10
    million building in which many of the chimps are housed on Holloman Air
    Force Base.
        The current lessee, The Coulston Foundation, is a private research
    laboratory that already owns over 500 chimpanzees. It may submit a bid
    to assume permanent ownership of the Air Force chimpanzees. The
    Foundation's director, Dr. Frederick Coulston, is a controversial
    figure. According to a Wall Street Journal article from December 30,
    1997, Coulston is quoted as saying, ``I would like to have 5,000
    [chimps] to use, eventually, as organ donor banks for humans. * * * He
    calls AIDS a `silly disease' whose sufferers should have been forced to
    display `a big sign on the door saying `Quarantine' * * * He says he
    had to turn to chimps when his work with human subjects--prisoners--was
    halted in the 1960's.'' \1\
    ---------------------------------------------------------------------------
        \1\ The Wall Street Journal, December 30, 1997.
    ---------------------------------------------------------------------------
        The current lessee was charged in 1995 by USDA with multiple
    violations of the Animal Welfare Act, including the overheating deaths
    of three chimpanzees. The case was settled after the lessee agreed to
    pay a $40,000 fine. Earlier this year, USDA filed an unprecedented
    second set of charges, including the negligent deaths of two
    chimpanzees and seriously deficient housing and sanitary conditions. It
    is our position that the chimpanzees for whom our government is
    responsible should be removed from this environment forthwith, much
    less be subjected to a bid process under which they might remain at
    this facility permanently.
        The Air Force has referenced $1.24 million in endowments
    accompanying some of the animals. However, the funds, which are
    maintained by The Coulston Foundation, have been placed in irrevocable
    trust funds and will not be transferred with the chimpanzees. The
    humane community may be forced to bid on these animals against a bidder
    who has already been awarded federal money for their lifetime care,
    which can be used to prove his financial ability to provide for the
    animals. This appears to run counter to Congressional intent.
        The humane community wants to do what is right by these animals. To
    do so will stimulate research into how best to care for other captive
    chimpanzees. It will provide a model for a ``sanctuary'' as recommended
    by a recently convened NIH-sponsored NAS Commission on the care of
    captive chimpanzees,\2\ and also the Speaker of the House.\3\
    ---------------------------------------------------------------------------
        \2\ ``Chimpanzees in Research: Strategies for Their Ethical Care,
    Management and Use'', National Research Council, 1997.
        \3\ ``Gingrich Supports Chimpanzees Home'', The New York Times, May
    5, 1998.
    ---------------------------------------------------------------------------
        But the humane community cannot do it alone. We did not capture
    these animals. We did not perform research on these animals. We did not
    warehouse them. However, we are willing, indeed excited, to work in a
    public/private partnership to solve this problem, but we cannot do it
    without your help.
        The Air Force has given us until June 3rd to present a proposal; it
    is unlikely we can meet our fundraising goal by this deadline, although
    we are doing all we can. The United States government must take some
    responsibility for these ``products'' of its progress. These
    chimpanzees should not be auctioned to the highest bidder. They are not
    old jets or broken tanks. They deserve the best care, not the easiest
    outcome, the Air Force can provide. This is true even if it means some
    additional cost for the United States government.
        The chimpanzees cannot speak out on their own behalf, they cannot
    recount their history and accomplishments, they cannot lobby the United
    States Senate or direct their fate. But every American who ever looked
    up into the heavens to pray for our astronauts can recognize what we as
    a nation owe these individuals, and can act on this conviction. Please
    appropriate the funds necessary to help us help them live out their
    lives in peace.
    STATEMENT OF FRANCES M. VISCO, PRESIDENT, NATIONAL
                BREAST CANCER COALITION
        Senator Inouye. Our final witness is the president of the
    National Breast Cancer Coalition, Frances Visco. Ms. Visco.
        Ms. Visco. Good afternoon, Senator Inouye. I just want to
    highlight some of the points from my testimony, because my
    testimony has been submitted for the record.
        I want to certainly thank you on behalf of the National
    Breast Cancer Coalition, you and Chairman Stevens, for your
    ongoing support of the Department of Defense peer review breast
    cancer research program.
        I know that you know the importance of this program to the
    women in the military, and to military dependents, and also the
    incredible benefits that have accrued to the Defense Department
    as a result of the program, enriched partnerships and
    collaborations with the academic and scientific community, and
    also a message to the women in the military of the importance
    of their issues.
        We, as you know, have a plan, a plan by which we spend the
    money appropriated for this program, and the plan has been
    incredibly successful. It is a plan that helps us look at what
    has happened in the world of science over the past couple of
    years.
        We can respond very quickly to what is happening out there,
    and we make certain that the money goes where it is going to
    have the strongest effect, and I think the recent news on
    cancer research highlights the importance of what it is that we
    have been doing through this program.
        You know, the cancer drug through Jude Folkeman's research
    on antiangiogenesis, he has had that idea for 30 years, and no
    one would fund him. The traditional funding mechanisms would
    not believe that it was a worthwhile idea.
        Well, the Department of Defense program is filling gaps
    like that. At the Food and Drug Administration right now there
    has been filed a request for approval of a very exciting,
    innovative therapy for breast cancer treatment, and this new
    therapy was funded in part through DOD funding while no one
    else would give the funding for that part of this research, so
    that is the kind of places where this program puts its money
    and where we put our money.
        Now, we are collaborating through this program with the
    National Institute of Health [NIH] and the National Cancer
    Institute [NCI] so that we do know what is going on there and
    what is happening in the outside world. Equally important, the
    integration panel that oversees this panel of which I am a
    member has outside scientists. It has representatives from the
    National Cancer Institute, but it also has primarily renowned
    scientists from the outside community, and so we are constantly
    getting information on what is happening in the world of
    research into breast cancer.
        I think another very important thing that has happened
    through this program, of which we can all be proud, is this
    past year we had the Era of Hope meeting in Washington, D.C.,
    and I am very sorry that you could not attend that meeting. It
    was incredible, where for the first time ever the taxpayers of
    this country were given a detailed report of what happened with
    their tax dollars. It was incredibly successful and we are
    going to continue to do that.

                               prepared statement

        While we are making great strides, the vast majority of the
    research is not getting funded. The proposals that score well
    are not getting funded through this program, and that is why we
    presented to the committee this morning a letter from 63 of
    your colleagues in the Senate in support of your request for
    $175 million to continue this incredible program.
        But once again, I want to thank you.
        [The statement follows:]
                     Prepared Statement of Frances M. Visco
        Thank you, Mr. Chairman and members of the Appropriations
    Subcommittee on Defense for your exceptional leadership in the effort
    to increase and improve breast cancer research. As my testimony will
    describe in detail, the investment in cancer research made by you and
    this Committee is one of the contributions which has brought us closer
    than ever to the verge of significant discoveries about cancer. I am
    Fran Visco, a breast cancer survivor, a wife and mother, a lawyer and
    President of the National Breast Cancer Coalition (NBCC).
        As you know, the NBCC, a grassroots advocacy organization made up
    of over 450 organizations and tens of thousands of individuals, has
    been working since 1991 toward the eradication of breast cancer through
    advocacy and action. The NBCC's goals are (1) to increase the federal
    funds available for research into breast cancer and to focus research
    on prevention, on finding the cause of and a cure for this insidious
    disease; (2) to make certain that all women have access to the quality
    care and treatment they need, regardless of their economic
    circumstances and (3) to increase the influence of women with breast
    cancer in the decision making that affects their lives.
        On behalf of the NBCC and the 2.6 million women who are now living
    with breast cancer, I thank you for your strong past support of the
    Department of Defense's (DOD) peer-reviewed Breast Cancer Research
    Program and I urge your continued support of this important program
    with an appropriation of $175 million for the program for fiscal year
    1999. The NBCC believes this program is vital to the eradication of
    breast cancer. And we are not alone, I have with me a letter signed
    from over 50 of your colleagues in the Senate which requests that the
    DOD peer-reviewed Breast Cancer Research Program be funded at $175
    million for fiscal year 1999.
        As a member of the Integration Panel that implements the DOD Breast
    Cancer Research Program, I have witnessed the evolution of this
    program. In just five short years, the program has matured from a
    small, isolated research program to a broad-reaching influential voice
    forging new and innovative directions for breast cancer research and
    science. The flexibility of the program has allowed the Army to
    administer this groundbreaking research effort with unparalleled
    efficiency and skill. In addition, an inherent part of this program has
    been the inclusion of consumer advocates at every level, which has
    created an unprecedented working partnership between advocates and
    scientists and ultimately led to unchartered research in breast cancer.
        It is important to note that the DOD Integration Panel that designs
    this program has a plan on how best to spend the funds appropriated.
    This plan is based on the state of science--what we know--the gaps that
    exist in our knowledge and the needs of women and their families. This
    plan exists within our philosophy that we do not want to restrict
    scientific freedom, creativity and innovation. While we carefully
    allocate these resources we do not want to predetermine the specific
    research areas to be addressed. This permits us to complement and not
    duplicate other federal funding programs. For example, the recent
    announcement of two new drugs that will go into clinical trials for
    cancer based on the preliminary work of Judha Folkman, highlights the
    importance of this philosophy. The DOD Breast Cancer Research Program
    funds ideas similar to Dr. Folkman's--those that are not easily
    accepted within traditional funding programs. In addition, a possible
    new revolutionary therapy for breast cancer is now before the FDA for
    approval. This therapy comes from research that in part was funded
    through the DOD program, when no one else would support the research.
        The NBCC, and its members, are dedicated to working with you to
    ensure the continuation of funding for this program at a level that
    allows this research to forge ahead. Just last week, our members were
    up on Capitol Hill to bring our message to Congress. We had over 600
    breast cancer activists from across the country join us at our Annual
    Advocacy Training Conference to continue to mobilize behind the efforts
    to eradicate breast cancer. The overwhelming interest and dedication to
    eradicate this disease continues to be evident as people are willing to
    come all the way to Washington, D.C.--paying the expenses out of their
    own pocket and taking time away from their careers and families--to
    deliver their message about the importance of our commitment.
        Breast cancer costs this country untold dollars in medical costs,
    lost resources, lost productivity, and in lost lives. The war against
    breast cancer, the search for answers to what causes the disease, how
    we can prevent it, how we can cure it--these are immense issues,
    requiring a concerted, coordinated effort on the national level. Breast
    cancer is not just an issue for one month, but an ongoing crisis.
        However, as is becoming more and more apparent in the media, we
    seem to be on the brink of a historical moment for cancer research.
    Recent discoveries and breakthroughs in cancer treatment have created
    extraordinary momentum in the fight against cancer at all policy
    levels. There is a new energy and optimism in the U.S. in the
    scientific, policy and consumer communities around cancer research--a
    universal feeling that the significant past research investments are
    poised to pay major dividends in the areas of cancer prevention,
    detection and treatment. We are closer than ever before to reaching our
    goal of eradicating breast cancer. Your leadership in supporting the
    DOD Breast Cancer Research Program is an essential component of the
    innovative approach that is needed to finally combat this disease.
        Since I testified before this Committee last year, the success of
    the DOD Breast Cancer Research Program has been illustrated by two
    unique assessments of the program. The Institute of Medicine (IOM)
    which originally recommended the structure for the program,
    independently re-examined the program in a report published in 1997.
    Their findings overwhelmingly encourage the continuation of the program
    and offer guidance for program implementation improvements. In addition
    to the IOM report, the DOD Breast Cancer Research Program reported the
    progress of the program to the American people during a public meeting
    called the ``Era of Hope.'' It was the first time a federally funded
    program reported back to the public in detail not only the funds used,
    but the research undertaken, knowledge gained from that research and
    future directions to be pursued. This meeting allowed scientists,
    consumers and the American public to see the exceptional progress made
    in breast cancer research through the DOD Breast Cancer Research
    Program.
        The 1997 IOM review of the DOD Breast Cancer Research Program
    commended the program and stated that ``the program fills a unique
    niche among public and private funding sources for cancer research. It
    is not duplicative of other programs and is a promising vehicle for
    forging new ideas and scientific breakthroughs in the nation's fight
    against breast cancer.'' The IOM report recommends continuing the
    program and establishes a solid direction for the next phase of the
    program. It is imperative that Congress complement the independent
    evaluations of the DOD Breast Cancer Research Program, as well as
    reiterate their own high level of commitment to the program by
    appropriating the funding needed to ensure its success. The IOM report
    has laid the ground work for effective and efficient implementation of
    the next phase of this vital research program, now it needs the
    appropriate funding.
        The success of the program was also highly evident in the fall of
    1997, when the DOD Breast Cancer Research Program hosted their public
    meeting, ``Era of Hope,'' bringing together scientific investigators
    and consumers to examine the progress made since the program's
    inception and look ahead at upcoming developments in promising new
    directions. The conference focused on breast cancer prevention and
    detection; breast cancer genetics and biology; and breast cancer
    treatment and quality of life. For each topic, the current status of
    health care or research available was examined and potential areas for
    progress were presented. The presentations were given both by
    scientists and consumers, demonstrating the strong partnership that has
    evolved between the scientific community and the public around breast
    cancer research. The unique collaboration of scientists and consumers
    in this public meeting, reaffirmed that together scientists and
    consumers are bringing an unforeseen vision and commitment to the fight
    against breast cancer and allowed for many new innovative ideas to be
    exchanged.
        One of the most impressive outcomes of the DOD Breast Cancer
    Research Program, made evident at the ``Era of Hope'' meeting, was the
    caliber of new scientific talent the program has recruited and the
    research insight the program has given them. The DOD 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. In the
    proceedings from the meeting, Brigadier General Zajtchuk, Commander of
    the U.S. Army Medical Research and Materiel Command, stated that ``the
    high quality and innovation of the research contained in these volumes
    and presented at the meeting clearly reflects that the U.S. Army
    Medical Research and Materiel Command has supported some of the most
    talented and creative scientists in their efforts to eradicate breast
    cancer.''
        Many scientists at the ``Era of Hope'' meeting expressed their
    enthusiasm for the program and the opportunity to work substantively
    with consumers at every step of the research process. In fact, 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 DOD Breast Cancer Research Program has attracted bright, fresh
    scientific minds with new ideas and continues to open the doors to how
    they think about breast cancer research and research in general.
        Developments in the past few years have begun to offer breast
    cancer researchers fascinating insights into the biology of breast
    cancer and 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.
        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 go directly to research grants. The federal government can
    truly be proud of its investment in DOD breast cancer research. The
    overall structure of the system has streamlined the entire funding
    process, while retaining traditional quality assurance mechanisms.
        The NBCC is highly committed to the DOD program, as we truly
    believe it is one of our best chances at finding a cure or prevention
    for breast cancer. In May of 1997, our members presented a petition
    with over 2.6 million signatures to the Congressional leaders on the
    steps of the Capitol. The petition calls on the President and the U.S.
    Congress to spend $2.6 billion on breast cancer research between 1997
    and the year 2000. Funding for the DOD 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.
        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 Inouye. I believe the women of America owe you a
    debt of gratitude, you and your ladies, for your determination
    and your persistence, and your commitment. I have seen the
    ladies standing in dark corridors at all hours of the day and
    night lobbying. I can tell you that the success that you have
    seen is due to your persistence and, in fact, many Members of
    the Congress are deathly afraid of your coalition. [Laughter.]
        Maybe the other lobbying groups could learn a lesson from
    you.
        Ms. Visco. Well, it really is as a result of the
    partnership we have developed with Members of Congress who
    support this cause also.
        Senator Inouye. Seriously, we will do our best.
        Ms. Visco. Thank you very much, Senator.
        Senator Inouye. I wish to thank all of you on behalf of the
    committee for sitting by all of these hours.

                        additional submitted statements

        The subcommittee has received statements for witnesses who
    could not testify and they will be placed in the record at this
    point.
        [The statements follow:]
        Prepared Statement of Michael D. Maves, MD, MBA, Executive Vice
     President, American Academy of Otolaryngology--Head and Neck Surgery,
                                      Inc.
        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. As you may know, 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.
        Mr. Chairman I would like to bring to your attention several issues
    that concern the Academy.
    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 Centers for Disease Control and Prevention (CDC) in
    developing 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 education 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.
                                     ______

      Prepared Statement of Edith G. Smith, Citizen Advocate for Disabled
                               Military Retirees
        I am Edith Smith, a citizen advocate dedicated to correcting the
    inequities in the TRICARE benefit now provided to disabled retired
    beneficiaries who are dually eligible for Medicare. I am pleased to
    submit my statement to the Members of the Defense Subcommittee of the
    Committee on Appropriations, United States Senate, at a hearing for
    public witnesses on May 11, 1998.
        My husband, Vincent M. Smith, and I became involved in this
    advocacy work as a result of our personal experiences and the
    devastating situations faced by other disabled retirees when they were
    unexpectedly terminated from their CHAMPUS benefit of retirement as a
    ``cost saving'' measure to the Pentagon.
        In 1989, my husband qualified for Social Security Disability Income
    at age 49 through Social Security contributions made solely by his
    private sector employer of more than 6 years following his military
    retirement from 21 years honorable service in the United States Marines
    Corps. Twenty-nine months later, his CHAMPUS benefit ended without
    notice of termination from DEERS, and he was forced to the lesser
    benefits of Medicare simply because he was disabled. How can DOD force
    the substitution of a benefit earned through private sector employment
    (Medicare) for a benefit of military retirement (CHAMPUS)?
        Efforts initiated by Congressman Bill Young, FLA., and Senator John
    McCain, AZ, quickly restored CHAMPUS as second payer to Medicare A and
    B for retired beneficiaries under age 65 in October, 1991.
        I would like to present my views on the military health benefit as
    uniquely provided to military retirees and their family members who
    become eligible for Medicare under age 65. I believe the Department of
    Defense has interpreted and implemented (or failed to implement) these
    laws in the most restrictive budget sense favoring the system, often
    without regard for fairness and equity to disabled beneficiaries.
    Congress passed these laws as critical protective measures to ensure
    that retired military beneficiaries would receive no less medical
    benefit than others simply because of their misfortune to suffer full
    disability or End Stage Renal Disease (ESRD.)
        The requirement to enroll in Medicare Part B coverage is an unjust,
    discriminating, and additional requirement of TRICARE eligibility for
    disabled retired beneficiaries. Medicare Part B participation is not
    required of disabled active duty family members to retain TRICARE
    eligibility or retired Federal Civilians to maintain their eligibility
    for FEHBP. The disabled retired military beneficiaries are unhappy with
    this ``second class status'' and many would be better served by a
    voluntary option to participate in the Federal Employees Health Benefit
    Program (FEHBP) that is provided to Congress and the Federal Civilian
    workforce.
           issues of concern for military medicare eligibles under 65
        Data match between Defense Enrollment Eligibility Reporting System
    (DEERS) and Health Care Financing Administration (HCFA) was
    accomplished by DEERS on about March 19, 1998, as required by Sec. 734,
    Fiscal Year 1996 Defense Authorization Act. DEERS courtesy information
    letters informing disabled beneficiaries of the termination of their
    retired eligibility TRICARE/CHAMPUS were mailed on March 20, 1998, to
    12,093 beneficiaries who had not purchase Medicare Part B. 99,676
    military beneficiaries were identified as eligible for Medicare A and
    TRICARE by the DEERS/HCFA match.
        DEERS inaccurately reflects TRICARE as primary w/o Part B. It
    appears that DEERS did not update their computer records on March 20,
    1998, to reflect Medicare A and the lack of Part B for individuals
    identified on the HCFA data tape when the match occurred. 12,093
    disabled persons may now be erroneously listed in DEERS as primary
    TRICARE eligible. Government personnel who depend on DEERS records have
    informally advised some disabled individuals who are not enrolled in
    Part B to continue with needed medical care under TRICARE until DEERS
    records reflect their ineligibility for TRICARE pending anticipated
    retroactive legislative relief. DOD must document this situation or
    informal policy so that no disabled person who trusted government
    advice will later be at risk to suffer prosecution under TRICARE fraud
    regulations if other officials disagree with this policy at a future
    date in order to recoup TRICARE funds and balance the budget on the
    backs of desperate disabled retirees.
        Part B requirement waived temporarily to September 30, 1998. The
    Supplemental Appropriations Bill, April 30, 1998, contains language to
    temporarily waive the Part B requirement for TRICARE beneficiaries who
    are dually eligible for Medicare. This waiver is based on a
    determination that such continuation is appropriate to assure health
    care coverage for a person who may have been unaware of the loss of
    CHAMPUS eligibility. The Part B waiver must be continued until July 1,
    1999, in order to properly coordinate with the complex enrollment
    requirements of Medicare B.
        Waiver of recoupment for erroneous CHAMPUS payments for Medicare
    eligibles; fiscal year 1996, Section 743, Not yet implemented--over 2
    years later. Proposed rule published in Federal Register, December 4,
    1997. An description of this provision was omitted from the DEERS
    letter mailed to disabled beneficiaries on March 20, 1998.
        ``Equitable Relief'' waivers for Under 65's are the appropriate
    solution to this ``no Part B'' problem and must be approved for request
    by DEERS as discussed in a letter from Dr. Stephen Joseph, ASD(HA) to
    HCFA, January 16, 1997. It appears that the rights of Medicare
    eligibles under age 65 have been prejudiced by DOD's failure to
    accomplish a data match which has caused the unintentional,
    inadvertent, or erroneous nonenrollment by some beneficiaries in
    Medicare Part B. ``Equitable Relief'' granted by HCFA would allow
    immediate or retroactive enrollment in Medicare Part B without premium
    penalties, thus quickly restoring earned TRICARE benefits to our most
    needy retirees without legislative changes.
        Eliminate the unfair requirement of Medicare Part B for TRICARE
    eligibility. People suffer when decreasing DOD staff cannot accomplish
    the additional tasks to develop the expanded administrative bureaucracy
    required by this new complex military health benefit.
                                   background
        This small group of disabled retired beneficiaries is unjustly
    denied equal eligibility for TRICARE/CHAMPUS. The disabled military
    beneficiaries have been cost shifted to the lesser benefits of Medicare
    A by entitlement, and to Part B by required enrollment with a 1998
    premium of $43.80 @ mo., simply because they have been employed and
    suffer the misfortune of severe disability or End Stage Renal Disease
    (ESRD.) No other military beneficiaries are required by law to purchase
    other health insurance for which they may be eligible in order to save
    TRICARE money.
        Why then has Congress required the disabled beneficiaries to enroll
    in Medicare B? As DOD develops and expands their new managed care
    demonstrations and programs, the Medicare eligibles under 65 have been
    ``cherry picked'' and left basically alone to fend for themselves in a
    ``no man's administrative land'' of the dual coverage of Medicare and
    TRICARE.
        Since 1973, when Social Security Law first entitled disabled
    individuals to Medicare A , DOD has recognized a continued need to
    coordinate a mechanism between DEERS and HCFA to identify and notify
    dual eligible military beneficiaries. After 25 years, DOD accomplished
    the data match last month and identified 12,093 unique retired
    beneficiaries who had failed to purchase Part B. Without Part B these
    disabled retired beneficiaries were ineligible for TRICARE. Complex
    Medicare B enrollment requirements will leave many without any
    outpatient coverage until July 1, 1999.
        DOD (HA) reacted with compassion to the plight of this large group
    of vulnerable beneficiaries and asked Congress for emergency
    legislation to waive the Part B requirement from January 1, 1998, to
    July 1, 1999. This legislative relief may leave unintended gaps in
    medical coverage. DOD's request for relief legislation ignores the
    spirit of forgiveness (implied by Congress) to waive the Medicare B
    premium penalties that have incurred because DOD/HCFA did not run the
    data match in 1991 when CHAMPUS was restored to these individuals.
        ``Equitable Relief'' waivers are critical for retired under 65
    beneficiaries because of the ability to enroll retroactively in Part B
    and the waiver of stiff premium penalties. Retroactive enrollment in
    Part B insures continuous eligibility for CHAMPUS/TRICARE coverage with
    necessary reimbursement for any previous unpaid medical bills.
        Foreseeing this catastrophic situation the disabled would face when
    the data match was accomplished, Dr. Stephen Joseph, ASD(HA), wrote to
    the Administrator of HCFA in January, 1997, and requested assistance in
    solving the problem unique to Medicare eligibles under 65 resulting
    from the lack of a data match.
        The Health Care Financing Administration (Medicare agency)
    regulations HI 00830.001--``Granting Equitable Relief'', HI 00830.005--
    ``When to Consider Relief'', HI 00830.010--``Evidence Required'', and
    HI 00805.236--``Current Equitable Relief Consideration Involving
    CHAMPUS'' describe HCFA's process ``* * * to provide certain forms of
    relief to individuals whose SMI or premium enrollment or coverage
    rights have been prejudiced by the error, misrepresentation, action or
    inaction of an employee or agent of the Government * * *.'' DOD
    officials explain that ``equitable relief'' is not an option because of
    the high cost to HCFA. These regulations do not describe a monetary cap
    which prevents HCFA from granting forgiveness to a number disabled
    beneficiaries who were unaware of the change in law.
        A DOD (Health Affairs) memo dated June, 1973, documents DOD's need
    for a mechanism to identify Medicare eligibles under age 65 who are
    dually eligible for CHAMPUS. If a data match was deemed to be required
    and run on March 19, 1998, then this data match should have been
    equally necessary in 1973. The CHAMPUS eligibility situation for active
    duty family members had not changed since the 1972 Amendments to the
    Social Security Act provided Medicare for those under age 65 because of
    disability or End Stage Renal Disease. Contrary to information in the
    recent DEERS letter, retired disabled military beneficiaries previously
    enjoyed dual eligibility of Medicare/CHAMPUS without the requirement to
    enroll in Part B from 1973 to December 13, 1980. If DEERS has mailed
    courtesy letters to Medicare eligible at age 65 since 1986, then how
    can government officials from both DOD and HCFA be permitted to turn
    their heads and ignore an equal need to identify and notify this unique
    disabled population under age 65?
        I respectfully suggest that Congress direct the Department of
    Defense to revert to old DOD/HCFA policy basis for ``equitable relief''
    for under 65's that includes ``error or inaction'' on the part of DOD/
    HCFA employees who have failed to accomplish the data match for 25
    years.
       data match between deers and hcfa to identify and notify disabled
      military beneficiaries of their unique champus/tricare eligibility
                                  requirements
        Defense Acts, (not Social Security Law) authorized this Part B
    requirement. Therefore, the Department of Defense must be held fully
    responsible and accountable to identify and notify disabled Medicare
    eligibles under age 65 of their change in eligibility to TRICARE/
    CHAMPUS. DEERS letters are the only personal notification Medicare
    eligibles receive. Had the DEERS letters been issued beginning in 1973,
    these disabled military beneficiaries would have received appropriate
    information to prompt timely enrollment in Part B, possibly averting
    the lifetime Part B premium penalties of 10 percent per year associated
    with late enrollment.
        The first DOD memorandum signed by Vernon McKensie, DASD (Health,
    Resources, and Programs), 25 June 1973, states a need for a ``data
    match'' with Social Security. To quote from the memo: ``We have not
    been able to complete the coordination with Social Security
    Administration which we feel is necessary to establish a final CHAMPUS
    implementation of the three new Medicare eligibility provisions of the
    Social Security Act of 1973 which provide Medicare eligibility for some
    CHAMPUS beneficiaries. Pending the completion of the necessary
    coordination of the CHAMPUS and Medicare claims procedures * * *.''
    This coordination was never accomplished by DOD until March 19, 1998.
        DEERS is a self-reporting system that holds the military sponsor
    responsible to update changes to his DEERS records. The Assistant
    Secretary of Defense (Health Affairs) reported to Congress on April 4,
    1997, that 23,733 retired Medicare eligibles under 65 have self-
    reported their Medicare A eligibility to DEERS. The 1998 data match has
    identified 99,676 retired beneficiaries dually eligible for Medicare/
    TRICARE.
        If DOD is not held responsible to provide information on this dual
    coverage, how can disabled beneficiaries be held responsible to know
    the law? When a disabled beneficiary declines enrollment in Part B, he
    often does so because he has not been properly informed of the loss of
    his TRICARE benefit. He believes he is covered by CHAMPUS until age 65
    as are all other retirees. He also erroneously believes that if he
    doesn't pay for Part B, then he is not enrolled, and does not need to
    report Medicare on his CHAMPUS form.
             equitable relief for medicare part b premium penalties
        The failure of DOD to previously provide DEERS courtesy information
    letters to dual Medicare/TRICARE beneficiaries should qualify as the
    ``error, misrepresentation, or inaction of a federal employee which
    caused the unintentional, inadvertent, or erroneous nonenrollment by
    the beneficiary in Part B.'' 42 CFR 407.32. [DOD, Office of General
    Counsel's Opinion, December 21, 1994.]
        Prior to 1996, when a military beneficiary attempted late
    enrollment in Medicare B, DEERS officials generally provided the
    necessary documentation to request an ``equitable relief'' waiver from
    HCFA by explaining that DOD had probably misinformed the retiree about
    this unique requirement to enroll in Medicare Part B as a condition to
    retain their military health benefit. TRICARE/CHAMPUS does not provide
    each military beneficiary with a handbook as does Medicare and most
    other insurance programs.
        Base closures caused many retirees who had depended on military
    medical care to apply for Medicare Part B with late enrollment
    penalties. This new influx of Part B applicants caused by base closure
    (most over 65) prompted HCFA to review sudden increased HCFA costs
    associated with granting ``Equitable Relief'' to these retirees. HCFA
    may not want to absorb additional costs to their programs resulting
    from downsizing the military.
        This influx of Part B applicants caused DOD to tighten its policy
    traditionally used for providing ``Equitable Relief'' letters from
    DEERS for military beneficiaries seeking late enrollment in Medicare B.
    DOD then forwarded legislation (fiscal year 1997 and fiscal year 1998)
    requesting ``equitable relief'' for over 65's in Base Realignment and
    Closure (BRAC) sites with no explanation for omitting the Medicare
    under 65's in this legislative proposal.
        Why would DOD exclusively identify BRAC site beneficiaries over age
    65 to receive legislative relief from the Part B penalties? Most over
    65 retirees would have received the DEERS courtesy letters explaining
    their termination of CHAMPUS, the switch to Medicare, and their
    personal risk to rely on ``space available military medical care'' if
    they choose not to enroll in Part B. DOD's criteria for requesting
    ``equitable relief'' waivers must focus on the beneficiaries who were
    not informed by DEERS courtesy information letters of their changed
    CHAMPUS eligibility. The unique situation of failing to identify and
    inform under 65's was not considered when the new DOD policy for
    ``Equitable Relief'' was written in May, 1996.
        DOD must acknowledge and accept responsibility for error and
    inaction on the part of government employees who failed to develop a
    mechanism to inform retired CHAMPUS beneficiaries of their changed
    eligibility in a timely manner. Had the data match been set up in 1973,
    the system for the dual coverage of Medicare/CHAMPUS would be working
    and each beneficiary would have received a timely letter of
    notification potentially averting penalties and a lapse of medical
    coverage when they need it most.
            tricare prime enrollment for medicare eligibles under 65
                     eliminate 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 retired Medicare-eligible
    beneficiary. TRICARE and Medicare are two different federal health
    programs run by two distinctly different federal agencies who serve
    distinctly different populations and purposes. If they have difficulty
    working together to accomplish a data match in 25 years, how will they
    coordinate their health benefits so that medical care for the most
    needy is accomplished without undue problems?
        Most DOD informational materials on TRICARE PRIME generally state
    that Medicare-eligibles may not enroll in PRIME at this time. Medicare
    eligibles under age 65 with Part B 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. 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. TRICARE websites also have
    failed to adequately describe the requirements of Part B for unique
    beneficiaries. TRICARE money saved by cost shifting the disabled to
    Medicare should be spent informing the disabled beneficiaries of their
    unique health benefit situation.
        Many military medical administrators are unaware of the complex
    eligibility requirements of the dual Medicare/TRICARE benefit.
      --Active duty family Medicare-eligible member is not required to
            purchase Part B.
      --Retired Medicare eligible beneficiary under 65 is required the Part
            B purchase.
      --Disabled family member who has not earned Social Security credits
            for Disability Income retains full CHAMPUS eligibility until
            age 65 without the required switch to Medicare.
      --Medicare eligibles at any age may enroll in the Uniformed Services
            Family Health Plan without the requirement to purchase Part B.
        Historically, military health benefits advisors have been untrained
    and unable to discuss Medicare benefits. Now that Defense ACTS have
    mandated Medicare as a substitute and requirement for under 65's to
    participate in TRICARE, the Defense Department must be responsible to
    inform individuals about their Medicare benefits and how they
    coordinate with TRICARE. The DOD must not ``cherry pick'' their
    programs of retirees because of age or health status as an easy way to
    meet budget targets.
     history of tricare/champus eligibility for medicare eligibles under 65
        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
    were given the voluntary option to participate.
        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 with a priority for ``wartime readiness.''
        1972, the Social Security Amendments (42 USC 1395c) expanded
    Medicare eligibility to entitled disabled CHAMPUS beneficiaries on or
    after 1 July 1973. DOD permitted a dual coverage benefit for all
    eligible beneficiaries until 1980 with no Part B requirement. The
    CHAMPUS regulations (DOD 6010.8 dated 10 January 1977) terminated
    CHAMPUS coverage effective January 1, 1978, for Medicare eligibles
    under age 65, but this was not supported in law. Fiscal year 1979
    Testimony presented to the Senate Armed Services Committee by Mr.
    Vernon McKenzie, ASD(HA) described this termination of CHAMPUS as a
    ``cost saving administrative action'' that did not reduce medical
    coverage.
        1980, CHAMPUS eligibility terminated for retired beneficiaries
    under age 65 who became entitled to Medicare Part A. Public Law 96-513,
    Sec. 511, an amendment to the ``Defense Officer Personnel Management
    Act'' signed on December 12, 1980.
        1991, CHAMPUS restored as second payer to Medicare A and B for
    retired beneficiaries under age 65. Fiscal Year 1992 Defense
    Appropriations Act, Public Law 102-190.
        1994, Authorized Coordination of Benefits between Medicare and
    CHAMPUS specifying traditional reimbursement procedures. Fiscal Year
    1995 Def Auth Act, Public Law 103-337, Sec. 704.
        1995, ``Waiver of recoupment'' for erroneous CHAMPUS payments.
    Fiscal year 1996, Sec. 743, which provides the authority to waive the
    collection of erroneous civilian health care payments from persons
    under the age of 65 who unknowingly lost TRICARE/CHAMPUS eligibility
    when they became eligible for Medicare as a result of a disability or
    End Stage Renal Disease. The period of waiver authority begins January
    1, 1967, and ends on either the termination date of any special
    enrollment Medicare period established by law, or July 1, 1996,
    whichever is later. The rule was published in the Federal Register,
    December 4, 1997.
        1995, ``Data Match''--Congress 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 or entitlement to Medicare Part A under age 65. Fiscal Year 1996
    Defense Authorization Act, Sec. 734.
        1997, January 16th letter from DOD (Health Affairs) to HCFA
    requesting a dialogue to develop viable options to provide ``equitable
    relief'' for CHAMPUS beneficiaries who are entitled to Medicare under
    age 65. DOD(HA) acknowledges the inability of DOD to identify this
    category of beneficiaries in order to notify them of the change in law.
    The execution of a timely data exchange was also requested.
        1997, Medicare Subvention Demonstration bills passed with fiscal
    year 1998 Budget Amendment. This Military Medicare Demo' is the only
    ``at risk'' Medicare HMO permitted to exclude the Medicare eligibles
    under age 65 who suffer disability. Are the Medicare eligibles under 65
    an ``unfunded mandate'' for MTF's? How will they be treated by the
    Military Facility Commander who retains the legal ability to pick and
    choose the MTF patients according to the needs of their Graduate
    Medical Education Program and the MTF budget targets?
        1997, Legislation waiving Medicare Part B late enrollment penalty
    excludes disabled Medicare eligibles under 65. H.R. 598 by Rep. John
    Ensign, (R-Nev.) and S. 912 by Sen. Chris Bond, (R-MO) waives the Part
    B premium penalty for over 65's. Why is there a discriminating omission
    of the Under 65's when they are the ones who did not receive DEERS
    notification of the change in the CHAMPUS eligibility?
        1998, Waiver of TRICARE PRIME enrollment fee for Medicare eligibles
    under age 65. DOD's final rule was published in the Federal Register
    with the effective date of March 26, 1998. However, DOD policy may not
    have been disseminated in time to be included in the initial marketing
    materials for Regions 1, 2, and 5.
        1998, ``Data Match'' was accomplished by DEERS/HCFA on March 19,
    1998, and DEERS letters were immediately mailed to 12,093 beneficiaries
    who had not purchased Part B and were without any outpatient coverage.
    The DEERS/HCFA data match identified 99,676 retired individuals who are
    Medicare eligible under age 65. If ASD(HA) last reported 23,733 dually
    covered beneficiaries, it would seem that about 76,000 military
    beneficiaries were erroneously listed with DEERS as having primary
    CHAMPUS eligibility.
        1998, Temporary waiver of Part B requirement provision in
    Supplemental Appropriations bill. April 30, 1998. This emergency
    measure assures continued medical coverage under TRICARE until
    September 30, 1998, for individuals who were unaware of the loss of
    TRICARE/CHAMPUS and the requirement to enroll in Medicare B.
                                   conclusion
        We are very grateful to the Congress for the restoration of CHAMPUS
    benefits to retired military under age 65 who are dually entitled to
    Medicare A and enrolled in Part B. However, we are concerned about the
    lack of oversight and understanding by DOD to administer this dual
    benefit with full responsibility and accountability. DOD must now
    accept full responsibility to advise retired beneficiaries about both
    Medicare and TRICARE. If Congress persists in requiring Medicare B,
    then DOD must adjust TRICARE coverage to fully supplement Medicare
    similar to the Federal Employees Health Benefits Program and Medicare,
    waiving all cost shares and deductibles of TRICARE as a ``quid pro
    quo'' for Part B enrollment.
                                recommendations
        Obtain additional emergency legislation to waive the Part B
    requirement temporarily in order to ensure continuing medical coverage
    for retired beneficiaries until July 1, 1999.
        I respectfully suggest that Congress direct the Department of
    Defense to designate a position to oversee the fair and equal
    administration of the health benefit as uniquely provided to Medicare
    beneficiaries under age 65. Funding for this centralized oversight task
    can be offset by savings accrued with the DOD money saved from shifting
    retired beneficiaries from TRICARE to Medicare A and B.
        DOD must be directed by Congress to work out an arrangement of
    relief for disabled beneficiaries consistent with HCFA requirements for
    ``Equitable Relief'' considerations. Congress implied forgiveness of
    disabled persons with ``Waiver of Recoupment'' of erroneous CHAMPUS
    payments provision in Fiscal Year 1996 Defense Authorization Act. The
    relief from Part B penalties should be similarly granted. Without
    ``Equitable Relief,'' disabled retirees are not properly enrolled in
    Medicare Part B will find themselves without outpatient coverage for up
    to 15 months * * * an unconscionable, unintended consequence of law
    combining two incompatible Federal Health Programs.
        Congress must consider eliminating the Part B requirement based on
    the failure of DOD to implement the administrative process required to
    support this provision. Congress must not expand complex bureaucratic
    requirements of government programs without adding sufficient staff to
    accomplish the task.
                                     ______

    Prepared Statement 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 1999 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.
        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.
        Our Coalition is working diligently to be a part of the effort to
    solve this major problem, but to do so, we need federal assistance to
    support research and efforts to deal effectively with what is
    essentially an unfunded federal mandate.
        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 $19 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 $8 million over the next two years
    to fund this important study.
        To date, this study project has benefited from federal funding
    provided through USDA's, DOD's, Interior's and EPA's budgets--a total
    of $10.6 million in federal funding. Through the Department of Defense,
    $250,000 was appropriated in fiscal year 1996, and $750,000 was
    provided in fiscal years 1997 and 1998. State and industry funding has
    matched this amount virtually dollar for dollar.
        With the planning phase of the California Regional PM-10/PM-2.5 Air
    Quality Study nearly complete, a number of significant accomplishments
    have been achieved. These interim products have not only provided
    guidance for completion of the remainder of the Study and crucial
    information for near-term regulatory planning, they have also produced
    preliminary findings which are significant to the Department of
    Defense's (DOD) interests.
        The Study is significant to DOD interests for a number of reasons.
    The San Joaquin Valley experiences some of the most severe PM episodes
    in the nation. The information being collected by the PM study is
    essential for development of sound and cost-effective control plans.
    Without this information, military installations such as Lemoore NAS in
    the San Joaquin Valley could be subjected to unnecessary or ineffective
    controls. In addition, previous studies have demonstrated that
    significant amounts of fine particles and their precursors from the San
    Joaquin Valley are transported trough the Tehachapi Pass into the
    Mojave Desert, impacting operations at both Edwards AFB and China Lake
    NAWS. Good visibility is a mission-essential resource for both Edwards
    AFB and China Lake NAWS due to reliance on optically-based methods of
    collecting data at the testing ranges at each facility. Significant
    visibility reduction could compromise testing operations at these
    facilities. Effective control plans for the San Joaquin Valley, based
    upon the results of the PM study, will help mitigate visibility
    reduction in the Mojave Desert through the reduction of transport from
    the Valley.
        To this end, the PM study is expending significant resources to
    provide an improved understanding of visibility in the San Joaquin
    Valley and the Mojave Desert and transport between these two air
    basins. A preliminary field monitoring program was conducted during the
    fall and winter of 1995/96. Extensive visibility and meteorological
    measurements were collected. This database is being analyzed to address
    the spatial and temporal patterns of visibility, determine the sources
    which contribute to visibility impairment, and provide an improved
    understanding of the wind flow patterns and transport routes between
    the Valley and the Mojave Desert. Preliminary results indicate that
    secondary ammonium nitrate is the largest contributor to visibility
    reduction in the Valley.
        The results of these analyses are being used to design large scale
    field monitoring programs to be conducted in 1999 and 2000. These field
    programs will address both the annual and 24-hour PM-10 and PM-2.5
    standards. Surface and aloft monitoring of air quality, meteorology,
    fog, and visibility will be conducted at a cost of over $12 million.
    Final plans for these field studies are being developed, which will be
    carried out by numerous contractors over a broad area encompassing
    Central California, the Sierra Nevada Mountains, and the Mojave Desert.
    A database of the field study results will be completed in 2001, with
    air quality modeling and data analysis findings available in 2002. This
    timeline is ideally positioned to provide information for federal
    planning requirements as part of the new PM-10/PM-2.5 national ambient
    air quality standards.
        The Department of Defense's prior funding and participation have
    enabled these projects to occur. Continued support by DOD is essential
    to implement a full scope of visibility and transport-related programs
    and to ensure that DOD concerns are met.
        For fiscal year 1999, 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 1999, 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 1999 appropriation of $750,000 for DOD to
    support the California Regional PM-10/PM-2.5 Air Quality Study.
                                     ______

    Prepared Statement of Maj. Gen. Roger W. Sandler, AUS (Ret.), Executive
          Director, Reserve Officers Association of the United States
        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 1999. In the National Defense
    Authorization Act for Fiscal Year 1991, the Congress stated that ``the
    overall reduction in the threat and the likelihood of continued fiscal
    constraints require the United States to increase the use of the
    Reserve components of the Armed Forces. The Department of Defense
    should shift a greater share of force structure and budgetary resources
    to the Reserve components of the Armed Forces. Expanding the Reserve
    components is the most effective way to retain quality personnel as the
    force structure of the Active components is reduced * * *. The United
    States should recommit itself to the concept of the citizen-soldier as
    a cornerstone of national defense policy for the future.''
                      reserve component cost-effectiveness
        ROA has long maintained 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 ($20.7 billion) of the fiscal
    year 1999 DOD budget. They require only 23 percent of active-duty
    personnel costs, even when factoring in the cost of needed full-time
    support personnel. We need only consider the comparable yearly
    personnel (only) costs for 100,000 Active and Reserve personnel to see
    the savings. 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
        Today's Army is smaller now than at any time since before WWII.
    Since 1989, the Army has reduced its ranks by more than 630,000
    soldiers and civilians and closed over 700 installations worldwide.
        With the downsizing of America's Army and the transfer of much of
    the Army's combat service (CS) and combat service support (CSS)
    missions into the Reserve, the Army Reserve, while only 20 percent of
    the Total Army, is now structured and missioned to perform 47 percent
    of the Army's CSS and 32 percent of the Army's CS missions. Its
    ``first-to-fight'' units are prepared to deploy on short notice.
        The fiscal year 1999 budget requests for USAR personnel, and
    operation and maintenance, are bare bones. The USAR's share of the
    Army's $64.3 billion request in the fiscal year 1999 DOD budget request
    is 5.3 percent or $3.2 billion (Reserve Personnel, Army--$2 billion and
    Operation and Maintenance, Army Reserve--$1.2 billion). Both RPA and
    OMAR need considerable plus-ups to fully fund known requirements
    identified during the development of the President's Budget, but fell
    below the funding line. Critical and executable funding shortfalls in
    the RPA and OMAR areas alone exceed $190 million.
        Reserve personnel, Army (RPA).--Even though the Army Reserve is
    downsizing to a programmed fiscal year 1998 end strength of 208,000.
    The President's RPA budget request for $2 billion is inadequate to
    resource USAR personnel and unit training, education, manning and
    support.
        The RPA budget request understates the actual executable/critical
    shortfall by at least $78 million. Listed are the executable critical
    shortfalls:

                                                                 In millions

    Professional Development Education (PDE)..........................  $7.3
    Mobilization Training for the IRR.................................  30.3
    Overseas Deployment Training......................................  10.5
    Health Professions Scholarship Program............................   5.1
    Full-Time Support (FTS)...........................................  25.0
                            -----------------------------------------------------------------
                            ________________________________________________
          Total.......................................................  78.2

        Professional development education (PDE).--The fiscal year 1999 RPA
    PDE training budget is funded at only 45 percent of its requirement,
    underfunding it by at least $50 million. This $50 million shortfall
    forces the USAR to limit PDE of some unit, and many IMA and IRR
    personnel. With adequate resourcing, soldiers, currently forced to
    attend schooling in lieu of collective training with their units during
    AT, will be able to train and become educationally and professionally
    qualified, enhancing unit readiness. The executable/critical PDE
    shortfall is $7.3 million.
        Individual Ready Reserve (IRR) training.--IRR Mobilization and
    educational training accounts are underfunded, severely limiting IRR
    opportunity to receive school training or the PDE required for
    promotion. 45,000 IRR soldiers are unqualified for known mobilization
    requirements. The training shortfall exceeds $235 million. The
    executable/critical shortfall is $30.3 million.
        Overseas deployment training (ODT).--ODT provides forward presence
    and nation-building activities in support of CINC missions. Previously
    an average 18,000 USAR soldiers deployed annually to 50 nations
    providing 378,000 mandays of cost-avoidance for AC PERSTEMPO and
    OPTEMPO. The fiscal year 1999 budget contains no ODT funding. The ODT
    executable/critical shortfall is $10.5 million.
        Health professions scholarship program (HPSP).--HPSP, the principal
    source of the AC's physicians and dentists, provides tuition and
    financial assistance to Army Medical Department students during their
    medical and dental professional training. The HPSP critical/executable
    shortfall is $5.1 million.
        Full-time support (FTS).--The USAR FTS level is 9 percent, much
    below DOD's 17 percent FTS average for the other RC's. FTS allows USAR
    unit members to take full advantage of limited training time and offers
    the most flexibility in improving unit readiness. Since 1990 USAR FTS
    has been reduced by almost 6,000 personnel, a 20 percent reduction. To
    reach a 10 percent FTS level in fiscal year 1999, the USAR requires an
    increase of 1,000 AGR positions. We urge Congress to add $25 million to
    the RPA request. This will build the FTS program by 1,000 AGR's and
    raise the FTS level to 10 percent.
        RPA summary.--Army Reserve personnel readiness, motivation, and
    willingness to continue as volunteers will decline if soldiers are
    denied the opportunity to receive necessary skills training and the PDE
    required for promotion. Added funding will increase the size of the FTS
    program to 10 percent. We urge the Congress to add $78.2 million to the
    RPA budget to fund critical training and manning shortfalls for TPU,
    IRR,IMA, HPSP, and FTS personnel.
        Operations and maintenance, Army Reserve (OMAR).--The fiscal year
    1999 DOD budget request for the Army Reserve Operations and Maintenance
    (OMAR) account is $1.2 billion. The executable and critical OMAR
    shortfall in the fiscal year 1999 request for recruiting and
    advertising, OPTEMPO, information management, and the backlog of
    maintenance and repair is $105 million. Critical shortfalls follow:

                                                                 In millions

    Recruiting and Advertising........................................ $13.0
    Operation Tempo...................................................  20.8
    Information Management............................................  32.1
    Real Property Maintenance.........................................  40.0
                            -----------------------------------------------------------------
                            ________________________________________________
          Total....................................................... 105.9

        Recruiting and advertising.--The USAR request is critically
    underfunded by at least $13 million. This severely limits multimedia,
    print, and contractual advertising during this period of difficult
    recruiting. The $16.6 million request is only 33 percent of the
    requirement. The executable/critical shortfall is $13 million.
        Army Reserve OPTEMPO.--USAR OPTEMPO is funded at only 52 percent of
    the requirement. Ninety-four percent of all USAR tactical units are
    aligned to support AC MTW requirements. Adequate OPTEMPO funding is
    necessary to ensure trained and ready units. The OPTEMPO critical/
    executable shortfall is $20.8 million.
        Information management (IM).--USAR IM accounts are not resourced to
    keep pace with the cost of operations and new technology, severely
    degrading USAR IM. The critical/executable shortfall is $32.1 million.
        Real property maintenance.--The USAR operates facilities in
    approximately 1,400 locations worldwide. Real property maintenance is
    funded at only 39 percent. Resources are applied only to the most
    critical maintenance and repair requirements, forcing commanders to use
    other under-resourced accounts to fund emergency repairs. The Backlog
    of Maintenance and Repair requirement is underfunded by at least $97
    million. The critical/executable shortfall for fiscal year 1999 is $40
    million.
        OMAR summary.--There is at least a $105 million executable/critical
    OMAR shortfall in this budget request that will force the USAR to
    further reduce equipment and facility maintenance, OPTEMPO, and supply
    purchases. Quality of life issues and lack of essential advertising
    will continue to negatively affect recruiting and retention. We urge
    the Congress to add $105.9 million to support these neglected and
    critically underfunded USAR OMAR programs.
        National Guard and Reserve equipment (NG&RE) request.--OSD, in its
    February 1998 National Guard and Reserve Equipment Report for fiscal
    year 1999, states that the USAR has 67 percent of its required
    equipment pacing items and 68 percent of its ERC A equipment-on-hand
    (EOH). This represents an equipment shortfall that exceeds $1.4
    billion. Realistically, EOH includes substituted equipment, some that
    is not compatible with Active Army equipment.
        Compatibility problems degrade many USAR CS and CSS capabilities:
    Reserve units are unable to communicate with supported units; huge
    burdens are placed on the logistics systems to deliver and stock
    multiple repair parts and fuel supplies, restricting the mobility,
    refueling, and maintenance of equipment. Combat multipliers achieved by
    modern equipment are severely degraded requirements to sustain multiple
    models of old and new equipment.
        The lack of modern test, measurement, and diagnostic equipment
    (TMDE) in USAR CSS units tasked to maintain modernized AC units is a
    major problem. Without the required TMDE, many units are unable to
    perform IDT on the equipment for which wartime proficiency is required.
    With many USAR units in the Force Support Package (FSP), any tactical
    vehicle or TMDE equipment incompatibility between USAR FSP units and
    supported units, degrades support of the combat force.
        The greatest relief to USAR equipment shortages is the NG&RE
    Appropriation. Since 1981 the USAR has received, through NG&REA and the
    help of Congress, over $1 billion in equipment. Without the
    appropriation the USAR would still be below 50 percent EOH.
        The USAR requires approximately $300 million each year just to
    modernize its equipment and be compatible with the equipment entering
    the Army's inventory. Major shortfalls include maintenance equipment,
    TMDE, trucks (M917A1 dump, M916A2 tractor), essential ESP upgrade kits
    (5T, M915), trailers, generators, forklifts, all-terrain cranes, night
    vision devices, floodlights, welding shops, steam cleaners, LADS,
    medical equipment, small arms simulators, engineer equipment (hydraulic
    excavator, roller vibratory type II), M88A1E recovery vehicles, CH-47D
    helicopter, and the funding to buy miscellaneous equipment. We urge the
    Congress to add $200 million in the NG&REA to fund critically needed
    equipment for the USAR.
                                    summary
        The Army Reserve is a full partner in America's Army, supplying 73
    percent of the RC units called for Operation Joint Endeavor/Guard. To
    maintain and improve current readiness levels the USAR must be properly
    resourced. USAR readiness is dependent upon adequate funding levels
    required to resource: the training of USAR TPU, IMA and IRR personnel;
    increased levels of FTS; necessary OPTEMPO; recruiting and retention of
    quality soldiers; the repair and maintenance of facilities; improved
    quality of life; and the procurement of modern compatible equipment.
    The combined RPA and OMAR budget requests for $3.2 billion, not
    counting NG&REA, are critically underfunded by at least $190 million.
    We urge Congress to add the necessary funding to train, support, and
    equip the dedicated professionals of the Army Reserve.
                                 naval reserve
        The Naval Reserve budget remains in decline when adjusted for
    inflation, despite its significant compensating leverage. In this
    regard, it would make more sense, in light of the decreased, but
    nevertheless continued threat, and the likelihood of enduring fiscal
    constraints, to increase rather than decrease the use of the Naval
    Reserve, as noted in the Sense of the Congress provision contained in
    the Fiscal Year 1991 DOD Authorization Act. Despite funding cuts, the
    Navy is increasingly employing the Naval Reserve force. Unfortunately,
    the budget submission does not reflect this increasing responsibility.
    The Naval Reserve is not a full partner when the issue boils down to
    competition for limited resources.
        Operations and maintenance funding.--The Naval Reserve provides
    continual OPTEMPO/PERSTEMPO relief for the regular force beyond that
    which occurs during annual training (AT) periods. There is, however, no
    reimbursement from the Regular component for this additional support.
    Accordingly, ROA urges that operations and maintenance funding be
    exempt from any correlation to a reduction in end-strength.
        Funding shortfalls--personnel.--Approximately 15 percent of all
    officers and 25 percent of all enlisted personnel will not receive AT
    orders in fiscal year 1998, whereas as recently as fiscal year 1994, AT
    waivers were granted only under limited circumstances. Furthermore,
    USNR AT is budgeted, and generally performed, for 12 days, rather than
    the 14 days prescribed for the other Reserve components (except the
    Coast Guard). Finally, AT is budgeted at 90 percent of the historical
    rates. At the same time, the Navy has significantly reduced ADT/ADSW
    funding, used for CINC support. The Naval Reserve, in proportion to
    end-strength, receives less ADT/ADSW support than any other Reserve
    component. As a consequence of insufficient ADT/ADSW funding and of the
    increasing demands for Reserve manpower from the fleet CINC's, the
    Naval Reserve has used AT funding for fleet support. Consequently,
    readiness, training, and schooling required for advancement and
    promotion are being adversely affected.
        Funding flexibility.--Title 31 U.S. Code, Section 1301(a), requires
    that appropriated funds only be used for programs and purposes for
    which the appropriation is made. An exception, however, has been
    enacted to permit the expenditure of RPN funds for functions performed
    by Reservists within the unified intelligence command umbrella and for
    DOD counter-narcotics efforts, with reimbursement to the RPN account
    without reprogramming. There are, however, other examples where ready
    reimbursement would facilitate the ready use of Reserves. Accordingly,
    ROA recommends that the provisions of section 1301(a) be modified to
    expand the authority for reimbursement to Reserve personnel accounts,
    without reprogramming, for all programs.
        Equipment modernization.--ROA has identified unfunded Naval Reserve
    equipment requirements for consideration by Congress for addition to
    the administration's request for fiscal year 1999, in either the NG&RE
    appropriation or as earmarked additions to the Navy's traditional
    procurement appropriations. These are: H-60's (about 22) at a total
    cost of approximately $450 million; Naval coastal warfare/littoral
    surveillance systems at an estimated total cost of $130 million; C-9
    replacement A/C (14) at a total cost of about $675 million; F/A-18 ECP
    mods at a total cost of about $50 million; expeditionary warfare force
    equipment at a total cost of about $140 million; P-3C update III kits
    at a total cost of about $180 million; and computer-based training at a
    total cost of about $4 million.
                              marine corps reserve
        Funding shortfalls.--The request to support the Marine Corps
    Reserve appears to be underfunded in the Operations and Maintenance,
    Marine Corps Reserve (O&M,MCR) and Reserve Personnel, Marine Corps
    Reserve (RP,MCR) appropriations. Additional O&M funds are needed for
    individual equipment issue and to provide required training,
    maintenance, and depot level repairables. The Marine Corps Reserve
    personnel appropriation also appears underfunded. Second to the Navy,
    the Marine Corps Reserve receives less ADT/ADSW support than any other
    Reserve component. The major deficiency in this appropriation is in the
    area of Active Duty for Special Work (ADSW).
        Equipment modernization.--To achieve the readiness necessary to
    quickly mobilize and augment the Active Marine Forces in time of
    national emergency, Marine Forces Reserve units must be equipped in the
    same manner as their Active force counterparts. In this regard, the
    Initial Issue Program, is a top priority. The Marine Corps Reserve is
    also in need of ECP-560's to make its F/A-18 aircraft compatible with
    the F/A-18C's and D's utilized by the active force at a cost of $36
    million, and two T-39 replacement aircraft at a cost of $9 million.
                              coast guard reserve
        We are fully aware that this committee is not responsible for the
    direct funding of the Coast Guard or the Coast Guard Reserve.
    Nevertheless, as funding for the DOD and the Coast Guard remains
    constrained, it is vital to be farsighted to ensure a continued robust
    sea power. The Coast Guard's people, systems, and platforms provide
    important national and international capabilities that complement the
    U.S. Navy. With a Navy of 116 surface combatants, and regional
    instability, the Coast Guard's cutters--along with several hundred
    coastal patrol boats--take on new significance. In this regard, the
    Coast Guard provides a trained, capable, and ready force for small-
    scale contingency operations, and force protection in major war.
        Coast Guard selected reserve strength.--The fiscal year 1999
    authorization request is to maintain the Coast Guard Selected Reserve
    end-strength at the 8,000 level. While recognizing that the Coast Guard
    Reserve's end-strength remains below 7,600 for the second consecutive
    year, we have serious concerns regarding the administration's proposal
    for an appropriated end-strength of only 7,600 in view of the fact that
    the Commandant has conducted an in-depth study that clearly indicates
    and justifies a requirement for in excess of 12,000 Coast Guard
    Reservists.
        We are particularly concerned that the administration and the Coast
    Guard have not succeeded in recruiting Reservists to end-strength. We
    are further very concerned over the impact that the failure to recruit
    may have on future authorized and appropriated end-strength in the
    Coast Guard Reserve. It must be noted that all the other armed services
    are meeting their recruiting goals for Reservists (the Army within the
    established range of plus, or minus, 2 percent). The immediate problem,
    therefore, appears unique to the Coast Guard Reserve.
        Coast Guard Reserve funding.--The administration has requested $67
    million for the Reserve Training (RT) appropriation for fiscal year
    1999, and it is anticipated that $25 million of this amount is intended
    for reimbursement to operating expenses. Given the present procedures
    for reimbursement for operating expenses and direct payments by the
    Coast Guard Reserve, this is the minimum needed to fund a full training
    program for 7,600 personnel. Even at this minimal funding level, Coast
    Guard Reservists would continue to receive only 12 days of AT each year
    (all the other armed services, except for the Navy, are entitled to 14
    days' AT by departmental regulation). In addition, it should be noted
    that the $67 million funding level is based on 90 percent funding of
    on-board strength, as opposed to previously established procedures of
    budgeting for 90 percent of authorized strength.
        Additional funding required to support the full 8,000 level
    authorized would appear to be $72 million. It should, however, be noted
    that the fiscal year 1998 appropriations bill, in appropriating $67
    million for the Coast Guard Reserve, limits the amount of Reserve
    training funds that may be transferred to operating expenses to $20
    million given the substantial amount of Reserve augmentation work
    provided by the Reserves in direct support.
        Public Health Service.--ROA is also fully aware that this committee
    is not directly responsible for oversight over the Public Health
    Service. Nevertheless, some Public Health Service oversight is
    necessary to ensure that the Public Health Service is, like the Coast
    Guard, capable of providing needed personnel to DOD in time of national
    emergency. In particular, the unique expertise of the commissioned
    Corps of the Public Health Service and its Reserve component is vital
    to the nation's defense to biological attack. In this regard, ROA
    requests the committee's review of utilization of the inactive Reserve
    component of the U.S. Public Health Service and establishment of a
    full-time Office of Reserve Coordination.
         air reserve components agr officer controlled grade execution
        Air Force Reserve Command (AFRC) and the Air National Guard (ANG)
    need an increase of 23 colonels and 41 lieutenant colonels AGR
    Controlled Grades, despite an under execution of 48 colonels and 90
    lieutenant colonels on September 30, 1997. They filled the
    authorizations with majors, in addition to utilizing all of the major
    authorizations. Although the numbers still showed an under execution of
    48 colonels and 11 lieutenant colonels, there were good reasons:
      --During this period, the AFRC and ANG placed majors in lieutenant
            colonel positions to season future senior leadership and
            establish an experience base in the program. The colonel and
            lieutenant colonel authorizations were allocated to the field
            with the plan to promote members upon eligibility. These
            members are now being promoted to the higher grades.
      --Thus, as of March 31, 1998, the AFRCE and AFRC used all officer
            controlled grades. As reflected below, within a 6-month period,
            seven lieutenant colonels were promoted to colonel and nine
            majors to lieutenant colonel (seven lieutenant colonel
            vacancies filled by seven majors plus two additional
            promotions). Such promotions are essential to career
            progression and retention.

    ------------------------------------------------------------------------
                 March 31, 1998                 COL        LTC        MAJ
    ------------------------------------------------------------------------
    Ceiling................................        274        672        643
    Execution \1\..........................        233        584        774
    Balance................................        -41        -88       +131
    Use of Higher Grade....................        +43        +88       -131
    Execution Delta........................         +2  .........  .........
    ------------------------------------------------------------------------
    \1\ Minus Counterdrug Strength.

      --AFRC's and ANG's continuing integration into Joint, Departmental
            and MAJCOM Headquarters, as well as significant growth in
            operational units, generates higher grade position
            requirements. The need to recruit and retain highly trained and
            experienced prior-service personnel necessitates hiring at
            higher grade levels.
      --AFRC's and ANG's end strength grows significantly from fiscal year
            1996 to fiscal year 1999: from 634 to 991 for AFRC (+357) and
            from 10,066 to 10,905 for ANG (+839).
        Without legislative relief in fiscal year 1999, severe personnel
    management actions are necessary: options include promotion freezes,
    voluntary early retirements and hiring at unacceptably low experience
    levels. Force structure alternatives include delaying mission starts,
    reversing resource mix decisions, and deliberately under executing
    funded end strength. (AFRC expects to under execute the fiscal year
    1998 AGR program by 28 solely due to grade constraints.)
        These highly disruptive actions to the full-time support program
    will jeopardize recruiting and retention, new mission growth, end
    strength execution and Total Force integration.
        ROA strongly urges the Congress to approve the required 23 colonel
    and 41 lieutenant colonel controlled grades for AFRC and ANG.
                        general reserve component issues
        Full-time support.--Increased reliance means increased requirements
    for readiness. Increased readiness in the Reserve components demands
    adequate levels of full-time support. The percentage of full-time
    support available in Reserve units has been shrinking under the
    pressure of budget reductions. ROA urges the Congress to authorize
    full-time support levels of at least 12 percent as recommended by the
    Assistant Secretary of Defense for Reserve Affairs in order to provide
    the readiness required by today's increased reliance upon the Reserve
    components.
        Reserve component recruiting.--Recruiting requirements are not
    overtaken by a military drawdown--new recruits are required to ensure
    force viability. While the Reserve components, with the exception of
    the Coast Guard, have not yet failed to meet their recruiting
    requirements, all of the Reserve chiefs are concerned that they may be
    faced with recruiting shortfalls in the future. While recruiting
    restraints are not always apparent, there are a number of known factors
    which are negatively affecting enlistment and commissioning. Perhaps
    the greatest factor is the turbulence and uncertainty caused by the
    drawdown and base realignment and closure actions. The positive
    attitude toward the military that the services enjoyed prior to but
    particularly during the Gulf War is eroding. A military career is no
    longer perceived as being as attractive as it was during most of the
    past decade.
        This committee can and should do much to make careers in the
    Reserve components more attractive, but as it becomes more difficult to
    attract highly qualified personnel, it is especially important that
    requests for recruiting be funded.
        Health affairs.--Historically, military retirees have been promised
    that they have a right to medical care in military treatment facilities
    following retirement. Military retirement pay and military medical care
    at age 60 are among the most important reasons citizen-soldiers pursue
    a career in the Reserve forces.
        There has been and continues to be erosion of health care benefits
    for retired military personnel and their eligible dependents because of
    the end of the Cold War and reduced wartime medical requirements;
    reductions in military medical personnel; and base closures and
    realignments under the Base Closure and Realignment Commission. ROA
    recommends improving military retiree access to space-available care in
    DOD medical treatment facilities and allowing Medicare-eligible
    military retirees and their eligible dependents to enroll in TRICARE
    Prime. We also recommend allowing Medicare-eligible military retirees
    and their eligible dependents who cannot get care in DOD medical
    treatment facilities and who lose their CHAMPUS/TRICARE eligibility
    (including any prescription drug coverage) at age 65 to enroll in the
    Federal Employees Health Benefits Program (FEHBP). Finally, ROA
    recommends allowing all retired military personnel and their eligible
    dependents to participate in the DOD Mail-Order Pharmacy Program.
        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 had difficulty
    obtaining military medical treatment pending definitive diagnoses. 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.
        Income protection for mobilized Reservists.--The Ready Reserve
    Mobilization Income Insurance Program was one of the most important
    programs that the federal government ever offered to the individual
    Reserve member. It provided a measure of economic security that
    demonstrated the government's commitment to the concept of the citizen-
    soldier and its recognition of the value that the citizen-soldier
    brings to this all-volunteer Total Force. Its cancellation, though
    programmatically understandable, was viewed by many Reservists as a
    major breach of faith. We believe that this program filled a critical
    need, and that amended and properly marketed and implemented, it could
    prove itself to be a significant element in maintaining Reserve and
    Total Force personnel strength and readiness. ROA urges the Congress to
    direct the Secretary of Defense to prepare a report setting forth his
    views of the need for and desirability of a program to provide income
    protection for involuntarily mobilized Reservists. We further urge that
    the report assess the need for and desirability of a program of small
    business loans for self-employed Reservists who are involuntarily
    mobilized.
        Grade of Reserve component chiefs.--The current grade of the chiefs
    of the armed services' Reserve components is O8 (major general/rear
    admiral, upper half). Public Law 104-201, the National Defense
    Authorization Act of 1997, contained provisions establishing the chiefs
    of the services' Reserve components as the commanders of those
    components, and directing the Secretary of Defense to submit to the
    Congress, within six months, a report containing his recommendations
    regarding the ``statutory designation of the positions and grades of
    any additional general and flag officers'' in the Reserve commands and
    offices established by that act. ROA recommends that the Secretary of
    Defense issue the report mandated by Public Law 104-201 and that he
    recommend the immediate promotion of the reserve chiefs/commanders of
    the armed services to the rank of lieutenant general/vice admiral. ROA
    also recommends that the Reserve chiefs and other Reserve general and
    flag officers on active duty be excluded from statutory and
    administrative ceilings on active duty general and flag officers. ROA
    further recommends that absent the report described above, the Congress
    include provisions in the Fiscal Year 1999 National Defense
    Authorization Act setting the rank of the Reserve chiefs at the three-
    star level.
        Commissaries.--The Congress has authorized unlimited access to
    exchanges, but in expanding commissary privileges, it limited
    commissary use to 12 a year. ROA believes that this 12-day restriction
    is not cost-effective and should be deleted. By eliminating the
    printing, distribution and control of the commissary privilege card,
    DOD has estimated that it would save the Department of Defense $13.5
    million annually. The Defense Commissary Agency calculated that the
    negligible increased use of the commissary by Reservists would require
    no additional DOD funding. We strongly urge the Congress to address
    this issue and increase commissary access from 12 to 24 visits per year
    for satisfactorily participating Ready Reservists and retirees.
        Space available travel.--Extending space available travel
    privileges to participating Ready Reserve members and their dependents
    simply recognizes the essential nature and value of the Reserve forces'
    contribution to the Total Force. The Reserve components of our Armed
    Forces are full partners in the defense of the nation, full partners
    that are increasingly called upon to support contingencies in all parts
    of the world and to contribute their frequently unique expertise to
    operations that could not otherwise be contemplated. Yet, in this issue
    they are not treated as full partners.
        Reservists, who will continue to constitute an increasingly
    critical element of our total military force, view full access to space
    available travel as a major equity and morale issue, even if they
    personally are unable to avail themselves of the privilege. Their
    support is essential to the Total Force. Congressional support is
    essential if they are to be accorded the privileges that are
    commensurate with their increasing contributions to the good of the
    nation. ROA urges the Congress to support increased space available
    travel privileges for eligible members of the Ready Reserve and to
    their dependents.
        Concurrent receipt of military retired pay and veterans
    compensation.--Currently military retirees receiving veterans
    disability compensation have the amount of that compensation deducted
    from their military retired pay, while other federal retirees receive
    their full retirement in addition to whatever disability compensation
    they may be receiving from the Department of Veterans Affairs.
    Congressman Bilirakis has introduced legislation to help remedy this
    situation and grant relief to veterans. ROA continues to deplore this
    inequity and urges the Congress to remedy the situation by enacting
    legislation authorizing concurrent receipt of both military retirement
    and veterans disability compensation.
                                   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.
                                     ______

       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 1999 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 140 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. In
    this way, the cost of an energy efficiency project is paid entirely
    from energy savings, requiring no additional budget outlay to support
    the capital investment.
    support for dod's 1999 budget request for competitive energy efficiency
                                    services
        NAESCO supports DOD's 1999 budget request for energy conservation
    programs, to the extent that those programs encourage and support the
    competitive procurement of private sector energy efficiency services.
    In addition, NAESCO supports the DOD's centralization of support
    services for energy savings contracting to enable implementation that
    creates more efficient and expeditious contracting procedures in all
    cases, by the provision of site-appropriate levels of support.
    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. In many cases, DOD has relied
    upon utility sole source energy supply contracts for these services,
    even though specific legislation was passed by Congress, in the 1992
    Energy Policy Act, creating competitive Energy Savings Performance
    Contracts (ESPC's).
        During the Senate Energy Committee's hearing on competitive energy
    efficiency procurement, held on September 25, 1997, DOD representatives
    argued that Congress did not need to pursue legislation to promote
    competition in the federal procurement of energy efficiency services.
    According to the DOD, competition already is on the increase in this
    area and the use of sole source utility contracts is on the decline.
    NAESCO respectfully requests that the Subcommittee strongly encourage
    DOD acceerate the trend and to ensure that the Government receive the
    benefits of competition for procurement of these services.
                      centralized contracting initiatives
        The DOD 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 recognition of 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 the 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
        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.
        By using energy efficiency investments to reduce the costs of
    operating the federal infrastructure, Congress and the agencies will
    reduce the long term tax burden required to support federal operations.
                                   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 DOD's 1999 budget request for energy conservation
    programs, to the extent that these programs encourage and support the
    competitive procurement of private sector energy efficiency services.
        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.

                              subcommittee recess

        Senator Inouye. Our next hearing will be on May 13. At that
    time the committee will hear from the Secretary of Defense, the
    Hon. Bill Cohen. The hearing is recessed.
        [Whereupon, at 4:27 p.m., Monday, May 11, the subcommittee
    was recessed, to reconvene at 10 a.m., Wednesday, May 13.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 1999

                                  ----------

                            WEDNESDAY, MAY 13, 1998

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:15 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Ted Stevens (chairman) presiding.
        Present: Senators Stevens, Specter, Domenici, Shelby,
    Gregg, Hutchison, Inouye, Hollings, Bumpers, Lautenberg,
    Harkin, and Dorgan.

                             DEPARTMENT OF DEFENSE

                            Office of the Secretary

    STATEMENT OF HON. WILLIAM S. COHEN, SECRETARY OF
                DEFENSE

                     OPENING STATEMENT OF HON. TED STEVENS

        Senator Stevens. Mr. Secretary, ladies and gentlemen, my
    apologies for being late. I had a little session on what has
    happened to the money that we used to have in this
    Appropriations Committee and why we do not have enough to
    respond to your needs.
        Secretary Cohen. Well, I gave a brilliant opening statement
    in your absence. [Laughter.]
        Senator Stevens. Gentlemen and ladies, I do apologize. We
    welcome you as a former colleague and a great friend.
        Yesterday the Secretary met with a delegation that went
    with Senator Inouye and me to Kuwait, Saudi Arabia, Bosnia, and
    the NATO headquarters, and it gave us an opportunity to report
    to him and the Joint Chiefs some of our observations and
    recommendations concerning the impact of deployments on our
    forces and the views of our allies on the presence and the
    roles involved in these activities.
        I know that we probably left a lot on the table there, but
    we are determined to work with you and the Chiefs to ensure
    that we meet the needs of our troops and respond, to the
    greatest ability we can, particularly to the problem of morale
    in the forces, to ensure that we have the capability to meet
    the security challenges our Nation faces around the world.
        Last year we commended you and General Austin for the
    presentation of the ``Quadrennial Defense Review [QDR]''. It is
    the right plan to take our military into the 21st century. Many
    of us have worked hard to ensure that in the bipartisan budget
    agreement, the White House would agree to spending levels
    needed to implement the QDR recommendations.
        Despite the good faith effort on all sides, I think we
    should all recognize that the amounts we agreed to are not
    sufficient to meet the needs for operations, quality of life,
    and modernization of our military. Deployments to Bosnia and
    Southwest Asia have consumed, in my judgment, the savings
    achieved through force reductions, lower inflation, and base
    closures. Environmental remediation and health care costs
    continue to grow. We cannot achieve the balance in spending we
    must secure for the future if we singularly pay the costs of
    maintaining the blockade of Iraq and the status quo in Bosnia.
        I do not want to go into what we said to you yesterday, Mr.
    Secretary, but 1999 will be the fifth year for our deployment
    in the Bosnia region. Now we feel these costs must be included
    in our budget.
        The committee understands the implications of the military
    having to pay for Bosnia out of the funds requested in the
    budget, and what we are trying to do is find out if the White
    House and the Office of Management and Budget in particular
    understand those implications. I believe there should be an
    increase in the caps so that we can take care of that problem
    and we should face it squarely.
        But you have the tough job, my friend. We were pleased to
    work with you on the supplemental. I think it was a little bit
    late but it was in time to prevent the devastation that could
    have taken place as far as our armed services if we had not
    passed it.
        Every member of this committee has worked with you to meet
    the needs of our forces. We are a bipartisan committee, and I
    think Senator Inouye and I pride ourselves in that fact.
        In my judgment the administration and Congress must
    reconsider the spending levels set for defense in the balance
    of this period leading to the balanced budget in 2002. We
    cannot treat the missions, for which we are planning to stay
    for many years, as annual emergencies. We must have a new
    approach to our position in the world and on what the commander
    in chief decides to do with regard to carrying out our roles
    overseas.
        I have taken too long. Despite the fact that I was late--I
    again apologize to you, but I want you to know that we are very
    sincerely trying to find some way to adjust this budget so we
    can meet the needs that you face.
        Senator Inouye.

                       STATEMENT OF HON. DANIEL K. INOUYE

        Senator Inouye. Thank you very much, Mr. Chairman. I ask
    that my full statement be made part of the record.
        Mr. Secretary, during the past many months, we have held
    many hearings, and throughout these hearings certain key words
    and phrases have been heard quite often: modernization, quality
    of life, deployment. But the one word that just about every
    witness seems to be concerned about is readiness, and that to
    me is the key to what we are discussing today. I can assure you
    that this committee is prepared to do whatever we can to make
    certain that our forces maintain the highest level of
    readiness.
        Thank you very much.
        [The statement follows:]

                 Prepared Statement of Senator Daniel K. Inouye

        Good morning, I want to join our chairman in welcoming you
    here this morning. I must note, Mr. Chairman that it has been
    several years since a Secretary of Defense has testified before
    this subcommittee. And, I for one am very glad we could find a
    time that our current Secretary was able to join us.
        For several years, this subcommittee has had as its
    practice a policy of hearing from the Secretary of Defense
    last, after all the other witnesses had testified. It has been
    our aim to take the information we have gathered and raise it
    to your attention. We have found this to be a very useful way
    to proceed for all of us.
        During our hearings this year, one subject which has been
    raised repeatedly is readiness. There appears to be great
    concern with our ability to maintain a ready force in the
    future.
        From our military leaders we learned that while
    modernization is still a key element of interest, it is
    readiness that is of greatest concern.
        From our subcommittee members we have learned about items
    in which they are particularly interested. Many, but not all,
    are included in DOD's funding request.
        I am sure we will find today's session most instructive and
    I look forward to your insight.

        Senator Stevens. Senator Hollings.
        Senator Hollings. Thank you, Mr. Chairman.
        Senator Stevens. Senator Lautenberg.

                     STATEMENT OF HON. FRANK R. LAUTENBERG

        Senator Lautenberg. Just very briefly, Mr. Chairman. I
    welcome this opportunity to hear from the Secretary and commend
    him for the job he has done. We are very proud of the work that
    you have been doing.
        I just want to say, Mr. Chairman, because you brought it
    up, and you do set just the right kind of tone I think of
    bipartisanship. We want to work together to accomplish our
    goals.
        I do have some concern as a member of the Budget Committee,
    the ranking Democrat on the Budget Committee, about breaking
    the caps because we worked like the devil to get ourselves a
    balanced budget.
        Senator Stevens. Senator, I did not say break them. I said
    lift them. [Laughter.]
        There is a difference.
        Senator Lautenberg. OK. About changing the caps.
        And here is the chairman of the Budget Committee just on
    time.
        Senator Domenici. I am for raising the caps on defense.
    [Laughter.]
        Senator Lautenberg. Well, I do not think it would be
    reasonable to lower them right now, but anyway I do not want
    internecine warfare here to take over.
        I think that we ought to examine very closely the
    proposition that we finance the Bosnia operation on an
    emergency basis. I think we ought to struggle with the prospect
    of adding to the budget. I for one want to hold the caps where
    they are. That was almost a solemn promise that we made to the
    public, and I would like to see it maintained.
        So, with that, I am ready for the debate to begin.
        Thank you very much, Mr. Chairman.
        Senator Stevens. I understand that Senator Dorgan was next.
        Senator Dorgan. Mr. Chairman, I have no opening statement.
    I am to go to the floor to speak at 10:30 on the national
    missile defense, and then I will return.
        But thank you for the hearing.
        Senator Stevens. My apologies for being late.
        Senator Harkin.

                          STATEMENT OF HON. TOM HARKIN

        Senator Harkin. I again join in thanking the Secretary for
    his great leadership at DOD. I know we are going to be talking
    about budgets and next year, but I hope, Mr. Secretary, we can
    spend a little bit of time talking about the recent events in
    South Asia while you are here this morning. Maybe we can get
    your insight and a little bit of overview of how you see things
    developing in South Asia.
        Thank you, Mr. Chairman.
        Senator Stevens. Senator Gregg.
        Senator Gregg. No, thank you, Mr. Chairman.
        Senator Stevens. Senator Domenici.

                       STATEMENT OF HON. PETE V. DOMENICI

        Senator Domenici. Mr. Chairman, I just want to take a
    minute and say that while I personally could favor and probably
    vote for the money requested by the President as an emergency
    for the Bosnian effort, I really believe when you are 5 years
    into an effort, to continue to call it an emergency and to not
    face up to the realization that it is part of the defense
    budget and in some way claim that we are enforcing caps, when
    it is almost as day follows night, that as long as you are
    there, the money will not be put in the budget, it will be
    called an emergency, is making a mockery of the caps.
        Now, there are other mockeries of the caps occurring
    regularly, and that is to create new entitlements that used to
    be appropriated accounts. That is a very interesting kind of
    approach.
        Then to run around and say we have not broken the caps, we
    have just found a new way to spend the taxpayers' money that we
    had expected not to spend when we put the caps in seems to me
    to also be something that the American public would understand.
        From my standpoint, I believe the time has come to be more
    realistic about the Defense Department's budget. If they cannot
    meet their responsibilities in Bosnia and the Middle East where
    we have these front-line engagements, if they cannot meet them
    without harming the defense budget that the President and we
    are approving, then we ought to be realistic and add it to the
    budget.
        Frankly, I can recall--my friend, Senator Hollings, sitting
    right there, do you recall the last time we were confronted
    with a hollow military? Now, I am not saying we are there yet.
    How did we fix it? In the middle of Jimmy Carter's campaign for
    a second term, we put 5 percent real growth in a budget and it
    stuck. That was the first time we had a significant turnaround
    in what was moving dramatically toward a hollow military. Maybe
    it was already there.
        You know, I do not say we are there yet, but you, Mr.
    Chairman, and others that know more than I, including Senator
    Inouye, are worried about what is going on in terms of
    scavenging one airplane to keep another one going, and those
    kinds of things.
        So, that is what I have to say about it, and I thank you
    for giving me a couple of minutes.
        Senator Stevens. Thank you.
        Senator Bumpers.
        Senator Bumpers. Mr. Secretary, I wanted to ask you----
        Senator Stevens. These are opening statements.
        Senator Bumpers. You mean we are just now to opening
    statements? [Laughter.]
        Mr. Secretary, you just got saved by the bell.
        Senator Stevens. I was late. I am sorry about that.
        Senator Bumpers. I have one but I will forego it.
        Senator Stevens. Thank you very much.
        Secretary Cohen.
        Secretary Cohen. Thank you for saving me, Mr. Chairman.
    [Laughter.]

                      Secretary Cohen's opening statement

        Mr. Chairman, it is a pleasure for me to be back before
    this committee, and let me say a couple of words before talking
    about my opening remarks.
        When President Clinton asked me to serve in this capacity,
    the first thing he said to me is that he wanted to develop a
    bipartisan consensus in this country for a strong national
    defense and that was the principal reason he was asking me to
    forego my plans of becoming a private citizen and take this
    position.
        It was that proverbial offer that could not be refused
    because the opportunity to represent the men and women in
    uniform in this country is one that everyone should extol and
    esteem, and it is something that I have held in the highest
    regard. And I did not reject that offer. I quickly accepted.
        I must say that during the past 18 months, I have tried to
    maintain a very strong relationship with Members on this side
    of Capitol Hill as well as the other. You came down to the
    Pentagon with your CODEL that recently returned from Southwest
    Asia and from Bosnia to have a breakfast whereby you could
    convey to me and to the Chairman and Vice Chairman of the Joint
    Chiefs and other members--give them the benefit of your
    observations. That is precisely the kind of relationship that
    one should always have.
        When we talk about if the Pentagon cannot meet its
    obligations, it is not the Pentagon. It is we, the country. So,
    what we have tried to do is to work not looking through one end
    of the telescope to the other side at the other end of the
    telescope, but rather looking at our national security needs
    from one perspective. I appreciate the friendship and the close
    cooperation we have had.
        The QDR last year was really an effort, mandated by
    Congress, for the Department to examine itself, saying, where
    are we going as a strategy, what is going to be our strategy
    for the future, for the next 4 years but well beyond that? We
    came up with three words to define it: shape, respond, prepare.
        The key aspect of that shaping is being forward deployed. I
    hosted a defense attaches' meeting last night at the State
    Department, and it was a remarkable experience to see some 86,
    88 countries represented by their defense attaches walk through
    that receiving line and the enthusiasm they had, the admiration
    they have for this country. We are admired and, to some degree,
    envied the world over. I sit in the Pentagon and receive
    defense ministers, prime ministers, presidents, heads of state,
    foreign ministers, and frankly they come and we discuss ways in
    which they can replicate the quality of the people that we have
    in our service, the high standards that we have, the kind of
    technological superiority that we have demonstrated over the
    years. They want to be more like the United States and they
    want to have an association with us.
        So, we are doing a lot of things right. We tend to open the
    morning paper and we can see the defects or the deficiencies,
    but I must tell you, having been in this position for 18
    months, the overwhelming majority of the cases we are highly
    regarded and respected and we deserve that respect, I must tell
    you, by the quality of the people we have serving us and the
    leadership that they have.
        So, it is within that context in terms of shaping the
    environment, we are shaping the environment of being forward
    deployed over in the Asia Pacific region. I think that redounds
    greatly to our benefit. We are shaping the environment in
    Europe, and we can talk about Bosnia and I am sure we will in a
    few moments. So, we are having an opportunity to shape world
    events in ways that are, nonetheless, favorable in spite of
    what we may see in the morning headlines, and we can discuss
    that in a moment. But overall, we are doing an outstanding job.
        With respect to today's testimony, I have submitted a very
    brief opening statement. Let me just try to summarize a couple
    of quick points.
        First of all, I want to thank you for your assistance on
    the nonoffset supplemental for fiscal year 1998. That was
    important to help us continue the operations in Bosnia until
    the end of this fiscal year. It was obviously enormously
    helpful as far as continuing operations in Southwest Asia as we
    continue to try to contain Saddam Hussein.
        I also want to thank the committee for the efforts it is
    making to resolve the disparity or dispute that we have in
    terms of the outlay problem as far as CBO's analysis and that
    of OMB. The outcome of that will have a major impact upon how
    we are able to fund the various programs that we have.

                      overview of fiscal year 1999 Budget

        With respect to the 1999 budget, we have tried to place
    before you a very balanced and detailed laying out of the
    responsibilities we have as far as maintaining operations and
    maintenance, maintaining readiness, which Senator Inouye has
    just mentioned, and also preparing for the future. The shape-
    respond-prepare is part of that paradigm that we have that we
    have to be able to respond to a variety of crises all the way
    from the very small neo-operations, noncombatant evacuation
    operations, all the way up to a major conflict, be it in Korea
    or with a country like Iraq, in addition to defending our
    country's national security here at home.
        The preparing part is one that I have taken as a specific
    challenge for myself. I recall that many times General
    Shalikashvili used to come before the Armed Services Committee,
    and he had a chart that he put up and it showed what had
    happened to procurement since the height of the cold war and
    the level of funding that we had for purchasing modernized
    equipment. The line kept going down, and the promise was we
    would start going up. We would reach $60 billion. Well, the
    problem was every time that General Shalikashvili kept coming
    up, he would show the line moving out. We cannot make it this
    year or next year. The line kept moving because we did not have
    enough money to put into procurement.
        So, one of the things that I really pledged to myself that
    I would do is make that line go up, consistent with the
    representation that we were making to you each year that we
    come before you. Last year I said in fiscal year 1999 we would
    have $49 billion for procurement. I was a little bit off. It is
    $48.7 billion, but we are close. We expect to hit the
    procurement level of $60 billion by the year 2001.
        I can only do that if, in fact, the other aspects of the
    program are achieved, savings that I am looking for. I know
    that base realignment and closure [BRAC] is a four-letter word,
    but it is something that we have to look forward to in terms of
    getting some efficiencies and eliminating some of the overhead
    that we have is very costly.
        In addition, I have done a number of things as far as
    trying to reform the way in which the Pentagon does business.
    We have the defense reform initiative that is headed up by Dr.
    Hamre, the Deputy Secretary of Defense. That is underway.
        So, we are doing our best to live within the caps that you,
    Mr. Chairman, have talked about. When I went to the Pentagon, I
    said it is unlikely that we are going to see major increases in
    defense spending for the foreseeable future in the absence of
    some significant conflict. I had to at least project that. I
    have no way of knowing. All of us would like to see more, but
    it was my judgment, based upon my experience sitting on that
    side of the table, that we were unlikely to see any significant
    increases in defense spending. So, I had to try to predict and
    project what do I have to work with and how do I balance
    operation and maintenance, readiness, the need for procurement.
        The budget we have submitted for 1999 is a well-balanced
    proposal, and there are some efforts underway on the other side
    of Capitol Hill on the House side to take significant sums out
    of the operation and maintenance [O&M] accounts. That will have
    a major impact on either quality of life, on readiness, and
    perhaps even on procurement. So, I would hope that you would
    see the wisdom and look at the proposal that we have before you
    in terms of the delicacy of the balance.

                         funding for Bosnia operations

        A final word perhaps on the supplemental for Bosnia. I have
    listened to you, Mr. Chairman, and also Senator Domenici in
    terms of whether you can call this an emergency. Frankly, I had
    hoped and had argued that we should have a termination of our
    efforts in Bosnia by the end of June of this year. I had hoped
    that that would be the case and I worked toward that end, but I
    also kept an open mind.
        I travel frequently to Bosnia. I met with my counterparts
    throughout NATO, and I also became convinced that if we left at
    June of this year, that it would take a turn for the worse and
    we were likely to see a loss of everything we have achieved to
    date.
        So, I think the President made the correct decision to say
    that it is going to take longer, not to set fixed time lines
    because we cannot really determine on a monthly or a day-by-day
    basis how much progress we are going to make. I can say--and I
    believe that those of you who have been there would say--there
    has been a dramatic change for the better that has taken place
    in Bosnia as a result of our being there.
        We have tried to shrink down the size of our force. We have
    come down from 20,000 to 15,000 to 12,000 to 10,000 to 8,500,
    and we now are going to go down to 6,900. So, we are coming
    down even as you are seeing a fairly significant change on the
    ground in terms of economic development, changes in attitudes,
    the election of more moderate members certainly coming in the
    Serbian portion and quarter.
        So, there are a lot of positive things taking place, and
    yes, it is still expensive.
        But we had no way of knowing in putting our budget together
    for fiscal year 1999 that we would be there beyond June of this
    year. That decision was not made until January of this year.
    So, in that sense, it is emergency. There is a wedge that has
    been put in the budget of some $3 billion plus, and what we are
    asking for is the $1.9 billion to come out of that wedge for
    contingencies.
        I will agree also that for the next budget that I present
    to you, we have to find a way to deal with it. It no longer can
    be called an emergency. The President has made a decision,
    which we are supporting, that there should be no definite,
    fixed time line, that we will try to continue to move in the
    direction we are going, but not setting artificial deadlines to
    only raise expectations and then dashing them.
        So, it is incumbent upon me now to go back for the next
    budget that I am preparing for next year to say we are going to
    have to absorb the cost of Bosnia in some fashion. That will
    raise the issue of whether or not there can be increased
    funding for defense or whether we are going to have to make
    some kind of modifications in terms of what we are going to
    have to give up or efficiencies achieved in order to have the
    money for it.
        But I would ask you that you would continue to look at this
    as a nonoffset emergency in the sense that there is money that
    has been set aside for contingencies and this is a contingency
    that we have to meet. In the event that we do not get the
    money, it is $1.9 billion I have got to take out of somewhere.
    If you look at the way the budget is put together, there is not
    much room for give. We have been talking about the question of
    readiness, and we are starting to see signs of some erosion
    certainly on the edges of things.
        And you heard from the Chairman of the Joint Chiefs and the
    Vice Chair. We have put into place mechanisms now to try to
    evaluate what are we doing with a number of units that are low
    density, high demand, as the chairman has described it, those
    units that you saw over in Southwest Asia, who are concerned
    about the amount of deployments. You talked to one individual
    who had 11 deployments in the past, I think, 5 years. We have
    got to deal with those issues of reducing the level of
    operational tempo and PERSTEMPO in order to make sure that we
    do not contribute to the exodus out of the Air Force by way of
    specific example.

                               prepared statement

        So, Mr. Chairman, I said I was not going to be long. Let me
    cease here and yield to your questions, but again, thank you
    for the support you have given to the Department over the
    years.
        [The statement follows:]
                     Prepared Statement of William S. Cohen
        Mr. Chairman, members of the Committee, it is a pleasure to be here
    to discuss President Clinton's fiscal year 1999 Department of Defense
    (DOD) budget.
        Before focusing on next year's budget, I want to thank you for your
    strong support of the President's fiscal year 1998 emergency nonoffset
    supplemental appropriations request. The approved funding will enable
    us to cover unbudgeted DOD costs for the extension of operations in
    Bosnia beyond this June, for the increased tempo of our military
    activities in Southwest Asia, and for recovery from natural disasters
    earlier this year. Your prompt action allows us to avoid the damaging
    diversion of funds from readiness-related accounts and from other
    important programs in our budget.
        I also thank you for your intensive efforts to achieve a
    satisfactory resolution on the CBO/OMB dispute on fiscal year 1999
    outlays. The outcome of this issue will substantially influence our
    shared goal of protecting force readiness and other military priorities
    in next year's budget.
              overview of fiscal year 1999 defense budget request
        Details submitted to the Congress on our fiscal year 1999 budget
    depict a plan carefully balanced between meeting current needs and
    preparing for an uncertain future. Our emphasis on keeping that
    balance, and how best to pursue it, is the result of last year's
    comprehensive Quadrennial Defense Review. The fiscal year 1999 budget
    begins implementation of our plans to keep our military ready to meet
    current missions, while transforming America's defense posture for the
    future.
        To preserve today's military readiness, the fiscal year 1999 budget
    provides strong support for training, exercises, maintenance, supplies,
    and other essentials. In preparing their new budgets, the military
    services followed my direction that they fully fund their readiness-
    related accounts. Traditional operational indicators of readiness--
    e.g., tank miles and flying hours--are projected to remain stable. When
    adjusted for today's lower troop strengths, fiscal year 1999 O&M
    funding is well above levels during the 1980's. Still, the intensity of
    military activities and other pressures require the Department to
    remain vigilant and ensure that major readiness problems do not
    develop.
        To ensure our long-term battlefield superiority, the budget
    substantially increases procurement funding for weapons modernization--
    and meets the Administration's goal of providing $60 billion for
    procurement by fiscal year 2001. Additionally, the Department's RDT&E
    request is carefully targeted to fund the technologies and programs
    offering the greatest potential payoff for American's future security.
        My department's long-term defense plans are achievable only if we
    streamline and reform our infrastructure and support activities. Much
    of the needed effort is underway, but we cannot succeed without
    congressional backing.
       fiscal year 1999 o&m funding and the president's budget amendment
        Your strong support of the President's fiscal year 1999 defense
    request is crucial to ensuring its continued balance and sufficiency. I
    especially want to stress the importance of fully funding the
    Department's Operation and Maintenance (O&M) budget and approving the
    nonoffset budget amendment for Bosnia as proposed by the President.
    Together these requests provide the O&M funding that is absolutely
    essential to sustaining the readiness of our armed forces while
    protecting America's security interests and enabling our global
    leadership.
        During discussions of our fiscal year 1999 budget request, your
    committee heard compelling testimony from our nation's military leaders
    about the readiness consequences of inadequate O&M funding. Our forces
    are in good shape now, but funding shortfalls would quickly erode
    readiness by forcing cuts in training, unit and depot-level
    maintenance, supplies, and other essentials. If fiscal year 1999 O&M
    funding falls below the President's total request, we would have
    enormous difficulty sustaining adequate readiness and could only hope
    to do so through highly undesirable measures such as personnel
    furloughs and major reductions in programs vital to the quality of life
    of our military personnel and their families.
        Key members of Congress have stated that they consider the
    President's O&M budget to be the minimum needed to maintain readiness.
    I agree with that assessment, as does General Shelton and the rest of
    our military leadership. We therefore urge in the strongest terms the
    full funding of our O&M appropriations. If the Congress makes major
    cuts in our O&M budget request, the readiness of our forces will be
    severely threatened.
        Regarding the Bosnia budget amendment, I cannot overstate the
    importance of your approval. This amendment was required because last
    year's bipartisan budget agreement did not anticipate an extension of
    Bosnia operations beyond June 1998 and because plans for that extension
    were not finalized with our NATO partners until a month after the
    President's fiscal year 1999 budget submission. The fiscal year 1999
    budget amendment, with its request for $1.9 billion to continue our
    operations in Bosnia, will enable the U.S. to sustain the considerable
    progress achieved in that critical region over the past 3 years. The
    President's budget included an allowance, separate from the DOD budget,
    for contingencies like Bosnia. That allowance should facilitate your
    approval of this plan for covering DOD's unbudgeted Bosnia costs.
        Without approval of the budget amendment, the Department's only
    recourse would be to submit a fiscal year 1999 supplemental
    appropriations request. Such a supplemental would require us to
    identify and carry out rescissions once the fiscal year 1999 DOD budget
    becomes law. That course would be terribly disruptive, threaten force
    readiness, and undermine the morale and well-being of our troops. The
    far superior option is to build upon recent passage of fiscal year 1998
    supplemental and complete congressional funding for extending Bosnia
    operations by approving the fiscal year 1999 amendment. Otherwise, the
    Department of Defense and its oversight committees would once again
    face the damaging burden of dealing with unbudgeted costs for an
    ongoing operation.
        In closing, let me say how important to our nation's armed forces
    is the strong support of this committee. I look forward to ongoing
    cooperation as together we work to reinforce America's military
    strength and global leadership.

        Senator Stevens. Very well. Thank you very much, Mr.
    Secretary.
        Without objection, we will run the clock, 5 minutes on each
    person, and we can try to share the time with you this morning.

                          importance of Pacific region

        Let me start off right by being provincial. Senator Inouye
    and I are really from the Pacific. My home is closer to Tokyo
    than it is to Washington, DC. We travel often westward.
        We find that less than 10 percent of our forces are
    deployed in the Pacific and even less a percentage in terms of
    total costs of operating the military. Today we witness India
    testing nuclear weapons. We see the seven largest armies in the
    world exercising in the Pacific, and yet when we go to Europe,
    we find a demand that we are going to have more and more
    nations come into NATO. There just seems to be an overwhelming
    compulsion of our country to spend more and more money on the
    continent and less and less of our defense dollars in terms of
    the rest of the world.
        What does the QDR really tell us about that deployment
    strategy? Are we adequately deployed in the Pacific for our
    defense? Will we be able to maintain our defense and our
    position as a guarantor of really peace in the Pacific?
        I steal one of his lines by saying four out of five of the
    wide-bodied cargo planes that leave this country go west, not
    east. Our increased trade that has given us a free market for
    agriculture is in the Pacific, not in Europe. And I do not
    understand why we cannot have more emphasis on our security
    forces in the Pacific.
        Secretary Cohen. Well, Mr. Chairman, I would agree with you
    in terms of the importance of the Pacific. We are not only a
    European power--I believe that to be the case--we are also a
    Pacific power.
        One of the most, I think, pleasing things that I have seen
    is the reputation that we enjoy throughout the Pacific. Last
    year, for example, we negotiated with Japan for updating the
    defense guidelines, something that is still controversial as
    far as its impact within domestic politics in Japan, but also
    in terms of the Chinese being concerned about what does it mean
    for them. But that is a very solid bilateral relationship we
    have with Japan. We have strengthened that. So, we have a
    really enduring relationship with Japan and the modernization
    of those guidelines is something that I think is in our mutual
    interest.
        When I was in Singapore a few years ago, I heard from some
    of the more senior leaders of Singapore who thought that the
    United States was in a state of decline and that we had lost
    our bearings, no longer could deal with our budgetary
    difficulties, and frankly were a declining power.
        That is no longer the perception in that part of the world.
    They see that we have, in fact, gotten control over our
    spending habits, that we are coming into balance, that we are
    still a super power, and that we have been invited by the
    defense minister of Singapore. To give you an example, they are
    building a pier that will be completed next year, 1999, and
    they invited our aircraft carriers and any other ships to come
    and visit as often as possible. So, that is another signal of
    our position in the Pacific.

                           burdensharing with Allies

        Senator Stevens. Can I interrupt you? When you look at the
    Pacific and look at Europe, our host nations pay substantially
    for our presence in Korea and Japan. When we go to Europe, we
    pay the major portion of the total cost of defending Europe.
    There is virtually no host nation support over there any
    longer, and yet we are being asked to increase our presence,
    increase our role in Europe. Bosnia is a good example. NATO
    would not have gone in there without us.
        Secretary Cohen. Which is correct.
        Senator Stevens. Yes; which means we are in charge of the
    defense of Europe, but we are doing so I believe at our peril
    in terms of representing our interests truly in the Pacific. We
    are stretched so thin in the Pacific. I do not believe we have
    a credible, real defense force there. We have a presence but we
    do not have a credible force like we do in Europe.
        Secretary Cohen. Well, there are other types of
    restrictions I might point out in the Pacific as well that many
    of the countries with which we have good relations and strong
    relations also do not wish to have a large presence on the part
    of the United States which means we have a naval presence much
    more than a land-based presence. So, that also raises the issue
    of how much we are going to have in the way of a naval presence
    in that region.
        I think we have a sufficient presence to maintain a strong
    influence over events in that part of the world. I believe that
    our relationship with Japan, with Korea, with Singapore, with
    Malaysia, with Thailand--all of these countries have been
    very----
        Senator Stevens. Go ahead. I have got 1 more minute.
        Secretary Cohen [continuing]. Beneficial, and also I might
    add with China.

           Theater high altitude area defense [THAAD] missile status

        Senator Stevens. What happened to THAAD? Before I lose you,
    what happened? We have the fifth failure now. What happened?
        Secretary Cohen. Mr. Chairman, I am no expert in the field
    of technology that I can give you an informed answer to that.
        I would point out that looking at this morning's papers, I
    think it was USA Today. I am not sure which paper it was, but
    it showed the failure of THAAD, but right next to it it had
    Ford recalling I do not know how many hundreds of thousands of
    its----
        Senator Hollings. 1.7 million.
        Secretary Cohen [continuing]. 1.7 million of its pickup
    trucks. The irony sort of struck me. Here we are talking about
    a major manufacturer having to recall a pickup truck because of
    the danger of the wheels falling off.
        Now, we are now talking about something different in terms
    of a--and I am not being critical of Ford in this regard, but
    to show you that technology can be very complicated as far as
    designing a missile system to intercept another missile system,
    the combination of the two traveling at a combined speed of
    8,000 miles a minute. That is something that is an
    extraordinary effort on our part.
        So, we are bound to have failures. Each of the failures has
    been for a different reason. Hopefully, if we continue to
    conduct the testing, we will overcome the technological defects
    that we have experienced. But I am not in a position to tell
    you what exactly went wrong. I have had it described to me, but
    I do not have the expertise to give you a full explanation.
        Senator Stevens. I thought maybe you had the answer.
        Thank you, my friend. Senator Inouye.
        Senator Inouye. Thank you.
        Mr. Secretary, if I may follow up my chairman's line of
    questioning. In Alaska just a few days ago, the commander in
    chief of the Pacific announced that he is developing a theater
    contingency response brigade in Alaska. It will be a fine
    organization, ready to move and ready to carry out the will of
    our Nation. But we have no airlift stationed in Alaska.
        We have the 25th Division minus one brigade in Hawaii ready
    to move, well trained, but no airlift stationed in Hawaii.
        We have a marine expeditionary force in Kaneohe. They are
    ready to go, but no amphibious ships in Hawaii. They are all on
    the west coast.
        I would hope that you and your staff would look into this
    because if you want fast response, the troops are ready,
    forward deployed, but we do not have the vehicles to provide
    lift. So, that is my only concern.
        Secretary Cohen. I will follow Senator Inouye's advice.
        Senator Inouye. Very well.
        Senator Stevens. Senator Hollings.
        Senator Hollings. I do not know where these fellows find
    all the enemy out in the Pacific. [Laughter.]
        I hope you deploy in accordance with the threat.
        Senator Stevens. What is the threat in Europe to the United
    States today?
        Senator Hollings. Bosnia and that tinderbox. I will go
    along with Senator Hutchison and withdraw our troops there if
    you want to.
        Senator Hutchison. Thank you. I will sign you up.
        Senator Hollings. Yes. [Laughter.]
        That would be a good question. Before I get to that though,
    you said that we have great respect for today's military.
    However, it seems to me that within DOD there seems to be a
    seed of disrespect toward our military relating, especially
    relating, to health care.
        I will never forget serving on the Grace Commission.
    Commission members said that commissaries, post exchanges, and
    CHAMPUS health care were all waste, fraud, and abuse. The
    Commission members had absolutely no understanding of the
    commitments that had been made to military men and women when
    they enlisted.
        Now, I happen to have been for the draft and still am, but
    we must support and pay for the All-Volunteer Army. That is the
    policy. That is why I have introduced Senate bill 2020, to keep
    the promises that have been made to those who served. This
    legislation, entitled the Military Health Care Equity Act,
    would require that DOD provide all military retirees with
    health care comparable to the care provided by the Federal
    employees health benefit plan, or failing that to make FEHBP
    available. The bill would also require TRICARE to be improved
    to the FEHBP level. I have also joined the chairman of the
    Veterans Committee in sponsoring a bill to allow Medicare to
    reimburse veteran's hospitals when they treat a veteran.
        Now we force retirees who turn 65 out of TRICARE and into
    Medicare. That is not the commitment we made. My best estimate
    is that my bill, Senate bill 2020 will cost about $2 billion to
    honor the commitment that the military has made to provide
    quality, lifetime health care to military retirees.
        Looking at the morning paper, other members are also
    concerned. You can take the $2 billion out of the intelligence
    budget. They always are surprised. That crowd needs to simmer
    back down, and I say that advisedly. I served on the Hoover
    Commission investigating them back in the 1950's. They have too
    much bureaucracy. They should read the New York Times and find
    out what is going on. [Laughter.]
        Otherwise, why not find a couple of billion there or
    elsewhere, not out of your budget, but give us a plan to really
    comply with the promises that have been made, and not a
    Philadelphia lawyer who says now that he is really wanting a
    commitment. Do you not believe we have made a commitment? You
    and I grew up on this side and not in the Pentagon, but that is
    what I have always understood. I believe that the military
    serving in and about us in South Carolina, and elsewhere, were
    promised health care for themselves and their families.

                                    TRICARE

        Secretary Cohen. Senator Hollings, you are correct. TRICARE
    I think is in the process of at least maturing and being
    refined in a way that will be beneficial ultimately. There have
    been a number of problems with it. It has not been the quality
    of the medical people. We have some of the finest physicians
    serving in our military. The problem has been access and also
    in terms of payment.
        As part of this DRI I talked about, defense reform
    initiative, I created something called the TRICARE management
    activity, and we are in the process of finalizing now getting a
    retired admiral who is also a physician to be the executive
    director of this agency to deal with those two issues, and that
    is access so you do not have the long lines that they have been
    experiencing and also the lack of payment--being made quickly.
        Senator Hollings. Mr. Secretary, you should hire a
    recruiting sergeant to be the executive director. Recruiting
    sergeants know what they promised the recruits in order to
    convince them to join the services. A recruiting sergeant could
    best explain how TRICARE should be organized so as to care for
    beneficiaries.
        Secretary Cohen. Last year, you may recall, we were about,
    as I remember, $500 million short on the funding of the health
    care programs, and we rectified that. We are still going to
    have to deal with the issue that you have raised here. It may
    take some additional funding.
        But the principal problems have been the lack of access and
    the lack of prompt payment, and those are the two we are
    focusing on right now.
        Senator Hollings. I wish you would look at our bill and
    give your comments when you have time.
        With the limited time, going right to Bosnia, I visited
    there with our majority leader. We got around the table with
    the three heads, Moslem, Croat, and Serb presidents, and
    everything was going hunky-dorey. It sounded just like one of
    those Vietnam briefings that we would get tell us the light
    could be seen at the end of the tunnel, and whoopee. Then,
    Senator Hagel asked, what about the war criminals? Well, the
    Serb president straightened up. He said, now, Mr. Senator, no
    one is a criminal until they are tried and proved guilty of a
    crime. He said, the offenses you charge against our leader, you
    can charge against the other leader, pointing to the Moslem
    leader.
        I can tell you right now I kept asking everybody, not just
    at Tuzla where we stayed, but at Sarajevo and at Tuzla and at
    Brcko, the GI and the general, is this thing working? They
    said, sure, they are fine, I mean, as long as you are going to
    pave their roads and reinstitute lines of communication, repair
    the airports, and clean up the hospitals, and everything else.
    But as soon as we leave, they are going back to war again.
        They are bound to get along as long as we are pouring in
    the money and cleaning the place up. But unless and until the
    Europeans are ready to take over, what is the cutoff date?
    Asked another way, from your experience, when will the job be
    accomplished?

                            the way ahead in Bosnia

        Secretary Cohen. Senator Hollings, I think you would agree
    that if you looked at Bosnia 3 years ago or 4 years ago and you
    saw it today, you would see a dramatic change that our presence
    has made. I think that we have to simply continue the process.
    As I mentioned before, we are coming down in size. I would like
    to come down further. I also have to take into account what our
    European command, SACEUR, General Clark, has to say in terms of
    force protection to make sure that as we are coming down, we do
    not see an enlarged mission. I know that some of you were
    concerned about that, that as we shrink our forces, we do not
    expand the mission. So, it is balancing the mission and the
    manpower. But we are coming down.
        One thing that I have urged upon my European counterparts
    is to create a specialized unit, something that would serve as
    a buffer between the S4 forces and the local police who have
    yet to be trained to professional standards. So, we are making
    a lot of progress in that regard. We have got a number of
    European countries who have committed not only money to the
    international police task force [IPTF], but they have also
    contributed manpower to this specialized unit.
        So, I cannot give you a definite answer. All I can say is I
    think we are going in the right direction and we are coming
    down. Ultimately, all of us will have to decide. It is not just
    this administration or our next administration. It is Members
    of Congress who have an equal role in deciding whether or not
    it is in our overall interest to be there. I think it is as of
    this time.
        Senator Hollings. Thank you, Mr. Chairman.
        Senator Stevens. Thank you, Senator.
        Senator Harkin.
        Senator Harkin. Thank you, Mr. Chairman.
        Again, Mr. Secretary, my compliments to you on your great
    leadership of the Department of Defense.
        I just publicly again want to thank you for being the first
    Secretary of Defense to visit the Rock Island Arsenal. I have
    been hearing wonderful things from the people out there who are
    very enthused by your visit, and I am thankful that you took
    the time.
        I wanted to ask you to assess for us what has happened in
    South Asia in the last couple of days. I do not know how much
    you want to talk about that.
        But under the existing law, the Nuclear Proliferation
    Prevention Act of 1994, certain sanctions are automatic. It
    says that under the sanctions, the U.S. Government shall
    terminate sales to that country--that country being a country
    that would explode a nuclear bomb--of any defense articles,
    defense services, or design and construction services, and
    licenses for the export to that country of any item on the U.S.
    munitions list, and the U.S. Government shall terminate all
    foreign military financing for that country under.
        So, a two-part question. One, can you assess for us in
    military terms what this might mean, what India has done in
    exploding five nuclear bombs now in the last 2 days, what this
    may mean for the entire region of South Asia, and second, what
    your Department is doing or will be doing to implement this
    section of the law?

                   development and testing of Nuclear weapons

        Secretary Cohen. Well, first of all, I was looking for a
    clock, but apparently it is behind me, but I believe around 10
    o'clock this morning, President Clinton did have a press
    conference in Germany in Pottsdam. He has indicated that the
    nuclear testing is unjustified, clearly creates dangerous
    instability in South Asia. He is imposing economic sanctions
    against India as an unambiguous response that would make clear
    our categorical position concerning the testing. So, I have not
    seen the details in terms of how broad those sanctions are
    going to be, but I know that he is deeply concerned about it
    and has responded quickly to the invoking of the sanctions
    under the law.
        I think that it is fair to say--I am not sure it is the
    right metaphor or the right wording to be used, but there will
    be a chain reaction. That is the potential of this, a chain
    reaction of other countries following suit. It is one of the
    reasons why we have worked, when I was a Member of the Senate
    and the House, so hard to try to keep the nuclear genie as far
    into the bottle as possible, as far as other nations
    participating in developing nuclear weapons. But as everybody
    knows, there will be pressure on Pakistan we are hoping, and we
    are urging Pakistan to exercise restraint and not to follow
    suit.
        But there will be other countries who will see this as an
    open invitation to try to acquire the technology. We know that
    there are a number of countries trying to acquire it. I filed a
    report last fall showing that there are roughly 25 countries
    now who either have possession or are in the process of
    acquiring nuclear, chemical, or biological weapons. So, we have
    a real proliferation problem that is taking place globally.
        This is only going to contribute to that. I think it is
    going to cause other countries to find a rationale, much as
    India has found its rationale for showing that it has a nuclear
    power. So, I think it is going to set off that kind of
    potentiality at least. Hopefully, we can encourage and be
    successful and encourage the Pakistanis not to follow suit,
    that we can continue to urge the Russians not to transfer
    nuclear technology to the Iranians, by way of example.
        I was in China earlier this year and I met with all of the
    top leadership of China. They made a pledge that they would
    stop selling and transferring nuclear technology to Iran.
    Hopefully, we can continue to maintain these kinds of bilateral
    relationships with major countries such as China and Russia to
    discourage them from having this technology fall into the hands
    of other countries. But it is a potential that we will all have
    to look at.
        Senator Harkin. If I can just use your analogy a little bit
    further. Chain reactions can be stopped technologically
    speaking.
        Secretary Cohen. Hopefully, politically speaking.
        Senator Harkin. And, hopefully, politically speaking too,
    which I think argues that the toughest possible sanctions of
    the law must come down on India to show other countries that we
    mean business on this. Hopefully, we will work with our allies
    to do the same.
        Secretary Cohen. I have been told--at least I learned on
    the news this morning--that Japan has agreed to impose
    sanctions, that France has indicated it would not. Beyond that,
    I have not heard what the international community's reaction
    is.
        Senator Harkin. Typical of France, anyway. [Laughter.]

                         Comprehensive Test Ban Treaty

        That is my statement. You do not need to nod or say
    anything else. Typical of France.
        The one way again to try to stop this chain reaction, it
    seems to me, is to push ahead on the Comprehensive Test Ban
    Treaty [CTBT] signed by 149 nations. We know that in August
    1996 India opted out. Now we begin to understand why. But
    again, looking ahead, a Comprehensive Test Ban Treaty I believe
    is one way of putting in those graphite rods and begin to stop
    this kind of a chain reaction.
        What I read in the paper is that our majority leader said
    that the test ban treaty probably has been set aside as a
    result of India's action. I hope that is not the case. I would
    hope that we would continue to push as hard as possible to get
    all countries to sign on the CTBT because that would be the way
    to stop the nuclear chain reaction.
        Any comments you might have on that I would appreciate it.
        Secretary Cohen. Senator Harkin, I agree with you. I think
    the fact that India has taken this action should not ease our
    concern, but rather accelerate our effort and we ought to be
    more determined than ever. I am hoping that we will continue to
    press other countries and get the ratification of the
    Comprehensive Test Ban Treaty and especially take it up in the
    Senate.
        Senator Harkin. I appreciate that.
        Thank you, Mr. Chairman.
        Senator Inouye. Senator Gregg.
        Senator Gregg. Thank you.

                   Indian nuclear capabilities and sanctions

        Mr. Secretary, does India have the capacity to deliver a
    nuclear weapon? Do they have aircraft or missiles which could
    deliver a nuclear weapon?
        Secretary Cohen. Senator Gregg, I would not want to comment
    in terms of what India's capacities are in terms of delivering
    nuclear weapons at this point. I think it is something that we
    certainly ought to look at but not at this time.
        Senator Gregg. Is the administration going to send up any
    legislation relative to extending sanctions against India
    beyond those which might be available already in the law such
    as sanctions which we can pursue under the IMF, but will there
    be language sent up that might track, for example, the Pressler
    language which applies to Pakistan?
        Secretary Cohen. The answer is I do not know. I have not
    had a chance to talk to other members of the President's
    Cabinet or with the President himself. He is traveling and I
    have not had occasion to talk with him. But certainly we will
    look at that and I will get back to you as soon as possible.
        Senator Gregg. Do you think it is appropriate that we put
    limitations such as the Pressler language on India? After all,
    if we are going to say to Pakistan, which has not exploded a
    nuclear device, that we are not going to sell you F-16's which
    you paid for, should we not apply the same sort of standard at
    the minimum to a country which has so flagrantly violated the
    norm on nuclear weapons?
        Secretary Cohen. I am sure the administration is going to
    look with the most severe and critical eye at this particular
    testing. I cannot say at this point what will be recommended,
    but I believe that the President is going to recommend strong
    reaction to it. I cannot tell you at this time what exactly
    that would entail.
        But with respect to Pakistan, let me say that I felt, as a
    Member of the Senate when I served here, that Pakistan was not
    being treated in an evenhanded fashion in terms of the sale of
    the F-16 and how we dealt with that issue, which is one reason
    I supported the Brown amendment to the Pressler amendment.
        Senator Gregg. What other options do we have as a Nation to
    address this type of action by a nation like India? I mean, if
    we use economic sanctions against a nation like India which is
    inherently destitute, we would probably end up taking it out on
    their people more than on their government which is responsible
    for this. What are our options?
        Secretary Cohen. I think sanctions really can have an
    impact if they are multinational or multilateral in nature. If
    it is a question only of the United States taking action, we
    have found that usually it does not produce positive results
    because other countries are rushing to undercut the impact that
    we would have.
        But I do believe that a broad imposition of economic
    sanctions can have an impact upon the leadership, political
    leadership, of a country, and I believe that to be the case
    with respect to India as well. If it is just the United States
    or one or two other countries, then I think the impact will be
    marginal and the political result will be inconsequential.
        Senator Gregg. Do we have any information which is
    available to the public as to whether or not India's
    representation that this was the last of a series is an
    accurate representation or is that----
        Secretary Cohen. I have no information on that subject
    whether it is the first or the last or whether there will be
    other attempts to either lead or mislead the United States. I
    am not in a position to comment.
        Senator Gregg. Thank you.
        Senator Inouye. Senator Bumpers.
        Senator Bumpers. Thank you, Mr. Chairman.
        Mr. Secretary, first of all, let me thank you and the
    administration for your very strong stand on the national
    missile defense deployment issue. The three-plus-three plan is
    an eminently sensible one, and I just want to express my thanks
    to you. God knows you do not get very much thanks these days
    for much of anything else.
        Let me just say that I am very sympathetic with your
    problems and particularly when you have 535 micromanagers to
    tell you what you ought to be doing. So, as 1 of the 535----
        Secretary Cohen. Let me tell you. [Laughter.]
        Senator Bumpers [continuing]. I will now proceed to do just
    that.
        First of all, we make decisions around here based on the
    most credible intelligence we can get. You served on the
    Intelligence Committee for a long time and I was speaking
    downtown last night, and I said apparently the $28 billion to
    $30 billion we spend on intelligence in this country did not
    help out in the case of India exploding underground nuclear
    weapons. So, sometimes our intelligence can be flawed and cause
    a great deal of difficulty. Apparently that was totally missed,
    according to the paper this morning.
        Nevertheless, we do have to depend on the intelligence
    community to determine what the threat is and we have to build
    our defense forces based on the most credible evidence we can
    get as to what the threat is. I happen to disagree with the
    chairman and the ranking member on the Pacific. I do not see
    any threats from the Pacific. That is not to say they are not
    there or that they will not be there.
        But my basic question is--about the only thing I have to
    ask you--when you consider the technological explosion in this
    world in the past several years and we try to translate that
    into our weapons systems, it seems to me that we do not need to
    replace existing weapons one for one. Take fighter planes, one
    of my favorite subjects. You know I am crazy about the F-22.
        Secretary Cohen. It used to be battleships I remember.
    [Laughter.]
        Senator Bumpers. Battleships and a host of others.
        But in any event, here we are getting ready to spend $300
    billion on fighter planes. The F-22 is one of them. Why we
    would put this much money into one fighter plane with no
    obvious threat. I mean, right now the F-22 would be valueless
    to us unless we had the bases, for example, in the Middle East
    to deploy those fighter planes.
        It seems to me that we ought to buy fewer than the 339 we
    plan.
        I know that one of your biggest problems and every defense
    chief before you is readiness. I never heard a Secretary of
    Defense come here and testify that he was not more worried
    about readiness than anything else. When we continue to spend--
    for example, procurement is going to go up about 30 percent
    over the next 5 years; while personnel will go up only 6
    percent; and operations and maintenance only about 7 percent.
    It seems to me like that is an inordinate amount for
    procurement.
        So, I have to ask why are we putting about 27 ships in
    mothballs that have, most of them, 15 years' life left in them?
    The CGN-41 Arkansas, $300 million when we launched it in 1978
    with a firm solemn promise that it had a 35-year life
    expectancy. Today that same ship costs $1 billion, but we were
    assured at that time that nobody would be able to match it and
    in my opinion nobody can match it. The only thing I can figure
    is that this is keeping the shipyards busy.
        Back to the point--and it is a philosophical one, one you
    have to deal with all the time--it troubles me that we are
    buying--I favor the E/F, but it troubles me that we are buying
    as many E/F's as we are.
        The F-16. Obviously, we just found out in the last couple
    of days the United Arab emirates thinks the F-16 is superior to
    the Eurofighter or the French Rafele.
        So, you understand the gist of my question. I would just
    like to hear your general comments on that.

                             Aircraft modernization

        Secretary Cohen. With respect to the aircraft, Senator
    Bumpers, you may recall back in 1984, I think it was, along
    with Senator Nunn at that time I introduced a concept called
    the guaranteed build-down, and I deliberately used something
    that sounded like a complete oxymoron by combining the two
    words. It was I believe Alton Frye who was with us at the time
    and sort of our guru about how that could work. But using the
    build-down concept, we said we were going to modernize our
    systems and make them more survivable by taking two of the
    older ones out for every new one we put in.
        In a way, that concept is inherent as far as the
    modernization of our tactical air is concerned. We have six
    different types of tactical air right now. These three new
    systems, in fact, will replace six that we currently have. They
    will be more capable and they will be fewer in number. I cut
    one-half, as a matter of fact, the number of F-18E/F's from the
    original projection. I reduced that number almost by one-half.
        Senator Bumpers. What is that number now, Mr. Secretary?
        Secretary Cohen. It has come from 1,000 down to, as I
    recall, 548, and with an opportunity to go up as high as 750
    roughly in the event that the joint strike fighter does not
    come online at a cost that we can afford. So, I have tried to
    use some balance here. I did not want us to find ourselves in a
    situation where you had one plane that all the services were
    buying into that suddenly had started to go off the charts as
    far as costs were concerned and a lack of performance. So, it
    gave me an ability to say I am going to use the E/F model of
    the F-18 to give me a hedge against the joint strike fighter in
    the event that it does not really pan out.
        With respect to the F-22, that is going to replace some
    aging aircraft, F-15's. It is going to give us a multirole
    stealth aircraft that I think will keep us superior in the
    years to come. One of the reasons that I supported the F-22 is
    that much of that stealth technology that is being developed
    for the joint strike fighter is going to be evolved from the F-
    22. So, there is a real synergy involved in those three
    programs.
        I know that it looks to you and to others perhaps as if we
    do not need that, but there is a rationale behind it in terms
    of what each plane can do and will do with the balance it gives
    us for restraining costs in the future and also keeping us well
    ahead of any other competitor. There are other countries out
    there who are seeking to develop better aircraft than we have.
    So far, we are still ahead and we want to keep it that way.
        Senator Bumpers. Thank you, Mr. Chairman.
        Senator Stevens. Senator Domenici.
        Senator Domenici. Thank you very much, Mr. Chairman.
        Thank you very much, Mr. Secretary, for your answers today.
        I am going to talk about three subjects very quickly. Mr.
    Secretary, I believe that from the economic standpoint that the
    status of the American economy has a bearing on the quality of
    life and the retention policies of this country. Now, let me
    explain what I mean.
        If, in fact, we are going to have an economy that has
    unemployment at below 5 percent with a very significant
    increase in the pay rates across this land for working men and
    women, it would appear to me that the U.S. military is going to
    have a more difficult time both recruiting and retaining. Now,
    there are a lot of other reasons, but it is pretty clear to me
    that in the area of Kuwait and Saudi Arabia, especially as to
    the Air Force--and I apologize for not knowing about the Navy
    or the Army--but it seemed to me that the economic situation in
    America is a tremendous draw on technically qualified men and
    women.
        That leads me to think that we cannot wish that away
    because, on the one hand, we wish the economic situation to
    continue indefinitely, and that leads me to ask of you that you
    seriously look at the entire commitment to the All-Volunteer
    Army as to their personal lifestyles. I believe quality of life
    cannot just be a phrase anymore, that you have to look at every
    aspect of our commitment, when we passed an all-volunteer
    military. Essentially it was that we will make sure you get
    paid the equivalent of the marketplace. We said that. That was
    the debate on the floor. That is how we passed it. If we do not
    continue to upgrade that, then it would seem to me that the
    premise upon which we build the All-Volunteer Army is missing.
    We had men and women tell us they were not going to stay in for
    a lot of reasons, excessive deployments, away from their
    families, but also in each case they were saying there are
    great jobs for us out there in anything to do with airplanes.
        So, I would urge, Mr. Secretary, that you be not the least
    bit abashed about reviewing what the appropriate commitment to
    a way of life, quality of life, pay, pensions, and certainly
    health care. If we cannot live up to our commitments, we are
    going to risk losing many, many recruits who are not going to
    join today because they see another opportunity and we are
    going to lose people in too short a period of time to make the
    All-Volunteer Army work.
        Now, I approach it a little differently than some, but I
    believe economics is a very important thing. We heard these men
    and women over there tell us that we cut their pensions. Well,
    they are aware, even though it was a number of years ago--and
    it was.
        Secretary Cohen. 1986.
        Senator Domenici. We ought to take another look at these
    things. Some of us never understood that it really impacts on
    them, especially I say again in an economic environment where
    jobs are plentiful and pay is high. So, that is my first
    observation, and I hope you will give us your views at some
    point. I want to move on to a second one and make sure we are
    clear.
        Mr. Secretary, when you speak of having a reserve fund in
    your budget, the truth of the matter is it is a reserve fund
    called in advance an emergency. So, it is not in the budget.
    So, it seems to me that if you are now beginning to look at
    budgets where you are going to have to have a contingency
    fund--and I would doubt that you will have very many budgets
    without it--it would seem to me that we ought to start talking
    about more and more of that being in the regular budget because
    to manage it otherwise is very tough on readiness, because you
    are robbing from one for another while you wait around for an
    emergency allocation of money.
        I offer to you my full support in an effort to make the
    budget more realistic in that regard. We now have very big
    surpluses. Everybody and his uncle are figuring out ways to
    spend it. I have not heard anybody say, well, what about
    defense. I am saying it right now. They want tax cuts. They
    want all kinds of new programs. If we have got a big surplus
    and we do not have to be worried so much, I am for increasing
    defense. I do not like to see what you have to do when you have
    an emergency. It is not fair to any of you, including the
    generals. Very tough on them.
        Now, my third question--would you like to comment on those
    two, please, just for a moment?
        Secretary Cohen. Why do you not ask your third one and I
    will comment on all three.
        Senator Domenici. All right. My third one is much more
    precise. In the DOD authorization bill, Mr. Secretary, which is
    on the floor, it is interesting that when it comes to missile
    defense--we have a bill on the floor. We are going to vote on
    cloture on the missile defense bill. In the armed services
    bill, the airborne laser program is cut $100 million. Now, that
    airborne laser program, from what I understand--and I would
    like you to corroborate this--is totally supported as one of
    the most significant programs we have. It clearly might work.
    It is ahead of everything else. I wonder whether you would
    agree that we ought to fund it, as you requested it, or should
    we take away funding for a platform that they want in order to
    take the second phase of this on?
        Senator Stevens. Knowing that we have a vote at 10:30, Mr.
    Secretary, perhaps----
        Senator Domenici. My time is up.
        Secretary Cohen. I will be very brief, Mr. Chairman.
        I meant no disrespect by asking you to go to your third
    question. I was looking at the timer, and we were already on
    the yellow light. I figured if I took the time to answer your
    first two questions, you would never get to ask the third one.
        Senator Domenici. Thank you very much.
        Secretary Cohen. So, in any event, let me try to move very
    quickly.

                          Quality of life and pensions

        I agree with you with respect to quality of life.
        The pension aspect, you are quite correct. We changed that
    back in 1986. We made a change in order to try to provide an
    inducement for people to stay longer, not to leave, so they
    would stay 30 years and not leave at the end of 20 years.
        Now it is having just the opposite effect. Right now people
    who have between 10 and 11 years and are looking at the
    future--and they know all about pension plans. I think at our
    respective ages at that time we were not too concerned about
    pensions. Now they are looking very closely, what does this
    mean as far as their future is concerned. And they are looking
    and they are going to see a rather significant reduction from
    those who signed up in 1980, by way of example, almost a 25-
    percent reduction.
        So, we have to address the issue on pensions and health
    care. I will not take more time right now, but I will tell you
    that is an issue that we will address in the near future.

                                Missile defense

        With respect to missile defense, we submitted a budget for
    the airborne laser program because we think that is the right
    way to go. So, money was taken out to put into a different
    platform. It is going to be up to this committee to make a
    judgment. We support the airborne laser program.
        Senator Domenici. Thank you very much.
        Senator Stevens. Senator Hutchison.
        Thank you, Senator.
        Senator Hutchison. I would just like to follow up on what
    Senator Domenici was asking and the chairman of the
    Intelligence Committee will follow shortly. I am sure he is
    going to address the issues of intelligence on the Indian
    missile testing.
        But I am very concerned about what Senator Domenici has
    just mentioned in light of not only India actually testing,
    which we know, but North Korea also today threatening to
    renounce its agreement and to refuel its nuclear reactors. We
    know that China has now been sold some of our technology. We
    have fought a war over Iraq having ballistic missiles with at
    least chemical and biological weapons and perhaps nuclear. Iran
    is gearing up.
        Now, I am just saying how can we say that all we need to do
    is wait to see if someone is successful and then within 3 years
    we will be able to deploy our defenses? It just seems to me
    that we ought to be putting this ahead in the priority list,
    especially in light of what has happened just in the last 5
    days.

                   National missile defense system and THAAD

        Secretary Cohen. We are spending billions of dollars for
    research and development for a national missile defense system.
    I helped to broker that compromise that was reached on the
    Three-Plus-Three Program, but a judgment we made in just
    another 1\1/2\ years in terms of whether or not it is time for
    the United States to move forward on a National Missile Defense
    Program. Intelligence will play an important factor. We could
    either dismiss it saying it is not reliable, but I tend to
    think that we only focus on the intelligence community when
    there is a failure, not when there are many successes. But in
    this particular case, you will make a judgment, we will make a
    judgment in terms of another 1\1/2\ years, do we go forward and
    deploy a system, assuming we have developed the technology that
    would allow us to do that.
        The THAAD Program raises an issue of the difficulties, the
    technological complexity involved in one missile hitting
    another missile traveling at those speeds. But we are devoting
    billions of dollars to the research and development so that we
    will be in a position to deploy a system should the
    intelligence warrant it or should the determination be made by
    political leaders at that time. Whether we want the
    intelligence to be a factor in our minds or not, that is always
    something that policymakers can make that determination.
        But I think that we are proceeding prudently. Some would
    argue, as a matter of fact, we had one team that said we are
    not proceeding prudently, that we are moving too fast. So, we
    are trying to take into account congressional concerns about
    this, as well as our own. We are moving as fast as we can, and
    for some it is too fast and for others not fast enough.
        Senator Hutchison. What would make you relook at that
    decision of waiting for 1\1/2\ years to make a final decision?
    Is there anything that would make you put that on a higher
    priority list?

                     deciding on Missile defense deployment

        Secretary Cohen. What I am saying is it is on a very high
    priority list right now. We are devoting billions of dollars to
    this research. This is a technically challenging task to build
    such a system, but we are talking about 18 months and we will
    be in a position to make a determination whether or not we have
    the technology to go forward and at that point whether we
    should deploy it. It will take into account other arguments.
    Senator Dorgan just went to the floor to talk about the
    national missile defense system, but you do have other factors
    involved.
        It may be that there will be a determination made at that
    time that the ABM Treaty is no longer relevant, but that is not
    a decision that has been made to date. We do not know, for
    example, whether we have the technology that you could deploy a
    system that will be ABM compatible by the year 2003 or sooner.
    Do we have such technology and is that not a consideration? If
    it is not a consideration, then you may decide on a different
    type of technology that will be required. So, those are factors
    I think we all have to address.
        But right now we are proceeding with our theater missile
    defense systems, developing it, failing in the THAAD Program
    most recently, and also with the national missile defense
    system. We now have a systems integrator who has been selected
    who will be integrating all the various tests that have been
    done to try to put together a system that would be deployable
    in the event the decision is made to deploy.
        Senator Stevens. Senator Dorgan.
        Senator Dorgan. Thank you, Mr. Chairman.

                  addressing multiple threats to U.S. security

        Let me ask two questions. I share the Senator from New
    Mexico's interest in the airborne laser program, and I just
    spoke on the floor about the National Missile Defense Program.
    There are a whole range of missile threats and different kinds
    of threats. If the Congress were to force the deployment as
    soon as technologically possible of a National Missile Defense
    Program, notwithstanding cost and other factors, could that in
    the intermediate or long term hinder funding for such things as
    the airborne laser [ABL]?
        Secretary Cohen. I do not disagree. I think we have got a
    balanced program right now and I think we should proceed with
    it. It is one of the reasons why we have tried to weigh all of
    the threats, all of the challenges we face. I think national
    missile defense is an important program. I also tried to point
    out that the spread of biological and chemical weapons also
    presents a threat to this country and to the world at large
    which we are, at this point, not prepared to cope with
    adequately.
        I think that you will see more and more countries
    developing biologicals. It is much easier, much cheaper, and
    equally as dangerous. I took the time to point out during a
    recent address that if you took 100 kilograms of anthrax in the
    right weather conditions and proper dispersal, it would have
    something like two to six times the destructive power of a 1
    megaton nuclear bomb.
        So, there are a lot of threats out there. We are trying to
    have a balanced program.
        Senator Dorgan. And that is the point of my question, that
    if you respond to one threat exclusively, it may well be at the
    expense of responding to other threats.
        Secretary Cohen. We have a whole panoply of threats we have
    to contend with in the future and we have to try to weigh what
    is the most likely, not only what is the most likely, but what
    is the most devastating as well. You might say that a nuclear
    exchange is the least likely, but, of course, it could be the
    most devastating. By the same token, we are looking at the
    spread of biological technology and that can prove equally
    destructive. So, we have a number of threats we have to contend
    with.
        Senator Dorgan. One might make the point that a less likely
    threat would be someone developing or getting a hold of an ICBM
    tipped with a nuclear device. Cruise missiles are probably much
    more readily available and easy to work with.

                          Base closure and realignment

        Let me also ask you about base closings. You, Mr.
    Secretary, suggested some while ago that if not given the
    authority, you might consider allowing some bases just to
    wither. I think you used the term ``wither,'' which might or
    might not be a term of art here. What exactly do you mean by
    that, and are you serious about that?
        Secretary Cohen. I do not think I suggested that as a
    viable option. I said that that could take place. It would be
    the least desirable of any option for a Secretary to exercise.
    It is possible to say that those facilities which no longer are
    deemed to be essential to carry out a mission would simply not
    receive the kind of attention that they otherwise might
    receive. That would not be fair. It would not be fair to the
    people who work there, to the men and women in uniform, and the
    civilian counterparts, and it would not be fair to the
    community in my opinion. That is the least fair of all the
    options because the community does not benefit from such a
    situation.
        BRAC, whatever its deficiencies, is a much fairer process.
    I can recall if you leave it up to the Pentagon and say, OK,
    let us just pick the bases that should be closed, the first
    thing that would happen, Members would say, wait a minute, it
    is political, let us not let that happen. So, you say, now we
    have BRAC. You say, well, that is political. We cannot let that
    happen. So, if you reduce all of the options, you are left with
    an option way down here that says, well, we just cannot afford
    to keep that going. We will let it not be upgraded. So, I think
    it is the least desirable.
        Senator Dorgan. I understand that, and I understand the
    issue of overcapacity, although there are some 40 to 50 bases
    that have been ordered closed but are not yet through the
    closing process. I am one of those who believe that once you
    start a BRAC round, there is a bull's eye on the front gate of
    every military installation and you begin to stunt the economic
    growth of every community until the round is complete.
        Could there not be a more focused approach to this? If you
    have overcapacity, for example, in certain areas, could you not
    do some kind of closure approach that does not put every
    community at risk or does not put every base in question? That
    is one of the reasons you are having problems getting authority
    from the Congress for another two rounds.
        The second questions is, could you not do it in one
    additional round at some point with a more focused set of
    objectives?
        Secretary Cohen. Let me respond very quickly.
        First of all, we found out that within 2 years of a closure
    of a base, about 75 percent of the employment has been
    regenerated. So, I can point to a number of great success
    stories where bases have been closed but they have far more
    employment. Most recently, at Pease Air Force Base, they have
    three times the employment they had when it was a military
    facility, now that it is in private hands.
        But, second, with respect to a more focused approach, if
    the Congress were to decide that you were to leave it up to me
    as Secretary of Defense to take a more focused approach and
    pick and choose those facilities that should be open and
    closed, I could certainly accept that, but I think the minute
    you were to say that, there would be other Members who would
    say, wait a minute. That is too political. We are not going to
    give one person the opportunity to shut down our facilities and
    make that kind of recommendation.
        So, it is one of those where I think the BRAC process is
    the fairest of all, where you have an independent panel that
    receives the recommendations of the Pentagon, and then they
    make a recommendation. I think that is the fairest. It is not
    certainly foolproof in terms of its equity, but I think it is
    the fairest of all the choices.
        Senator Dorgan. Thank you, Mr. Secretary.
        Senator Stevens. Senator Shelby.
        Senator Shelby. Mr. Chairman, I have several questions for
    the record regarding procurement spending and the cost of
    operations in Bosnia that I would like to ask the Secretary for
    the record and that it be part of, if that would be permitted.

                            nuclear testing by India

        Having said that, I would like to get into the problem on
    the subcontinent of Asia. Mr. Secretary, you served a long time
    as a member of the Armed Services Committee. You spent a lot of
    time on the Intelligence Committee. I have worked with you on a
    lot of issues. Were you surprised or shocked at what happened
    in India and us not knowing about it, our intelligence?
        Secretary Cohen. I think my characterization would be the
    same as any of yours. It did come as a surprise. There were a
    number of statements apparently that were quite misleading on
    the part of political leaders. There was, from a technical
    point of view--and again, I have only been looking at this very
    artificially so far--or superficially I should say. I have not
    had any briefings on it as of yet, but it appears that we have
    the technology to see that something was taking place, but the
    analysis was not there. But there is going to be an internal
    investigation by the CIA.
        Senator Shelby. Perhaps the analysis was not done.
        Secretary Cohen. Analysis not done.
        You are going to be conducting hearings----
        Senator Shelby. Tomorrow.
        Secretary Cohen [continuing]. Into the subject matter, and
    you are going to be in a far better position than I am at this
    point to comment.
        Senator Shelby. I believe it was your term--and I thought
    it was very appropriate--that we have now a real proliferation
    problem.
        Secretary Cohen. We do.
        Senator Shelby. We knew it was looming. You mentioned that
    there were 25 nations in the world--I believe it was 25 that
    you said--that have either nuclear, biological, or chemical
    capability.
        Secretary Cohen. Or seeking to acquire it.
        Senator Shelby. Or seeking. Is this going to set off the
    arms race? I believe the phrase was a ``chain reaction.'' There
    has got to be a response to this either by China, Pakistan, or
    someone else, unless we can hold the line somewhere. I do not
    know how we are going to get the genie back in the bottle. I
    would like to see us get it in the bottle, and I know you
    would. Would you want to comment on that?
        Secretary Cohen. The danger is that there will be this
    proliferation and reaction. I used the phrase ``chain
    reaction.'' It can, in fact, be precluded or stopped, as
    Senator Harkin pointed out from a technological point of view,
    but I think also from a political point of view. We need to
    bring to bear all of the political will not only of this
    country, but certainly all of our allies to come down very hard
    on India and to discourage Pakistan from following suit or to
    giving any kind of incentive to any of the other nations who
    are seeking to acquire this technology, pointing to India as an
    example of a country that is now boasting it has a nuclear
    power status which gives them new political prestige in the
    world. I might take issue with that and I think many will, but
    that is part of the rationale, as well as their own
    determination----
        Senator Shelby. But it also makes the world more dangerous
    as we know it today. Is that correct?
        Secretary Cohen. It makes the world more dangerous. It
    means that other countries will try to follow suit unless we
    are able to intervene politically and persuade them that they
    should not do so, and that may take a combination of economic
    sanctions and also some solidarity on the part of the world to
    condemn the action and not only condemn it verbally, but to
    take actions to voice this concern with material actions taken
    on their part.

                   international reaction to India's testing

        Senator Shelby. Are you optimistic on getting our allies
    and friends to be part of that solidarity with us, including
    the French and others who at times go their separate ways?
        Secretary Cohen. The answer is I do not know at this point.
    We have had Japan say that they would impose sanctions. The
    French apparently, according to the report I heard on this
    morning's news, said it would not, but that may change as well.
    I would hope that with President Clinton taking strong action
    quickly, that there will be solidarity of response on the part
    of our allies. I cannot predict how that will turn out, but
    that is what is necessary if we are going to dissuade other
    countries from following suit.
        Senator Shelby. But the bottom line is the detonations in
    India have changed the equation tremendously. Have they not?
        Secretary Cohen. It has a significant impact on other
    countries.
        Senator Shelby. Thank you, Mr. Chairman.
        Senator Stevens. Senator Specter.
        Senator Specter. Thank you very much, Mr. Chairman.
        It is nice to have you back, Mr. Secretary, if only
    temporarily.
        I have two questions for you and I will ask them both.
        Secretary Cohen. Could you tell me why the yellow light is
    on before you started?
        Senator Stevens. That is to caution him. [Laughter.]
        Senator Specter. I am going to use up the balance of
    Senator Shelby's time, Mr. Secretary.
        We all know about the nuclear explosion in China. We have
    seen already the immediate ramifications of Pakistan, likely to
    do the same. North Korea may follow suit. China is going to be
    jeopardized. Just how important is the Nuclear Test Ban Treaty
    for the world security, for world peace? How hard will the
    administration and you be pushing to see to it that the Senate
    takes it up and at least considers ratification?
        The second question I have for you relates to the current
    controversy with Israel. We had a briefing last night from
    Secretary of State Albright, and while she did not discuss the
    specific figure, there has been a lot of publicity of 13.1
    percent withdrawal, further deployment, and it seems to me that
    the question of Israeli security is something which has to be
    determined by the Israelis just as a fundamental matter.
        But I do wonder. I did not have a chance to ask her this
    question yesterday. You know the sessions in Senate bill 407.
    There is not a whole lot of time to ask her whether there had
    been an analysis made by our military people, by the Secretary
    of Defense, for example, as to whether the proposal pushed by
    the United States would at least in the eyes of experts in
    defense adequately assure Israel's security.
        I do not say that that would be a substitute for Israel's
    independent judgment, but I would be interested to know, Mr.
    Secretary, whether you or the Department of Defense or anybody
    that you know of has made an independent analysis of the United
    States position on what Israeli redeployment should be as to
    whether at least the United States conclusion is, from a
    knowledgeable point of view, that there is adequate security
    for Israel.

                         Comprehensive Test Ban Treaty

        Secretary Cohen. With respect to your first question,
    Senator Specter, I am a strong believer in the Comprehensive
    Test Ban Treaty. I think the Senate should take it up. I think
    you should ratify it as quickly as possible, and I believe that
    is the position of President Clinton and the Secretary of
    State. We have all called to try to see if that cannot be
    scheduled as quickly as possible. We would like to see it as
    soon as possible. There are not many legislative days left in
    this session. So, we place a high priority on it.

                                Israeli security

        With respect to Israel, I must say that I have not made an
    independent analysis of any formulation pertaining to Israeli
    security. I was recently in Israel and we cooperated very
    closely, I might add, during the buildup of the Iraqi crisis
    starting last October, November, right through February. We
    worked very closely with Israel. I continue to work closely
    with them to make sure that we have satisfied that we are doing
    whatever is necessary to help them in defining their own
    security needs, but I have not made an independent analysis of
    any formulation.
        Senator Specter. I thank you for the succinctness of your
    answers. It gives me a chance for a third question.

                           NATO expansion and Russia

        I voted against the NATO ratification for expansion and I
    did so because of the concern that I have that the inclusion of
    the other three countries may give radical elements in Russia a
    political toehold and that they may come to power. We all know
    that the Russian army has disintegrated very materially but
    that they have enormous nuclear capability. I would like your
    assessment to a question as to whether there was any--to what
    extent do you see at all, 1 percent, 2 percent, because the
    consequences are so cataclysmic if a radical comes to power and
    uses the nuclear force--to what extent at all do you see any
    risk that the radical elements in Russia might come into power
    as a result of NATO expansion and pose any risk at all of a
    nuclear confrontation?
        Secretary Cohen. Well, my personal judgment is that the
    expansion will not contribute to radical elements coming into
    power. We have maintained very strong lines of communication.
    As a matter of fact, just yesterday morning I spent about 45
    minutes on the phone with Marshall Segeyev, the defense
    minister of Russia, talking about ways in which we can continue
    to cooperate. I was asking about ratification of START II and
    what that will take.
        We have, for example, a delegation coming from the Duma
    next week. One of the complaints I have found from the Duma
    members is they do not have enough contact with you, meaning
    you, the Senate. Senate Members no longer travel to Moscow as
    much to meet with them. I am not talking about you, Senator
    Specter, but they do not feel that they are getting the kind of
    reciprocal attention that would be warranted.
        So, when this delegation comes, I am going to meet with
    them. I hope as many Members of the Senate and the House can
    meet with them to build upon the relationships that are
    important, to make sure, as best we can, that we will not have
    any kind of a radical element coming to power relying
    principally upon nuclear weapons.
        I think the Nunn-Lugar funding, for example, the
    cooperative threat reduction funds, should be approved. A very
    important program. When I was in Moscow in February, I went out
    with Marshall Segeyev to one of the sites where we are, in
    fact, helping them to reduce their nuclear weapons. We want to
    continue those kinds of programs.
        But I think as far as this enlargement is concerned, it
    will not contribute to that kind of a risk.
        Senator Specter. Thank you for your answers, and thank you
    for the fine job you are doing.
        Senator Stevens. Thank you, Senator.
        Mr. Secretary, I was late because we had to have a meeting
    of the subcommittee chairmen of this committee to determine
    what we are going to do about the budget. We are substantially
    under the budget. Primarily that comes about because the
    President assumes a whole new series of revenue streams coming
    into the budget process, but none of them are available to this
    committee until they are approved by Congress and become law.
        I have asked each of the subcommittee chairmen to review
    his or her budget and tell me whether there is anything we can
    eliminate or reduce in any function of Government. Since I am
    chairman of this subcommittee, I am looking at that myself.
        I am reminded that when I got that Forrestal Award the
    other night, my staff and I went back and reviewed Forrestal's
    life and Forrestal's recommendations for change at the period
    at the end of World War II.
        We are coming into a new century now, and you are Secretary
    of Defense at a very propitious time. So, I want to ask you
    some unfair questions that I do not expect you to respond to
    now but perhaps we can discuss them later.
        What has been done in the Pentagon as we have closed base
    after base? I do not see ring after ring in the Pentagon being
    closed. Do we see need for a service Assistant Secretary, Under
    Secretary, and Assistant Secretaries for every service? Do we
    still need the redundant systems in the Department of Defense
    itself, the Under Secretary, the Assistant Secretaries? Do we
    need as many CINC's as we have got in the country?
        In other words, have we closed down the management
    structure as we have closed down the structure for housing our
    forces, and do we really need to think about changing the whole
    system? We are in a different period now. We are going into a
    new really space age type of warfare. Maybe we ought to have a
    Secretary for communications and one for intelligence and one
    for deployment policy.
        It seems to me we are structure bound in the Department,
    and the only option you have right now is to close more bases.
    I think we ought to really look at this system and see what we
    need for the next century in terms of defense. I tell you, my
    poet friend, you are the one to do it if we are going to do it.
        Now, we need another Forrestal and I do not think I have
    the position he had. You have. I think it is time you answered
    some of our questions. What can we do to eliminate some of the
    costs of managing the military so that we can preserve the
    force we need to defend our country?
        Now, with that, my friend, I will listen to your comments
    and then I will go vote. All right?
        Secretary Cohen. OK, and how much time before you have to
    vote?
        Senator Stevens. I have got at least 15 minutes to listen
    to you.

                         streamlining and reforming DOD

        Secretary Cohen. OK. Let me give you a 15-minute
    dissertation on what is taking place.
        I agree with you in terms of reforming the way in which we
    do business in the Pentagon. That is principally the reason
    that we initiated the defense reform initiative, the DRI. You
    have a copy of that, and I might point out to you that when I
    went to the services and said, I want you to start taking some
    people out, we have got to get the manpower levels down because
    that is where I can get the savings to put into the
    procurement, I said I am going to take it out of hide as well.
        I expected and we will cut roughly one-third of the people
    in OSD, my office. That is 1,000 people will be eliminated from
    the positions in an 18-month period. It does not translate into
    big dollars, but I want it to be a big symbol that we need to
    change the way in which we are doing business.
        A lot of the structure that has accumulated over the years
    has been political in nature. If I could reform the system on
    my own, I could make a number of changes. Unfortunately, I
    would not have the authority to do that. But I can tell you
    that working with Dr. Hamre, we do have a very strong blueprint
    about changes that we are conducting now and making in the way
    in which we do business. We are moving to a paperless society.
    We are eliminating thousands of pages of regulations. You now
    have to go to the Internet in order to get those regulations.
    We are contracting through the Internet now and will be almost
    wholly by the year 2000, 2001. So, we are making a number of
    changes as we are moving into this cyber age of ours and it
    will be reflected in the way in which we are going to manage
    the Department differently.
        But I will need political support. I cannot change the
    structure of the operations of the Pentagon globally in terms
    of the Secretaries, Assistant Secretaries, and CINC's and so
    forth without considerable support from the Congress. So, I
    will call upon you for changes I will need to have made
    statutorily.
        Senator Stevens. You draft me the law to give you that
    authority, a command consolidation commission, or whatever you
    want to call it, and I will introduce it. If we cannot get it
    out of the authorizing committee, I will put it in your bill.
    We need to have that kind of reform to lead, and if you do
    that--if you do that--if we get you the authority, I will
    support your Base Closure Commission.
        Secretary Cohen. I will even give you the proposal in blank
    verse. [Laughter.]
        Senator Stevens. Thank you, Bill.

                         Additional committee questions

        By the way, the Secretary used to come first and we changed
    that because there are developments through the period of time
    after we review all the departments of your Department, and we
    brought you last. So, you get more heat than your predecessors
    did, but you do well. 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 by Senator Thad Cochran
                           dd-21 acquisition strategy
        Question. Mr. Secretary, recent news reports coming out of the
    Pentagon have highlighted that the Navy and the Department of Defense
    may be considering changes to the current DD-21 acquisition strategy
    due to a perceived lack of competition. I understand that Dr. Hamre met
    with Defense Acquisition Officials to discuss this issue as recently as
    yesterday.
        As you are aware, the Navy issued a request for proposals (RFP)
    that requires potential offerors to respond by May 22, 1998. I
    understand that the RFP requires offers to establish a process for
    ensuring competition and innovation throughout the DD-21 program. Also,
    I've been informed that over 80 percent of the systems and subsystems
    provide opportunities for competition and innovation.
        Is there anything in the RFP that prohibits any other potential
    offeror from bidding on this program?
        Answer. The Navy sought up to three independent offerors for Phase
    I of the DD-21 solicitation. The RFP was drafted and issued with the
    clear intent of having at least two offerors submitting bids. There was
    nothing in the RFP that prevented other potential offerors from bidding
    on the program.
        Question. Doesn't the existing DD-21 acquisition strategy provide
    ample opportunity and incentives for industry participation and
    competition, and benefit significantly from the Government's large
    investment in the Arsenal Ship Program?
        Answer. Yes. The opportunity exists for industry to bring forward
    several teams capable of making acceptable bids for DD-21 development.
    Some individual companies interested in bidding on DD-21 are having
    difficulty making acceptable business arrangements with other companies
    which would lead to formation of a second or third DD-21 team. The Navy
    is discussing the issue with industry in order to determine the range
    of possible solutions to this problem.
        Question. Is it fair to say that the strategy permits two very
    important matters to go forward: shipyard teaming to maximize the
    return on Government and industry investment in common design and
    production process; and, a shipyard as prime contractor?
        Answer. Yes. The current strategy (as of May 13, 1998) would allow
    for those particular matters to be included in an industry team bid
    proposal for DD-21 development, should an industry team choose to do
    so. However, the Navy is concerned about the apparent inability of
    industry to form a second team to compete on DD-21 development. The
    Navy believes that intense industry competition at the system level is
    required in order to meet the aggressive cost and performance goals
    provided in the DD-21 Operational Requirements Document. As of May 13,
    1998, the Navy is discussing its concerns with industry and interested
    Congressional staffs in an effort to craft an acquisition strategy that
    will meet all of the Navy's requirements for competition in the DD-21
    program.
                                     ______

                Questions Submitted by Senator Richard C. Shelby
        Question. Mr. Secretary, I commend your personnel commitment to
    achieving the Department's investment goal of $60 billion in annual
    procurement spending. I am, however, concerned that the QDR planning
    assumptions to achieve this goal are unrealistic considering the
    historic migration of procurement funds to other accounts, the
    rejection of another BRAC round, and the uncertainty of savings from
    acquisition reform. If these savings do not materialize, how do you
    intend to reach this goal?
        Answer. The Department is on track to achieve the goal of $60
    billion in procurement by fiscal year 2001. In fiscal year 1999 we
    increased procurement by $3.6 billion over the fiscal year 1998 funding
    level, which was within $300 million of our $49 billion goal for this
    year. Even in the absence of more rounds of BRAC we hope to continue
    this track to hit the $60 billion target in fiscal year 2001.
        But, without congressional approval of BRAC rounds in fiscal year
    2001 and fiscal year 2005, we will not be able to sustain this
    procurement program into the next decade. The $3 billion in savings
    that two BRAC rounds will provide is critical to our longer term
    modernization plans. The Department has a number of significant
    programs that will be entering procurement in the next decade,
    including the Joint Strike Fighter, the DD-21 destroyer, the Comanche
    helicopter, various missile defense programs and a number of new
    generation satellites.
        Question. Does the Department have a comprehensive plan to address
    the rapid and massive aging problem of its major warfighting equipment,
    including aircraft, tanks, and ships? To what extent are life extension
    programs being considered? At what point does aging equipment make an
    impact on the decision to use force?
        Answer. The Department is executing an integrated plan to mitigate
    and reverse the aging of our major warfighting equipment. This plan
    encompasses the following elements: Reinventing our logistics processes
    to enhance equipment sustainment while reducing O&M costs in order to
    provide increased funding for modernization; increasing procurement
    funding to $54 billion by fiscal year 2000; reengineering our
    acquisition process to reduce costs, enabling more rapid modernization;
    and adopting modernization of spares to enable rapid technology
    insertion into existing platforms.
        These DOD-level initiatives complement ongoing efforts within each
    Service to assess their capabilities and projected modernization
    requirements.
        The Department relies on each Component to determine their
    equipment and systems requirements. They also determine when new
    procurement programs or life extension programs are necessary to meet
    their requirements. Life extension programs are primarily considered
    for their cost savings or cost avoidance attributes. In some cases,
    life extension programs are used to ``fill the gap'' prior to delivery
    of new equipment or new systems.
        Ongoing ``life extension'' programs include efforts by the Services
    to modernize equipment to meet current threats. Examples include the
    remanufacture and modernization of the 2.5 ton truck (M35A2) under the
    Extended Service Program and the AV-8B remanufacturing program.
        As part of the normal programming and budgeting process, the
    Department and the Service Components review readiness related areas
    and modernization efforts. Through this process, the Department can
    ensure that the current and future condition of warfighting equipment
    and systems will not impact a decision to use force.
        Question. How much does the Department expect to spend before
    completion of its operations in the Balkans?
        Answer. An estimate of total expenditures is not possible since we
    do not currently have a specific end date. Rather than focus on a
    specific end date for operations in Bosnia, the goal is to achieve a
    secure environment without further need for a NATO-led military force.
    NATO is pursuing a transition strategy with the goal of progressively
    reducing force levels, taking account of the security situation in
    theater and the progress toward implementing the Dayton Agreement.
    NATO's intent is to review tasks, the security environment, and risks
    at about 6-month intervals with reductions in force size beginning, if
    possible, after the national elections in September 1998.
        Question. If the fiscal year 1999 budget request for Bosnia, which
    you are requesting that Congress designate as emergency spending, is
    insufficient to cover actual peacekeeping expenses there, will the
    Department need to seek supplemental appropriations that also are
    considered ``emergency'' spending?
        Answer. The fiscal year 1999 request is designated an emergency
    because the requirement was not identified before the budget was
    submitted. Given the current assessment of forces required to support
    operations in Bosnia, the fiscal year 1999 estimate of $1.9 billion
    will be adequate to meet our requirements. However, if an unforeseen
    situation should develop that the Department could not accommodate from
    available funding, then alternative methods of financing would be
    explored, including an emergency supplemental request if the situation
    warrants.
        Question. What are the opportunity costs associated with the
    prolonged peacekeeping operations in Bosnia? Specifically, what
    additional weapon systems would the Department have been able to
    procure if it had not been forced to execute the deployment to Bosnia?
        Answer. It is the Department's responsibility to be ready to
    respond to crises that threaten the nation's interests. The situation
    in Bosnia is such a crisis and we have made a commitment to help lead
    the NATO peacekeeping effort. To avoid serious impact on other defense
    needs the Department proposed financing the fiscal year 1998 Bosnia
    operations with an emergency supplemental appropriation. I am very
    grateful for your cooperation and assistance in providing these
    critical funds to the Department in a timely manner. In a similar vein,
    the Administration submitted a budget amendment to finance the
    projected fiscal year 1999 costs from a reserve established by OMB for
    this and other emergent requirements. If this amendment is not
    approved, it will have a devastating effect on our efforts to achieve
    the readiness and modernization goals outlined in our budget request.
        Question. Despite extensive anecdotal reports that near-term
    readiness is eroding, many unit commanders and regional CINC's contend
    that they do not have accurate or reliable statistics that reflect the
    true state of their forces. What is the status of the Department's
    efforts to provide a better gauge of readiness? Do you believe that it
    is possible to develop a system that is capable of identifying trends
    and therefore could be used for predictive modeling?
        Answer. We are continually improving our ability to assess
    readiness and detect problems and have made great progress to ensure
    that readiness issues receive top management attention. The Senior
    Readiness Oversight Council, called the SROC, was created to provide a
    monthly forum where the senior DOD leaders can review and discuss
    readiness issues. The SROC is chaired by the Deputy Secretary, with
    membership including the Vice Chairman, the Under Secretaries of
    Defense, the Service Chiefs, and the Under Secretaries of the Military
    Departments.
        We have instituted and evolved a monthly in-depth readiness
    assessment process by the Joint Staff, the CINC's, and the Services
    called the Joint Monthly Readiness Review (JMRR). The JMRR, is a
    monthly forum led by the Vice Chairman, JCS, to assess our readiness to
    meet the spectrum of missions as defined in our National Military
    Strategy. We continue to refine both the SROC and JMRR processes to
    help identify, evaluate, and resolve major readiness concerns.
        DOD is also sponsoring several initiatives to improve current
    readiness reporting. The Joint Staff is working to develop an improved
    readiness assessment system that uses the power of information
    technology to improve the timeliness of the reporting process and
    integrate the many aspects of force readiness. Our Military Departments
    also continue to improve and refine their unit reporting systems to
    ensure accurate and timely information.
        Section 322 of the 1998 National Defense Authorization Act directed
    the Secretary of Defense to expand the scope of the readiness reports
    submitted to Congress. These readiness reporting system enhancements
    are currently underway, and DOD is preparing to submit its first
    expanded report to Congress in October 1998. This expanded readiness
    report will include thirteen additional readiness reporting categories
    comprising over two hundred and fifty additional readiness indicators
    designed to provide Congress with a more in-depth view of DOD readiness
    status and trends.
        The Department already uses numerous indicators as warning signs of
    pending readiness problems. We routinely monitor indicators of
    personnel, training, and equipment readiness. Some examples of
    personnel indicators include measures of recruit quality, training
    retention, personnel turbulence, force manning, critical skill manning,
    and PERSTEMPO. Equally important are the equipment and training
    indicators. We routinely follow trends in maintenance backlogs,
    equipment capability rates, Operations tempo, named deployments, and
    spares funding. Several of the indicators, such as mission-capable
    rates, have been monitored for many years and have proven their
    usefulness in assuring ready forces. Others--such as our efforts to
    capture the effects of deployment tempo on our personnel--are
    relatively new, and we are analyzing the data to assess its ability to
    predict trends in personnel readiness. Although no readiness system can
    guarantee accurate predictions, the Department does use such indicators
    to help prevent readiness problems. For example, in a Senior Readiness
    Oversight Council meeting last year, the Air Force noted that the
    aviation bonus ``take rate'' for Air Force pilots was showing a marked
    decline. This was one of the first signs of the emerging pilot
    retention problem. As a result of this indication, the Department
    proposed additional aviation career incentives and other significant
    actions to help mitigate the problem.
        The Department is committed to having a trained and ready force and
    to minimizing any risk in employing that force should the need arise.
    It is to that end that the Services, the Joint Staff, and the Office of
    the Secretary of Defense continue to refine their readiness reporting
    systems.
        Question. In any of your discussions regarding BRAC or alternative
    approaches to reducing excess infrastructure, have you considered
    consolidating primary helicopter pilot training? Would you agree that
    the consolidation of primary helicopter training furthers your goals of
    reducing excess capacity in infrastructure, promoting jointness, and
    eliminating duplication of effort?
        Answer. There has been no consideration subsequent to BRAC 95
    concerning the issue of potential consolidation of primary helicopter
    training. Consolidation of undergraduate helicopter pilot training
    (UHPT) has been reviewed over time and in previous BRAC deliberations
    as an area of potential interest. These reviews considered many
    variables, including operational effectiveness, promoting jointness,
    and cost effectiveness (reducing excess infrastructure, eliminating
    duplication of effort, etc.). Current practices have the Navy and
    Marine Corps conducting consolidated UHPT at Whiting Field, Florida,
    and the Army and Air Force training together at Fort Rucker, Alabama.
                                     ______

                Questions Submitted by Senator Patrick J. Leahy
                                 legacy program
        Question. Conferees for the fiscal 1998 Defense Appropriations Bill
    included $100,000 of the $10 million Legacy Program account to develop
    a management plan for the 1776 Revolutionary War gunboat recently
    discovered in Lake Champlain. This work is being carried out through
    the Underwater Archeology Branch of the Naval Historical Center. It is
    my understanding that approximately $7 million in Legacy funds have
    been released and the initial Underwater Archeology allocation amounted
    to some $200,000. While the Department has made a strong commitment to
    the 1776 gunboat initiative, I remain concerned since the total fiscal
    1998 requirement for Underwater Archeology is closer to $400,000. Would
    you support the release of the remaining $3 million in fiscal year 1998
    Legacy appropriations with an additional $200,000 allocation to
    Underwater Archeology?
        Answer. I am pleased to inform you the Department recently released
    the additional $3 million in fiscal year 1998 Legacy appropriations. Of
    this amount, the Department provided an additional $272,000 to the
    Naval Historical Center for its Underwater Archeology program. This
    means the total fiscal year 1998 Legacy funding for Underwater
    Archeology from the Legacy program is $472,000.
                         underwater archeology program
        Question. Would you support permanent funding for the Underwater
    Archeology program in future fiscal years?
        Answer. The Department of Defense recognizes the importance of
    preserving its cultural heritage, including its underwater
    archeological resources. The Navy Historical Center is the Department
    of the Navy (DON) command responsible for oversight of those resources.
    The Department, however, is currently faced with significant
    competition for limited funds from many areas, including mission
    essential programs, modernization initiatives, and quality of life
    projects. While we expect to be able to fund our underwater archeology
    program at an appropriate level to meet our needs, these constraints
    currently require us to remain flexible and therefore prevent us from
    supporting permanent funding for the Underwater Archeology program.

                              subcommittee recess

        Senator Stevens. If there is nothing further, the
    subcommittee will stand in recess.
        [Whereupon, at 11:46 a.m., Wednesday, May 13, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 1999

                                  ----------

                            WEDNESDAY, MAY 20, 1998

                                           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, Cochran, Domenici, Shelby,
    Inouye, and Bumpers.

                             DEPARTMENT OF DEFENSE

                             Secretary of the Army

    STATEMENTS OF:
            HON. ROBERT M. WALKER, ACTING SECRETARY OF THE ARMY
            GEN. DENNIS J. REIMER, CHIEF OF STAFF

                     OPENING STATEMENT OF HON. TED STEVENS

        Senator Stevens. Good morning, Mr. Secretary, General
    Reimer. I understand this morning, General, we are honored by
    your spouse who is here. We welcome that. I do not know whose
    shoulder she is looking over, yours or mine.
        General Reimer. She is here to protect me, Mr. Chairman.
        Senator Stevens. We extend greetings to you, Secretary
    Walker, as your first appearance as Acting Secretary. We are
    going to mark up this bill on June 2, and we have many of the
    problems still that we encountered in the 1999 supplemental.
    Those funds came in as an emergency, and now we have a real
    problem on the 1999 budget to balance readiness and
    modernization.
        You two gentlemen face the ongoing challenge of achieving a
    true partnership between the Active Army and Reserve
    components, and I think we have witnessed considerable progress
    this past year in the budget and in the efforts to build new
    bridges within the Army.
        With the new Army Guard director, the new Chief of the
    Guard Bureau to be named, Congress will give you time to
    implement the initiatives started this year and let the new
    Guard leaders establish their priorities working with you.
        I was pleased to have that conversation with you, General,
    as we left the Secretary's office the other morning.
        The actions that you take in formulating the Army's fiscal
    year 2000 budget and the out-year budget plan will be proof of
    the Army's commitment to realize the sort of partnership that
    must exist in the Army as it does in the Air Force and the Air
    Guard.
        I do want to welcome my friend here, and see if he has an
    opening comment first. Senator Inouye.

                       STATEMENT OF HON. DANIEL K. INOUYE

        Senator Inouye. Thank you very much.
        Mr. Secretary and General Reimer, I join my chairman in
    welcoming you here this morning and I appreciate your
    forbearance and willingness to appear. I know that this is the
    third time we have made this attempt.
        Mr. Secretary and General Reimer, some say that the Army is
    at a crossroads, that you are preparing yourselves for the 21st
    century. Over a 2-year period from 1997 to 1999 your forces
    will be reduced from 495,000 to 480,000. You are also
    spearheading an effort to digitize the battlefield and
    modernizing your forces.
        You have added an emphasis to reduce the infrastructure by
    trimming the civilian workers. I applaud your efforts, noting
    that just a few years ago the Army insisted it could not reduce
    its manpower below 495,000.
        Others are questioning whether a smaller force structure
    will be sufficient, and there are some who criticize your
    modernization programs, pointing out that the Comanche
    helicopter, which has already been in development for more than
    15 years, is still nearly a decade away from production.
        Others question whether the weight of the Crusader is too
    heavy for the battlefield, and argue that it no longer is
    planned to incorporate state-of-the-art technologies.
        There is one thing about this city. This city is filled
    with critics, and I suppose there will always be critics, so
    this is your opportunity to discuss these and many other issues
    of interest to this committee, and we look forward to listening
    to your views.
        Mr. Chairman, I want to close by thanking Secretary Walker
    for the fine work he has been doing. As you know, Mr. Walker
    was selected to be the Under Secretary of the Army, but has
    been Acting Secretary for several months. I should also point
    out that during this time there has been no Assistant Secretary
    for Acquisition, none for Civil Works, and no one to replace
    him in his previous job as Assistant Army Secretary for
    Installations.
        I note this because this week the Senate confirmed the
    nominee for Acquisition Matters, and finally, Secretary Walker,
    you will get some help.
        Mr. Walker. Thank you. Thank you, Senator.
        Senator Inouye. So again, General Reimer, Secretary Walker,
    I look forward to your testimony.
        Senator Stevens. Senator Cochran, do you have a statement?
        Senator Cochran. Mr. Chairman, I join you and Senator
    Inouye in welcoming the Secretary and the General to our
    committee, and thank them for their cooperation with us as we
    try to review the budget request and make decisions about the
    level of funding for all the various programs in the Army.
    Thank you.
        Senator Stevens. Senator Shelby, do you have any comments?
        Senator Shelby. I do not have any statement, but I want to
    join you, too, Mr. Chairman, in welcoming General Reimer here
    today and Secretary Walker.
        Senator Stevens. Gentlemen, we will print your statements
    in the record in full. You may use the time as you see fit.

                       statement of Hon. Robert M. Walker

        Mr. Walker. Thank you, Mr. Chairman. As you know, I spent
    15 good years working on this committee, and they were the best
    years of my life, until I went to the Army, and I have got to
    tell you that being able to work with America's soldiers----
        Senator Stevens. There is life after the Senate if you are
    young enough, Mike. [Laughter.]
        Go ahead. Sorry about that.
        Mr. Walker. Mr. Chairman, I turned 50 this year, so I have
    been thinking a lot about that.
        But working with America's soldiers has been for me
    absolutely the best experience of my life. It does not get any
    better than that, and serving as their Acting Secretary for
    these past 5 months has been a tremendous honor, and I very
    much appreciate the support and good words that you and members
    of this committee have given me, but I especially want to thank
    you for the strong support that you give to our soldiers. It is
    recognized, and it is deeply, deeply appreciated.
        A good example of that support was the extraordinary effort
    that this committee made to secure the supplemental. Without
    those funds Army readiness would have broken, because we could
    not have absorbed over $1 billion in the last quarter of the
    fiscal year, so we thank you very much for this committee's
    leadership in securing the supplemental.
        Mr. Chairman, at risk of sounding like that old adage,
    ``What have you done for me lately,'' I am here this morning to
    ask you for a little bit more help. As you know, when the Army
    put its budget together the decision had not been made to
    extend the Bosnia deployment and, as a result, there are no
    funds in the fiscal year 1999 Army budget request for
    contingency operations.
        Mr. Chairman, we cannot maintain readiness in the Army next
    year without the additional allowance for contingencies which
    the President has requested in the 920 function of the budget.
    Now, I understand the concerns of this committee on this issue,
    but I must report to you that we cannot manage the Army without
    those additional funds, so I respectfully ask the committee to
    give this request very careful consideration before the
    appropriations process is complete.
        Mr. Chairman, as you know, the Army is very busy these
    days. In 29 deployments since the end of the cold war, the Army
    has provided more than two-thirds of the personnel to those
    deployments. We are doing that heavy lifting for about one-
    fourth or about 25 percent of the Defense budget, so America is
    getting a great bargain from her Army.
        Today, almost 33,000 soldiers are deployed in 76 countries
    around the world, and to help ease the tempo of the Active
    Force, over 6,000 of those soldiers are from the Guard and
    Reserve, so the total force is hard at work.
        Now, Mr. Chairman, with regard to the total force, I thank
    you for your comments earlier about the efforts that are being
    made, and I know how important this issue is to you and to the
    entire committee. Frankly, no other issue has commanded more of
    my time since I have been the Acting Secretary, and I want to
    assure you and the committee that we are doing our best to
    faithfully implement Secretary Cohen's total force integration
    policy.
        General Reimer and I are personally committed to
    reestablishing a trusting relationship. We just finished work
    on the program objective memorandum [POM], and the Guard and
    Reserve were at every meeting. They were equal participants,
    and that is the right way to do business, so we will continue
    to make decisions as one seamless Total Army team.
        Now, Mr. Chairman, these are tight budget times for the
    Army. It is difficult, making ends meet, and I must report to
    you that we must secure full funding of our operations and
    maintenance [O&M] request for fiscal year 1999. It is the
    absolute minimum that we will need to keep the Army trained and
    ready during the next fiscal year.
        As you know, last year Army O&M was reduced $450 million
    below the budget request. That reduction did have an impact on
    the field. We essentially had to levy a tax on the major
    commands to pay for it and, as a result, operating tempo
    [OPTEMPO] paid for much of the shortfall, leaving less
    flexibility for commanders to take care of other readiness-
    related bills as the year progressed, and we still have a
    shortfall.
        To make up for that shortfall, we will soon be sending you
    a reprogramming request to ensure that we can maintain
    readiness for the rest of the fiscal year. My concern for
    fiscal year 1999 is that we have absolutely no margin for
    error.
        The budget request before the committee includes over
    $1,300 million in efficiencies and savings. We did that to
    shift resources from operations and support to our investment
    accounts, and that was the right thing to do. But if those
    efficiencies are slow to materialize and if the O&M budget is
    also cut, then readiness will be impacted. So I ask the
    committee to support full funding of our O&M request for fiscal
    year 1999.
        Mr. Chairman, with regard to our procurement account, since
    the end of the cold war we essentially took a procurement
    holiday in order to pay for high levels of readiness. We have
    reached the point where we can no longer do that, so this year
    we made a deliberate decision to begin a revitalized
    modernization program. The procurement request before this
    committee today is 17 percent higher than last year as a result
    of that.
        We simply cannot put modernization off any longer. Our
    equipment is aging and wearing out, and technology is growing
    by leaps and bounds. But today, 80 percent of our fielded
    weapons systems have technology that is 1970's technology, and
    our soldiers are driving trucks that are older than they are,
    so we must get on with the task of modernizing an information-
    age Army. So I ask for the committee's support for our
    procurement request.
        Now, Mr. Chairman, I know this is not the authorizing
    committee, but I completely agree with Secretary Cohen that we
    will need additional base closures if we are to secure the
    funding that we will need in the future to modernize the Army
    for the 21st century.
        I understand how difficult base closures are. When I was an
    Assistant Secretary, I was the Army's base closure official. It
    was one of the hardest things I ever did. But as difficult as
    base closures are, they do save money--money that we will
    desperately need to invest in the Army of the future.
        By the year 2001, we will be saving almost $1 billion
    annually from our four previous rounds of base realignment and
    closure [BRAC], even after we account for the cost of
    environmental cleanup. But after those four rounds of BRAC, we
    still have excess infrastructure. So to help fund future
    modernization and future force structure, to help fund the
    future readiness of the Army, the next generation of Army
    leaders will need us to make some difficult decisions, and they
    will need us to begin to reduce our excess infrastructure now.
    So I would ask the committee for your support for additional
    rounds of BRAC.
        Mr. Chairman, to conclude, when I became Acting Secretary,
    I said that every decision I made would be made with soldiers
    in mind. We do have the best Army in the world today for one
    reason, because our soldiers are the best of America. We owe
    them not only our respect and admiration, but we owe them a
    good quality of life and an opportunity to achieve their
    personal goals and aspirations.

                               prepared statement

        I believe very simply that if we get it right with
    soldiers, all of these other issues will fall into place and we
    will be able to take care of the Army.
        Mr. Chairman, thank you very much for the opportunity to
    appear today, and I look forward to your questions. Thank you.
        [The statement follows:]
                  Prepared Statement of Hon. Robert M. Walker
        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 1999.
                                a starting point
        Since the birth of our Nation, America's Army has served the United
    States with honor, courage, and distinction, both at home and abroad,
    in peace and in war. At the threshold of the 21st century, the Army is
    a Total Force, an institution with people at its core--Active, National
    Guard, Army Reserve, civilian employees, families, and retired members.
    The strength and character of the Army's soldiers and civilians are the
    linchpin in maintaining our Army as the finest in the world.
        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, selfless service, and personal
    sacrifice. With over 100,000 soldiers stationed overseas and, on any
    given day during the year, with another 30,000 soldiers of the Total
    Force deployed to more than 70 countries on joint and combined
    operations and exercises, America's Army continues to be a key player
    in our Nation's efforts to help shape the international security
    environment. You, and the entire Nation, can and should be proud of
    their achievements.
                               where we are today
        A new global security environment exists as a result of social,
    political, and military changes that have occurred during the past
    decade. No longer a world in which two hostile super-powers face each
    other, today's environment includes threats--and opportunities--in a
    wide number of areas.
        While we no longer face the immediate threat of a rival superpower,
    there are states and other transnational actors who can still challenge
    our interests militarily and, increasingly, by asymmetric means such as
    weapons of mass destruction and cyber-terrorism. Make no mistake about
    it; we live in a very complex and still dangerous world.
        America's Army has evolved to meet the challenges of this post-Cold
    War world. We are a strategically relevant member of the joint forces
    America can deploy to meet the challenges of today's world. Executing
    missions now requires a mobile Army that can be deployed rapidly
    wherever and whenever needed. In the last eight years, we have
    transformed the Army from a forward-deployed force to a capabilities-
    based force. 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 is strategically relevant and has an important role in
    helping to shape a new international environment to bring about a more
    peaceful and stable world. While fighting and winning two nearly
    simultaneous major theater wars remains the foremost task, we must also
    respond to a wide variety of other potential missions. For example, we
    are fully involved in the Asia-Pacific region, an area of increasing
    importance to the American people. By building strong relationships
    through engagement activities in this region of the world, the Army
    helps foster trust and confidence, as well as contributes to the
    political security and economic stability of our friends, allies, and
    other countries. Our involvement in bilateral and multinational
    exercises, exchange programs, information sharing, and other contacts
    with militaries throughout the Asia-Pacific region are active methods
    for shaping the strategic environment in ways favorable to America's
    interests. In this vitally important area of the world, the Army has
    provided demining training in Cambodia and Laos; and shelter,
    processing, care, and security for Kurdish evacuees in Guam. Army
    soldiers have trained with their counterparts from Thailand, Japan,
    Korea, Australia, and other nations in a number of combined exercises.
        Additionally, Headquarters, U.S. Army Pacific (USARPAC) co-hosts
    the Pacific Armies Management Seminar with the army of another Asia-
    Pacific nation on a biennial basis. This is a non-political effort with
    the purpose of providing a forum for discussion of common military
    issues in a professional environment. Additionally, this is the only
    regular gathering of the chiefs of armies in the Asia-Pacific region
    and is a major element of USARPAC's Expanded Relations Program.
        In Europe, consider the George C. Marshall Center in Garmisch,
    Germany. Since its foundation in June 1994, the Center has been at the
    forefront of pioneering efforts to build an active environment for the
    growth of democracy and democratic institutions within the diplomatic
    and defense bureaucracies of the newly independent states of the former
    Soviet Union (FSU) and Central Europe. The primary teaching vehicle
    used by the Center is an 18-week course for senior foreign civilians
    and military officers from these countries.
        The content of the course includes such subjects as western methods
    of defense organization, planning and budgeting, civilian oversight of
    the military, civil-military interaction, and the democratization
    process. Because of the synergy created within the Center, the Army
    trains all of our Eurasian regional specialists there. In addition to
    an excellent curriculum, study at the Center provides these American
    officer-students an opportunity to establish personal contacts within
    the various Central European and FSU governments. These contacts have
    reaped enormous dividends and strengthen a very successful program that
    produces our Army's Soldier-Diplomats.
        The National Guard State Partnership Program, which began in
    December 1992, is another example of Army shaping activities. The
    program links U.S. states and emerging democracies of Central and
    Eastern Europe, Eurasia, and Latin America through ties between the
    state governor and state National Guard with the ministry of defense
    and the soldiers of the partner country. Our goal is to demonstrate,
    through the example of the citizen-soldier, the role of the military in
    a democratic society. The program seeks to build long-term
    institutional affiliations and people-to-people relationships while
    simultaneously assisting in the effort to establish democratic military
    organizations.
        In Latin America, for example, the Army supports the U.S. Southern
    Command's efforts to bolster the emerging as well as more established
    democracies of the region. The area's past history of military
    intervention in politics and the instability created by
    narcotrafficking threaten Latin American democracies.
        With regard to Latin America, the Army supports the National
    Security and National Military Strategies, as well as the Regional
    Strategy of the Commander-in-Chief through a variety of programs. Most
    important among these is the U.S. Army School of the America's
    (USARSA), where we seek to convey to our Latin American neighbors the
    know-how to conduct effective security operations while respecting
    democratic principles, especially the human rights of their people.
        USARSA is truly relevant to the challenges we face in Latin
    America. The curriculum is derived from the Southern Command strategy,
    and emphasizes supporting democratic institutions, combating
    narcotrafficking, and respecting human rights. Last year, 60 percent of
    USARSA students came from the Andean Ridge and Mexico, key countries in
    our war on drugs; 20 percent were police.
        USARSA is critical to our efforts to develop closer ties with Latin
    American militaries. The school effectively conveys our values to our
    southern neighbors. We carefully screen prospective students and are
    equally careful about what we teach. I have heard the concerns raised
    about this school, and I want you to know that today USARSA is teaching
    the technical skills and promoting the democratic values that support
    American policies and values.
        The combination of Active Army participation in joint and combined
    exercises, army-to-army contacts, and humanitarian assistance and civic
    action projects around the world provide our allies a deeper
    understanding and appreciation of the U.S. Army's roles, missions, and
    capabilities. Additionally, these activities improve interoperability,
    increase the warfighting capability of our combined forces, and
    demonstrate to any potential aggressors our determination to maintain
    peace and stability around the world. Finally, these activities provide
    our leadership an opportunity to build and strengthen personal and
    professional relationships while providing valuable insights into the
    needs and hopes of our friends and allies.
        As we take on these diverse missions, we continue to focus on our
    core competence: to fight and win the Nation's wars. Throughout
    history, forces on the ground have won wars and brought final
    conclusion to conflict. Only soldiers on the ground can take and hold
    territory. America's Army is able to project its forces and establish
    direct, continuous, and comprehensive control over land, resources, and
    people in order to achieve victory and ensure an enduring peace.
    Whatever the mission, one thing remains as clear today as it has
    throughout history: committing the Army commits the Nation. There is no
    greater expression of national resolve and will than to put our
    soldiers--America's sons and daughters--on the ground.
        The inherent versatility of America's Army makes it the force of
    choice for the majority of military operations in support of the
    National Security Strategy. In 28 joint military operations since the
    fall of the Berlin Wall, the Army has repeatedly done the Nation's
    heavy lifting, accounting for over 60 percent of the forces committed
    to these operations, while consuming less than one-quarter of
    Department of Defense's budget.
        The force levels recommended in the Quadrennial Defense Review
    (QDR) are the minimum necessary to carry out the National Military
    Strategy. We cannot reduce our capabilities below that level and still
    respond to two major theater wars. Further, we must begin to transform
    the Army by exploiting technological advances that will change future
    warfare. To do this with forces that remain committed to operational
    readiness, contingency operations, and engagement activities requires a
    predictable investment program and a fundamental re-engineering of
    support infrastructure. It is clearer than ever that we require
    additional rounds of base-closures to maintain force structure and
    ensure readiness in the 21st century. Both the Chief of Staff and I are
    in full agreement on this. We recognize how painful base closures are,
    but we must reduce our infrastructure to meet the requirements of the
    future.
        For fiscal year 1999 and beyond, 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. Accordingly, we will continue the integration of
    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
    Authorities a range of options when dealing with contingencies.
                            fiscal year 1999 budget
        President Clinton has submitted an Army budget for fiscal year 1999
    of $64.3 billion. This budget is the result of a very careful
    assessment of our needs and priorities and reflects today's fiscal
    realities. More importantly, this represents a real increase over the
    fiscal year 1998 budget. This is the first increase since 1985,
    excluding Desert Storm.
        Between fiscal year 1989 and fiscal year 1998 the Army's buying
    power has been reduced 37 percent. The greatest challenge facing the
    Total Army is balancing readiness, quality of life, and modernization
    within available resources. In addition, since 1989 the Army has seen
    the number of operational deployments increase 300 percent from the
    Cold War period.
        Maintaining this delicate balance between requirements and
    resources is increasingly difficult. Funding must be adequate,
    sustained, predictable, and synchronized to meet the readiness, force
    structure and endstrength, quality of life, and modernization
    requirements of today and the uncertain future.
                                army priorities
        As we look to the future, the Nation's interests require America to
    continue to field the best Army in the world. Our priorities are to
    maintain current high levels of readiness, to resource priority
    modernization requirements, and to maintain a good quality of life for
    all members of the Total Force.
        Last year's budget request assumed that U.S. forces would complete
    the mission in Bosnia by the end of June 1998. As the committee is
    aware, the President has determined that an extension of the U.S.
    mission is required to ensure continued compliance with the Dayton
    Agreement. The Administration will submit a non-offset budget
    amendment, designated as an emergency under the Budget Act, to provide
    for the required funds during the remainder of fiscal year 1998. In
    addition, the fiscal year 1999 President's budget includes an allowance
    for undistributed funds to cover contingencies such as the Bosnia
    mission and natural disasters.
        I strongly urge the committee to approve the President's requests.
    The Army cannot absorb these costs within current budgets. Timely
    passage of the fiscal year 1998 supplemental is necessary to prevent
    severe readiness problems in the Army. Without the approval of these
    funds, Army commanders will be required to curtail training and the
    readiness ratings for Army combat forces could slip below that required
    to support the National Military Strategy. Failure to receive required
    non-offset funding in fiscal year 1999 would also reduce readiness
    below acceptable levels in the next fiscal year.
    Readiness
        Readiness continues to be our number one priority. The fiscal year
    1999 request provides adequate funds to maintain readiness and ensure
    the Army's ability to fulfill the National Military Strategy. High-
    quality people, both soldiers and civilians, in all components of the
    Total Force are the defining characteristic of a ready force. Today's
    strategic environment demands highly capable and flexible soldiers and
    civilians, able to adapt to complex, dangerous, and ever-changing
    situations throughout the world. Many factors contribute to readiness;
    however, three key contributors are recruiting, training, and
    leadership.
        Recruiting.--Today's recruits continue to be the best educated and
    disciplined in our Army's history. To succeed now and into the future
    requires that we sustain the high quality men and women serving in the
    Army today. They are the indispensable and decisive element in any
    strategy.
        During fiscal year 1997, the Army was able to overcome many
    significant challenges and successfully recruited 82,087 soldiers to
    meet end-strength requirements. Quality marks for these soldiers meet
    established Department of Defense goals. More than 90 percent possessed
    high school diplomas; over 68 percent scored in Test Score Categories
    I-IIIA on the Armed Services Vocational Aptitude Battery; and fewer
    than 2 percent scored in Test Score Category IV. The ten percent
    without high school diplomas possess a GED or equivalent high school
    education and must score in the upper half of the aptitude test. During
    fiscal year 1997, the Army also improved retention and decreased
    attrition.
        The Army is on track to meet its fiscal year 1998 accession
    mission. Our success in the current fiscal year and the out years will
    be to some extent, a reflection of the extraordinary efforts made
    during fiscal year 1997--increased enlistment bonus and educational
    benefit funding; increased maximum enlistment bonus payments for
    selected military occupational specialties; increased maximum college
    loan repayment; increased educational benefits (a combination of the
    Montgomery GI Bill and the Army College Fund); increased numbers of
    production recruiters; and increased funding for advertising and
    recruiter support.
        While the Army continues to enjoy success in recruiting, the strong
    domestic economy and tight labor market have created an extremely
    challenging recruiting environment. Despite these challenges, the
    Army's professional recruiters are doing a masterful job in both
    quantitative and qualitative terms. We must support them and continue
    to give them the tools, including the resources, necessary to guarantee
    their success.
        Training.--Quality training is essential to maintaining a decisive
    battlefield edge. Readiness is directly related to our ability to
    provide realistic and relevant training. However, our military
    commanders indicate that the quality of training is not necessarily
    related to the quantity. In today's operational environment, soldiers
    and families are already under significant stress from operational
    deployments. Leadership is the key to ensuring that the training
    schedule is not overcrowded and that the focus is on providing high
    quality training events to maintain readiness.
        Realistic and relevant training--conducted at the proper
    frequency--is the glue that bonds the Total Force together as an
    effective fighting force. In the coming year, we will examine how we
    train at our Combat Training Centers in order to ensure that they offer
    the full range of threats we anticipate our soldiers will face in the
    years ahead. This includes weapons of mass destruction, increasing
    urbanization, and the presence of noncombatants on the battlefield.
        We are toughening the training of our recruits to improve
    ``soldierization.'' This year we will expand basic training by one
    week. This will enable us to focus on the values of America's Army and
    to institute a three-day warrior field exercise designed to challenge
    recruits to meet their full potential as soldiers.
        Leadership.--A ready Army is not only well trained, but also well
    led. Our Force XXI process of change has already taught us much in
    terms of equipping and training the force for the future. Likewise,
    this year will see significant developments in our Force XXI leader
    development programs. We have initiated a new Officer Efficiency Report
    and have implemented Officer Personnel Management System XXI.
        The backbone of our Army is the world's finest non-commissioned
    officer (NCO) corps. Today's strategic environment requires
    disciplined, well-trained and ready forces. Our NCO corps is the key to
    success. From the flooded streets of America's cities to the strife
    torn regions of Bosnia-Herzegovina, the Army's NCO's demonstrate
    courage and commitment on a daily basis. In the classrooms and motor
    pools, on the firing ranges and at our Combat Training Centers, the
    Army's non-commissioned officers exemplify professional competence.
    They demonstrate a willingness to take prudent risk, the boldness to
    seize the initiative, and the determination to do their best; qualities
    that have been the hallmark of America's soldiers since before we were
    a nation. On a daily basis, both at home and abroad, our NCO's serve as
    role models for our soldiers, as well as people around the world,
    standing as an example of American values and as the embodiment of a
    professional military.
    Modernization
        Modernization is the guarantor of future readiness. Far too often
    over the last several years, we have been forced to mortgage our future
    in order to preserve near-term readiness. When supplemental funding for
    the Gulf War is excluded, fiscal year 1998 was the thirteenth
    consecutive year of declining Army resources. During that period
    modernization declined 65 percent while we lived off the drawdown. By
    fiscal year 1998, Army procurement comprised only 15 percent of all
    Defense procurement.
        The Army modernization strategy prioritizes investments over time
    and reflects the linkage of our modernization plan to the operational
    concepts described in Joint Vision 2010 and the patterns of operation
    outlined in Army Vision 2010. The Army Modernization Plan is a
    comprehensive program of improvement designed to ensure that America's
    Army remains the world's preeminent land force.
        Our modernization efforts are designed to provide America's
    soldiers with the best weapons and equipment available; weapons and
    equipment that are suitable for operations at all levels of the
    operational continuum. We are focused on maintaining our current combat
    overmatch and achieving Information Dominance in the near-term. In the
    long-term, we seek to field an Army capable of achieving Full Spectrum
    Dominance. Our revised modernization strategy investment goals are
    designed to achieve five major objectives:
      --Digitize the Total Army by 2010.
      --Maintain Combat Overmatch.
      --Recapitalize the Army.
      --Fully integrate the Active and Reserve Components.
      --Focus Science and Technology (S&T) efforts on leap-ahead
            technologies required for the Army After Next.
        Military hardware, operational concepts, doctrine, and command
    initiatives are neither absolute nor static. Change is constant. The
    armies of the past have all required reorganization and restructuring
    to meet then current requirements. The Army of Desert Storm must
    likewise change to meet the challenges of the future. The fiscal year
    1999 budget reverses the decline of the past. We are proposing a 17
    percent increase in the procurement accounts. We must sustain this
    trend to transform an Industrial Age army into an Information Age army.
        Today's Army leads the way in acquisition reform. By continuously
    evaluating the way it does business to ensure our soldiers always have
    access to affordable and effective leading edge technology in equipment
    and service, the Army has achieved considerable success with
    acquisition reform.
        For example, we have launched a major effort, called Modernization
    through Spares, to insert commercial technologies and reduce the cost
    of spare parts. Additionally, in attaining savings through credit card
    purchases, the Army was the first federal agency to exceed one million
    transactions for micro-purchases in fiscal year 1996, and broke that
    record with 2.4 million transactions in fiscal year 1997. By
    aggressively implementing better business practices at all levels, the
    Army is taking advantage of the Revolution in Business Affairs to help
    fund modernization, readiness, and quality of life programs. But, we
    must continue to emphasize the benefits of acquisition reform.
        We must also continue to work to remove the structural barriers to
    achieving the most efficient Army possible. We are working hard to
    ensure that we have one Army--not an operational army, a support army,
    and an acquisition army. As we continue down this road, I ask for your
    support in these and other initiatives we are pursuing. It is
    imperative that we look at innovative ways to reduce overall support
    costs, improve spare parts availability, maintain weapon system
    readiness rates, and provide funds for modernization. In particular, I
    would mention the Prime Vendor Support program (PVS). This is an
    initiative whereby prime contractors could assume full responsibility
    for total system performance while achieving savings in operations and
    support costs and modernizing the weapon system through the integration
    of contemporary spare parts. At the same time, these innovative
    concepts must be effective in peacetime, during contingency operations,
    and in war. We strongly believe that PVS is an initiative that will
    leverage the best commercial practices that industry has to offer,
    maximize rapid distribution, and reduce stock levels while maintaining
    readiness. We are confident that it holds the potential for significant
    savings for our Army. In the next few months, we will finalize the
    details for the Apache pilot program as well as the M109 fleet
    management pilot program, and then make the final decisions required to
    move forward.
    A New Method of Change
        The current process of change is called Force XXI and is designed
    to reconceptualize and redesign the Army at all echelons, from the
    factory to the foxhole, in order to fully exploit the capabilities of
    Information Age technologies. The product resulting from that effort
    will be Army XXI, currently scheduled to be fielded from 2000-2010.
    Army XXI will be digitized and capable of achieving Information
    Dominance over any adversary.
        The Force XXI process is a journey, not a destination, however, and
    Army XXI is only one step along the way. As a result of the
    overwhelming success of Desert Storm, many nations are seeking to
    obtain and apply modern technology to their military forces. The result
    will likely be that the next battlefield we face will be more
    challenging than ever before. The Army After Next Project (AAN) is
    designed to explore the uncertain world of the deeper future and help
    ensure that land component operations in 2015 and beyond are fully
    integrated with those of our joint and multinational partners. The AAN
    long-term focus is on obtaining the leap-ahead technologies required
    for the Army to achieve Full Spectrum Dominance during the military
    operations of the future.
        Information Dominance is central to achieving the Full Spectrum
    Dominance described in Joint Vision 2010. Recent Advanced Warfighting
    Experiments (AWE's) have revealed that secure information technology
    can create an order of magnitude difference in combat effectiveness.
    Information Dominance, when coupled with revised leader development and
    training programs, will give the Army the mental agility required to
    exploit opportunities on the increasingly complex and dynamic
    battlefields of the future.
        Digitization is the means by which we will achieve Information
    Dominance and, as such, is the key to the ultimate realization of Full
    Spectrum Dominance. Digitization is an integral part of modernizing for
    the Information Age. Digitization spans the entire Army modernization
    strategy. It involves the use of modern communications capabilities and
    computers to enable commanders, planners, and soldiers to rapidly
    acquire and share information. The resulting improved awareness will
    revolutionize the conduct and tempo of all phases of future combat
    operations.
        The cornerstone of this effort is our goal of fielding a digitized
    corps by 2004, with an intermediate objective of a digitized division
    by 2000. Remaining Active Component divisions and selected Reserve
    Component combat, combat support, and combat service support units will
    be digitized by 2010.
        The Digitization process involves upgrading or modifying some
    existing systems; adding to or ``appliqueing'' a capability to others;
    and ensuring future systems have information technologies built in as
    an integral part of the system when appropriate. All these capabilities
    are being developed in compliance with a common set of standards to
    ensure interoperability and enhance efficiency through software reuse.
        The Task Force XXI AWE, completed this past Spring at the National
    Training Center, focused on operations at the brigade level and below.
    Friendly situational awareness, a top priority for this experiment, was
    a great success. In preparation for the experiment, the Army installed
    and integrated over 4,000 pieces of digital equipment on nearly 1,000
    vehicles of all types. The AWE successfully experimented with the
    Tactical Internet, and provided insights that will guide investment
    decisions in hardware and software technologies. In November 1997, the
    Army conducted the Division XXI AWE which focused on division and corps
    operations using Army Tactical Command and Control Systems. Results
    will help refine the architecture for the first digitized division (the
    4th Infantry Division), which will be fielded in fiscal year 2000.
        The Army continues to pursue many ongoing efforts with the other
    services and allies to ensure interoperability and seamless
    communications throughout the battlespace. Additionally, the common,
    minimal set of information technology standards developed by the Army
    on behalf of digitization is the basis of the Joint Technical
    Architecture that is now mandated for use throughout the Department of
    Defense.
    Protecting Information
        What we are seeking is information dominance. At the same time,
    however, we are not alone in our efforts to harness the power of the
    Information Age. There are many threats to our ability to gather,
    process, and disseminate information, some of them have only just begun
    to emerge. Protecting our information will be key to the success of
    future operations.
        Our Advanced Warfighting Experiments have demonstrated that the
    computers and other information systems we are developing worked well
    at all echelons and provided continuous, enhanced situational
    awareness. We are able to detect, identify, and track hostile activity
    in sufficient time to target it with lethal weapons or maneuver against
    or around it as appropriate. Likewise, we are able to locate, identify,
    and track friendly forces.
        What we have learned has gone a long way toward answering a
    soldier's three most important questions: Where am I? Where are my team
    members? Where is the enemy? That information is powerful and our
    ability to gather, process, and disseminate more of it than ever before
    has made a major difference in our conduct of operations.
        As we look to the future, however, we know that to be successful,
    we must also have information superiority: the capability to collect,
    process, and disseminate information while exploiting or denying an
    adversary's ability to do the same. In all our developmental and
    experimental efforts, we are conducting appropriate ``red team''
    efforts as part of a holistic approach to organizational, materiel, and
    procedural solutions needed to protect our information from the full
    array of potential threats.

                     RESEARCH, DEVELOPMENT, TEST AND EVALUATION--FISCAL YEAR 1999 PRESIDENT'S BUDGET
                                                [In millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                               Fiscal year--
                         Category                     --------------------------------------------------------------
                                                         1997     1998     1999     2000     2001     2002     2003
    ----------------------------------------------------------------------------------------------------------------
    Basic Research...................................      175      180      201      211      216      221      227
    Applied Research.................................      542      654      511      526      541      557      569
    Adv Tech Dev.....................................      654      657      484      556      515      480      475
    Dem/Val..........................................      540      563      466      449      330      203      248
    Eng Manufacturing Dev............................    1,146    1,162    1,269    1,361    1,728    1,993    1,801
    Management Support...............................    1,145    1,129    1,076    1,054    1,001      953      942
    Operational Sys Dev..............................      716      679      773      596      569      479      623
                                                      --------------------------------------------------------------
          Total RDTE.................................    4,916    5,025    4,781    4,754    4,900    4,887    4,885
    ----------------------------------------------------------------------------------------------------------------

        The fiscal year 1999 RDTE request provides funding for Science and
    Technology efforts that are focused on affordable options to achieve
    capabilities envisioned for Force XXI, Army Vision 2010, and Army After
    Next. This will ensure the timely development and transition of
    technology into weapon systems and system upgrades and to explore
    alternative concepts in future global, capabilities-based warfighting.
    The Army S&T program emphasizes technology insertion via upgrades to
    existing platforms, support of Joint Chiefs of Staff future warfighting
    capabilities and Force XXI AWE's, early reduction of risk in material
    development programs and management through the Army Science and
    Technology Master Plan.
        It also provides for the continued funding for the Force XXI
    Initiatives begun in fiscal year 1997, a program that uses the
    Warfighting Rapid Acquisition Program (WRAP) as a vehicle to jump start
    technology and put proven technology into the hands of soldiers, while
    achieving significant time and dollar efficiencies.
        The fiscal year 1999 RDTE budget provides for the continued
    development of major programs such as Comanche, Crusader, Follow-on to
    TOW, Brilliant Anti-Armor Submunitions (BAT) and Army Battlefield
    Communications System. The budget does not provide for any major system
    new starts.

                             PROCUREMENT APPROPRIATIONS--FISCAL YEAR 1999 PRESIDENT'S BUDGET
                                                [In millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                               Fiscal year--
                      Appropriation                   --------------------------------------------------------------
                                                         1997     1998     1999     2000     2001     2002     2003
    ----------------------------------------------------------------------------------------------------------------
    Aircraft.........................................    1,329    1,323    1,325    1,372    1,456    2,007    2,074
    Missiles.........................................    1,003      744    1,206    1,432    1,414    1,488    1,285
    Weapons/Tracked Cbt Veh..........................    1,419    1,291    1,434    1,566    1,615    1,794    1,911
    Ammunition.......................................    1,143    1,020    1,009    1,157    1,232    1,495    1,664
    Other Procurement................................    3,178    2,563    3,199    3,602    4,204    4,456    5,327
                                                      --------------------------------------------------------------
          Total......................................    8,071    6,941    8,173    9,128   10,022   11,239   12,260
    ----------------------------------------------------------------------------------------------------------------

        The fiscal year 1999 President's budget request for the procurement
    appropriations is $1.2 billion higher than the amount appropriated in
    fiscal year 1998. This increase reflects the Army's continued emphasis
    on modernization for the Total Army. The budget request increases
    funding for Reserve Component modernization, specifically in Air
    Defense, Combat Service Support Systems and Blackhawks (for the Army
    National Guard). Critical modernization programs such as Longbow
    Apache, Abrams Tank Upgrade, Family of Medium Tactical Vehicles,
    Bradley Upgrades, ATACMS and first year funding for the BAT are also
    funded.
        The digitization of the force is another key investment focus with
    increased funding for the Army Battle Command System, which encompasses
    Command and Control Systems and the Warfighters Internet. These systems
    are key to the Army's ability to digitize the first division in fiscal
    year 2000.
        The ammunition program consists of Training Ammunition, War Reserve
    Modernization Ammunition, Ammunition Industrial Base Funding to include
    the Armament Retooling and Manufacturing Support (ARM's) initiative,
    and Ammunition Demilitarization.
        The President's budget funds Training Ammunition to the C-1
    Readiness level. It buys four of the Army's ammunition modernization
    priorities, funds a strong ammunition demilitarization program and
    provides modest funding for Ammunition Industrial Base including the
    continuation of ARM's through the end of fiscal year 1999. It provides
    partial funding for the continuation of depleted uranium production.
    The President's budget supplies sufficient ammunition for the Army to
    conduct two major theater wars with moderate risk relying on
    substitutes. It meets defense guidance on the Industrial Base for
    replenishment and environmental concerns with moderate risk. It
    provides a small fund for continued ARMS incentives, and a continuation
    of the loan guarantee program. The budget does not provide for new
    production of any new major systems.
    Civilian Drawdown
        The Army's civilian workforce of 243,000 has been reduced about
    160,000 people since the drawdown began in fiscal year 1989--a 40
    percent decrease. To shape the Army of the future, current plans are to
    further reduce manpower to about 237,000 by the end of fiscal year 1999
    and to about 218,000 in fiscal year 2003. Overall this is a reduction
    of 46 percent since fiscal year 1989. The civilian manpower reductions
    are attributed to functional transfers to agencies outside of the Army,
    force structure downsizing, base closures and consolidations,
    reengineering and efficiency studies, privatization, and funded
    workload and affordability decisions.
        We are committed to making these changes to the size and
    composition of the work force, while maintaining the capability to
    adequately support and sustain a ready force. Current congressional
    guidance is to manage the civilian work force based on funded work load
    and we support that guidance. Initiatives are underway to correct some
    problems in our manpower requirement determination process, and they
    will help us to better size our work force as well as keep down the
    costs of labor. We need continued congressional support to provide
    flexibility to manage the work force throughout the remaining phase of
    the drawdown.
    Human Relations Environment
        The cornerstone of the Army's human relations philosophy is that
    every soldier is entitled to be treated with dignity and respect,
    without regard to that soldier's gender or race. The Army's commitment
    to equality is a matter of historical record in which we take great
    pride and which we are determined to uphold.
        The Army is dedicated to improving its human relations environment
    and understands the impact of the human dimension on combat readiness.
    The Army continues to work hard to reduce sexual harassment, sexual
    discrimination, and sexual misconduct. In response to incidents in the
    Fall of 1996, Army leadership directed a thorough assessment of the
    Army's human relations environment.
        Secretary West initiated two critical self-studies. First, he
    formed the Senior Review Panel, with a charter to examine the human
    relations environment Army-wide, placing emphasis on sexual harassment.
    Second, he directed the Inspector General to conduct a special
    inspection of equal opportunity and sexual misconduct policies and
    procedures at initial entry training organizations. This was an honest
    look, and we learned a great deal about ourselves.
        The Army's Human Relations Action Plan addresses the findings and
    recommendations of both reports in order to make the Army a better
    place for soldiers without weakening standards. The Action Plan
    contains ongoing actions and actions to be taken with dates for
    completion. Both the Chief of Staff and I receive periodic updates on
    the progress of the Action Plan. Commanders in the field, as well as
    senior Army leaders, have already initiated many of the needed
    corrections.
        We have begun to restore soldier's trust and confidence in the
    Army's Equal Opportunity system as a means to improving our overall
    human relations environment. The Army remains ever vigilant in its
    quest to maintain fair and equitable treatment for soldiers while being
    well aware that without this treatment, readiness ultimately suffers.
    Quality of Life
        We must take care of our soldiers and their families. An ``iron
    logic'' connects quality of life, quality installations, retention, and
    readiness. To recruit and retain quality people, we must provide
    challenging careers and a quality of life comparable to the society
    they are pledged to defend. Our men and women know that they are well
    trained. They have the tools to put that training into practice. And,
    most importantly, they believe that their efforts around the world are
    making a difference. Our soldiers sacrifice greatly to serve their
    country. It is our responsibility to ensure that the Nation adequately
    recognizes that sacrifice. Fair pay and compensation, a stable
    retirement system, accessible quality health care, a predictable duty
    and service environment, and an improved military living environment
    remain top priorities. We must adequately fund community and family
    support programs and continue our progress toward meeting morale,
    welfare, and recreation funding standards. As we further integrate the
    Reserve Component (RC), integration and funding of RC quality of life
    programs becomes equally critical to overall readiness.
        Adequate compensation is a fundamental requirement for maintaining
    an all-volunteer force. This year's budget includes a request for a 3.1
    percent pay raise for our military and civilian personnel, as allowed
    by law. Quality housing is another important element of the quality of
    life for our soldiers. The fiscal year 1999 President's budget contains
    $307 million for the Whole Barracks Renewal Program. Construction of
    these new barracks will improve the living conditions of 2,316 single
    soldiers in the United States, as well as 1,278 living overseas. The
    budget also provides $68.5 million for 506 new family housing units,
    and $28.6 million to provide four Whole Neighborhood renovation
    projects containing an additional 514 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 that will, in turn, revitalize the housing
    for our Army families. The first of these initiatives is scheduled to
    be awarded early this year at Fort Carson, Colorado. Our plan is to use
    these authorities wherever feasible and economical in the U.S. We are
    applying lessons learned from the Fort Carson project in the
    development of 26 additional family housing privatization projects.
        The Army's soldier, family, and community support programs are
    essential for an Army facing the demanding OPTEMPO and PERSTEMPO
    requirements of the current strategic environment. In fiscal year 1999,
    we have requested $388.4 million to support these customer driven
    programs that provide integrated, major educational, preventive, and
    support services that directly affect soldier readiness and foster
    self-reliance. They assist soldiers and families with transition to the
    Army, frequent relocation, deployments and other soldier absences, as
    well as life within the military community. Sports, fitness,
    recreation, library, leisure, and business programs foster mission
    readiness, offer opportunities for social interaction, support
    professional and personal development, relieve stress, and provide ways
    for deployed soldiers to fill off-duty hours. Family support, child,
    and youth programs provide options and resources to reduce the conflict
    between soldiers' personal and family responsibilities and their
    mission requirements.
                                 the way ahead
    The Army Vision
        Our Vision for today and tomorrow is straightforward: The world's
    best army, a full spectrum force--trained and ready for victory. A
    Total Force of quality soldiers and civilians is:
      --A values-based organization.
      --An integral part of the Joint Team.
      --Equipped with the most modern weapons and equipment the Nation can
            provide.
      --Able to respond to our Nation's needs.
      --Changing to meet the challenges of today, tomorrow, and the 21st
            century.
    The Total Force
        Our best judgment is that the National Security Strategy and the
    National Military Strategy, with their integrated approach to Shaping
    the international environment, Responding to crises, and Preparing now
    for an uncertain future, will protect the Nation and its interests, and
    promote a peace that benefits America and all like-minded nations.
        To execute this strategy, the Army requires forces of sufficient
    size, depth, flexibility, and combat power to defend the U.S. homeland;
    maintain effective overseas presence; conduct a wide range of
    concurrent engagement activities and smaller-scale contingencies,
    including peace operations; and conduct decisive campaigns against
    adversaries in two distant, overlapping major theater wars, all in the
    face of weapons of mass destruction and other asymmetric threats.
        That force is a Total Force, an 18 division Army--a force that
    combines the unique capabilities of its Active and Reserve Components
    and its civilian employees. All elements of the Total Force must be
    appropriately resourced, organized, modernized, trained, and
    integrated.
    Active Component--Reserve Component Integration
        The Guard and Reserve are important links between the Armed Forces
    and the American public. Mobilization of the Reserve Component has
    always been an important indicator of the commitment of national will.
    Guardsmen and Reservists are not only integrated into war plans, but
    also provide critical skills in carrying out contingency operations, as
    well as augmenting and supporting active units during peacetime.
        Today, the Reserve Component is fully engaged, providing critical
    support to the National Military Strategy. Every operation America's
    Army conducts today is a Total Army effort, involving Active duty
    personnel, members of the Army National Guard, and Army Reservists
    working side-by-side to accomplish the mission. We do not see this
    changing. Approximately 55 percent of the Total Army's combat arms are
    in the National Guard. Likewise, the Reserve Component contributes over
    60 percent of the Combat Support forces and over 70 percent of the
    Combat Service Support forces to the Total Force.
        The Army has and will continue to mobilize Reserve Component units
    and individuals to provide essential support during contingency
    operations. For example, we have mobilized more than 500 Reserve
    Component units and more than 15,000 soldiers in support of Operations
    Joint Endeavor and Joint Guard. More than 5,000 RC soldiers have
    augmented or backfilled staffs and units in Germany, Italy, and the
    United States by providing functional support in the following areas:
    postal, military police, movement control, logistics, aviation,
    finance, personnel administration, and maintenance. More than 7,000
    have been deployed directly to Bosnia-Herzegovina to perform a wide
    variety of missions.
        Currently, the Army is working to implement 31 separate initiatives
    that will integrate components at all levels across the entire spectrum
    of combat, combat support, and combat service support. Using a phased
    approach, we are in the process of placing two Active Component
    division headquarters; one heavy at Fort Riley and one light at Fort
    Carson, with six enhanced Separate Brigades. This approach will allow
    the Army to maintain combat capability throughout the transition to a
    fully integrated warfighting division.
        Individual integration into selected Active and Reserve units is
    also a high priority. The intent is to develop officers with cross
    component experience as a way of bridging the culture gaps between
    components. Other ongoing AC/RC initiatives include the conversion of
    Army National Guard (ARNG) divisional structure from combat to combat
    support and combat service support structure. This will significantly
    reduce the shortfall in combat support and combat service support that
    has been identified as a systemic problem.
        Additional new AC/RC initiatives include: increasing the number of
    composite (multi-component) units which have AC and RC soldiers blended
    into a cohesive unit; using ARNG Man-Portable Air Defense System teams
    to support AC Patriot battalions deploying to Southwest Asia; and
    involving ARNG rotations in support of Able Sentry in Macedonia, as
    well as the Multinational Force and Observers missions in the Sinai.
        The Secretary of the Army is the Executive Agent for implementation
    of the Nunn-Lugar II program. Emergency first responders in 120 cities
    across the United States will be trained to respond to the potential
    use of weapons of mass destruction (WMD). A new initiative in fiscal
    year 1998 is our plan to resource and employ the Guard and Reserve in
    an integrated response to domestic terrorism incidents involving WMD.
    At the request of Secretary Cohen, I formed a Tiger Team of subject
    matter experts to identify the functional model, forces, funding, and
    direction required to integrate the Guard and Reserve into WMD
    response. As a result of these efforts, DOD is requesting $49.2 million
    in the fiscal year 1999 budget to begin preparations, including:
    fielding ten Rapid Assessment and Initial Detection elements;
    conducting various interagency exercises; and other initiatives. As the
    Secretary of Defense's Executive Agent for this mission, we will
    establish a Consequence Management Program Integration Office to manage
    the effort, take the actions necessary to implement the program in
    fiscal year 1999, and plan for future program initiatives.
        The U.S. Army Reserve (USAR) is testing a program called the
    Reserve Associate Support Program (RASP) which will attach USAR
    soldiers to Active Component units upon completion of their initial
    entry training. After completing the remainder of a two-year Active
    Duty for Training tour, the USAR soldiers are then returned to their
    USAR unit. RASP will provide fully trained soldiers in critical skills
    to high-priority Active Component units and USAR Force Support Package
    units. A test of RASP will commence with 100 soldiers this year, with
    the potential to expand to 4,000 soldiers if it is successful.
        The USAR is also testing a Proof of Principle at three universities
    with Reserve Officers Training Corps battalions. This program replaces
    Active Component officers and NCO's at the battalions with qualified
    drilling reservists from USAR Troop Program Units. This initiative is
    intended to maintain effective ROTC instruction while providing
    potential personnel efficiencies to be reinvested in the Active
    Component force structure.
        These are just a sampling of the 31 initiatives currently underway
    to enhance the integration of the Total Force. The recently completed
    Quadrennial Defense Review and subsequent effort by the National
    Defense Panel have each included several recommendations to strengthen
    the Total Force. Each effort has reinforced the need for all components
    of the Total Force to work together in an atmosphere of mutual trust.
    The foundation of our approach to future operations must rely on Total
    Army solutions that make the best and most appropriate use of each
    component's individuals and organizations. We are fully committed to
    the Secretary of Defense's four principles on Total Force Integration
    to ensure that each component is properly resourced, structured, and
    utilized to best support the National Military Strategy. Those
    principles are:
      --Clearly understood responsibility for and ownership of the Total
            Force by the senior leaders throughout the Total Force.
      --Clear and mutual understanding on the mission of each unit--Active,
            Guard, and Reserve--in service and joint/combined operations,
            during peace and war.
      --Commitment to provide the resources needed to accomplish assigned
            missions.
      --Leadership by senior commanders--Active, Guard, and Reserve--to
            ensure the readiness of the Total Force.
        While much has been done to achieve integration, much more needs to
    be done in the area of assigning relevant missions to all units. The
    Army senior leadership will work closely with the leadership of the
    Army Reserve and the Adjutants General to ensure that units are
    assigned realistic and relevant missions in support of the National
    Military Strategy.
        With your support, we have made significant progress in many areas,
    which has resulted in enhancing the capabilities of the Reserve
    Component. Over time, as the Army has increasingly called upon the
    Reserve Component for support, its share of the Army budget has
    increased. Over $21 billion has been invested in modernization,
    including cascading equipment, for Reserve Component forces in the last
    six years. Today, the Reserve Component's share of Army operations and
    support is the highest it has been since 1962.
        We are fully committed to Secretary Cohen's four principles for
    Total Force Integration. A seamless Total Army is absolutely necessary
    to meet the Nation's requirement for forces that are effective,
    efficient, and strategically relevant in today's security environment.
                                    summary
        As America's Army shapes and responds to the world today and
    prepares for an uncertain future, it will confront many challenges. In
    the new century, the Army must remain actively engaged, while
    continuing to change to meet the challenges of an ambiguous world.
    Balancing readiness, modernization, and quality of life while
    continuing to meet the needs of the Nation poses the greatest challenge
    to Army leaders today.
        The Total Army is going forward together--one team of Active,
    National Guard, and Army Reserve soldiers and civilians--committed to
    the idea of one fight--an integrated joint force working in concert to
    provide for the common defense--and working together for one future--a
    secure America in a safe and prosperous world. To meet all these
    challenges, the Army must stay focused on some guiding principles that
    will serve us well today and prepare us for tomorrow.
        First, we must always keep our focus on people. Soldiers are what
    make the Army work. So, soldiers must take care of themselves, take
    care of their soldiers, and take care of their families. In return, the
    Nation must take care of her soldiers. The American Army will only be
    as good as its people. Today, America is asking a great deal from the
    Total Army team. So, Army leaders at all levels must always make
    decisions with people foremost in mind.
        Second, America's Army must always be strategically relevant to the
    needs of the Nation. It must continue to be trained and ready to fight
    and win the Nation's wars while helping to prevent conflicts, shaping
    the international environment, promoting our national interests abroad,
    and influencing democratic values around the globe.
        Third, we must modernize the Army now for the 21st century. Warfare
    in the information age requires new weapons, new doctrine,
    organization, and training. Our modernization program will focus
    investments on securing the capabilities needed to evolve today's Army
    into Army XXI and the Army After Next. We are committed to providing
    the soldier--our most precious resource--with the best chance to
    prevail quickly and with minimum casualties on the battlefields of
    today and tomorrow.
        Fourth, the Army must always be a disciplined force where men and
    women from all races, religions, and backgrounds serve together with
    dignity and respect. We must be an Army of soldiers and civilians who
    exemplify the values and character of the Nation. An Army of citizens
    who are also soldiers, but first and always Americans.
        Fifth, our Army must be a Total Force where each component--the
    Active force, Army National Guard, and Army Reserve--contributes to a
    seamless team. Our leaders must work together and trust each other and
    seek to understand the strengths that each component provides the
    Nation. Together, we must tirelessly work to leverage the capabilities
    of all the components into one Total Force for America.
        Sixth, our Army must be a full partner in the Nation's joint
    military force. A combined team where each service provides
    complementary capabilities in support of the National Military
    Strategy.
        As the Acting Secretary of the Army, I assure you that the Army
    senior leadership is committed to following these principles as we lead
    the Army into the 21st century. Leadership, of course, is the key to
    achieving our goals. Our leaders must, and will, lead. We will take
    care of people, ensuring that their needs are met. We will embrace and
    promote innovation while continuing to maintain the warrior ethic and
    the culture and traditions of our Army.
        Training will become even more important as we transition to
    Information Age warfare and deal with the threats, challenges, and
    uncertainties of an increasingly ambiguous world. We must continue to
    train to standard, concentrating on warfighting skills, while preparing
    soldiers and units for operations across the spectrum of conflict.
        Managing the Army's budget is another key to achieving our goals.
    While the fiscal year 1999 budget is sound, we must continue to balance
    our resources to meet today's challenges while preparing for
    tomorrow's. The Nation demands that we be good stewards of the limited
    resources we are provided. We are committed to carefully determining
    requirements and reengineering our organizations and processes to
    achieve the savings necessary to finance future needs. As Secretary
    Cohen has said, a revolution in business affairs is necessary and will
    lead to a more efficient Army, focused on our core military
    competencies, and operating with reduced overhead and support costs.
        The Army has made every effort to be as efficient and as effective
    as possible. We have programmed $10.5 billion in efficiencies over the
    Future Years Defense Program, with $1.3 billion of that programmed in
    fiscal year 1999. This approach assumes a degree of risk, which we will
    carefully manage.
                                   conclusion
        Strategically relevant and cost effective at less than 25 percent
    of the Department of Defense budget, the Army is America's force of
    decision. The fiscal year 1999 budget reflects the Army's commitment to
    our Nation. Our soldiers are proud to carry out that commitment, which
    began even before we were a Nation and has led America to a position as
    the dominant leader of the community of nations. As an Army, we thank
    this committee for your support in the past and look to you for
    continued wisdom, guidance, and support as we fulfill our commitment to
    the Nation. With America's sons and daughters always at the forefront
    of our efforts, I am confident that we will make the decisions today
    that will enable continued success tomorrow.

        Senator Stevens. Thank you very much, Mr. Secretary.
        General Reimer.

                       STATEMENT OF GEN. DENNIS J. REIMER

        General Reimer. Mr. Chairman, distinguished members of the
    committee, I am delighted to be here and appear before this
    committee. I have a prepared statement which I would ask be
    included for the record, and I would just like to make a few
    remarks.
        First of all, I am delighted to be able to represent all
    the soldiers, the active and Reserve component soldiers, in the
    U.S. Army, and on behalf of them, I say thank you for your
    efforts in getting the supplemental for us in 1998. That has
    made a big difference. You have led the charge in this
    particular area, and I am deeply appreciative, as are they.
        I would like to talk a little bit about the 1999 budget and
    put it in perspective of the overall Army plan. If you go back
    to 1991 to 1997, that was a drawdown period for the Army. We
    took out over 600,000 people, active and Reserve component
    soldiers and Army civilians, and we closed over 700 bases
    worldwide, and in doing that, we carried a risk in future
    readiness. We used the modernization account to help take care
    of our people. That was the right thing to do, and we knew that
    at the end of that drawdown period we had to move more money
    into the modernization account.
        The 1998 budget, which you have appropriated and is out in
    the field now, reflects the transition year, and the 1999
    budget, which we have submitted to you, continues that change.
    It continues the change that Senator Inouye talked about, a
    very fundamental change to the U.S. Army, but at the same time,
    it allows us to keep units trained and ready.
        I want to talk a little bit about the specifics of that
    particular budget. That budget increases the investment account
    from 21 percent in 1998 to 22 percent. It keeps our major
    programs, the Comanche and the Crusader, on track. Those are
    really the only new programs that we have. It keeps the effort
    in digitization, which leads us to a new organization, on
    track, and so it really reflects what I was talking about in
    terms of modernizing for the future. It retains a balance
    between near and future readiness.
        I have been involved with the Army budget process--as
    either the Vice Chief of Staff, the Forces Command Commander,
    or now, as the Chief of Staff--since 1991. This is the most
    finely balanced budget that we have submitted. It really
    reflects our efforts to move money from current readiness to
    future readiness, and that is pretty difficult when you are
    facing 15 years of declining buying power.
        There is no magic about it. We have relied heavily on
    efficiencies, and we have taken some force structure end
    strength cuts in order to do that. That is the only way we had
    of making sure that we brought the modernization account up and
    allowing us to address that window of vulnerability that we
    think we will experience in the 21st century if we do not do
    that.
        This budget, I think, also reflects the Total Army
    perspective. Fifty-four percent of the U.S. Army is in the
    Reserve component. The percentage of total obligation authority
    [TOA] going to the Reserve component in 1999 is 3 percent
    higher than it was in 1989 as a percentage of Army TOA.
        Now, I would also tell you that it is higher than what you
    appropriated in 1998. We did the best we could, but at the same
    time the Reserve components will tell you that they have 962
    million dollars' worth of unfunded requirements, and that is
    true, but again, as I said, it is a very finely balanced
    budget.
        The budget allows us to continue the momentum of change. We
    have programmed a digitized division by 2000. That is the
    division at Fort Hood that has gone through the advanced war-
    fighting experiment. That is on track. That will lead to a new
    corps by 2004.
        The Army after next wargame that we conduct at Carlisle
    each year has become more robust, and it helped drive science
    technology investment, our research, development, and
    acquisition [RDA] program, and I think it is really doing what
    we wanted it to do.
        While the Army will fundamentally change from the cold war
    Army in the 1980's to a different type of Army in the 21st
    century, one thing that will not change are those quality
    soldiers we have. We owe them a predictable and adequate
    quality of life, and that is what we have asked in this
    particular budget.
        We emphasize four things which have been our priorities
    from the very start: adequate pay for them, adequate medical
    benefits, decent housing, and a retirement and benefits system
    that is solid and does not keep getting eroded over time.

                               prepared statement

        And on their behalf, let me say thank you for your
    support--your support that you show with your appropriations
    and also your support with your visits. I know members of this
    committee who traveled through six different countries in 4 or
    5 days, and you visited our soldiers, and I can just tell you
    that means an awful lot to them.
        So I thank you, Mr. Chairman and the members of the
    committee, for your support. 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 and the magnificent
    soldiers who proudly serve our Nation.
                               path to the future
        The best way to understand the state of today's Army is to envision
    our path to the future. This path is marked by signposts corresponding
    to the three pillars of our national military strategy: respond, shape,
    and prepare. To be ready to ``respond,'' we focus on ensuring near-term
    readiness so that our forces are ready to react to requirements
    worldwide. We also ``shape'' the global environment, increasing
    international understanding and cooperation, diminishing threats, and
    securing America's place in a free and prosperous world. Finally, we
    ``prepare'' for the future, transforming the Army so that our soldiers
    will be ready for the national security tasks the Nation will face in
    the next century. In my testimony, I will address our progress in each
    of these areas. The assessment I offer today is cautiously optimistic.
    I am convinced today's Army is trained and ready. I am equally
    optimistic about the course we have laid out for the future. However,
    we do not live in a risk-free environment and in order to balance all
    the pillars of the National Military Strategy we have to take risks. I
    believe these risks to be prudent. With continued congressional
    support, I am confident that when America's soldiers are needed, they
    will always be there.
                                a starting point
        Every path has a beginning. The Army's path to success starts with
    the support of the American people represented by your concern and
    commitment. I want to personally thank you for your continued support
    to the American soldier. Coincidentally, exactly 200 years ago we faced
    a series of difficult decisions not too unlike those we see today. Our
    new republic was in an era of transition, facing a future filled with
    ambiguity, potential problems, and unprecedented opportunities. The
    Spring of 1798 saw new and unexpected threats. President John Adams
    could not see the future, but he knew that Americans lived in a
    dangerous world, and he understood well the cost of unpreparedness. The
    President turned to Congress for support in strengthening the armed
    forces, and congressional leaders responded to the call. They
    reestablished the United States Marine Corps under the newly created
    Navy Department, added companies to the Army's regular regiments, and
    enhanced the federal government's ability to call on the militia to
    supplement national defense. These were difficult decisions made for
    the common good, putting the needs of the new nation above regional
    issues and a thousand other concerns. Two centuries later, our nation's
    leaders are no less vigilant. Our country has a remarkable history, a
    powerful legacy of commitment to the common defense. Many of you have
    recently traveled around the world, meeting, talking, and listening to
    America's soldiers. They were deeply appreciative of your concern and
    interest. On behalf of all of them--men and women of the Active force,
    the Army National Guard, and the United States Army Reserve--I want to
    offer you their sincere appreciation and thanks.
                                a turning point
        There is no question that since the end of the Cold War, the Army
    has undergone an unprecedented transition. Today, we are at the turning
    point in creating a very different army. We have become a globally
    engaged force, handling a broad range of military missions. The need
    for land power during peacetime is greater than ever. The Army has
    participated in 28 of the 32 major post-Cold War deployments by U.S.
    forces, providing over 60 percent of the personnel involved in those
    operations. In 1997, on average, the Army deployed about 31,000 Active,
    Reserve and National Guard soldiers away from their home stations and
    families, spread across 70 countries around the world. Backing them up
    were approximately another 62,000 men and women preparing to deploy,
    deploying, or recovering from operations. During the year, a
    significant portion of the Army's soldiers were on the move, supporting
    active operational commitments, while others were training and
    preparing for the full spectrum of military operations, from
    conventional combat to teaching chemical and biological detection and
    defense to civilian agencies. The requirements of America's post-Cold
    War defense have made the U.S. Army busier than ever.
        All of the activity of the past few years has taken place in
    conjunction with one of the most significant force reductions in our
    Nation's history. We have taken more than 630,000 active and reserve
    component soldiers and civilian employees out of the force. We have
    closed over 700 bases. In Europe, for example, we reduced the force
    from over 215,000 soldiers to about 65,000. The total drawdown in
    Europe would be equivalent to closing 12 major installations in the
    United States. While these reductions took place, the number of Army
    deployments has increased by more than 300 percent. Despite the
    magnitude of our efforts and the everyday pressures and stresses on the
    force, our soldiers continue to perform magnificently. They have the
    willingness to take prudent risk, the boldness to seize the initiative,
    and the professionalism to do their absolute best--trademarks of the
    American Army for 223 years.
        As you do, I recognize that the service of our soldiers has not
    come without cost. We are not perfect. Many are concerned whether the
    Army can maintain the tremendous progress we have made since the end of
    the Cold War. Some worry that a ``zero defects'' mentality might
    resurrect itself and that opportunities for assignments and promotion
    will diminish. Others fear a return to what some refer to as ``the
    hollow army,'' where requirements far outstripped resources. Some are
    concerned that the high pace of operations will detract from training
    to the point that units will lose their warfighting edge. These
    concerns are understandable and bear watching because they highlight an
    important constant that we can never compromise--at its core, the Army
    is about taking care of people--because they are and always will be our
    greatest asset. In my remarks, I will address what we are doing and
    what needs to be done to ensure our soldiers are prepared to go in
    harm's way today and at every point along the path to the future.
         responding to our nation's needs--ensuring readiness through
                 recruiting, retention, and realistic training
        Responding to the needs of Americans at home and abroad has always
    been a tenet of our military strategy and the Army's time-honored task.
    Every American who has watched an Army National Guard truck deliver a
    load of sand bags to help shore-up a levy holding back a raging flood,
    or an Army convoy plow through an ice storm to deliver lifesaving
    supplies, understands what we mean by the ``respond'' pillar of the
    national military strategy. In like manner, people across the earth--
    from a Korean War veteran in Yongsan to an impressionable young
    Hungarian meeting his first American at the Army headquarters in
    Kaposvar--have experienced first hand the meaning of the presence of
    U.S. ground forces and America's resolve in responding to crisis
    worldwide.
    Recruiting
        Supporting the ``respond'' pillar of the national military strategy
    requires above all else, a trained and ready force. Meeting this
    responsibility starts with recruiting high quality soldiers. 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. As you know, history shows
    that the difficulty of recruiting increases as the jobless rate
    declines, and unemployment figures have been at their lowest point in a
    decade. Nevertheless, the Army is blessed with an outstanding corps of
    professional recruiters who have done a tremendous job of bringing
    young men and women into the force. We fully expect to accomplish our
    recruiting mission this year. The importance of this mission continues
    to increase as the drawdown concludes and we begin to replace losses on
    a one-for-one basis. The Army's recruiting effort in the next few years
    is crucial to maintaining readiness. In particular, we have placed
    increased emphasis on recruiting in critical combat military
    occupational specialties. This should give commanders confidence that
    they will continue to have high quality soldiers, in sufficient
    numbers, to fill their ranks.
        Every soldier who joins the Army is an important and a valued
    member of the team. As you know, in the recent Secretary of the Army's
    Senior Review Panel Report and the Report of the Inspector General, the
    Army took a hard look at what needs to be done to ensure each recruit
    is treated with proper dignity and respect. This work resulted in the
    Army's Human Relations Action Plan. The plan fully recognizes that
    initial entry training (IET) is a critical step in the
    ``soldierization'' process, and we are aggressively implementing the
    recommendations of both reports. We are expanding Basic Combat Training
    (BCT) by a week to ensure every recruit is thoroughly grounded in Army
    values, teamwork, and discipline. The changes we are making in the
    training base are not about lowering standards. In fact, we are working
    to make IET even more challenging and physically demanding, ensuring we
    produce highly motivated, confident young men and women graduates.
        At the direction of the Secretary of Defense, we have reviewed the
    report by the Federal Advisory Committee on Gender-Integrated Training
    and Related Issues (the Kassebaum-Baker Report). Many of the committee
    report's findings mirror the conclusions in the Secretary of the Army's
    Senior Review Panel and the Report of the Inspector General. These
    concerns are being addressed by the initiatives outlined in the Army's
    Human Relations Action Plan. The committee also makes additional
    recommendations that we carefully considered. I can assure you my
    response to the Secretary of Defense focused on three objectives: (1)
    enforcing the highest standards in discipline and training; (2)
    ensuring every soldier lives and trains in a safe and secure
    environment where they are treated with dignity and respect; and (3)
    building the cohesion, confidence, and teamwork that will prepare
    soldiers for success in their units. We are committed to following an
    approach to training that will provide the most efficient and effective
    military force, while realizing the full potential of the young
    Americans who serve our country.
    Retention
        Ensuring the Army's near-term readiness and America's ability to
    respond to any crisis worldwide also requires retaining the world's
    best soldiers. The increased frequency of deployments combined with
    concerns over inadequate pay for our enlisted personnel, benefits,
    health care, and retirement have the potential to increase uncertainty
    and adversely affect retention. I think the very high reenlistment
    rates among units that have conducted the most frequent operational
    deployments under harsh and dangerous conditions say a lot about the
    professionalism of American soldiers. Our men and women know that they
    are well trained. They have the tools to put that training into
    practice. Most important, they believe their effort and sacrifice is
    making a difference, saving lives, protecting property, and
    contributing to freedom and prosperity in places where these words had
    no meaning until an American soldier stood behind them. 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. Maintaining a high quality of life for both married and
    single soldiers remains a top priority for the Army.
    Realistic Training
        Near-term readiness is also about providing realistic and relevant
    training. The Army's senior leadership has an obligation to give
    leaders and soldiers a reasonable expectation that they'll have the
    time and resources they need to train. ``Slowing down the train'' is an
    important part of this effort. More training is not always better
    training. I do not think we can do more with less--but we must get more
    out of what we have got. Fewer and higher quality training events are
    more important than ensuring every moment on the training schedule is
    chock full of activity. For starters, as you know the Joint Chiefs of
    Staff have committed to reducing joint training and exercise
    requirements by 25 percent. This reduction is designed to eliminate the
    least effective training events and should help to reduce the burden on
    commanders who, all too frequently, meet themselves coming and going,
    racing from one training exercise to the next.
        We are also fine-tuning the Army's training programs. In the coming
    year we will relook how we train at the Combat Training Centers
    (CTC's). The CTC's remain the ``crown jewels'' of our training system,
    and we need to begin to look at expanding their role in training for
    the asymmetrical threats we anticipate our soldiers will face in the
    years ahead. This training will not dilute or detract from our
    warfighting focus, but it will place additional emphasis on emerging
    threats, such as urban combat, the proliferation of weapons of mass
    destruction, and the greater intermingling of combatants and
    noncombatants on the battlefield. The sophistication of the CTC's has
    increased by ``an order of magnitude'' since the end of the Cold War,
    but continues to be focused on tough, realistic high intensity combat.
    Our efforts at the CTC's will be paired with an increased, more cost
    effective and balanced use of live training, distance learning and
    simulations at home station. We have made tremendous gains in learning
    how to mix new training technologies with traditional field training.
    As a result of this effort, I think we will be adequately positioned to
    provide a support base for realistic, relevant training in the years
    ahead.
        Realistic, relevant training remains the glue holding the force
    together. If I have one concern, it is that commanders at major
    commands and installations who face tighter budgets and diminished
    resources have fewer and fewer options in managing the assets at their
    command. We need to empower these creative, innovative, and highly
    competent leaders. In that light, we are looking at programmatic
    solutions and the potential of proposing revisions to legislation to
    provide commanders some relief and flexibility in how they structure
    and support their missions. I ask for your consideration and support
    with these efforts.
        Responding to the diverse and often unforeseen mission requirements
    of the post-Cold War world requires disciplined, well-trained and ready
    forces. I believe the steps I have outlined here will ensure that we
    will continue to have those forces as we walk the path to the future.
        shaping the international environment--with total army solutions
        In recent years, the Army's shaping responsibilities have become
    the most demanding aspect of our mission. The Army has truly become
    America's premier shaping force--from our forward-presence forces in
    Korea and Europe; to stability operations in Bosnia, the former
    Yugoslav Republic of Macedonia, Haiti, Ecuador, Peru and the Sinai; to
    international programs, such as the Partnership for Peace exercises and
    military-to-military contacts with friends and allies around the world.
    In addition, visits with my counterparts in Asia, South America, and
    Central Europe lead me to believe strongly that there is more the Army
    could and should do, particularly as part of an interagency approach,
    to promote regional stability, provide strategic early warning of
    global change, and mitigate threats before they become acute. The
    Army's utility in the post-Cold War world is vast, and we are being
    increasingly called upon to work with the other instruments of national
    power to help shape the international environment.
        Managing the high operational and personnel tempo required to
    sustain our efforts represents one of the most significant challenges
    we will face in the year ahead. Ongoing stability operations in Bosnia
    are a case in point. Recognizing the need for an extended commitment in
    this region, we are now looking at ways to avoid consecutive tours. Our
    soldiers remain committed to the mission and are proud of the fact that
    they have saved thousands of lives and mitigated human suffering
    thorough their efforts. We are, however, beginning to see soldiers
    conducting ``back to back'' deployments. To lessen the burden of high
    tempo operations, we must develop new, creative operational and
    personnel policies specifically tailored to recognize the reality of
    conducting business in the post-Cold War world.
        The foundation of our approach to future operations must rely on
    Total Army solutions that make the best and most appropriate use of a
    mix of active, United States Army Reserve, and Army National Guard
    soldiers. As you know, 54 percent of the Army's force structure is in
    the Guard and Reserve. Recent experience clearly demonstrates that any
    significant deployment requires a robust mix of component capabilities.
    About one-quarter of our force in Bosnia, for example, consists of
    soldiers from the Army National Guard and United States Army Reserve,
    while other soldiers from the reserve components have deployed to
    Europe to ``backfill'' active duty soldiers serving in the
    Stabilization Force. Providing sustained support to shaping activities
    across the globe, while continuing to meet the requirements of the
    other two pillars of the national military strategy, requires Total
    Army solutions.
        We are using the four principles outlined by the Secretary of
    Defense in his recent letter on Total Force Integration to focus our
    efforts on ensuring that each component is properly resourced,
    structured, and assigned missions to support our Nation's strategy. Let
    me briefly outline here the principles and some of the key initiatives
    we have undertaken.
        The first principle highlights responsibility. We recognize that
    responsibility for the Total Army can only be taken through energetic
    leadership and effective communications. The Army has moved to improve
    communications. Our Reserve Component Chiefs presented their budget
    issues personally to the Defense Resources Board during the fiscal year
    1999 budget preparation process. They are more frequently and routinely
    in my office and others to ensure there are no filters. I have had
    several meetings in small groups of state Adjutant Generals. The
    Secretary of the Army has established an Army Forum on Integration of
    the Reserve and Active Components to ensure Army leadership involvement
    in Total Army integration issues. The Secretary has placed renewed
    emphasis on our Army Reserve Forces Policy Committee, composed of
    Active, Guard, and Reserve general officers. The Vice Chief of Staff
    has reenergized the Reserve Component Coordination Council to address
    tough policy and resourcing issues.
        The second principle outlined by the Secretary of Defense relates
    to the relevance of missions. This principle recognizes the importance
    of establishing clear and mutually understood missions for each unit.
    We believe missioning all units is essential because it establishes the
    purpose and relevancy of the force. Currently, the Army is converting
    up to 12 combat brigades of Army National Guard structure to meet the
    combat support and combat service support requirements identified in
    the National Military Strategy. There is, however, much more work to be
    done in the area of assigning relevant missions. Currently, there are
    eight Army National Guard combat divisions and three separate brigades
    that have no defined operational mission in the Defense Planning
    Guidance. Nevertheless, the Army needs these forces to help meet its
    worldwide commitments for shaping the conditions that will enhance
    America's global interests and responding to the threats that endanger
    our peace and security. Our task is to define the role of these forces
    and embed their missions clearly in the defense planning guidance. An
    implied task is to gain consensus in the Department of Defense and with
    Congress that recognizes the need to resource these missions.
        One option for enhancing the utility of Reserve Component forces
    might be to create ``dual-capable'' units that have the potential to
    perform traditional combat missions but can also meet a range of
    requirements. In this area, we are looking at a number of innovative
    concepts. These concepts range from forming multi-component units that
    could augment or replace other forces, to giving new missions to the
    reserve components that they could assume within their existing force
    structure. One of the most important areas for potential ``collateral''
    missions is the area of homeland defense. These missions could include
    responsibilities for National Missile Defense, protection of critical
    infrastructure, and response to domestic emergencies, including the
    threats of terrorism and weapons of mass destruction. Another potential
    area of emerging requirements is earmarking commands as ``bridging
    forces'' for working with our friends and allies around the world.
    These forces would serve as important links to facilitate combined and
    multinational operations. They could form habitual training
    relationships with allied nations. Training would put special emphasis
    on the linguistic and liaison capabilities that facilitate
    multinational operations.
        The Army senior leaders must work closely with the Army Reserve
    leadership, the National Guard Bureau, and the Adjutant Generals to
    explore these new requirements and initiatives, realistically defining
    what can and should be done. Our objective must be to get the greatest
    utility out of every element of the force. At the same time, our goal
    should be to add predictability and stability to the force. Rapid and
    unplanned force structure changes place additional stresses on the
    force, complicating not only resourcing decisions, but long-term
    professional development of officers and soldiers. Where possible, we
    must make smart decisions that minimize turmoil while providing the
    most effective and responsive force possible. This is an achievable
    goal, but only if we make a concerted effort to complete the missioning
    process.
        The Secretary's third principle recognizes the importance of
    training, maintaining, and modernizing all the components of the force.
    In the last few years, the Army, with congressional support, has made
    significant progress in creating an integrated approach to enhancing
    the capabilities of the Army National Guard and the United States Army
    Reserve. New initiatives continue to be developed. The Reserve
    Associate Support Program, for example, will provide enhanced training
    for United States Army Reserve soldiers and enhanced readiness for
    Reserve combat support and combat service support units. After
    individual entry training, soldiers are attached to an Active Army
    combat support or combat service support unit for 24 months of active
    duty. These soldiers then return to their United States Army Reserve
    unit experienced and fully trained. The Army has approved a pilot
    program to test the feasibility of the concept. Another significant
    initiative is the development of the Integrated Division. Over the next
    year, the Army will create two integrated divisions, placing three
    Enhanced Separate Brigades under a headquarters commanded by an active
    duty major general. Upon mobilization, the brigades would deploy as
    separate forces while the headquarters serves as a center for training
    follow-on forces.
        The Secretary's fourth principle emphasizes that Total Force
    integration programs must culminate with a commitment to resource
    forces adequately to accomplish their assigned missions. Despite the
    Army's declining share of the Department of Defense budget, the Reserve
    Component's share of the Army budget has risen commensurately with
    their increased use. The Reserve Component's share as a percentage of
    the Army's budget is the highest it has been since 1962. In addition,
    over the last six years the Army has invested an unprecedented $21.5
    billion in modernizing Reserve Component forces, including cascading
    equipment. In the future, more can be done to ensure the efficient and
    appropriate distribution of resources. For example, we are expanding
    Reserve Component participation in Total Army Analysis (TAA) process,
    using their expertise to help validate Army warfighting requirements
    and allocate resources within the Army's budget.
        We have also reviewed the successful integration of both the Air
    Force and the United States Marine Corps. We think there are
    opportunities for the Army to use the underlying principles of these
    models. Using them, we are currently refining concepts that provide for
    even greater integration of the Active, National Guard and Reserve
    soldiers with emphasis on rounding out units up to the company level.
    At that level, soldiers and leaders focus on a single system and the
    challenges of integration are the most manageable.
        We are fully committed to managing the Total Army in accordance
    with the Secretary of Defense's four principles for force integration.
    We believe that the result will be Total Army solutions that allow the
    U.S. Army to conduct prolonged, responsive shaping operations today,
    tomorrow, and into the next century.
       preparing for the challenges ahead--experimenting with the force,
             readying the leaders, reengineering the infrastructure
        As you know, the Army has been preparing for the future through our
    Force XXI process. The process is designed to spearhead the development
    of Army XXI, a product-improved force that will see the Army into the
    next century. Army XXI is primarily concerned with enhancing our
    current systems with information age technology. In addition, Force XXI
    is directing our explorations into the Army After Next (AAN). AAN is a
    future force designed specifically to meet the national security
    requirements of the 21st century. It will most probably include
    organizations and systems which do not yet exist. The objective of
    Force XXI is to synchronize modern equipment, quality people, doctrine,
    force mix, training, and leader and soldier development--the six Army
    imperatives--ensuring that the United States Army can conduct a variety
    of missions in diverse environments, from today until well into the
    next century.
        The centerpiece of the Force XXI process has been a series of
    Advanced Warfighting Experiments (AWE's) designed to test new systems
    and operational concepts. In the last year, we conducted two pivotal
    experiments: the Task Force XXI AWE at the National Training Center,
    Fort Irwin, California, and the Division AWE at Fort Hood, Texas. These
    experiments have provided a range of insights into future force design.
    In particular, they validated the importance of ``spiral development,''
    synchronizing the evolution of new systems with organizational,
    training, leader, soldier, and doctrinal developments. The experiments
    also reaffirmed the importance of situational awareness and information
    dominance provided by new technologies. As a result of the AWE's, I am
    convinced more than ever that developing and fielding digitized
    divisions and a digitized corps is both feasible and absolutely
    essential for providing the competent, capable forces we will need in
    the future. But, the AWE's are more than just technology. They are
    about spearheading the cultural and institutional change that will
    prepare the force mentally for the challenges of the next century.
        Through the lessons learned from Task Force XXI and Division AWE
    experimentation and wargaming, we will develop the insights we need in
    order to make the programmatic decisions to carry us through the year
    2005 timeframe. This year we will invest considerable effort in fine
    tuning our modernization programs for the decade ahead. In particular,
    we must make sure we have in place the backbone of systems we need to
    conduct information based operations. We must also focus our Research
    and Development efforts and pinpoint potential AAN capabilities that
    can be brought forward and developed now. We cannot yet clearly define
    the timeline for fielding an AAN force, but it is time to think about
    taking AAN initiatives out of the theoretical stage and begin looking
    at potential applications. In particular, future experimentation will
    focus on the capabilities of light forces and increased joint
    experimentation. We continue to work closely with the United States
    Marine Corps on the development of land warfare. Recently, the Air
    Force and the Army have agreed to begin planning on a cooperative
    warfighting experiment, which I hope will serve as the precursor for a
    truly joint experimentation program that will inform and energize a
    fully integrated joint modernization process.
        In addition to the tremendous progress we have made in
    experimentation, this year marks a significant development in our Force
    XXI leader development programs. The Officer Personnel Management
    System (OPMS) XXI and the new Officer Efficiency Report (OER) are
    important components of our future-oriented programs. Though these are
    officer programs, they are intended as a start point for
    institutionalizing leader programs for the 21st century across the
    Army. OPMS XXI restructures how active duty officers will be managed,
    developed, and promoted over a career of service. The changes it
    introduces are significant. The new system will not only open new
    opportunities for advancement, command and education, but will better
    serve the Army's demanding and diverse needs for officer leadership in
    the 21st century. We developed OPMS XXI hand-in-hand with the revision
    of the OER system. The new report places special emphasis on ethical
    attributes and the ability to share and instill those qualities in
    subordinates. These initiatives, in conjunction with our other Force
    XXI efforts, are important steps in growing the soldiers and leaders of
    the next century.
        While we continue our Force XXI process, we are reviewing the
    findings of the recently completed work of the National Defense Panel
    (NDP). The panel's report has far reaching implications that deserve to
    be discussed and considered. On the whole, I find the report's findings
    as a vote of confidence for the path we are on and see nothing that
    leads me to believe we should significantly alter our path. We must
    take a prudent course; each pillar in our national strategy carries
    great importance. We would be ill-advised to assume undue risk in one
    area for the sake of speeding developments in another. A balanced
    approach to the future--responding to and deterring threats when they
    present themselves, shaping the strategic environment to mitigate
    potential sources of instability before they become acute, and
    preparing in a disciplined, deliberate manner for the challenges we
    know we will face ahead--remains our best hope for ensuring Americans
    peace and prosperity from today to tomorrow.
        One finding of the NDP report with which I fully agree is the
    recommendation to eliminate excess infrastructure. I fully recognize
    that this is a contentious and controversial issue. Yet, I believe it
    is one that we as a Nation must address. As you know, the Army has made
    every effort to be as efficient and effective as possible. The Army has
    programmed approximately $10.5 billion in efficiencies over the Future
    Years Defense Program (FYDP). While we have assumed a degree of risk
    through the aggressive pursuit of efficiencies, we believe the risk is
    known, balanced, and manageable. I am concerned, however, that these
    efficiencies alone will not be enough to balance readiness and
    modernization in the out years. Reducing excess infrastructure and
    increasing our flexibility in directing resources and management reform
    is the surest, most efficient means for improving the value of
    America's investment in defense.
               the strategic balance--requirements and resources
        The Army is not only an invaluable strategic force, it is also cost
    effective, accounting for less than 25 percent of the Department of
    Defense budget. We are justifiably proud of the return we provide for
    the American citizen's investment. Yet as I testified last year, we
    remain a force under stress. The greatest potential threat to Army
    readiness is the medium- and long-term impact of an increased
    operational pace and insufficient modernization funding. By failing to
    modernize and update our equipment, we put tomorrow's soldiers at risk.
    I cannot overestimate the risk we take by failing to modernize. The
    continued threat of weapons proliferation can allow even no-tech
    nations to field high-tech armies in the flash of an arms deal. Though
    no nation may be capable of fielding a force that can compete with the
    United States in a conventional war, any nation can develop a ``niche''
    capability that will cost American lives in a future conflict. At the
    same time, sacrificing force structure and undercutting quality of life
    programs are equally unacceptable. Our requirement for ground forces to
    shape and respond will not diminish. In fact, the changing
    international environment will probably increase the requirement for
    the sustained forward presence of our forces and enhanced power
    projection capabilities. Any option other than maintaining the balance
    between current readiness and prudent modernization places our ability
    to effectively implement the national military strategy at undue risk.
        As you are aware, as requirements for shaping and responding have
    expanded in the post-Cold War years, the Army has relied on
    modernization accounts as the primary bill payer. In fiscal year 1998,
    Army procurement reached its lowest level since 1960. Quadrennial
    Defense Review personnel reductions, savings from better business
    practices, and congressional supplemental appropriations have off-set
    somewhat the drain on Army modernization, but these initiatives alone
    are not sufficient to mitigate the risk that the Army will be
    unprepared for the national security challenges of the future. The
    proposed fiscal year 1999 Army budget only begins to bring our
    requirements back into balance. The fiscal year 1999 President's Budget
    for the Army totals $64.3 billion. While this is a $3.3 billion
    increase over the fiscal year 1998 budget, it follows 13 years of
    decline (except for Desert Storm) in real terms and reflects the
    continued decrease in the Army's percentage of the Department of
    Defense's budget from 27 percent in fiscal year 1989 to 24.9 percent
    fiscal year 1999. Implementing the budget requires the Army to assume
    risk in certain areas and make tough choices to balance requirements
    and resources.
              one team, one fight, one future--america's soldiers
        Balancing priorities is never an easy task. Our first congressional
    leaders learned that lesson well 200 years ago, and very little has
    changed. There are no easy answers, no silver bullets, no magic
    solutions. Inside the Army, we have done our best to provide the right
    balance among readiness, endstrength, modernization, and quality of
    life. We are one team, United States Army Active, Reserve and National
    Guard. We believe in one fight conducted by an integrated joint combat
    force in concert with other federal agencies--providing for the common
    defense. We are working for one future: a better, more secure place for
    America in a safer and more prosperous world. At the heart of this
    commitment are American soldiers, prepared and ready to serve whenever
    and wherever our nation calls. Supported by these exceptional men and
    women, we can and will face the tough choices ahead and make the right
    decisions to safely travel down the path to the years ahead.
        [Clerk's Note.--The U.S. Army Posture Statement, Fiscal Year 1999
    can be found on the Department's website at http://www.army.mil.]

                             Reprogramming request

        Senator Stevens. Thank you very much, General.
        Mr. Secretary, what is this reprogramming you are going to
    give us? Is this for 1998?
        Mr. Walker. Yes, sir; we have a reprogramming request
    pending in the Office of the Secretary of Defense [OSD] which
    is undergoing OSD review now to ensure readiness funding for
    our divisions for the rest of the year. In fact, all the
    services will be having an omnibus reprogramming presented
    sometime later in June.
        Senator Stevens. I thought we did that in the supplemental.
        Mr. Walker. That only took care of the Bosnia-related cost.
        Senator Stevens. All right. I think we all hear you in
    terms of this request. We have a $1.9 billion request for 1999
    on an emergency basis. It is very clear that that cannot be
    approved by the House and I am not sure it will be approved
    over here in terms of being offbudget, so that is going to
    exacerbate our problem, and Mr. Cortese and I are just thinking
    about some of the things we might do to try and deal with that
    issue. That is as I understand it about an 80-percent outlay,
    very difficult to handle, to bring that back onbudget.
        Mr. Walker. Mr. Chairman, of that $1.9 billion, the Army
    share of that is approximately $1.4 billion. We cannot absorb
    that kind of cost in 1999.
        To put it into perspective, that is well over one-half of
    the ground OPTEMPO training cost for the Army during the fiscal
    year. It would be impossible to absorb, so I do not know how we
    can pay for it any other way.
        Senator Stevens. When we get this bill to the floor it
    faces some amendments that will require a mandatory phasedown
    in deployment, and I am sure when it gets to the House it will
    face an even more difficult problem in terms of cutting off
    funds for being in Bosnia altogether. It is a difficult thing
    to cross the bridge and make it an emergency after 4 years.
        I really do not know how we can deal with that, except we
    will try to be as--I think the best thing is innovative as
    possible in terms of trying to look at the outlays and to see
    if there are other items in the bill that would be truly
    considered an emergency that we might shift emergency
    designation there.
        I want to confer with you on that.
        Mr. Walker. Thank you.
        Senator Stevens. Let me ask you----
        Mr. Walker. Senator, may I assure you that it will be an
    emergency for the Army come October 1.
        Senator Stevens. It will be an emergency if you have to
    take the money out of other accounts, that is true.
        Mr. Walker. Yes, sir.
        Senator Stevens. However, you know, we got that in March,
    for September being an emergency. It is a tough row to hoe.

                               Year 2000 problem

        Where do you stand in terms of the Army on that, what we
    call a year 2000 problem? It would seem to me that is a
    difficult thing too. We are having a hearing here when we get
    back and we have just allocated $2.25 billion to our special
    committee, and that is on an emergency basis now. Are you
    affected by that, and what can we look forward to? That has to
    be dealt with before December 31, 1999.
        Mr. Walker. Yes, sir; we have estimated through the year
    2000 over $330 million that we will be spending to deal with
    the year 2000 problem. It is a serious problem, and we have got
    to deal with it. Particularly, we have to make sure that our
    critical systems are taken care of. This is something that is
    carefully watched in the Army. Both General Reimer and I meet
    with Lieutenant General Campbell, our Director of Information
    Systems for Command, Control, Communications and Computers, on
    a regular basis on this issue, and it is carefully monitored at
    the Department of Defense. There is a great expense and a great
    deal of work to be done.
        There is a concern that is not just for the Army and the
    Department of Defense, but what are our allies doing as well.
    So the concern extends beyond the Federal Government and the
    United States, but also those that we have to interoperate with
    and our allies around the world.
        Senator Stevens. Well, I would hope that we would find some
    way to cooperate between what you are doing and our special
    committee. We have had some briefings from some of the experts
    in the area, and I am led to believe that some of the chips
    that were put in the systems had kept capacity far beyond the
    system, because it is less expensive to acquire chips that have
    an expanded capacity than it is those that have just a very
    narrow capacity.
        And if you are dealing with a system that had a series of
    models and one was a super-duper model and the plain model, the
    plain model has the same chip, and many people may not
    understand that the functions on that chip are those that would
    be affected by the year 2000 problem.
        I hope that we have a way of interrogating those people who
    sold us the equipment as to what type chip they used, and it is
    going to be a very serious thing.
        Mr. Walker. We found a new aspect of it every week that had
    not been considered. We just hope we find out all the aspects
    of it before the year 2000 comes around.
        Senator Stevens. Well, you could suddenly find out that the
    one chip that makes the treads go on the tank is the one that
    is hidden down there under the tank and no one knows it is
    there.
        Mr. Walker. Well, those critical systems are being very,
    very carefully managed to make sure we do not have that
    problem.

                                     Bosnia

        Senator Stevens. Very well.
        I am really worried about the Bosnia situation, gentlemen.
    We were told by General Clark that the Army is going to be
    deployed in Bosnia for several years, and we have obviously the
    statement of the President. I was there at Christmastime, the
    same thing.
        Do we have budgeting in here for the contracting support?
    Is this $1.9 billion for the Army--what did you do about
    contracting support?
        Mr. Walker. It would include the Army's share of the
    support to the contractors that we have there, which provide
    the quality of life support to the deployed soldiers.
        Senator Stevens. All right. Well, I appreciate it. I may
    have some questions later, but let me go to Senator Cochran.

                                 Budget request

        Senator Cochran. Thank you, Mr. Chairman.
        In looking over the statements that you submitted, I am
    encouraged first of all that the Army seems to have been able
    to obtain approval for asking the Congress to appropriate an
    increased amount of funding for this fiscal year compared with
    last, and this is something new. We have been seeing cuts every
    year since 1985, except for Desert Storm, so there is an
    increase in this budget request, and that is encouraging.
        Mr. Walker. We hope that trend continues, Senator.

                            Recruiting and retention

        Senator Cochran. I am curious also to see your upbeat
    appraisal of recruiting at a time when some of the other
    services are telling us that because of the operational tempo
    and other attractions of civilian life compared with the
    military now that they are losing highly skilled people. The
    Air Force is worried about having enough pilots to fly the
    planes and perform the missions.
        But you suggest in your statement, Mr. Secretary, that
    recruiting has been doing well, more than 90 percent of the
    soldiers you recruited last year had high school diplomas, that
    you are not under any real stress there.
        Do you anticipate this continuing, or do you see any
    problems with the prolonged deployments to places like Bosnia
    and elsewhere around the world and the operational tempo having
    a negative impact on future recruiting goals?
        Mr. Walker. Senator, let me say this about recruiting. If
    we had been testifying this time last year, it would not have
    been as rosy. But with the help of this committee, you helped
    us to increase allowances, bonuses, to increase the number of
    recruiters, and to take other actions which turned our
    recruiting problem around, and we were particularly having a
    problem which, if left unaddressed, would have led to a
    readiness problem in terms of the number of unfilled squads,
    particularly in infantry and armor, that we have turned around,
    and we are now recruiting larger numbers of both infantry and
    armor. So we believe the recruiting aspect of it, with the help
    of this committee, is going in the right direction.
        With regard to retention, the Chief and I were just looking
    at the figures. It is coming in at 104 percent of our goals.
    When we look at the 1st Armored Division and those divisions
    that have been deployed to Bosnia, we are surprised to find
    numbers of 120 and 130 percent. It appears that currently
    soldiers like doing their job.
        What we do not know is, how many times can you keep asking,
    particularly families, to undergo the stress of multiple
    deployments? We do not know the answer to that yet, but we have
    the same concerns that you suggest in your question.

                           National Guard integration

        Senator Cochran. There is another question I would like to
    hear your reaction as well as General Reimer's, and that is on
    the plan to redesign the National Guard and integrate them into
    the Total Army concept. I understand that is undergoing some
    changes, and that some plans are being made to transform some
    of these combat troops to support units.
        Tell me what you are planning to do with the funds that are
    made available in this budget in that regard, and have you been
    able to develop support among the National Guard Adjutants
    General [TAG's], for example, and bring them along with this
    program, or are we looking for a collision that is about to
    happen?
        Mr. Walker. With regard to the specific issue that you
    bring up, there was for the first time unanimous support of the
    54 TAG's for that approach. What we are doing are converting 12
    combat brigades to combat support and combat service support,
    which will help us reduce a significant longstanding shortfall
    that we had in combat support and combat service support. That
    is on track. I will provide you for the record the amount of
    money that is in this budget and how much is in the POM for
    that redesign, but that is one of over 30 initiatives that are
    underway that are being reviewed both in the Active Army and
    the Guard and Reserve.
        [The information follows:]

                            National Guard Redesign

        In the President's budget for fiscal year 1999, $87 million
    is programmed for the Army National Guard Redesign Study
    (ADRS).
        As of the President's budget submission, the Future Years
    Defense Plan contained the following funding for ADRS equipping
    and training:

                                                                 In millions

    Fiscal year:
        1999..........................................................   $87
        2000.......................................................... 114.4
        2001.......................................................... 145.6
        2002.......................................................... 180.6
        2003.......................................................... 366.3
                            -----------------------------------------------------------------
                            ________________________________________________
          Total....................................................... 893.9

        Of the total, $843.9 million is programmed for equipment, and $50
    million is programmed for training.
        As we continue to assess and validate the ADRS, requirements are
    subject to change.

        General Reimer. May I just say, Senator, there are a number
    of initiatives that basically work to bring the Total Army
    together and make it a more seamless Army. That is what it has
    got to be in the 21st century, and we have got to move in that
    direction.
        The Secretary has mentioned the conversion of combat units
    to combat service support units, and that makes great sense
    from both a warfighting mission and a State support mission,
    and I think that has been accepted. The other part that has
    been accepted are the two integrated divisions that basically
    combine active component division headquarters with three
    enhanced brigades. We will develop that concept to its fullest.
        There are others that we are discussing in terms of teaming
    concepts between one division of the National Guard and an
    active component division. More integration--the whole issue is
    to develop the trust and confidence among all members of the
    Total Army. That is what we are trying to do, and we are trying
    to do that through open communication, having everybody's
    opinion heard and evaluated, and also by working together to
    integrate wherever we possibly can.
        Currently, we have three active component commanders
    commanding National Guard organizations, and that is fully
    accepted by all TAG's.
        At the same time, we are looking at an exchange program
    where we would have active component officers commanding
    Reserve component units and Reserve component commanders
    commanding active component units.
        I think the idea of bringing everybody together is
    absolutely what we have to do. That is where we put a lot of
    effort in the past year.
        Now, there will still be discussions on that. There will be
    different opinions on how to go about doing it. These issues
    are complex. The discussions are rooted in the Constitution of
    the United States, but we are addressing them, and in
    addressing them, we are trying to do what is right for the Army
    and what is right for America.

                   Theater high altitude area defense [THAAD]

        Senator Cochran. There has been a good deal of attention
    focused on the failure of a test of your Theater High Altitude
    Area Defense Program, the THAAD missile, so-called. Tell us
    what the current status of your views are about this program.
    Does this test mean that that is going to be an unsuccessful
    program and you are going to cancel it or something, or is this
    just one of a series of numerous tests, and you learn something
    from each one and proceed to stick with your plan of figuring
    out a way to make this system work?
        Mr. Walker. Senator, we are looking very carefully at the
    cause of that last failure. Let me say, we have a tremendous
    requirement that must be filled by THAAD, and that is the right
    platform to fill a requirement that our commanders in chief
    [CINC's] out in the field have identified to protect our
    forces.
        We believe that the latter part of your statement is
    correct, that it is the right approach, and we are going to
    work those bugs out, and we are going to continue with that
    program.
        General Reimer. Let me just add, Senator, if I could, the
    requirement is absolutely solid. The threat is there. This is
    not some threat that might come about. Tactical missiles are
    there, and we have to protect our troops. This is about
    protecting those quality soldiers that I talked about. So we
    are very, very solid in support of that requirement.
        We have had a series of eight tests with THAAD. Of the five
    intercept attempts, we have not been able to achieve the
    results that we wanted totally. There has not been any systemic
    fault that we have been able to identify, and we are continuing
    to work the system.
        The contractor has been given a cure notice and will come
    back in with a program this week with corrective action that
    will be taken. We are not falling off of the requirement. We
    are going to keep the pressure on the contractor and make this
    thing work. We need it for our soldiers.
        Senator Cochran. We were over in Korea with the chairman 1
    year ago, a little over 1 year ago, and it became very clear to
    us when we started asking what the threats were for our troops
    there, one of them was missiles, and the fact that you were at
    point-blank range there, but not only that, with North Korea
    developing longer range missiles our troops in Japan were being
    singled out by the North Koreans as potential targets, we were
    told.
        So the fact of the matter is, we have troops all around the
    world who are under the gun now. We lost 28 in Dharhan during
    the gulf war to a Scud missile, and we know things have not
    gotten any friendlier in some parts of the world. They have
    gotten more hostile, with threats being made by leaders of some
    of these nation states against the United States.
        So it is a matter of great concern to me, and I hope that
    we can take hope in the different programs that are under
    development by the services, and this is the system that is
    under development by the Army. This is the one the Army
    selected as the best approach to missile defense for its troops
    in the theaters.
        So we wish you well. We are going to continue to provide, I
    hope, the level of funding necessary to get the job done. We
    need to have that missile system developed and deployed sooner
    rather than later, in my view.
        Mr. Walker. I think we need to stick with it, Senator,
    because of the other systems being considered, the THAAD is 5
    years ahead of any other system that could compete.
        We have a real threat now that we need to be dealing with.
    If we had it today, it would be deployed.
        Senator Cochran. Thank you, Mr. Chairman.
        Senator Stevens. Senator Shelby.
        Senator Shelby. Thank you.
        General Reimer, following up on Senator Cochran's questions
    dealing with THAAD, this is just a question regarding tests.
    You know, I believe they have had five tests.
        General Reimer. They have had a total of eight with that
    system, Senator.
        Senator Shelby. What if they had 50 tests? I know you would
    learn a lot more. I just throw that figure out, because if the
    basic concept of a system is good, which people tell me it is,
    the more tests, the better chance you work it out, and then you
    say, well, gosh, we are going to do another test in 4 months,
    or 6 months, and everything is relying on that one test,
    whereas our real aim is to work the bugs out, is it not?
        General Reimer. I think you make a very valid point. This
    is a system in the early stage of its development, and as we
    get more tests, we certainly learn more about it.
        We have tried, and I think the contractor, working in
    conjunction and partnership with us, has tried very hard to
    make sure each of those tests is successful. So we have gone
    through that to try and really fine-tune it as best we could.
        As the Secretary pointed out, it is still far ahead of any
    other system right now, and it offers the greatest opportunity
    to put the missile on the ground faster than anything else, so
    we are going to stay with it.
        And you are right, we need to run more tests, and we need
    to run them as fast as we can, but we have got to make sure
    they are successful, too. That is the balance we are trying to
    achieve.
        Senator Shelby. General, you can just go back a few years,
    a good many years back when the M-1 tank was coming on line and
    there were all kinds of articles out there, it will never work,
    it is terrible, it is nothing, and you did have a lot of little
    glitches to work out, and you work them out little by little,
    and we know the history since then, do we not?
        General Reimer. Absolutely.

                               Space capabilities

        Senator Shelby. I would like to get into something else,
    General Reimer. The Air Force recently has emphasized that it
    is undergoing a transformation into a space and air force,
    whatever that means.
        The Army, as you well know, has also had a long and
    distinguished legacy in space. Given this heritage, what is
    your vision for the Army contribution to space operations, and
    how do you believe the Army can tailor space capabilities to
    support land force and joint missions, which is what you have
    done? Is that a real lively thing today?
        General Reimer. I understand the question, and it is a very
    contemporary topic that needs to be discussed and is discussed
    a lot. The Army after next wargames that I mentioned in my
    remarks really have emphasized the importance of space.
        Space is the high ground in the 21st century. We understand
    that. We are really very dependent upon space for the global
    positioning systems, for communications, and for intelligence,
    and so our effort has been to increase the emphasis in terms of
    Army involvement in space.
        We have done that primarily through the U.S. Army SMDC, the
    Space and Missile Defense Command. That is headed up by Lt.
    Gen. Ed Anderson, and has been really the Army vehicle to
    emphasize space. We believe very strongly that we have a very
    strong future in space, and the Army needs to be involved, and
    we will stay involved in space.

                      Enhanced fiber optic guided missile

        Senator Shelby. General, both the House and the Senate
    authorizing committees zeroed-out the enhanced fiberoptic
    guided missile program. General, does the Army still support
    the Enhanced Fiber Optic Guided Missile [EFOG-M] Program?
        General Reimer. Senator, the EFOG-M program is a program
    that we have in the advanced concept technology demonstration
    [ACTD] model, and I do not think both committees zeroed it
    completely. They cut, it is my understanding, pretty close to
    zeroing out, but not quite.
        We brought the EFOG-M in as a hedge against the uncertainty
    of light forces being caught in a situation like Desert Shield
    and not having as many systems to kill tanks as they should
    have. So EFOG-M was seen as one of the potentials for the
    future.
        To answer your question, we want to stay with the ACTD to
    continue to evaluate it. We are running some tests on it.
        Senator Shelby. It has come a long way, though, has it not?
        General Reimer. It has come a long way. We have not gotten
    all the results out of it yet that we want, but it is coming
    along, and we want to stay with it through the ACTD phase and
    then make a decision at that point.

                             Science and technology

        Senator Shelby. General, what level of inhouse competency
    in Army labs and research centers is necessary to ensure that
    the Army develops technologies needed to achieve divisions of
    Force XXI, or Army after next?
        General Reimer. In terms of level, I do not know exactly
    how to describe that, except to say we put about $1 billion
    into the science and technology [S&T] base.
        Senator Shelby. It has paid off, too, has it not?
        General Reimer. It has, and you identified a few programs
    that have been brought along by that.
        We are using the Army after next wargames, which look at
    what the Army needs to be in the 2020 timeframe and the
    technologies we need to drive that S&T base, and so we are
    focusing our investments in S&T in that particular area. I
    think S&T will continue to be very important as we change to a
    fundamentally different Army in the 21st century.
        Senator Shelby. General, do you believe that if there is a
    downsizing strategy that results in Army scientists and
    engineers with high grade pay--in other words, high
    competence--to be placed in lower grades or lower performance
    positions, do you believe that would be good public policy or
    bad public policy?
        General Reimer. Well, I do not think that is necessarily
    good policy. I think that is a reflection of the way we have
    had to reshape the civilian work force.
        Senator Shelby. If you had a downsizing, a gradual
    downsizing, trying to keep the best and the brightest would
    make a lot more sense, would it not?
        General Reimer. It would. I worry about the shape of the
    civilian work force, because I do not think we have done a very
    good job of bringing new people in and growing the middle
    management we will need in the 21st century, but your basic
    thrust is right, Senator.

                                     M-113

        Senator Shelby. I have one more question. The M-113 family
    of vehicles, getting into that for a moment, is the procurement
    and O&M funding profile now stabilized to accomplish the
    upgrades in a reasonable timeframe at the lowest cost?
        In other words, it is my understanding that the
    modernization of the M-113 family of vehicles is funded in
    several different lines, and I am concerned as a result of
    funding requests for upgrades to the M-113 that are not
    consolidated or coordinated the Army may be upgrading these
    systems--you know, we want to do it at the lowest cost. Could
    cost savings be achieved by a consolidated and coordinated
    conversion plan for the M-113 family of vehicles?
        General Reimer. We believe they are, Senator. There is a
    partnership between United Defense Limited Partnership [UDLP]
    and Anniston, and that is the most cost-effective means of
    doing it. I think most of it, if not all of it, is done in
    Alabama, as a matter of fact, but we think it is a very cost-
    effective program. It is as cost effective as we can make it.
        Senator Shelby. But it is moving along and saving money, is
    it not?
        General Reimer. I think so, Senator, yes. I would like to
    provide more detail for the record on that one if I could.
        [The information follows:]

                                 M-113 Program

        M-113 upgrade modifications are done by Anniston Army Depot
    in compliance with the depot workload law. Beyond that
    requirement, upgrades are also performed under a partnership
    agreement between United Defense Limited Partnership and
    Anniston Army Depot. Chassis inspection and repair is done at
    Anniston Army Depot, then United Defense Limited Partnership
    applies the upgrade kits. This partnership is the most cost-
    effective method of applying the upgrades and saves
    approximately fifteen percent of the cost to upgrade each unit.

        Senator Shelby. Secretary Walker, do you have a comment?
        Mr. Walker. Yes, Senator. Sixty percent of that work is
    done at Anniston. It is a great partnership, and it is working,
    yes, sir.
        Senator Shelby. Thank you, Mr. Chairman.

                               Pine Bluff Arsenal

        Senator Stevens. Senator Bumpers.
        Senator Bumpers. Thank you, Mr. Chairman.
        Secretary Walker, I note that General Wilson, who is
    commander of the Army Materiel Command [AMC], has stated that
    he wants to cut AMC installations from 62 to 39. I have no
    objection to that as long as Pine Bluff is not one of them.
    [Laughter.]
        Incidentally, Mr. Secretary, I do not have any objection to
    another base realignment and closure [BRAC] as long as Little
    Rock Air Force Base is not on the list.
        But having brought this question of Pine Bluff Arsenal up,
    the thing that was mildly troublesome to me about that, first
    of all they are already scheduled for 138 personnel cuts, which
    is about 16 percent of the personnel cuts that General Wilson
    is proposing, whereas the others are only taking a 3- to 7-
    percent cut, so I have, I guess, two questions.
        No. 1, why has Pine Bluff been targeted for such an
    inordinate share of the cuts, No. 1, and No. 2, why he arrived
    at a magic figure, General Wilson arrived at a magic figure of
    39. That makes me think he has a list in his hip pocket, and I
    would like to see that list.
        Mr. Walker. Senator, I have not heard that number 39 from
    General Wilson, and I will certainly take that up with him and
    discuss it with him.
        With regard to the additional reductions that you refer to,
    that is part of the ``Quadrennial Defense Review'' [QDR]
    reductions that are going on throughout AMC and throughout the
    Army. General Wilson and the AMC staff have worked very
    diligently to keep those reductions to a minimum at all
    locations, but they still had reductions which were required by
    QDR that they had to meet, and that is the result of that
    requirement.
        Senator Bumpers. Mr. Secretary, I consider you a friend and
    I have the utmost respect for you, but I did write to you on
    March 10 on this item and, as they say in Arkansas, I ain't had
    no hearing.
        Mr. Walker. Really. You will get one today.

                            Theater missile defense

        Senator Bumpers. Thank you.
        Now, General Reimer, back to Senator Cochran's line of
    questioning on THAAD, let us take Korea, for example. Let us
    take the peninsula. North Korea apparently has a big stable
    full of Scud's, about 600 of them.
        We have been told by General Lyles that the improved
    Patriot can handle that, but my question is--and I am not
    questioning whether or not it can or not. Of course, I think
    PAC-3 would come closer to handling it, but for just purposes
    of discussion, do we have a sufficient number of interceptors
    there, either the Patriot or PAC-2, to handle that kind of
    arsenal in the hands of the North Koreans?
        General Reimer. Well, we have forward-deployed, as you
    indicated, a Patriot battalion to cover a number of different
    installations over there, and it basically provides the low
    altitude point defense for that particular threat.
        What we need, though, is the high altitude defense to
    complement, and that is why THAAD is so important. Patriot will
    allow you to kill a certain percentage of the threat, but to
    get the assurance that we want for our soldiers, we need that
    high altitude piece.
        As you indicate, we are updating the Patriots over there
    from the standard Patriot to the GEM missile, which is an
    enhanced missile, and ultimately to a PAC-3. They will be one
    of the first to receive the PAC-3, so we recognize the
    criticality of Korea and are doing everything possible to
    increase its protection. But I would feel a lot better if we
    had THAAD over there right now, and I think General Tillelli,
    the CINC, would feel the same way.
        Senator Bumpers. You would not feel better if we had THAAD
    in its present state over there, would you, which has not been
    able to hit anything yet.
        General Reimer. No; but I have a lot of confidence THAAD
    will do it.
        Senator Bumpers. I do, too. That is another kettle of fish.
        But let me ask you about the North Korea No-Dong with a
    600-mile range, and while that is still under development, they
    have not tested it since 1993, is that correct?
        General Reimer. Senator, I do not know. I would have to go
    back and provide that for the record, because that is something
    I just do not know.
        [The information follows:]

                                No-Dong Missile

        [Deleted.]

        Senator Bumpers. Well, I think the PAC-3 could handle that
    missile, and I understand development of PAC-3 is moving along
    very well, but I think the improved Patriot could probably
    handle that too.
        General Reimer. Well, the PAC-3 is your improved Patriot.
    It gives you a greater coverage.
        Senator Bumpers. Do we not have a Patriot 2?
        General Reimer. We have a Patriot 2 and a GEM missile,
    which is an enhanced missile that we are fielding over there
    right now, which gives you increased coverage over what we had
    in Operation Desert Storm. The PAC-3 will increase further the
    coverage, but it only gives you a low altitude coverage. You
    have to go up into the high altitude, and that is why THAAD is
    so important, to get into the high altitude in order to get the
    assurance that you want for your soldiers in terms of
    protection, and I think that is very appropriate for the No-
    Dong missile.

                            National missile defense

        Senator Bumpers. General Reimer, let me make a comment, and
    then just ask you to comment on mine.
        I have not supported Senator Cochran's amendment. It is
    mildly troublesome to me. No. 1, Senator Cochran is a
    thoughtful person and I do not cavalierly take issue with him.
    We work together well, and he is a friend, and I think he has
    studied this issue very carefully, so that made it difficult
    for me to vote no on that.
        On the other hand, I do not see any point in deploying
    before we have to until the intelligence community tells us
    that the threat exists, because the longer we go--first of all,
    we have had a very difficult time with THAAD, and we are going
    to have an even more difficult time with a ballistic missile
    defense, but be that as it may, stick with THAAD for the time
    being, as I say, I am most reluctant to deploy something that
    we do not have the kind of assurance in the effectiveness of
    that we have a right to expect.
        So I want to put that off as long as possible, and in order
    to do that, I have to have a lot of confidence in the
    intelligence community to tell us what the threat is.
        In other words, if there is no threat for the year 2003,
    2004, 2005, I think we ought to continue improving the THAAD
    until we have a high degree of confidence in its ability to
    perform.
        Having said that, and this will tell you why I was so
    troubled about Senator Cochran's amendment, the intelligence
    community did not know India was getting ready to explode a
    bomb, either, and every time we turn around we find these big
    intelligence gaps.
        Senator Cochran and some of his cohorts made the point on
    the floor, which was a perfectly legitimate point, and that is,
    we do not often know what the threat is, but if we are going to
    spend $25 or $30 billion on intelligence, we either ought to
    quit spending it, or we ought to put some confidence in what
    they tell us.
        All I am saying is, that is the reason this whole thing is
    so troublesome to me. If you have any comment on that, I would
    be interested in hearing it.
        General Reimer. Senator Bumpers, what I would say is that
    the THAAD is a theater missile defense system. There is a
    threat out there that requires that right now. I do not think
    the intelligence community differs on that. I think we would
    say that the threat in theater missile defense is there. We
    need THAAD now.
        As you get into national missile defense, then I think you
    start to get into question about whether the threat is there,
    whether we need 3 years to develop a system, and that kind of
    thing.
        Senator Bumpers. I mixed up apples and oranges there,
    General. Your point is well taken.
        General Reimer. As far as the THAAD is concerned, I am
    convinced the threat is there. I think we ought to deploy THAAD
    as soon as we can. I agree with Secretary Walker, if we had
    THAAD now, we would deploy it in Korea, and we would feel a lot
    better about that.

                                  Food stamps

        Senator Bumpers. Well, back to THAAD. You know, I take
    strong exception to buying 40 interceptors when we have our
    first hit, which is the present plan. To me that would be the
    height of folly. One hit might be a random hit, and to go all
    out to deploy that missile based on that I think would be
    foolish.
        But let me ask you one other question, and then I will
    quit. In the New York Daily News there was an article by Lars
    Eric Nelson quoting a General Russell--is it Honore?--he says,
    I have got a tank commander who has a wife and three kids
    living in a trailer park down in Killeen, TX, and he is on WIC,
    and I might say, that would be most interesting, since WIC is a
    women's and infant's and children's program. That is
    interesting for a tank commander to be on it.
        But I think what he meant was, he was on food stamps, or
    his family was getting food stamps, because as I say, WIC is a
    program for pregnant women. This tank commander would hardly
    qualify.
        But the point he was making is, he talks about a welfare
    Cadillac, and he calls the M1A2 a welfare Cadillac. Here you
    have got a guy who is commanding a $4 million tank and he goes
    home at night and eats food bought with food stamps, and I must
    say, that point is well-taken. That point has been made in this
    committee time and time again.
        Can you tell me how many of our servicemen qualify, not
    actually draw food stamps or any form of welfare, but how many
    people qualify?
        General Reimer. We can give you that number, and I will be
    glad to provide it for the record.
        [The information follows:]

             How Many Army Service Members Qualify for Food Stamps

        Based on a Department of Defense survey and study, the Army
    estimates that 9,968 soldiers are eligible for food stamps. For
    military members to be eligible for food stamps, their cash pay
    must be less than the gross income eligibility limit for food
    stamps. Food stamp eligibility requirements are 30 percent
    above the poverty level and are based on family size and total
    family income.
        When estimating the number of food stamp eligibles, we
    assumed qualifiers based on a worst-case scenario. We assumed
    the member's income was the only source of household income,
    while, in fact, more than 60 percent of military spouses work.
    However, since their earnings are not known, they are not
    counted in this analysis. Second, we assumed members received
    no other special pays and/or allowances and no earnings from
    other sources, such as interest or rent. Finally, we assumed
    the other resources of the member are limited and would not
    preclude his/her eligibility.
        While it is unfortunate that there are military members
    eligible and receiving food stamp benefits, eligibility for
    food stamps is largely driven by the rules used in determining
    eligibility rather than by soldier compensation. For example,
    the free housing service members living on base receive does
    not count as part of income for food stamp eligibility
    purposes. Additionally, households may have up to $2,000 in
    countable resources, such as a bank account, and other
    resources, such as a home and land. Thus, it is possible for
    soldiers with above average incomes to be eligible for food
    stamps.

        General Reimer. From the Army's standpoint, it has to do
    with first of all your pay and then the size of your family.
        Senator Bumpers. Yes.

                                  adequate Pay

        General Reimer. Let me go back to Russ Honore for a minute,
    because Russ Honore is one of our better warfighters, in my
    opinion. He has a lot of experience, and what he is reflecting
    is absolutely what all of us feel.
        We have the best soldiers in the world, the best people,
    America's sons and daughters, and we owe them an adequate and
    predictable quality of life. That is why one of the top
    priorities, and probably the top priority, is to provide them
    adequate pay for their services.
        Now, that wife may have been on WIC. I do not know whether
    it was food stamps or WIC that he was talking about.
        Senator Bumpers. Well, I think he is making a point.
        General Reimer. The point is the same. We are not paying
    them enough. We need to increase their pay. That is why your
    support on the 3.1-percent pay increase that we programmed for
    this budget is very important, and I would hope that we would
    continue that, because those soldiers are about 13 percent
    behind their civilian counterparts, and we are not catching up
    fast enough. We need to take care of them, or else they are not
    going to be with us that long.
        Senator Bumpers. General, why don't the Chiefs, or why
    doesn't the Secretary come over here with a proposal to say, we
    want enough money to make sure that no man or woman in the U.S.
    Armed Forces is forced to apply for or eligible for any welfare
    program?
        Now, the chairman and Senator Cochran and Senator Domenici
    know that I am a little bit of an iconoclast when it comes to
    defense spending.
        Senator Domenici. What is the word?
        Senator Bumpers. That is too big a word for them. I am a
    spendthrift.
        But in any event, that is one place where you get no squawk
    from me, and I do not understand why the request is not made.
    In my opinion the U.S. Congress would respond and respond
    quickly.
        General Reimer. Senator, I have been Chief for 3 years and
    consistently have said our four priorities are adequate pay,
    medical care, housing, and a stable benefits and retirement
    program. We continue to push them, given the top line that we
    have, and we will continue to do that, but we also have to make
    sure we keep it balanced.
        We have a responsibility to make sure that those soldiers
    that we put in harm's way are trained and ready, and that is
    what this budget is all about, achieving that fine balance that
    I talked about in my opening statement.
        Senator Bumpers. Thank you, Mr. Chairman.
        Senator Stevens. Yes, sir.
        Senator Inouye.

                                   Readiness

        Senator Inouye. Mr. Chairman, I apologize for having rushed
    out. There was an emergency. Forgive me, sir, for not being
    aware of the questions that have been asked. I may be
    duplicating them, if I am, please advise me.
        Mr. Secretary and General, the one word that concerns all
    of us here is readiness, and there has been some discussion
    that several of your Army divisions may fall into the category
    of C-3 by the end of this year. Is this a problem of readiness
    or definition? Can you enlighten us?
        General Reimer. I think it is truly a product of readiness
    in the future. What we have asked for, and what the omnibus
    reprogramming that Secretary Walker mentioned in his opening
    statement is designed to do, is to make sure that the readiness
    of those divisions does not slip.
        What has happened is that we have funded them in 1998 at a
    certain level of OPTEMPO which has been standard for us, 800
    miles, but we have underfunded them in base operations and real
    property maintenance [RPM], and also in terms of barracks
    improvements, so there has been some migration of funds to make
    sure we take care of quality of life.
        The point that I was making with Senator Bumpers is, if we
    do not take care of soldiers in terms of quality of life, then
    we are not going to be able to keep these same quality
    soldiers. So what the division commanders in the field are
    doing is to try and work that balance.
        We feel like there is a small omnibus reprogramming
    requirement for us. We are working that with OSD right now,
    and, hopefully, it will be on its way over here, and we think
    that will take care of any potential readiness problem we have
    in the fourth quarter with the active component divisions.
        Senator Inouye. Do you have any comment, Mr. Secretary?
        Mr. Walker. No, sir; I will just reiterate what the Chief
    said. We would solicit your support for the reprogramming,
    because we will need it to ensure readiness for the remainder
    of the fiscal year.
        Senator Inouye. Mr. Secretary and General Reimer, about 10
    years ago the Army had about 105,000 troops assigned overseas
    in the Pacific. Last year, it was down to 78,000. The 6th
    Division in Alaska has been downsized to one brigade. The 25th
    in Hawaii has lost one brigade. The 7th at Fort Ord, CA, has
    been dismantled. The High Technology Light Division at Fort
    Lewis, WA, has been dismantled.
        There are some who view these as signs that the U.S. Army
    continues to focus on Europe and does not care too much about
    the Pacific. How would you respond to that contention?
        General Reimer. Senator, I would say your figures are
    absolutely correct. There has been a downsizing in the Pacific,
    but it has probably been fairly consistent with the downsizing
    across the Army overall. The active component has come down
    about 38 percent in terms of numbers. If you look at Europe
    now, for example, and compare it to Europe in 1989, we had
    216,000 soldiers over there. Now we have 65,000. I do not think
    the cuts in the Pacific have been that great.
        I totally agree with you; we were probably too oriented
    toward Europe during the cold war, because that was the major
    threat. We are trying to shift our emphasis to the Pacific and
    get a more balanced view of both of those theaters, which I
    think are very important to the United States, and in so doing,
    we brought down Europe dramatically.
        We have 75 percent of the fighting force of the active
    component in the continental United States that can go to
    either region, and we have a pretty balanced number of soldiers
    deployed to the Pacific and deployed to Europe, so that is what
    we have been trying to do, and tried to work that balance as
    best we could.
        Mr. Walker. Senator, let me just say, the importance of the
    Asia-Pacific region cannot be overstated. We are in many
    respects a Pacific nation now because of all of our trade that
    we do there, and the Army keeps that in mind, and we will
    continue to keep that in mind as we look at the future.
        All you have to do is pick up the newspaper and look at
    what is happening in Indonesia today to know that there can
    never be a lack of attention by the United States on the Asia-
    Pacific region.

                             National Guard funding

        Senator Inouye. I thank you for that.
        The other words we use today are total force, integrating
    the National Guard with the active component. However, in
    providing resources to the Guard, especially in military
    construction the Army's allocation I believe is rather
    inadequate. Why does the Army not provide enough funding to
    support National Guard needs?
        Mr. Walker. Let me say, Senator, I think our military
    construction budget, in general, is underfunded, because we had
    to pay for other competing requirements as we put the budget
    together.
        With regard to the specific amount that is included for the
    National Guard, there was an agreement as part of the offsite
    at a certain level, and I think it is $50 million in the next
    several years would be included in the budget, and that is why
    you see the level that is included this year.
        Senator Inouye. I hope you look over some of the requests
    that have been coming through from National Guard units
    throughout the United States. Looking over them, they seem to
    be rather urgent in need, and I would hope that you would give
    them another look.
        Mr. Chairman, I have several other questions I would like
    to ask, but may I submit them, sir?
        Senator Stevens. Yes, sir; we will submit your series of
    questions to the gentlemen.
        Senator Domenici.
        Senator Domenici. Senator Bumpers wants me to yield to him
    first.

                            National missile defense

        Senator Bumpers. I just wanted to clarify the record on my
    line of questioning to General Reimer earlier, when I mixed
    THAAD and national missile defense.
        Senator Cochran's amendment goes to a national missile
    defense system, and when you said a moment ago--we were talking
    about the intelligence community and you were talking about
    intelligence admits that there is a threat, there are threats
    that we do not even know about, you were talking about theater
    missile threats, were you not?
        General Reimer. What I was saying is that in the tactical
    missile defense arena, the threat is out there to justify the
    THAAD. It is not a matter of trying to develop the threat, or
    worrying about the threat. It is there.
        Senator Bumpers. I understand that, and I totally agree
    with you, but I wanted to make sure that you were not saying
    that there was a national missile threat that the intelligence
    community did not know about.
        General Reimer. I am not aware of any.
        Senator Bumpers. Well, the only thing I can think of that
    might even come close, and I think we know as much about it as
    we can, is the Taepo Dong-2, which is the only missile I know
    anything about that could possibly hit Hawaii, as being a
    threat to the United States.
        General Reimer. I am a little worried about the
    classification of that system. I prefer to provide that for the
    record, and I would also like to make sure that I talk with the
    intelligence community on their assessment of the threat.
        [The information follows:]

                              Taepo Dong-2 Missile

        [Deleted.]

        Senator Bumpers. I just wanted to clarify the record on
    where the threat was, or whether there was a threat or not,
    because as I said, in the debate on Senator Cochran's
    amendment, the whole debate was that there is no threat, and
    whether you wanted to wait until the intelligence community
    defined the threat and described it to us before you deploy,
    that was the real issue in Senator Cochran's amendment.
        Senator Domenici, thank you very much.
        Senator Domenici. You are welcome.
        General, Mr. Secretary, Mr. Walker, it is nice to see you.
    I used to see you a lot more when you were on Senator Sasser's
    staff.
        Mr. Walker. It is good to be back.
        Senator Domenici. I might say, we are all getting more
    mature. Even you look older.
        Mr. Walker. Yes, sir. I remarked earlier, I turned 50 this
    year. I am beginning to think about it.

                           White Sands missile range

        Senator Domenici. General, and Mr. Secretary, I was going
    to take a little time and talk about White Sands missile range
    and the personnel cuts there, but I am not going to do that. I
    am going to submit the questions with the background to you. I
    would very much appreciate your paying personal attention to it
    and giving me some answers.
        I also would like you to make sure that Lieutenant General
    Lyles, who came up here and testified about the overall missile
    defense programs--and he said at that hearing that he would
    check to see whether the Army's plans for White Sands missile
    range reductions were consistent with the overall military plan
    for using the range during the next 5 to 10 years because of
    plans for new missile activity like THAAD.
        I am concerned that you, being a soldier, are following
    orders on a budget, trying to get within the 5-year budget
    plan, and I give you great credit for trying to do that. No
    other people in Government have to do that, just the Defense
    Department. There is nobody else with a 5-year budget in this
    Government except you guys, and whenever somebody talks about
    budgeting you ought to remind them.
        There is no 5-year budget for HUD. There is no 5-year
    budget for NIH. They all change as people need more things, and
    you have to plan all of these resources for 5 years.
        But in any event, I would be very disturbed if we cut back
    the personnel at White Sands missile range, our major inland
    missile range, and then find that in 3 or 4 years, to meet the
    national plan, that we made a mistake and we had to go back and
    hire them back. It would be very expensive. I am also concerned
    that we have opened the window at White Sands to people getting
    out of the service.
        I asked them to please wait until we had oversight
    hearings. They told me they would, but then they did not, so
    these people are going to be gone by the time we decide, with
    evidence from General Lyles and yourself, whether it is totally
    correct.
        Now, having said that, I joined our chairman and ranking
    member on this trip to the Middle East. I do not travel very
    much, but I have learned a lot more from it, and so I am doing
    it more. I did not get to work with as many Army people on the
    ground as I did Air Force. That was just a coincidence of how
    we broke up our groups.

                             impact of Deployments

        But I am very concerned about the impact of so many
    deployments overseas and so many deployments that leave and
    then come back, redeploy. I think the military has to be honest
    with this committee and with the President and tell us what
    impact that has on the lifestyle of our troops and whether they
    really feel like they are part of something worthwhile when
    that happens.
        From talking to these people it is so different than the
    man on the ground in Bosnia, where they have a mission, and
    there is a much better deployment scheme, and you do not bring
    them in and out. We talked to a couple of people who were in
    and out 10 times or more, 11, in the Middle East in a few
    years. Well, you can understand that that guy has got a few
    kids and a wife. He did not sign up to be in the Foreign
    Legion.
        So I have some questions regarding how you go about asking
    the military men and women for their views about their
    treatment, and I really would like you to look at them, because
    I believe we are in a position where I think you need some
    outside confirmation of the attitude of the young men and
    women, because it is suspect when overseers ask underlings to
    answer questions about the overseers.
        They are not going to say, ``We do not like our four-star
    general,'' right? They believe somebody is going to find out,
    right?
        So I am asking that you take a look at outside polling
    under your direction, and that you really get us some answers
    about what is going wrong in the quality of life and the rest.
        And I want to make one other point. I hope nobody in the
    military is thinking about trying to give preferential
    treatment to military people who do not have kids; all we need
    is an Army that does not have any families.
        Frankly, if I heard such a thing we would have one hell of
    an explosion up here, because when you ask men and women to
    stay in 20 years, you cannot then say, well, we do not like it,
    they have got too many kids. That cannot be our situation, or
    we will have acted totally irresponsible in my opinion.

                                 Privatization

        Now, I also am going to ask you some questions for you to
    answer about how you are going to get the 20-percent savings
    over the next 5 years, each year, from privatization. I am
    aware that this is a huge burden on you, that if you think
    there is one thing that may not happen in your budget, it is
    that.
        You are, again, good soldiers, you are going to go try to
    do it. But you see, we are left with a situation, if the
    privatization does not work, and save money, then what do we do
    to pick up the money that you already put in your budget as
    being saved? We are going to have to put it back in there, or
    else you are going to have to cut something that you do not
    plan to cut, and we did not plan to cut.

                               Budget shortfalls

        My last point has to do with your budget, and I just want,
    since you are a member of the Joint Chiefs, I want to tell you,
    as one Senator who works on the budget and tries desperately to
    keep ourselves as a Nation from overspending, I do not
    appreciate the Secretary of Defense and the President sending
    us a budget and then putting $1.9 billion into an emergency pot
    to pay for Bosnia, where we have now been--how many years, Mr.
    Chairman--4 years.
        Now, that puts us in a position where if we cannot get that
    deemed an emergency, then we are going to be deemed cutting
    defense more than our President, and that is not right. In
    fact, I have been trying to figure out a way to send him his
    budget back--I do not know how I am going to do it yet. Maybe
    it is too late--but send it back to the President and say,
    Congress is not going to agree that this is an emergency. It is
    4 years now that we have been in Bosnia.
        So you do us a new budget and tell us about it, and I would
    urge that he raise the caps. We may have to do that ourselves.
    I may do that in conference when we go to the House. They want
    to cut domestic spending. I may surprise them and say, well,
    while you are cutting so much, why do you not add $3 billion on
    the defense side.
        I probably would not win, but I am telling you where I
    stand. [Applause.]
        Having said that, you just heard my spiel about all this,
    and I did not let you answer any questions, but you will have a
    bunch of them in writing, and I really would appreciate your
    personal attention, particularly with respect to White Sands.
        General Reimer. I will call General Lyles and talk with him
    myself.
        Senator Stevens. You see how fortunate we are to have as a
    member of our committee the chairman of the Budget Committee. I
    want you to know he does carry the defense shield wherever he
    goes, and we are either going to do it his way, or if we cannot
    do it his way, we will do it the stealth way and try to get you
    some more money.
        Senator Domenici. And I will help you.
        Senator Stevens. We will get that money.
        Senator Inouye. Mr. Chairman.
        Senator Stevens. Yes, sir.

                           Southwest Asia deployments

        Senator Inouye. If I may follow up with Senator Domenici on
    his trip to Kuwait, he worked with the Air Force personnel and
    I was assigned to the Army, and the first question that I was
    asked by the assembly was rather stunning. When do we go home?
        I did some investigating and apparently those who were
    there before the recent Iraqi-Saddam Hussein crisis are not
    feeling that way, but those who came afterwards, during the
    crisis, who really do not know when they are going to be
    leaving, are quite concerned, and I hope that we will be able
    to clarify that so they can tell their wives they will be home
    for Christmas, or Thanksgiving, or something like that.
        The other matter, which may be out of your area of
    responsibility, several of the Army people complained that they
    were not permitted to wear the American flag on their uniform,
    and they were hoping that rules and regulations can change so
    that they can put it on.
        I realize that the host country in the case of Saudi Arabia
    is not too happy with that. Are any steps being taken?
        General Reimer. Senator, that is news to me. I am meeting
    with the Army Central Command [ARCENT] commander this
    afternoon. I will bring that up with him, and we will get into
    that. I do not know exactly whether they were permanently
    assigned there in Kuwait, or whether they were deployed over
    there as part of the 3d Infantry Division. The 3d Infantry
    Division went over there with the American flag on their
    shoulders. I will have to get into the details of that.
        But can I also just come back to your question. I think
    that is a very natural question. It was a thing that we
    experienced in October 1990 when I first went over on Desert
    Shield. The soldiers wanted to know when they were going to
    come home. When we said, you are there for the duration, that
    question went away. They understood that, and they accepted
    that.
        I think that is a very natural reaction for the soldiers
    over there, and we are working very hard, the Joint Chiefs, to
    make that determination or recommendation in conjunction with
    the administration on how we are going to go about rotating
    them, or what are we going to do.
        Senator Inouye. Otherwise the men and women were in great
    shape. They just want to know when they are going to get home.
        General Reimer. I visited them just a couple of weeks
    before you did and had the same impression. They were making
    the most out of some very austere conditions, and I was very
    proud of them, as I always am.

                                  Health care

        Senator Domenici. Would the Senator yield?
        General, I failed to mention something about health care. I
    am not one who thinks you can introduce a big medical program
    without some things going wrong, when you all are trying to get
    out of the CHAMPUS mode, which was a failure, to a better mode,
    but I believe that it ought to be a very high priority of the
    Joint Chiefs that somebody finds out the extent to which
    TRICARE is not working. There ought to be some very stiff
    penalties imposed on those who are delivering this system if
    they make mistakes.
        If they are not the ones making them, then that is one
    thing, but we ran into one situation where a sergeant, in front
    of the general, got up and said, I have had to call home for a
    private with two kids because his wife is being hounded to pay
    health care bills and she is frantic because she does not have
    enough money, and that is not her responsibility to pay health
    care bills for those two kids. She is right on a base.
        And it struck me that if we hear one--my rule in my office,
    if you hear a complaint that people are willing to run up and
    tell you about, it is not the only one. My rule of thumb is
    that there are usually a lot of them, and I urge that you do
    everything you can in that regard.
        General Reimer. I think you are absolutely right, Mr.
    Chairman. We are really focusing on that. We have transitioned
    to a new care plan called TRICARE, and there have been some
    bumps in the road. What we have tried to do, and what we are
    doing, is go after each one of those individual challenges like
    that and figure out what went wrong and how to fix it.
        I think once we have gotten everybody in the Army on this
    TRICARE plan, we will start to work our way through that, and I
    think we will provide the adequate care that our soldier is so
    entitled to.
        Senator Domenici. Thank you, Mr. Chairman.

                                     Morale

        Senator Stevens. Senator Bumpers asked me, what are you
    doing signing your mail when we have a hearing going on? I have
    to tell you, if you come from a State like mine, you read your
    mail, every one. There are so few of us that I know them all,
    and I apologize for that.
        But I also want to tell you that on our visit--we said this
    when we met with the Secretary, but I want to make sure that we
    say it on the record and publicly. We found such enormous
    morale in Bosnia as compared to the morale that we found in
    Kuwait and Saudi Arabia. I think, as I said, it is a tribute to
    General Ellis and to your whole system that, despite the fact
    of the questions at home about deployment, once they are there,
    those young people were doing their jobs, and we are very proud
    of it, and we are proud of them.
        But I have walked around a lot of bases and I have been in
    a lot of places with many general officers, and you can tell
    when the troops understand who he is and have great respect for
    him. That was a great day we spent with him.

                         172d Separate Infantry Brigade

        Last, let me say to you that I am grateful to you, Mr.
    Secretary, for going up to the ceremony when we redesignated
    the 172d Separate Infantry Brigade for Alaska. That solved a
    tremendous problem for us. Everybody used to tell me we had an
    orphan brigade, and now it has a mission and it has a real
    definition as part of the forces that my colleague has out in
    Hawaii, and we are part of the Pacific, where we think we
    should be, and I do thank you very much for that.
        I think General Simpson did a tremendous job in pursuing
    that. It is my understanding that the U.S. Army of the Pacific
    is going to ask you now to redesignate one officer there at
    Wainwright to be a brigadier to solve this problem of north and
    south of the range in Alaska.
        I am not going to ask you now what you are going to do with
    it, but I hope that you will help us really nail down that
    solution so that there is not this animosity between our two
    major cities over who commands Wainwright.
        As Senator Domenici said to us, we have had some real fine
    trips here in the last year or so, and a lot of them have been
    to places under your command, and we are ex-Army people. I was
    Army Air Corps, he was Army, but when you look at the people we
    have got out there, they are fine people, and we are really
    delighted.

                               Retirement system

        The only thing I have got to tell you that we ran into that
    I am still trying to study was that buzz-saw on retirement, and
    we are dedicated to try and find some way to correct that if it
    was an error. I do not know yet whether it was an error, but I
    have talked to members of the Armed Services Committee about
    that.
        This concept came at us through an e-mail. That also was
    enlightening, that almost every tent had an e-mail outlet. Now,
    that is a new Army, General.
        But they were all waving this one little bulletin that came
    out of, was it Fort Meade? But it was very critical to the
    policies of Congress and alerted people in the Army to the fact
    that there had been a change.
        That change was made several years ago, as you know. I do
    not know if you all have some recommendations for me. If you
    have any recommendations for us as to how to fix that problem--
    we do not want that problem of retirement to seep in and give
    you all the kind of morale problems we found in Kuwait and
    Saudi Arabia, so keep us informed if there is something we can
    do, General.
        General Reimer. Mr. Chairman, may I just say, on that
    specific issue, you are absolutely correct, and to refer to a
    comment made earlier, we do a sample survey of military
    personnel in the Army each year to really get at this morale
    issue and how people are feeling. The retirement system is the
    fastest growing area of dissatisfaction there.
        There are three retirement systems in effect for military
    personnel right now. I am under one. There is another one for
    people that are a lot younger than me, and the one that you are
    referring to I think went into effect in 1986.
        Senator Stevens. I was the author of that, the Federal
    employee retirement system.
        General Reimer. The first one is a very good retirement
    system, I think, but I think there is a great deal of concern
    about the last retirement system, and it is the fastest growing
    area of dissatisfaction we see out there in terms of morale.
        Senator Stevens. Well, if you could get us some sort of
    information on it, we will do our best to see if we might
    confer with the Government Affairs Committee. As a matter of
    fact, three of us are on that committee, so we will confer with
    them and perhaps we can find a way in this year's bill to find
    a way to make those retirement systems into one and compatible,
    and pick up these people who think that they were harmed by
    coming in at the time they did.
        I did not understand it, because this one young man said he
    came in after this other fellow did, and he had a better
    retirement system under the new plan, and there was sort of a
    gap there in about 1987, I think it was, 1988, but I would like
    very much to pursue that and try to iron it out so that it does
    not eat into the morale that we saw was so good.
        Are there any questions, comments? Senator Cochran.
        Senator Cochran. Mr. Chairman, we did have a hearing on
    that the other day in our subcommittee that I chair. The
    Federal services comes under the jurisdiction of that
    subcommittee, but it was really on the civilian system, but it
    sounds like a similar problem on the military system, and I do
    not know that we have looked into that yet, so we ought to.
        Senator Stevens. That is why I said, I do not think we did.
    I saw that you were onto that. I congratulate you for that,
    too. There is a glitch on the civilian side, too.
        Senator Cochran. One other question I wanted to ask, and
    that has to do with this new Force XXI, the modernization.
    General Reimer in his statement makes, I think, one of the best
    most succinct statements about the challenge of the future.
        On page 13 in his statement he says:

        I cannot overestimate the risk we take by failing to
    modernize. The continuing threat of weapons proliferation can
    allow even no-tech nations to field high-tech armies in the
    flash of an arms deal.
        Though no nation may be capable of fielding a force that
    can compete with the United States in a conventional war, any
    nation can develop a niche capability that will cost American
    lives in a future conflict.

        I think that is not only eloquent, but it is also a
    challenge to all of us to realize and appreciate the importance
    of modernization, taking advantage of the emerging technologies
    of all kinds, whether we are talking about missile defense,
    communications, radar systems, all the rest, and how important
    it is for us to stay up to date, and that is the reason why we
    are so secure right now in terms of the safety of U.S. citizens
    and our interests abroad are fully protected, because we do
    have the best, most modern, most up-to-date armed force in the
    world, but we want to keep it that way.

                            Position location system

        One thing that is a part of this, I know, are your plans
    for position location reporting systems. There is one system
    that is an integral part, as described in your posture
    statement, of the future battlefield situation analysis.
        Would it be helpful for us to review this carefully to be
    sure that in each of these component systems we are providing
    the level of funding necessary to keep this whole process
    moving forward? That is something that could easily get
    overlooked, because there are so many acronyms and names of new
    things that you are putting into this battlefield management
    program for the future that I hope some of us do not overlook
    the importance of each one of these systems.
        One of them happens to be made in my State. I am kind of
    like Senator Bumpers. It got my attention when I saw that we
    were actually producing in the State of Mississippi one of
    these component parts, the enhanced position locating and
    reporting system, EPLRS, it is called.
        General Reimer. Senator, I think first of all that you are
    right; that is a fundamental change for the Army, and basically
    we set out to answer the questions: where am I, where are my
    buddies, and where is the enemy? We figure that if we could do
    that, then we could change the way we do operations on the
    battlefield and even during operations like Bosnia.
        That has turned out to be exactly what the experimentation
    has showed us. We have about $2.6 billion in that particular
    effort, but as you say, it is in small lines and kind of
    hidden. We will be glad to work with the committee staff to
    make sure that you understand what is in there and how
    important that is to our efforts to modernize the force, the
    digitization of the force, as we call it.
        Senator Cochran. Thank you very much.
        Senator Stevens. Mr. Secretary and General----
        Senator Domenici. Could I make one observation?
        Senator Stevens. Yes.

                            Recruiting and retention

        Senator Domenici. Mr. Chairman and the two witnesses, I
    just want to give you an observation regarding recruiting and
    retention.
        Frankly, we are putting a lot of blame on you all for
    retention not being as good in some parts of the service as
    they were 5 or 6 years ago. I think the reality of it is that
    you are also in competition with a vibrant, powerful American
    economy, and the truth of the matter is, there are not so many
    kids 17 to 23 or 24 who cannot find good jobs, and there are
    those in the military who are being offered spectacular jobs if
    they get out and take them.
        And I think that is why it is important that you look at
    whether our pay is correct, whether our benefits are adequate,
    because we do want America's economy to go on for another 5 or
    6 years without a recession. That is not going to make your
    jobs any easier, but we surely are not going to have a
    recession to help you recruit. You understand that.
        Mr. Walker. Senator, thank you for making that comment,
    because it is difficult out there just for the reason you
    mentioned. Even McDonald's provides funding, money for college
    for people who come to work for them now, young people come to
    work for them. That is amazing competition we have out there,
    so you make a very important point.
        Senator Domenici. Thank you.

                               Medical technology

        Senator Stevens. We are trying to compete with that right
    up here, as a matter of fact.
        Gentlemen, I have a few rabbit trails I pursue, and one of
    them is medical technology. Now, out there at Walter Reed there
    is an angiocat. General, your wife is here, so I do not want to
    ask you if you have been there, but I want to urge you to go
    there and go through that, and you, too, Mr. Secretary, because
    we are working on angiocat 2.
        Now, the angiocat 2 is designed for the battlefield if it
    comes through, and the two of us have a great interest in that,
    personal interest in that, and we want to see that there is an
    understanding in the military where that medical technology is
    going in order to try and care for a person that is wounded in
    a modern-day battlefield, the speed with which they have to be
    handled, and that angiocat 2 can do it.
        But in order to understand angiocat 2, you have got to
    understand what angiocat 1 does, and then to see what a new
    version of that would do in the battlefield structure, so I
    would urge you to do it. As a matter of fact, I went out there
    and went through it myself. I went out there to California, and
    went through it where it was made.
        But it does seem to me that this is a technology now that
    even in terms of the first version is dealing with preventative
    medicine for the military, and we ought to get ahead of the
    curve and not just treat the people after they get sick.
        This thing can give you an advanced knowledge of what is
    coming, and we almost ought to send everybody through it before
    they are deployed overseas.
        It is like my wife's father said, ``be sure she gets her
    teeth fixed before you get married''? You ought to take care of
    these guys before they go over. You ought to take care of them,
    and that angiocat process could do it.
        So if we can get the time down, where it is the timeframe
    you can spend to send them through--you literally, on the
    angiocat 2 it takes 90 seconds. This takes 15 to 20 minutes,
    but still, it is a worthwhile thing.
        And I would urge you, pursue it and help us make certain
    that it is the tool that we believe it will be for the future
    in dealing with the military, and when we are talking about the
    military, we are primarily talking about the Army in terms of
    the kind of wounds that your people will get, God forbid we get
    into another conflict.

                         Additional committee questions

        We do appreciate you being here today, gentlemen. It is
    something we look forward to.
        Mr. Secretary, we thank you for your help, and General, it
    is always a pleasure. 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 Hon. Robert M. Walker
                   Questions Submitted by Senator Ted Stevens
                              prime vendor support
        Question. I understand that the Apache program may have to ``buy
    its way out'' of the current depot and base maintenance structure in
    order to move to Prime Vendor Support (PVS). Can you tell us how much
    ``revenue'' Apache bases will lose under PVS and how much it may
    ``cost'' Apache?
        Answer. There are no planned changes to supply and maintenance
    procedures at the base level except that the required repair parts will
    be issued free to Apache units under the proposed PVS contract. Under
    PVS, flying hour dollars for parts will no longer go to the
    installation, but will be used to fund the PVS contract. All other
    field-level funding remains the same. If the PVS program is
    implemented, we anticipate significant savings to the Apache program.
        Question. How would Congress be notified of substantial
    modernization efforts started under the Apache PVS contract?
        Answer. It is the intent of the Army to maintain continuous
    communications with Congress. Before any PVS contract is signed,
    Congress will be notified via an Information for Member of Congress
    memorandum as to why the Army is awarding the contract and what
    modernization activities are planned. PVS specifically requires the
    contractor to operate within the firm fixed price of the contract and
    not to expand the performance. Future modernization efforts are an
    integral part of the basic contract and will be funded within the
    negotiated price of the contract. The proposed contract includes
    incentives, including loss of profit if planned modernization efforts
    are not completed.
        Question. How would the Army pay for cost overruns on PVS
    modernization efforts? Would the Army turn to the Congress or other
    Operations and Maintenance programs?
        Answer. The proposed contract is a firm fixed price contract to
    include the planned modernization efforts. Any cost of overruns will be
    borne by the contractor and would not impact any other appropriations.
                                     ______

                Questions Submitted by Senator Pete V. Domenici
                                   priorities
        Question. In its Department of Defense Authorization bill, the
    Senate Armed Services Committee added about $315 million for ``Base
    Support'' and ``Maintenance of Real Property'' in the Army Operations
    and Maintenance account, and it added about $300 million for additional
    trucks and helicopters in the Army Procurement account. Do these add-
    ons represent the Army's highest priorities in the 1999 budget?
        Answer. The Army's top unfunded requirement remains the $1,390
    million for fiscal year 1999 Bosnia contingency operations. However,
    this past March, a list of the Army's fiscal year 1999 unfunded
    priorities was forwarded to the committee chairman. That list focused
    on our top priority of readiness and included unfunded requirements for
    Base Support, Real Property Maintenance, trucks, and helicopters.
        Question. If this committee finds funds to add to the President's
    request for the Army, where do you recommend we put that money? Real
    readiness issues such as training and spare parts? Quality of life
    issues? Which quality of life issues?
        Answer. In March, the Army submitted to the committee a list of its
    top fiscal year 1999 unfunded priorities. The top five issues support
    Total Army readiness and include: fiscal year 1999 Contingency
    Operations; Army National Guard Military Technicians; Total Army Real
    Property Maintenance; Total Army Base Operations Support; and Army
    National Guard/U.S. Army Reserve Operating Tempo.
        The unfunded priority list was based on some up-front assumptions.
    First, the fiscal year 1999 budget amendment must include new funding
    to pay for on-going contingency operations in Bosnia. Second, the
    Army's fiscal year 1999 budget would be funded in the categories we
    requested. If these assumptions hold, the Army's first use of
    additional funding will be to resource near term readiness shortfalls
    in training and maintenance.
                                 privatization
        Question. What savings does the Army plan from contracting out for
    1999 and 1999-2003?
        Answer. The competitive sourcing initiative is programmed to
    achieve net savings of over $1 billion during fiscal years 1999-2003 by
    conducting A-76 studies of approximately 48,000 civilian and 8,000
    military commercial activity-type positions. The Army expects to
    generate gross savings of $48 million in fiscal year 1999. These
    programmed savings are based on a 20 percent reduction of the spaces
    studied along with the associated salary dollars.
        Question. How did the Army arrive at the number of civilian and
    military jobs to be eliminated and/or contracted out?
        Answer. The Office of the Secretary of Defense provided programming
    guidance. The guidance governing competitive sourcing directed the
    services to program a minimum 20 percent reduction in civilian end-
    strength and dollars. The Army elected to use Circular A-76,
    Performance of Commercial Activities, as its tool to achieve directed
    cuts.
        Question. Were specific, individual studies performed to analyze
    the savings and appropriateness of activities to compete? Or, was a
    goal imposed ``from the top?''
        Answer. In 1995, the Commission on Roles and Missions recommended
    all non-core support activities be outsourced. In its August 1996
    report, the Defense Science Board Task Force on Outsourcing and
    Privatization recommended the Department of Defense establish a goal of
    shifting dollars savings achieved through competitive sourcing from
    defense support activities to modernization. Finally, the Quadrennial
    Defense Review, in a report released in May of 1997, directed cuts be
    programmed in the fiscal year 1999-2003 Program Objective Memorandum.
        Question. How did the Army determine that contracting out saves 20
    percent? Why does the Air Force assume different savings? Please
    provide copies of the analysis you performed to come to the conclusion
    that 20 percent was the right number.
        Answer. The 20 percent savings figure was not the product of a
    written analysis. The fiscal year 1999-2003 program guidance directed a
    minimum 20 percent reduction of the spaces studied along with the
    associated salary dollars. Historically, average savings based on
    winning contractor or in-house bid versus pre-study cost has been
    approximately 28 percent. Given previous and competing initiatives to
    reduce the civilian workforce, the Army viewed 20 percent a more
    conservative savings factor.
        Question. With fewer military personnel and DOD civilians after all
    this contracting out, what will be the impact on overseas rotations and
    ``perstempo'' problems?
        Answer. Rotation and personnel tempo problems related to
    competitive sourcing are minimal, because the Army has so few overseas
    military positions for which rotation base positions have to be
    preserved.
        Question. How will the Army monitor and document the progress in
    achieving your outsourcing programs and achieving the planned savings?
    Will these data be confirmed by an outside party?
        Answer. The Army is developing a database that will track the
    outcome of these commercial activities studies to validate savings. In
    the interim, we have asked the Army Audit Agency to validate savings.
    The Army also receives reports on study progress regularly from its
    field commands. Savings are documented on cost comparison forms which
    reflect the results of each study. While the Army has not requested an
    outside agency to review future A-76 results, historically, many such
    reviews have been conducted. In fact, the Government Accounting Office
    is currently reviewing the Department of Defense's past A-76 efforts
    and future A-76 plans.
        Question. What actions do you plan if the savings do not
    materialize as planned? More outsourcing? Cuts in procurement? Force
    structure? Readiness?
        Answer. If the savings are not achieved, funding planned for
    additional modernization programs will be delayed or an equivalent
    savings will be achieved through economies and efficiencies in other
    areas. However, we expect to achieve savings as planned, because our
    projections are more conservative than the average savings achieved by
    the Army and by the Department of Defense in the past. Specifically, we
    have programmed 20 percent savings compared to the historical average
    of 28 percent savings. During the last several years, as we have
    emphasized the savings that competitive sourcing can produce, we have
    allowed our commanders to make the local decisions on which specific
    commercial activity functions to study. They are in the best position
    to know what makes sense to compete and when, supporting readiness as
    our number one priority. In separate actions, the Army is already
    reducing military manpower from 495,000 to 480,000 to comply with
    Quadrennial Defense Review decisions.
                                     ______

                Questions Submitted by Senator Daniel K. Inouye
                              civilian reductions
        Question. Mr. Secretary, over the past decade the Army has cut its
    civilian workforce by 166,000 people. Many of these cuts were related
    to base closings. Over the next five years, you plan to cut another
    21,000 jobs unrelated to base closure. Already there are some members
    of Congress requesting that civilians should not be cut from their
    particular bases. How do you suggest we respond to these requests?
        Answer. Reductions in the budget translate to reductions in
    civilian manpower. As we face budget reductions and must shift some
    resources to modernization programs, we look to efficiencies in
    performing the mission. These efficiencies are based on decreases in
    workload or sometimes outsourcing a function if cost effective through
    a competitive process. Other adjustments in workload and work force are
    made based on changes in force structure.
        Question. Mr. Secretary, I have been on the Appropriations
    Committee for nearly 30 years, and I cannot recall another occasion in
    which a department was cutting its workforce this year below
    congressionally approved levels in anticipation of future cuts. Would
    you explain to me, from your position, why this is Army policy?
        Answer. Army is aligning the workforce to missions and funding
    levels. We provide Commanders some flexibility in the year of execution
    to meet mission requirements by increasing or reducing personnel
    strengths not submitted in the budget. Commanders in the field from
    time to time must re-balance resources in order to protect readiness
    and soldier quality of life. It is this re-balancing to which you are
    probably referring.
                                    comanche
        Question. The Comanche program and its forerunner, the LHX, have
    been in development for 15 years. What possible rationale can you
    provide for this, and why should we continue to fund its development
    for the next eight years to begin production?
        Answer. The Comanche program has undergone a number of externally
    imposed restructures over the years. What has not changed is the Army's
    critical battlefield deficiency of armed reconnaissance. Comanche is
    key to Army modernization and will replace the Vietnam-era AH-1 Cobra
    and OH-58A/C aircraft with a survivable, versatile, lethal, and
    deployable armed reconnaissance aircraft to meet that critical
    battlefield deficiency.
                       theater high altitude area defense
        Question. Last week, the Theater High Altitude Area Defense (THAAD)
    missile missed its fifth consecutive target. Have you examined this
    program, its schedule risk to consider whether it might make sense to
    require it to hit targets more than once before we should buy the
    missiles?
        Answer. We are presently looking at several options, one which
    includes executing the User Operational Evaluation System (UOES)
    contingency option after two intercepts, and other options that include
    conducting additional testing on risk reduction missiles. We will
    present our options to the Department of Defense (DOD) at the
    Overarching Integrated Product Team (OIPT) meeting this summer. The
    OIPT will reach a consensus regarding how many intercepts will be
    considered adequate to execute the UOES missile contingency option or
    whether additional risk reduction testing is necessary to reduce
    procurement risk.
        Question. Would you support a policy where DOD did not buy any of
    these advanced ``hit-to-kill'' missile defense systems until it had
    demonstrated repeated successes in actual flight testing?
        Answer. Current ``hit-to-kill'' missile defense systems require
    demonstrating repeated successes in actual flight testing prior to
    entering the Engineering and Manufacturing Development (EMD)
    acquisition life cycle phase. For example, the THAAD program's current
    requirement is to demonstrate three successes in actual flight testing
    prior to entering the EMD phase.
                joint stars data link system improvement program
        Question. I am told that the Joint Surveillance Target Attack Radar
    System (STARS) aircraft relies on the Surveillance Control Data Link
    (SCDL) to pass information between the aircraft and ground stations.
    Can you tell me if the Army is planning to upgrade this data link and
    whether there would be significant cost savings by implementing this
    modernization at a faster pace?
        Answer. The Army began the SCDL System Improvement Program (SIP-1)
    in fiscal year 1996 with $1 million to solve the Disappearing Military
    Suppliers (obsolete parts) problem by converting digital circuit boards
    to modern software-based Field Programmable Gate Array (FPGA) boards.
    Additionally, other technology was inserted to reduce production costs.
    SIP-2 began in fiscal year 1997 with $12 million and continues the
    modernization effort by converting all air and ground digital boards to
    FPGA boards. SIP-2 completion is scheduled for January 1999. SIP-3 is
    scheduled to begin in fiscal year 2000, but $16 million in fiscal year
    1999 would accelerate the start by one year, immediately follow SIP-2,
    and result in an $84 million life cycle cost savings versus $70
    million. SIP-3 will provide a higher data rate SCDL needed for the
    Joint STARS Radar Technology Insertion Program and reduce the size and
    weight of the SCDL Ground Data Terminal, allowing the addition of new
    sensor and communications systems to the Joint STARS Common Ground
    Station.
                                     ______

                  Questions Submitted to Gen. Dennis J. Reimer
                   Questions Submitted by Senator Ted Stevens
                                  digitization
        Question. Will the entire Army eventually be digitized, or will
    digitization efforts focus on providing a ``digital backbone?'' Which
    modernization programs are now being considered as key division assets?
        Answer. To achieve the goal of Army XXI by the year 2010 (in
    accordance with Joint Vision 2010), nearly all of the Total Army will
    be digitized. All Active component units and a significant number of
    Reserve component (Army National Guard and Army Reserve) units will be
    digitized by 2010. This equates to five heavy divisions, one composite
    division, four light divisions, one armored cavalry regiment, one light
    cavalry regiment, four corps headquarters and corps troops (most
    Reserve component units to be digitized by 2010 fit into this
    category), the training base, and the Army and Commander-in-Chief
    headquarters.
        The Reserve component slice will be fielded with their Active
    counterpart units, primarily combat support and combat service support
    units, but also some combat arms units such as Field Artillery and Air
    Defense Artillery. Current plans call for the Army National Guard
    Enhanced Separate Brigades to be digitized with the ``backbone''
    systems and Force XXI Battle Command Brigade and Below (FBCB\2\)/
    Applique by 2012, with most units fielded by 2010.
        The Army does have a ``digital backbone.'' These systems are the
    eleven Category 1 Digital Systems: they consist of the five Army
    Tactical Command and Control Systems, FBCB\2\/Applique, and five
    communications systems (most make up the Tactical Internet). A
    digitized division must be fielded with these eleven systems as a
    minimum to be considered a ``digitized'' unit. U.S. Army Training and
    Doctrine Command has also developed a draft list of Category 1 Systems
    for Light Units.
        The ``digital backbone'' described above and a select number of
    modernization systems are considered key division assets. The
    modernization systems include: the M1A2 System Enhancement Program tank
    and M2/M3A3 Bradley Fighting Vehicle with embedded FBCB\2\ or the M1A1D
    and M2A2 Operation Desert Storm configuration; FBCB\2\; Maneuver
    Control System; All Source Analysis System; Advanced Field Artillery
    Tactical Data Systems; Forward Area Air Defense Command and Control;
    and Combat Service Support Control System.
        Question. Will upgrades of Abrams tanks be continued beyond the
    current multiyear contract?
        Answer. The current multiyear ends in fiscal year 2000. The fiscal
    year 1999 President's budget includes funding for a follow-on three-
    year multiyear procurement for an average of about 95 Abrams upgrades
    per year. Advance procurement for the next multiyear begins in fiscal
    year 2000, and the last procurement year is fiscal year 2003.
        Question. Will the new command and control vehicle, the C2V,
    program continue under the current plan?
        Answer. The Army fully supports the fiscal year 1999 President's
    budget request for the C2V program. In fiscal year 1999, the Army will
    fund $46.7 million, which will procure ten C2V's. These C2V's will be
    fielded to the 4th Infantry Division.
        The C2V provides the Army an essential global communications and
    command and control platform. The C2V enables commanders and their
    staffs to rapidly assimilate the Army's Battle Command Systems into a
    single node to plan and execute heavy force operations on the digital
    battlefield. The capabilities and unique features of the C2V far exceed
    the capabilities of the current M577 Command Post Vehicle.
        The C2V is in its second year of Low Rate Initial Production. The
    program is on schedule and within budget. We used five C2V's during our
    Brigade Task Force XXI Advanced Warfighting Experiment (AWE). The AWE
    validated the critical need for the C2V.
        Unfortunately, total Army budgetary constraints have forced the
    Army to consider restructuring the C2V program. The planned program
    represented in the fiscal year 1999 President's budget buys 439 C2V's,
    which will field it to all Active heavy units, war reserves, and the
    training base. Although we would like to continue with the program in
    its current form, a restructuring would allow the Army to pay for other
    urgently needed programs. An alternative under consideration will
    provide C2V's to the Army's First Digital Corps only.
                 army national guard integration pilot program
        Question. General Reimer, I understand that the Army is initiating
    a pilot program called Agile Warrior. Would you explain the concept and
    explain how it will improve integration between the Active Army and the
    Army National Guard?
        Answer. While still in the development phase, the Divisional
    Teaming pilot program (previously known as ``Agile Warrior'') will pair
    selected Active and National Guard combat divisions in a relationship
    that will cover the entire spectrum of Army operations. Under the
    Divisional Teaming concept, partnered divisions will conduct joint
    planning, training, and readiness assessments. When called upon to
    support operational requirements, the divisions will team their
    resources for rapid response. The Army National Guard will augment and
    assist its partnered command, speeding deployment of the Active
    division and then conducting their own follow-on, post-mobilization
    preparations. In the event of domestic emergencies or homeland defense,
    the Active division will be prepared to supplement and reinforce the
    Army National Guard division's lead. Integration will be greatly
    enhanced as the divisions work together accomplishing specific
    missions. Through the Divisional Teaming partnership, both units will
    benefit, and the Army's capability to respond across the full spectrum
    of military operations will be greatly enhanced.
        Question. How many units will be assigned under this concept
    initially?
        Answer. The specific number of divisions to be teamed under the
    initial phase of the Divisional Teaming program is still being
    determined.
        Question. If this pilot program is successful, will all Army
    divisional forces be aligned in this manner?
        Answer. Yes. If the pilot program is successful, the intent is to
    establish a teaming relationship between all eight Army National Guard
    divisions and eight of ten Active component divisions.
                                     ______

                Questions Submitted by Senator Pete V. Domenici
                                   readiness
        Question. How do you survey people leaving the Army, and those
    staying?
        Answer. The Army uses the same Army-wide survey (the semi-annual
    Sample Survey of Military Personnel (SSMP)) for both those leaving the
    Army and those staying in the Active component. This approach allows
    the Army to compare the responses of those who are thinking about or
    definitely plan on leaving the Army with those who are planning to stay
    past their current obligation and/or to retirement.
        Question. Do you use ``blind,'' anonymous surveys or face-to-face
    meetings with commanders.
        Answer. The SSMP is an anonymous survey, printed on optical scan
    paper to facilitate transferring the responses from each soldier to a
    data file for analysis. The soldier places the completed survey in an
    envelope, seals it, and returns it to the person who distributed the
    survey or mails it directly to the Army's central survey processing
    point.
        At the unit level, commanders conduct informal exit interviews with
    soldiers who are leaving. The results of these interviews usually are
    not sent to a central collection point.
        Question. Why would you trust data on these issues if they are
    based on face-to-face interviews?
        Answer. The face-to-face interviews with commanders permits
    departing soldiers to point out strengths and weaknesses of the unit,
    without having to be concerned with the potential impact the comments
    might have on their future careers. Conducting the interviews
    immediately before the soldier leaves the unit is one way of
    encouraging candid comments. Usually, no ``data'' or results are
    compiled on the basis of these interviews. For commanders, the
    interviews are one of many tools used to assess the status of their
    units.
        Question. Do you collect and retain survey data? Please provide the
    results from this data.
        Answer. The Army Personnel Survey Office (APSO) at the U.S. Army
    Research Institute for the Behavioral and Social Sciences is
    responsible for conducting the SSMP, analyzing the data, and reporting
    the findings to Army activities sponsoring selected survey topics as
    well as to top Army leaders. For some topics, APSO has trend data
    dating back to the mid-1980's. Below is a table reporting the percent
    of officers and enlisted personnel who are satisfied with various
    aspects of their Army jobs and the quality of life in the Army from
    surveys taken over that last four years.

                                                                                              [In percent]
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Officers (percent satisfied, very satisfied)                Enlisted Officers (percent satisfied, very satisfied)
                                                                     -------------------------------------------------------------------------------------------------------------------------------
                                                                      S 1994  F 1994  S 1995  F 1995  S 1996  F 1996  S 1997  F 1997  S 1994  F 1994  S 1995  F 1995  S 1996  F 1996  S 1997  F 1997
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Access to education/training....................................    68.9    68.7    67.6    68.1    70.4    71.2    70.4    69.8    56.0    58.7    54.3    54.2    57.2    54.3    58.7    59.7
    Amount of enjoyment from my job.................................    78.1    77.9    77.7    75.7    78.5    77.3    77.3    76.6    60.6    61.6    59.6    57.3    60.5    59.1    61.2    62.1
    Amount of equipment/supplies....................................    54.7    51.5    54.3    54.1    56.8    54.9    56.1    54.0    39.1    41.1    39.5    38.7    41.0    38.8    42.9    39.9
    Amount of paperwork.............................................    37.7    35.7    35.5    37.3    40.1    38.6    38.6    38.9    53.7    54.8    53.6    53.4    57.0    53.0    56.0    55.2
    Amount of pay (basic)...........................................    65.4    61.5    61.4    62.3    61.9    61.0    61.3    58.1    33.1    29.3    29.2    28.1    30.9    28.3    28.9    27.3
    Amount of personnel available to do work........................    38.2    34.9    33.5    33.3    33.7    32.5    29.9    32.3    40.5    41.3    36.0    35.0    35.7    33.5    35.9    39.2
    Amount of regulation and discipline.............................    72.2    72.4    71.1    71.1    70.9    70.5    67.6    68.3    63.5    63.2    61.8    60.4    63.6    58.9    61.1    59.2
    Amount of respect from superiors................................    80.0    81.7    81.2    80.0    81.5    82.4    81.6    82.7    60.7    61.8    60.1    59.0    61.7    60.6    63.7    63.0
    Amount of time separated from family............................    60.2    58.5    56.7    51.5    54.0    50.7    51.9    52.8    42.0    45.6    40.2    38.8    40.3    39.1    39.4    40.2
    Amount of VHA/COLA..............................................    50.2    45.1    48.0    54.7    49.9    49.5    49.7    46.7    37.9    36.8    37.3    38.1    38.4    37.5    38.4    33.2
    Assignment to leadership jobs...................................    80.5    80.1    79.5    79.0    80.2    81.7    79.9    79.1    62.0    62.6    62.5    61.0    63.5    63.1    64.1    64.0
    Assignments to jobs offering tech/prof development..............    73.3    73.1    71.6    71.4    72.4    71.7    72.0    72.1    47.9    48.8    47.5    45.2    49.0    46.6    48.2    50.7
    Availability of Army family programs............................    74.1    73.5    75.0    74.3    76.1    76.7    76.0    74.8    67.3    67.5    65.6    65.2    65.4    67.3    64.4    66.1
    Availability of family dental care..............................    25.7    27.1    30.4    33.4    32.6    33.3    37.3    36.7    37.9    39.4    38.0    39.3    40.2    39.7    45.0    44.9
    Availability of family medical care.............................    35.0    32.8    33.6    38.6    39.7    38.7    40.2    40.7    43.4    43.8    42.0    44.2    44.8    41.7    48.8    45.0
    Availability of government housing..............................    37.9    36.0    32.8    39.4    35.8    37.7    37.6    38.5    29.2    32.2    28.0    30.7    35.2    29.8    37.1    36.4
    Commissary......................................................    81.4    80.8    81.9    81.4    81.1    80.5    81.6    81.7    80.6    78.5    77.9    80.0    78.3    77.1    79.1    78.2
    Compensation for PCS moves......................................    48.5    54.1    51.5    51.6    53.6    52.8    56.2    55.0    50.4    51.5    44.6    47.3    50.4    48.9    51.6    48.8
    Control over my job assignments.................................    54.5    54.4    52.2    52.8    54.7    55.4    52.9    54.0    43.5    45.5    41.5    40.3    40.6    41.7    43.5    43.2
    Dependent schools (DODDS).......................................    69.6    71.3    69.2    68.0    71.6    73.3    67.5    68.6    66.7    68.8    69.2    66.0    67.1    66.5    65.8    64.5
    Fairness of married vs. single pay..............................    77.9    76.8    76.7    76.0    79.2    77.9    79.6    76.8    54.9    52.9    52.5    53.3    55.8    53.8    54.5    53.2
    Geographic location of jobs.....................................    80.7    81.2    79.3    79.9    78.7    78.7    78.3    78.4    69.4    70.5    67.8    68.8    68.3    68.1    69.4    70.4
    Job security....................................................    53.1    54.0    53.8    55.6    53.9    56.8    55.8    59.8    62.5    63.4    64.5    61.2    62.5    63.9    65.7    67.6
    Length of working hours.........................................    65.8    63.6    62.8    58.0    62.1    62.0    61.6    60.1    61.9    62.4    59.1    57.0    61.3    59.9    61.4    63.2
    Level of competence of co-workers...............................    78.9    79.8    78.4    77.2    78.8    79.3    77.3    77.2    62.9    63.8    60.5    58.1    61.7    60.2    60.7    60.1
    Level of competence of supervisors..............................    77.3    79.3    77.7    77.2    78.6    80.4    77.8    80.4    62.5    63.8    61.2    59.9    63.8    63.8    64.8    64.5
    Level of educational benefits...................................    68.9    68.1    68.5    69.8    72.9    71.1    71.4    70.7    59.7    57.2    57.4    55.9    62.0    59.6    61.6    61.4
    Level of fairness in how my performance is eval.................    74.1    73.5    73.1    72.6    73.9    76.2    76.8    78.1    65.0    65.3    64.5    61.7    65.8    64.6    66.2    64.8
    Level of job fulfillment/challenge..............................    79.8    78.5    79.8    77.3    80.2    79.8    78.3    78.6    60.5    62.8    61.2    60.5    62.2    60.5    62.1    62.5
    Level of recognition for my accomplishments.....................    69.3    68.2    69.1    70.5    70.2    73.1    71.7    72.1    47.2    47.8    45.8    43.5    47.0    46.9    50.3    49.6
    Living conditions overseas......................................    65.7    63.0    63.5    60.1    63.5    60.4    56.1    58.7    56.2    54.2    53.2    51.6    50.4    52.4    48.9    49.7
    Living conditions stateside.....................................    76.9    72.0    71.8    72.9    71.4    69.3    70.9    70.1    54.1    55.0    50.6    51.6    54.9    53.5    56.1    55.1
    Number of PCS relocations.......................................    72.0    72.3    69.1    69.2    70.0    67.3    68.1    68.0    60.9    62.3    57.8    59.3    63.5    59.4    60.2    61.6
    Number of quick response tasks..................................    45.0    41.8    41.5    39.9    43.6    41.8    40.7    42.2    56.2    56.5    55.4    53.9    56.3    55.1    56.1    55.4
    Opportunity to select a job, training, or station...............    55.1    56.8    54.6    54.7    54.8    56.5    55.0    55.2    30.0    32.5    28.4    30.2    30.3    30.1    32.8    32.2
    Overall quality of Army life....................................    74.5    71.2    70.8    68.1    72.3    71.1    68.4    68.7    54.7    53.1    53.0    48.6    52.5    52.4    52.2    53.0
    Overseas duty...................................................    82.0    81.9    81.4    81.9    82.2    82.6    80.4    81.5    67.7    70.0    67.5    69.9    69.7    66.9    68.8    68.5
    Post Exchange (PX)..............................................    75.2    75.5    73.2    70.9    72.4    72.7    73.7    73.5    75.3    71.4    70.9    71.7    70.8    71.8    72.4    72.7
    Promotion/advancement opportunities.............................    71.5    71.8    70.8    69.4    68.4    69.6    71.4    71.5    46.4    48.0    44.5    40.5    42.2    45.0    50.2    51.4
    Quality of Army family programs.................................    74.1    73.5    74.0    73.4    75.1    76.7    74.7    74.3    66.8    66.1    64.7    63.4    63.8    65.7    64.3    63.7
    Quality of equipment/supplies...................................    63.1    60.5    61.9    60.5    62.6    61.7    60.7    60.5    43.8    44.9    42.9    41.7    44.3    41.2    45.4    43.8
    Quality of family dental care...................................    40.7    40.1    42.1    45.5    44.3    42.9    46.8    46.0    42.4    44.5    42.0    41.9    42.3    42.5    47.4    47.7
    Quality of family medical care..................................    44.7    42.6    42.5    48.9    48.8    47.3    46.4    46.0    44.5    45.5    43.7    44.5    46.3    42.1    47.8    43.6
    Quality of government housing...................................    50.0    45.8    39.7    41.0    42.1    40.2    41.5    40.1    46.8    44.5    40.7    42.7    46.2    43.3    43.2    45.2
    Quality of leadership at your place of duty.....................    71.7    73.5    71.7    70.6    71.4    73.8    71.2    74.7    53.6    54.9    52.7    51.7    53.4    54.3    56.4    56.5
    Quality of military dental care.................................    69.7    68.7    69.5    71.9    72.3    71.5    70.7    70.8    63.7    65.4    64.4    66.0    65.5    61.7    68.7    66.9
    Quality of military medical care................................    59.1    56.5    56.0    60.9    62.1    61.6    53.8    53.2    50.5    50.3    50.2    50.3    53.6    49.3    51.5    46.9
    Quality of recreational services................................    85.9    85.8    84.9    84.1    83.0    83.2    84.3    82.5    78.1    77.1    77.7    76.2    76.3    76.4    76.8    75.4
    Retirement benefits.............................................    51.7    51.8    48.4    44.8    48.7    44.4    39.0    38.5    42.0    40.5    38.5    32.5    32.9    33.1    28.1    28.3
    Special pay (such as bonuses)...................................    56.5    53.7    55.1    55.4    58.1    57.1    53.4    49.2    34.2    34.9    33.8    32.0    35.9    33.4    35.0    33.1
    Spouse career/work opportunities................................    46.6    45.8    47.7    45.2    45.7    44.6    47.3    46.0    42.2    43.9    39.8    38.5    40.6    40.3    40.7    42.8
    Use of my skills and training on the job........................    77.8    76.3    77.5    74.6    77.3    77.6    75.8    75.8    63.8    64.5    63.4    61.8    64.0    63.8    64.4    64.0
    Youth services..................................................    79.9    80.8    81.2    80.0    82.3    81.8    79.9    78.6    78.7    76.0    77.7    77.2    78.4    78.9    72.7    72.8
    Availability of recreational services...........................  ......  ......  ......  ......    81.6    81.4    81.2    80.0  ......  ......  ......  ......    75.4    75.3    75.2    74.0
    Army Child Care Programs........................................  ......  ......  ......  ......  ......  ......    67.8    65.2  ......  ......  ......  ......  ......  ......    56.0    55.8
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

        Question. What do your latest 1998 data show about retention of
    basic infantrymen, mechanics, cooks, and pilots? Is it getting better
    or worse? Is it better or worse for married personnel? With families?
    What are the socio-economic profiles of the people leaving? Staying?
        Answer. Retention data through the first half of fiscal year 1998
    shows overall retention in the requested specialties to be at or above
    fiscal year 1997 levels. Rates for first-term infantrymen averaged 47.9
    percent from fiscal year 1994-96, but dipped to 44.2 percent in fiscal
    year 1997. They have rebounded to 49.5 percent thus far in fiscal year
    1998. This is largely attributable to increasing the reenlistment bonus
    for infantry during fiscal year 1997 at an additional cost of $14
    million per year. Rates for mid-career (reenlisted once with 10 or less
    years service) infantry soldiers have risen from 72 percent for fiscal
    year 1994-96 to 75 percent for fiscal year 1997 and fiscal year 1998 to
    date.
        Retention for cooks has remained well above Army averages in all
    categories from fiscal year 1994-97. However, there has been a decline
    in cook retention in fiscal year 1998, compared to fiscal year 1997.
    Retention rates for first-term cooks were 62 percent in fiscal year
    1997, compared with 56 percent in fiscal year 1998. Mid-career rates
    have fallen from 79 percent in fiscal year 1997 to 74 percent in fiscal
    year 1998. It is still too early to tell if this trend is the beginning
    of a steady decline or due to other factors.
        Mechanic retention for both first-termers and mid-careerists fell
    substantially during fiscal year 1995 and fiscal year 1996,
    attributable to budget forced promotion slowdowns, bonus reductions and
    a strong economy. Mechanic retention rebounded in fiscal year 1997 and
    in fiscal year 1998. Critical mechanic skills were added to the
    reenlistment bonus program in fiscal year 1997 and remain for fiscal
    year 1998. Mechanics will remain in the bonus program as a hedge
    against future losses impacted by the availability of civilian
    employment. Fiscal year 1997 first-term rate was 52 percent, compared
    with a 47 percent rate for fiscal year 1994-96. The fiscal year 1998
    rate is 54 percent. Mid-career rates show similar trends.
        Pilot retention has remained consistent since fiscal year 1994;
    however, under accessioning from fiscal year 1995-97 and opportunities
    for civilian employment have hampered readiness and retention.
    Anticipated pilot losses for fiscal year 1998 are 450-525, with
    accessions expected to be approximately 350. Pending bonuses for
    pilots, if approved, are expected to offset some losses.
        Retention of married soldiers with families has declined slightly
    since fiscal year 1995, particularly among frequently deployed
    soldiers. Minority soldiers have been reenlisting at rates (5-8
    percent) higher than white soldiers. Married soldiers cite spousal
    dissatisfaction and perceptions of benefit reductions as major reasons
    for leaving the Army. The socio-economic status of soldiers who depart
    is nonconclusive. Soldiers with marketable skills and higher aptitude
    capabilities have a higher loss rate than soldiers from lower aptitude
    groups.
        Question. What are the specific complaints of people leaving the
    Army?
        Answer. The Sample Survey of Military Personnel, conducted most
    recently during the fall of 1997, has identified the following as the
    most important reasons for soldiers thinking about or leaving the Army
    before retirement: amount of time separated from family; amount of
    enjoyment from job; amount of basic pay; overall quality of life in the
    Army; retirement benefits; and promotion/advancement opportunities.
        Question. What are the reasons for staying of the people who stay?
        Answer. The decision to stay in or leave the Army before retirement
    is very complex, including job satisfaction, quality of life,
    patriotism, and enjoyment of the Army way of life. Usually, there is no
    single reason for staying in, just as there usually is no single reason
    for wanting to leave the Army. However, the following are those aspects
    of the job and quality of life issues which have been rated highest in
    satisfaction according to the fall of 1997 Sample Survey of Military
    Personnel and are believed to contribute most heavily to a soldier's
    decision to stay in the Army:

          Officers
    Amount of respect from superiors
    Quality of recreational services
    Commissary benefits
    Overseas duty
    Level of competence of supervisors
    Availability of recreational services
    Assignment to leadership jobs
    Level of job fulfillment/challenge
    Youth services
    Geographic location of jobs
          Enlisted
    Commissary benefits
    Quality of recreational services
    Availability of recreational services
    Youth services
    Post Exchanges benefits
    Geographic location of jobs
    Overseas duty
    Job security
    Quality of military dental care
    Availability of Army family programs

        Question. Which of your ``quality of life'' programs are working?
    Which are not?
        Answer. All of the quality of life programs the Army offers are
    working. Soldiers' satisfaction with the availability and quality of
    family and recreation programs, as measured by the Army-wide Sample
    Survey of Military Personnel, remains high. The survey measures 55
    quality of life and job issues. Satisfaction with quality and
    availability of recreation programs ranks within the top five, and all
    morale, welfare and recreation (MWR) programs rank within the top 20.
    To maintain its consistently high ranking, Army MWR tailors its quality
    of life programs based on populations, locations, and trends. Each
    installation offers those programs from the Army-wide mix that its
    community demands. Commanders consider availability and accessibility
    of programs and services off the installation. Both installations and
    higher headquarters track new ideas to either modify existing programs
    or offer new programs to further improve quality of life. We are
    currently redesigning our teen programs to improve the quality of
    service, better meet the needs of our teens, and enhance program
    management. We are fielding an improved outdoor recreation program. We
    are also exploring ways to strengthen our fitness program with trained
    and certified fitness professionals, equipment standards, and
    centralized acquisition of equipment.
        Question. Which generate the best pay-off in terms of retention?
    Please provide the data and analysis to substantiate your answer, or
    are you using judgment or anecdotal evidence to assess the degrees of
    success or failure?
        Answer. We know of no studies in the Army or the other services
    that show which programs generate the best pay-off in terms of
    retention. The Walter Reed Army Institute of Research is conducting
    exploratory research using existing survey databases to determine
    program impacts on quality of life and retention. In 1996, Caliber
    Associates reviewed military and civilian literature for the Army.
    Their report, Morale, Welfare and Recreation (MWR) Programs and
    Readiness Links, presents findings from over 100 studies, mostly
    military, that tie MWR programs to ``commitment.'' Commitment is
    defined as the strength of an individual's identification with and
    involvement in the work organization, including allegiance,
    determination, and retention.
        Question. Does the Army have any studies of these issues? By
    independent organizations? Please provide copies.
        Answer. We have provided a copy of Caliber Associates' MWR Programs
    and Readiness Links separately to the committee. The report's
    bibliography lists the studies that Caliber Associates reviewed.
        Question. What changes have been occurring in spouse and child
    abuse for the past two years? Please differentiate between officers and
    enlisted, length of service, and among major military specialties and
    PERSTEMPO rates.
        Answer. The rate of substantiated spouse abuse incidents among
    enlisted soldiers declined from 12.2/1,000 in fiscal year 1996 to 10.9/
    1,000 in fiscal year 1997. The rate among officers also declined from
    1.4/1,000 in fiscal year 1996 to 1.1/1,000 in fiscal year 1997. In the
    area of child abuse, the substantiation rate among enlisted soldiers
    was 8.2/1,000 in fiscal year 1996, and remained unchanged in fiscal
    year 1997. Among officers, the rate declined from 1.7/1,000 in fiscal
    year 1996 to 1.3/1,000 in fiscal year 1997. Given the limitations of
    the data we collect, we are unable to differentiate abuse based upon
    length of service, military occupational specialty (MOS), or PERSTEMPO
    rates presumably tied to MOS
        Question. What is the role of the current high PERSTEMPO in any
    changes in family abuse? Please provide copies of any analysis you have
    of the relationship.
        Answer. We are not aware of any research showing a statistically
    significant relationship between high PERSTEMPO and family violence.
                                     ______

                Questions Submitted by Senator Daniel K. Inouye
                              civilian reductions
        Question. General Reimer, last month I met with Army military
    leaders in Hawaii, and I learned that they are making large civilian
    cuts in their work force this year even though they have funding to pay
    them, but because they have been told by Army Headquarters that they
    won't have funding to keep them in 1999. Can you explain why
    Headquarters is mandating that these cuts be taken now to pay for
    shortfalls in the coming year.
        Answer. We are not mandating early reductions. The commanders are
    taking this action as the most effective and efficient way to use their
    resources to protect readiness and quality of life. Commanders are
    attempting to implement these reductions through voluntary separations
    to the maximum extent possible. Savings from the reductions are being
    put into other areas that are critical to accomplishing the commanders'
    missions.
                                    comanche
        Question. General Reimer, 14 years ago the Army wanted to
    accelerate the development of the Comanche so that it would reach its
    initial operating capability in 1992. Obviously that didn't happen. It
    is now 1998, and we are still eight or nine years away from starting
    Comanche production. When do you now expect to have an initial
    operating capability, or the first operational unit in the field?
        Answer. Low Rate Initial Production will begin in 2004, and we will
    field the initial operating capability unit, a troop in the divisional
    cavalry squadron of the First Cavalry Division, Fort Hood, Texas, in
    December 2006. We plan to complete fielding the rest of the squadron by
    the end of 2007.
                                     ______

               Questions Submitted by Senator Ernest F. Hollings
                          army prepositioned equipment
        Question. The South Carolina (SC) National Guard believes it could
    less expensively and more efficiently manage the Army's prepositioned
    (PREPO) equipment in Charleston. I support the National Guard in this
    endeavor as this mission seems an ideal one for the National Guard.
    Therefore, I trust that you will insure that their proposal is heard
    and fairly evaluated as you seek a competitive maintainer of this
    important war reserve equipment.
        Answer. The Army will conduct a fair competition between private
    industry and the SC National Guard. The process will begin with a pre-
    solicitation conference on July 1, 1998, for all interested parties as
    well as the SC National Guard. A final decision will be in accordance
    with contractual procedures governed by law.
                                  medical care
        Question. I receive letters from retirees and active soldiers alike
    who are concerned that the promise of free, lifetime medical care is
    being broken. A recent letter from a Fort Jackson commander expressed
    concern that a shortage of doctors at the military hospital caused his
    troops to be treated off post, costing them money and taking them away
    from training for long periods of time. Retirees tell me that it is
    more difficult, and often impossible to receive treatment in military
    medical facilities.
        What is the Army doing to improve medical care for soldiers and
    retirees?
        Answer. The Army Medical Department (AMEDD) is concentrating
    considerable energy on a number of initiatives to improve medical care
    for soldiers and retirees, as well as for their families. These
    initiatives include the implementation and enhancement of TRICARE
    system-wide, and Army emphasis on health promotion to keep our people
    in an optimal state of health and fitness.
        TRICARE is now implemented nationwide and offers our beneficiaries
    access to a quality medical benefits package at a reasonable cost. All
    active duty soldiers are automatically enrolled in TRICARE Prime and,
    as always, are our top priority for care. When needed care is not
    available at nearby medical facilities, our soldiers are either
    referred to military medical centers or are assisted in obtaining care
    from local civilian providers, with full consideration of duty
    requirements and at no cost to the soldier.
        The Army has led the way in pursuing meaningful enhancements to the
    TRICARE program. Among these, we have succeeded in establishing family-
    focused features, such as TRICARE portability and split enrollment,
    which assure continuity of the TRICARE Prime health benefit for all
    beneficiaries and reduce enrollment fees for our retired families.
    Also, those eligible under the Civilian Health and Medical Program for
    Uniformed Services may now elect to use the National Mail Order
    Pharmacy Program which offers very low cost prescription service when
    access to a nearby military pharmacy is not possible.
        The AMEDD is aggressively promoting real health preventive measures
    such as patient education, personal behavior changes, and early disease
    detection. Along with the other services, we have targeted alcohol
    consumption, accident prevention, and tobacco cessation as the
    centerpiece of our health promotion program.
        Although ``the promise of free, lifetime medical care'' is an
    understanding currently not supported by the Justice Department and the
    Courts, the AMEDD is doing everything possible to provide low cost
    quality medical care to all our beneficiaries. In cooperation with
    other Department of Defense elements, we have succeeded in obtaining
    Congressional authorization and Health Care Financing Administration
    (HCFA) cooperation to conduct a Medicare Subvention demonstration which
    we believe will provide the basis for extending military health care to
    our military retirees beyond their 65th birthday. Two of our Army
    demonstration sites, Madigan Army Medical Center and Brooke Army
    Medical Center, have recently undergone successful HCFA on-site
    certifications, and we anticipate initiation of the demonstration very
    soon.
     active component/army national guard integrated division headquarters
        Question. I want to again express my disappointment that the
    division headquarters of the National Guard division with brigades in
    North Carolina, South Carolina, and Georgia has been located in Fort
    Riley, Kansas, instead of centrally in South Carolina. I believe this
    headquarters arrangement shortchanges the National Guard, will cost the
    taxpayers more in travel funds, and waste precious training time for
    brigade leaders. I'd like you to evaluate this arrangement during the
    first year and provide me a report of your findings. I am convinced
    that a rational look at this proposal will result in much needed
    changes to locate the headquarters with the troops, preferably with the
    division forward, not 1,300 miles away.
        Answer. The locations for the integrated divisions' headquarters
    and their forward elements were approved on December 2, 1997, by the
    Secretary of the Army after a rigorous analysis with on-site surveys of
    15 potential sites. Sites evaluated on the east coast included Forts
    Jackson, Knox, Drum, Rucker, Campbell, and Stewart. The weighted
    criteria applied during the analysis were the availability of division
    headquarters facilities, base facilities, simulation centers, motor
    pools, a transportation hub, and living areas and the ability to
    support a transition to an alternative divisional organization for the
    integrated division. This meticulous evaluation resulted in the
    selection of Fort Riley with a forward element at Fort Jackson for the
    heavy division. Throughout the entire process, the National Guard
    Bureau, the Adjutants General from states with enhanced Separate
    Brigades, and Forces Command provided input to and support of the final
    decisions. The benefits derived from association with the division and
    the selected locations far outweigh the minimal investment of time and
    money for travel. Fort Riley was selected based on its established
    heavy maneuver training areas, which currently serve two heavy maneuver
    brigades. In addition, the 218th Infantry Brigade of the South Carolina
    Army National Guard has had an historic training relationship with Fort
    Riley. Fort Riley also possesses adequate division headquarters
    buildings and facilities; an advanced simulation center; and an
    established garrison command headquarters supporting heavy combat
    forces. Fort Jackson, which is predominately a training installation,
    serves as the forward element and would provide the necessary daily
    command and control functions. In addition, the forward element at Fort
    Jackson will be able to accomplish a significant portion of the tasks
    for training support and mentoring the three assigned enhanced Separate
    Brigades.
        One year after the activation of the two integrated divisions, a
    report will be provided on the effectiveness of this arrangement.
                                   simulators
        Question. What is the Active Army plan to incorporate weapon
    training simulators? What is the current status of this plan? As
    background, understand that the U.S. Marine Corps (USMC) and Air Force
    have successfully used weapons simulation to help maintain skills and
    also offsetting some of the requirements for ammunition and operating
    tempo (OPTEMPO) resources.
        Answer. Today's Army (Active and Reserve components) increasingly
    relies upon simulators and simulations. A wide range of devices are
    already in use, and new ones are being developed (e.g., live--Multiple
    Integrated Laser Engagement System 2000; virtual--Close Combat Tactical
    Trainer (CCTT); and constructive--Warfighter's Simulation) that will
    create a seamless virtual environment from crew through combined arms
    task force level.
        Our goal is to have repetitive, structured training to standard in
    tough, realistic, increasingly difficult conditions across all domains:
    live, virtual, and constructive. In some cases simulation training will
    be used to precede actual live training, thus allowing live training to
    become more intense and to remain the center piece of the Army's
    training program. In other cases simulation training can substitute for
    live training. For example, we have done Division and Corps command and
    staff training for years using only simulations.
        As capabilities in simulators and simulations increase, we will be
    able to substitute some for live training events to achieve savings in
    OPTEMPO and reduce personnel tempo (PERTEMPO) while retaining our
    commitment to high quality training. Examples of offsetting live
    OPTEMPO include: CCTT--Platoon maneuver tasks associated with 60 miles
    of live training can now be performed in CCTT simulators; and Tank
    Weapons Gunnery Simulations System/Precision Gunnery System--Using
    these simulators, we have increased gunner and crew proficiency while
    also reducing the amount of ammunition we buy. Tank rounds saved--10
    Active component and 5 Reserve component; and 25 mm rounds saved--192
    per Bradley Fighting Vehicle (BFV) and 193 per Cavalry Fighting Vehicle
    (Active component only).
        Question. What is the plan to use simulation in weapons training in
    the Army Reserve? What is the current status of this plan?
        Answer. The U.S. Army Reserve (USAR) supports and uses training
    aids in accordance with the Army's Training Aids, Devices, and
    Simulation Systems guidance. The USAR trains with all simulator systems
    used by similar Active component units. The USAR has incorporated the
    use of weapons simulators as they have become available. Historically,
    the Weaponeer, Multi-purpose Arcade Combat Simulator and the Fire Arms
    Training Simulator have been utilized to enhance weapons training
    capabilities for small arms. The USAR does not require simulators for
    heavy weapons, i.e. tanks, artillery, and air defense. However, it does
    employ attack helicopters and utilizes the Combat Mission Simulator for
    both weaponry and flight training for its AH-64 Apache helicopters. It
    incorporates simulators within training plans subject to the
    availability of funds for acquisition, travel, and training,
    particularly train-the-trainer instruction.
        Question. What is the plan to use simulation in weapons training in
    the National Guard? What is the current status of this plan?
        Answer. The Army National Guard (ARNG) plans to use training aids,
    devices, simulators, and simulations to replicate, but not replace,
    live weapons training to the fullest extent possible. This includes the
    spectrum from individual weapons to crew gunnery and force-to-force
    maneuver training.
        Because National Guard training is inherently constrained by time,
    distance to ranges, and range availability, the ARNG is committed to
    maximizing the use of simulation. The ARNG is a full partner with the
    Army Reserve and the Active Army in supporting the development of
    simulation in the Total Army training strategy.
        The ARNG uses sophisticated simulation devices and models in
    individual weapons training, vehicle and cockpit crew training, and
    force-on-force simulations. Simulators and simulated training are, and
    will continue to be, a critical component of the ARNG's plan for
    maximizing the use of all available resources for training.
                                     ______

                   Questions Submitted by Senator Larry Craig
                             national guard funding
        Question. I am very concerned about the $634 million shortfall in
    the National Guard operating budget--the difference between the overall
    amount recommended in the Administration's budget and the funding needs
    as assessed by the 50 states' National Guard units. This shortfall
    could prove detrimental to the 41,000 guardsmen by limiting education,
    annual training, or even promotions.
        I would like to know whether this shortfall implies a fundamental
    shift in the National Guard's capability and mission, from war fighting
    to acting as a war-support mechanism.
        What are the Administration's--and I assume the Defense
    Department's and the Army's--policy and mission objectives in
    recommending a budget with this shortfall?
        Answer. In fiscal year 1999, the Army National Guard's (ARNG's)
    operating budget is at 90 percent of it's reported critical
    requirement, leaving the $634 million reported shortfall. There are
    shortfalls throughout the Total Army and the $634 million ARNG
    shortfall represents a part of the Total Army's overall $3 to $5
    billion funding shortfall for fiscal year 1999. To mitigate the
    readiness impact of the funding shortfalls, the ``First to Fight''
    funding philosophy was adopted. The ``First to Fight'' principle
    balances risk across all components. The ARNG is adequately funded to
    support the National Military Strategy.
        The identified shortfall does not imply nor has there been a policy
    or mission change which was designed to negatively impact the ARNG's
    capability. Current Army resource levels affect every aspect of the
    Total Army (i.e. personnel, training, equipment, and modernization). We
    continue to place increasing emphasis on the management of our very
    constrained and limited Total Obligation Authority. These limited
    resources force us to make some difficult choices among a number of
    competing program requirements while attempting to sustain and protect
    combat readiness. The Total Army budget was submitted with risk
    apportioned to units in accordance with applicable war-fight
    requirements.
                             ground operating tempo
        Question. With regard to Vehicle Operating Tempo (OPTEMPO), in per
    vehicle miles and total dollars:
        What were the Army's budgeted OPTEMPO and the actual OPTEMPO for
    last year, fiscal year 1997? How do you account for the difference?
        Answer. In fiscal year 1997, the Army budgeted 800 miles for all
    Active component units, funded at $2,665 million. This mileage is based
    on what the Army needs to conduct critical battalion-level maneuver
    training. The actual miles executed were 654 miles, with $2,290 million
    of funding executed.
        Commanders in the field have had to balance training requirements
    with other programs that also impact on readiness. For example in Base
    Operations, commanders have been required to divert training dollars to
    pay for the sustainment of their training areas and ranges, motor
    pools, supply warehouses, railheads, airfields, and other areas that
    support training. Without these facilities, the units could not train.
        Additionally, the Army has been heavily engaged in supporting
    contingency operations and performing other missions not directly
    related to its warfighting mission. The Army has been required to pay
    for these missions out of its current budget pending supplemental
    funding from Congress. If funding from Congress comes too late in the
    year, then training opportunities are lost due to the lack of time to
    execute training. That money will then be spent on other high priority
    programs. This accounts for some of the migration and underexecution
    that is evident today.
        The Army has taken several steps in the current budget to bring the
    programming and execution of resources more in line. We have also taken
    several steps to reduce the overall cost of training, to include
    incorporation of simulation into our training strategies and use of
    heavy equipment transports to reduce the number of miles required to be
    driven by combat vehicles.
        Question. What were the Army's budgeted OPTEMPO and the actual
    OPTEMPO for the current year, fiscal year 1998? How do you account for
    the difference?
        Answer. In fiscal year 1998, the Army budgeted 800 miles for all
    Active component units, funded at $2,509 million. This mileage is based
    on what the Army needs to conduct critical battalion-level maneuver
    training. OPTEMPO execution as of second quarter of fiscal year 1998 is
    311 miles.
        While the Army funded OPTEMPO in the President's budget at 800
    miles, congressional reductions to Operation and Maintenance, Army, for
    fiscal year 1998 amounted to $450 million. About $178 million were in
    specified areas. Another $272 million in reductions were unspecified in
    the Appropriations Conference report and those reductions were
    distributed on a fair share basis to Army commands.
        Congressional direction and Department of Defense implementing
    instructions required more detailed reporting procedures for fiscal
    year 1998 that show earlier in the fiscal year the diversion of OPTEMPO
    to pay congressional and Headquarters, Department of the Army, bills.
    Commanders took reductions in the OPTEMPO accounts because of the
    fiscal year 1998 level of funding in Base Operations (80 percent) and
    Real Property Maintenance (62 percent).
        After all the reductions were taken and budget realigned,
    approximately $220 million was paid from OPTEMPO accounts. The net
    result is equivalent to reducing OPTEMPO from 800 miles to 652 miles,
    or OPTEMPO funding at $2,291 million.
        Question. What has been budgeted for the Army's OPTEMPO for the
    coming year, fiscal year 1999? What is the basis for any increase (or
    decrease) in the fiscal year 1999 budgeted amounts compared with the
    previous years' actual and estimated amounts?
        Answer. For fiscal year 1999, the Army budgeted 800 miles for all
    Active component units, funded at $2,489 million. This mileage is based
    on what the Army needs to conduct critical battalion-level maneuver
    training. There has been no significant increase or decrease in the
    Active component's OPTEMPO budget between fiscal year 1997, fiscal year
    1998, or fiscal year 1999.

                             conclusion of hearings

        Senator Stevens. This will conclude the hearings on the
    fiscal year 1999 budget request for the Department of Defense.
    If there is nothing further, the hearing is recessed.
        [Whereupon, at 11:37 a.m., Wednesday, May 20, 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
    Baca, Lt. Gen. Edward D., Chief, National Guard Bureau,
      Department of Defense..........................................   333
        Prepared statement...........................................   336
    Blanck, Lt. Gen. Ronald R., Surgeon General, U.S. Army,
      Department of Defense........................................409, 410
        Prepared statement...........................................   412
        Questions submitted to.......................................   456
    Bond, Hon. Christopher S., U.S. Senator from Missouri...........48, 134
    Brooke, Mildred, vice president, J&E Associates..................   731
        Prepared statement...........................................   733
    Brown, Tiffany Nicole, student, Georgia..........................   398
        Prepared statement...........................................   399
    Bumpers, Hon. Dale, U.S. Senator from Arkansas, questions
      submitted by............................................312, 331, 563
    Burke, Dr. Donald S., member of legislative task force, American
      Society of Tropical Medicine and Hygiene.......................   754
        Prepared statement...........................................   755

    California Industry and Government Coalition on PM-10/PM-2.5,
      prepared statement.............................................   773
    Calkins, Charles L., national executive secretary, Fleet Reserve
      Association....................................................   697
        Prepared statement...........................................   699
    Chameau, Jean Lou, dean of engineering, Georgia Institute of
      Technology, on behalf of the Association of American
      Universities...................................................   719
        Prepared statement...........................................   720
    Cline, Master Sergeant Michael P., (ret.), executive director,
      Enlisted Association of the National Guard of the United States   736
        Prepared statement...........................................   737
    Cochran, Hon. Thad, U.S. Senator from Mississippi................   334
        Prepared statement...........................................   133
        Questions submitted by......................298, 326, 336, 559, 816
    Cohen, Hon. William S., Secretary of Defense, Office of the
      Secretary, Department of Defense...............................   785
        Prepared statement...........................................   793
    Craig, Hon. Larry, U.S. Senator from Idaho, questions submitted
      by.............................................................   882
    Crowley, James M., Ph.D., executive director, Society for
      Industrial and Applied Mathematics, on behalf of the Joint
      Policy Board for Mathematics...................................   711
        Prepared statement...........................................   712

    Dalton, Hon. John H., Secretary of the Navy, Department of the
      Navy, Department of Defense....................................   131
        Prepared statement...........................................   138
        Questions submitted to.......................................   297
    Domenici, Hon. Pete V., U.S. Senator from New Mexico............. 3,188
        Questions submitted by...37, 115, 120, 298, 315, 327, 604, 871, 875
    Dorgan, Hon. Byron, U.S. Senator from North Dakota...............     3
        Prepared statement...........................................   135
        Questions submitted by...45, 126, 313, 326, 331, 407, 465, 468, 564
    Duggan, Dennis M., deputy director, national security-foreign
      relations division, The American Legion........................   653
        Prepared statement...........................................   655

    Ekarius, John C., acting director of government relations,
      University of Medicine and Dentistry of New Jersey.............   668
        Prepared statement...........................................   668
    Engel, Rear Adm. Joan M., Nurse Corps, Department of Defense,
      prepared statement of..........................................   488

    Foil, Martin B., Jr., chairman, Brain Injury Association, Inc....   649
        Prepared statement...........................................   650

    Gallo, Betty, Dean & Gallo, the Cancer Institute of New Jersey...   668
        Prepared statement...........................................   671
    Gardner, Capt. Mary Anne, Deputy Director, Navy Nurse Corps,
      Department of Defense..........................................   485
        Question submitted to........................................   501
    George, Father William L., S.J., assistant to the president,
      Georgetown University..........................................   639
        Prepared statement...........................................   640
    Gregg, Judd, U.S. Senator from New Hampshire, questions submitted
      by.............................................38, 116, 310, 325, 329

    Hamre, Hon. John, Deputy Secretary, Office of the Deputy
      Secretary, Department of Defense...............................     1
    Harkin, Hon. Tom, U.S. Senator from Iowa.........................   788
    Harnage, Bobby L., national president, American Federation of
      Government Employees, AFL-CIO..................................   679
        Prepared statement...........................................   680
    Hazard, Holly E., executive director, Doris Day Animal League....   758
        Prepared statement...........................................   760
    Hickey, Sydney T., associate director, government relations, the
      National Military Family Association [NMFA]....................   630
        Prepared statement...........................................   631
    Hollings, Hon. Ernest F., U.S. Senator from South Carolina,
      questions submitted by...................................42, 311, 880
    Hutchison, Hon. Kay Bailey, U.S. Senator from Texas..............     2
        Questions submitted by.......................................   122

    Inouye, Hon. Daniel K., U.S. Senator from Haw2, 132, 409, 570, 786, 822
        Prepared statement...........................................   787
        Questions submi40, 117, 125, 456, 461, 467, 500, 501, 609, 872, 879

    Johnson, Adm. Jay L., Chief of Naval Operations, U.S. Navy,
      Department of the Navy, Department of Defense................131, 182
        Questions submitted to.......................................   314
    Johnson, David, Ph.D., executive director, Federation of
      Behavioral, Psychological and Cognitive Sciences...............   622
        Prepared statement...........................................   623
    Jollivette, Cyrus M., vice president for government relations,
      University of Miami............................................   660
        Prepared statement...........................................   661

    Koenig, Vice Adm. Harold, Medical Corps, Surgeon General, U.S.
      Navy, Department of Defense....................................   426
        Prepared statement...........................................   429
        Questions submitted to.......................................   459
    Kolker, Ann, executive director, Ovarian Cancer National
      Alliance: Ovar'coming Together.................................   704
        Prepared statement...........................................   706
    Krebs, Joshua W., Chief Master Sergeant, USAF (retired), manager,
      legislative affairs, Air Force Sergeants Association...........   618
        Prepared statement...........................................   619
    Krulak, Gen. Charles C., Commandant, U.S. Marine Corps,
      Department of the Navy, Department of Defense................131, 182
        Prepared statement...........................................   183
        Questions submitted to.......................................   326

    Lautenberg, Hon. Frank R., U.S. Senator from New Jersey..........   787
        Questions submitted by.................................43, 458, 564
    Leahy, Hon. Patrick J., U.S. Senator from Vermont, questions
      submitted by...................................................   819
    Lestenkof, Maj. Gen. Jake, Adjutant General of Alaska, Youth
      Challenge Program, Department of Defense.......................   395
    Lord, Cmdr. Mike, JAGC, USN (ret.), The Military Coalition.......   743
    Lyles, Gen. Lester L., U.S. Air Force, Director, Ballistic
      Missile Defense Organization, Department of Defense............   503
        Prepared statement...........................................   517

    Maves, Michael D., MD, MBA, executive vice president, American
      Academy of Otolaryngology--Head and Neck Surgery, Inc.,
      prepared statement.............................................   766

    National Association of Energy Service Companies, prepared
      statement......................................................   782
    Navas, Maj. Gen. William A., Director, Army National Guard,
      National Guard Bureau, Department of Defense.................333, 346
        Prepared statement...........................................   347

    O'Donovan, Father Leo J., S.J., Georgetown University............   639
    Odom, Jerome, Ph.D., chairman, Coalition of EPSCoR States........   645
        Prepared statement...........................................   646
    Olanoff, Chief Master Sergeant Mark H., USAF (ret.), legislative
      director, the Retired Enlisted Association.....................   723
        Prepared statement...........................................   725
    Ouellette, Michael F., Sergeant Major, USA (retired), director of
      legislative affairs, Non Commissioned Officers Association of
      the United States of America...................................   683
        Prepared statement...........................................   684

    Partridge, Charles C., Colonel, USA (retired), National Military
      and Veterans Alliance..........................................   707
        Prepared statement...........................................   708
    Peters, Hon. F. Whitten, Acting Secretary of the Air Force,
      Office of the Secretary, Department of the Air Force,
      Department of Defense..........................................    47
        Biographical sketch..........................................    81
        Prepared statement...........................................    56
        Questions submitted to.......................................   115
    Phagan, Joshua Bryson, student, Georgia..........................   398
        Prepared statement...........................................   398
    Prueher, Adm. Joseph W., U.S. Navy, Commander in Chief, U.S.
      Pacific Command, Department of Defense.........................   569
        Prepared statement...........................................   576

    Quickel, Kenneth E., Jr., M.D., president, Joslin Diabetes
      Center, Boston, MA.............................................   641
        Prepared statement...........................................   643

    Raymond, Sandra C., executive director, National Osteoporosis
      Foundation.....................................................   613
        Prepared statement...........................................   615
    Reimer, Gen. Dennis J., Chief of Staff, Secretary of the Army,
      Department of Defense........................................821, 837
        Prepared statement...........................................   839
        Questions submitted to.......................................   873
    Roadman, Lt. Gen. Charles H., II, Surgeon General, U.S. Air
      Force, Department of Defense...................................   435
        Prepared statement...........................................   437
        Questions submitted to.......................................   466
    Rubin, Robert W., Ph.D., president and chief executive officer,
      Lovelace Respiratory Research Institute, New Mexico............   673
        Prepared statement...........................................   674
    Ryan, Gen. Michael E., Chief of Staff, Office of the Secretary,
      Department of the Air Force, Department of Defense.............    47
        Biographical sketch..........................................    81
        Prepared statement...........................................    56
        Questions submitted to.......................................   118

    Sandler, Maj. Gen. Roger W., AUS (ret.), executive director,
      Reserve Officers Association of the United States, prepared
      statement......................................................   775
    Scott, Charles K., II, Commander, Department of the Navy.........   613
    Shelby, Hon. Richard C., U.S. Senator from Alabama:
        Prepared statement...........................................   452
        Questions submitted by.......310, 325, 329, 456, 460, 466, 561, 816
    Simmons, Brig. Gen. Bettye, Chief, Army Nurse Corps, Department
      of Defense.....................................................   492
        Prepared statement...........................................   493
        Question submitted to........................................   500
    Smith, Edith G., citizen advocate for disabled military retirees,
      prepared statement.............................................   767
    Sparra, Alex J., sophomore, The Citadel, graduate, Georgia Youth
      Challenge Academy..............................................   400
    Specter, Hon. Arlen, U.S. Senator from Pennsylvania, question
      submitted by...................................................   459
    Stevens, Hon. Ted, U.S. Senator from Alaska:
        Prepared statement...........................................   569
        Questions submitted by...36, 115, 118, 297, 314, 556, 601, 870, 873
    Stierle, Brig. Gen. Linda J., Director of Medical Readiness and
      Nursing Services, Office of the Surgeon General, Department of
      the Air Force, Nurse Corps, Department of Defense..............   471
        Prepared statement...........................................   474

    Torsch, Cmdr. Virginia, MSC, USNR, The Military Coalition........   743
        Prepared statement...........................................   745

    Van Cott, Harold P., Ph.D., president, Human Factors and
      Ergonomics Society; on behalf of the American Psychological
      Association....................................................   626
        Prepared statement...........................................   627
    Van Nest, Ronald, certified registered nurse anesthetist,
      American Association of Nurse Anesthetists.....................   689
        Prepared statement...........................................   690
    Visco, Frances M., president, National Breast Cancer Coalition...   761
        Prepared statement...........................................   762

    Walker, Hon. Robert M., Acting Secretary of the Army, Secretary
      of the Army, Department of Defense...........................821, 823
        Prepared statement...........................................   825
        Questions submitted to.......................................   870
    Weaver, Maj. Gen. Paul A., Jr., Director, Air National Guard,
      National Guard Bureau, Department of Defense.................333, 370
        Prepared statement...........................................   371
        Questions submitted to.......................................   407
    Weisenberg, Jane, vice president community programs, Children's
      Hospital and Health Center, San Diego, CA......................   728
        Prepared statement...........................................   729
    Whiston, David A., D.D.S., president, American Dental Association   715
        Letter from..................................................   718
        Prepared statement...........................................   716
    Williams, Lt. Col. Francis B., Director, Georgia Youth Challenge
      Academy, Youth Challenge Program, Department of Defense........   395

                                 SUBJECT INDEX

                                  ----------

                             DEPARTMENT OF DEFENSE

                     Ballistic Missile Defense Organization

                                                                       Page
    ABM Treaty compliance............................................   540
    Additional committee questions...................................   556
    Advance technology...............................................   515
    Advanced Research Center [ARC]...................................   561
    Affordability....................................................   507
    Airborne laser [ABL]......................................512, 541, 560
    Arrow............................................................   566
        Technology...................................................   548
        Third battery................................................   545
    Atmospheric interceptor technology [AIT].........................   562
    Ballistic missile defense:
        Mission areas................................................   505
        Test philosophy..............................................   538
    BMDO costs.......................................................   549
    Fifty States, protection of......................................   540
    Kinetic kill vehicle hardware in the loop simulator [KHILS]......   561
    Lessons learned..................................................   550
    Long-range air launched target [LRALT]...........................   560
    Major programs...................................................   508
    Medium extended air defense system [MEADS].....................512, 556
    Missile testing..................................................   514
    Modeling and simulation..........................................   544
    National missile defense [NMD]..................513, 537, 563, 564, 565
        Basing.......................................................   556
        Cost and schedule............................................   557
        Deployment...................................................   536
        Siting.......................................................   565
        Threat coverage..............................................   535
        Three-plus-three.............................................   547
    Navy area wide...................................................   545
    Navy theater wide program [NTW]................................511, 564
        THAAD........................................................   552
    Out-year:
        Budgets......................................................   554
        Funding......................................................   534
    Pacific missile range facility [PMRF]............................   545
    Patriot advanced capability-3 [PAC-3]..........................546, 558
    Patriot effectiveness............................................   539
    Program deadlines................................................   549
    Program risks, managing..........................................   550
    Space-based missile defense......................................   559
    Targets and countermeasures......................................   563
    Theater high altitude area defense [THAAD].....................557, 566
        Development..................................................   537
        Navy theater wide defense [NTW]..............................   564
        Status.......................................................   552
        Test program.................................................   559
        Testing......................................................   509
        UOES.........................................................   543
    Threat:
        And countermeasures..........................................   551
        Development..................................................   557
    User operational evaluation system...............................   510
    Welch:
        Panel........................................................   536
        Report.......................................................   565
    White Sands missile range [WSMR]...............................542, 543

                          Department of the Air Force

                            Office of the Secretary

    Additional committee questions...................................   114
    Air Force:
        Contemporary operations......................................    57
        Role in national security....................................    56
        Space laboratory.............................................    99
    Air Mobility Command upgrades....................................   108
    Airborne laser.........................................88, 94, 125, 127
    Bomber:
        Status.......................................................   110
        Training initiatives.........................................   101
    Bosnia, deployment of United States troops in....................   122
    BRAC planning....................................................    97
    C-17 support.....................................................   113
    C-130's, modernization of........................................   107
    Cannon Air Force Base............................................   101
    Chairman's opening remarks.......................................    81
    Civil Air Patrol.................................................    93
    Collision avoidance system.......................................   111
    Contingencies, funding for.......................................   117
    Continuation pay and aviation career incentive pay...............   118
    Contracting out..................................................   128
        Savings......................................................    98
    Deep attack weapons mix study....................................   127
    Deployment challenges............................................    53
    Electronic Systems Center, restructuring of......................   103
    Environmental costs..............................................    84
    Environmental impact statement [EIS].............................   100
    Equipment:
        Modernization................................................    52
        Upgrades.....................................................    54
    Evolved expendable launch vehicle [EELV].........................   105
    F-15A's..........................................................85, 86
    F-22............................................109, 110, 115, 118, 125
    F-117............................................................   100
    Fighter aircraft requirements....................................   124
    Flying Hour Program..............................................   119
    Funding request overview.........................................    83
    Guard and Reserve upgrades.......................................   108
    Improving efficiency.............................................    76
    In-house software capability.....................................   103
    Information security.............................................   123
    Information technology software capability.......................   102
    JASSM............................................................   119
    Joint air-to-surface standoff missile [JASSM]....................   104
    Joint Strike Fighter [JSF].......................................   126
    Long-range air power panel.......................................   126
    Manned reconnaissance............................................   120
    National missile defense.........................................   105
    NATO enlargement.................................................   123
    Navigator training...............................................   127
    O&P savings......................................................   102
    Partnering.......................................................   100
        For peace....................................................   116
    Pay equity.......................................................   118
    PERSTEMPO........................................................   119
    Pilot:
        Readiness....................................................    86
        Retention...................................................90, 127
        Training.....................................................    88
    Preparing for the 21st century--strengthening core competencies..    68
    Privatization....................................................   115
    Quality force, maintaining a.....................................    62
    Quality of life..................................................51, 87
        Programs.....................................................   121
    Readiness......................................................120, 123
        Impact.......................................................   125
    Recruitment......................................................    91
    Report status....................................................    96
    Retention methodology............................................    55
    Safety enhancements..............................................   112
    Science and technology programs..................................   117
    Shared facility..................................................   101
    START III and bomber force structure.............................   126
    Superbases.....................................................114, 128
    T-6A.............................................................   125
    Tanker forces....................................................    95
    The Tunner.......................................................    86
    Treaty compliance................................................   105
    Unmanned reconnaissance system, basing of........................   120

                             Department of the Army

                             Secretary of the Army

    A starting point...............................................825, 839
    A turning point..................................................   839
    Active component/Army National Guard integrated division
      headquarters...................................................   881
    Additional committee questions...................................   870
    Army:
        National Guard Integration Pilot Program.....................   874
        Prepositioned equipment......................................   880
        Priorities...................................................   828
    Bosnia...........................................................   848
    Budget:
        Fiscal year 1999.............................................   827
        Request......................................................   848
        Shortfalls...................................................   863
    Challenges ahead--experimenting with the force, readying the
      leaders, reengineering the infrastructure, preparing for the...   844
    Civilian reductions............................................872, 879
    Comanche.......................................................872, 880
    Deployments, impact of...........................................   863
    Digitization.....................................................   873
    Enhanced fiber optic guided missile..............................   853
    Food stamps......................................................   857
        How many Army service members qualify for....................   858
    Future, path to the..............................................   839
    Ground operating tempo...........................................   883
    Health care......................................................   865
    International environment--with total Army solutions, shaping the   842
    Joint STARS Data Link System Improvement Program.................   873
    M-113............................................................   854
    Medical:
        Care.........................................................   880
        Technology...................................................   869
    Morale...........................................................   866
    National Guard:
        Funding....................................................860, 882
        Integration..................................................   849
        Redesign.....................................................   849
    National missile defense.......................................856, 861
    No-Dong missile..................................................   856
    172d Separate Infantry Brigade...................................   866
    One team, one fight, one future--America's soldiers..............   846
    Pay, adequate....................................................   858
    Pine Bluff Arsenal...............................................   854
    Position location system.........................................   868
    Prime vendor support.............................................   870
    Priorities.......................................................   871
    Privatization..................................................863, 871
    Readiness......................................................859, 875
    Recruiting and retention.......................................848, 869
    Reprogramming request............................................   846
    Responding to our Nation's needs--ensuring readiness through
      recruiting, retention, and realistic training..................   840
    Retirement system................................................   867
    Science and technology...........................................   853
    Simulators.......................................................   881
    Southwest Asia deployments.......................................   864
    Space capabilities...............................................   852
    Strategic balance--requirements and resources....................   845
    Taepo Dong-2 missile.............................................   861
    The way ahead....................................................   834
    Theater high altitude area defense [THAAD].....................850, 873
    Theater missile defense..........................................   855
    Where we are today...............................................   825
    White Sands missile range........................................   862
    Year 2000 problem................................................   847

                             Department of the Navy

                             Secretary of the Navy

    A-12 lawsuit, status of..........................................   298
    Adak reuse.......................................................   202
    Additional committee questions...................................   297
    AH-1W............................................................   330
    Aircraft carriers................................................   314
    Amphibious shipping..............................................   331
    APL barracks barge...............................................   298
    Carrier rotation in the gulf.....................................   184
    CH-60 Helicopter Program.........................................   325
    Chemical biological incident response force [CBIRF]..............   329
    Coast Guard/Navy ship procurement commonality....................   199
    CVN-77...........................................................   313
    CVX..............................................................   297
    CVX R&D..........................................................   314
    Department of the Navy 1998 Posture Statement....................   141
    Excess infrastructure and base closures..........................   311
    F-18E/F...................................................304, 308, 320
    F/A-18 capabilities..............................................   193
    F/A-18E/F......................................................187, 298
        And Joint Strike Fighter [JSF]...............................   326
        Wing drop....................................................   308
    Hellfire II missiles...........................................310, 329
    Joint Strike Fighter [JSF].......................................   331
    LHA service life extension.......................................   326
    LHD's/LHA's......................................................   189
    Lockheed and Northrop merger.....................................   313
    Missions, capability to perform..................................   191
    Naval Reserve CH-60 aircraft.....................................   310
    Navy JROTC.......................................................   311
    Navy theaterwide missile defense program.........................   203
    New attack submarine.............................................   185
    NTACMS...........................................................   312
    Nuclear Power School relocation, gymnasium in support of.........   312
    Operational:
        Readiness....................................................   310
        Tempo, increased.............................................   296
    Operationally....................................................   136
    Per user fee contract strategy...................................   298
    Personnel........................................................   136
        Problems/statistics..........................................   195
    Pilot retention..................................................   200
    Privatization.............................................298, 315, 327
        Outsourcing..................................................   196
    Programmatically.................................................   137
    Readiness.................................................299, 316, 328
    Recruiting and retention.........................................   186
    Reserve personnel, fiscal year 1999, Navy [RPN] funding..........   311
    Retention--exit surveys..........................................   205
    Ship:
        Depot maintenance funding....................................   325
        Service life.................................................   194
    Tactical Tomahawk................................................   325
    Theaterwide ballistic missile defense............................   192
    300-ship Navy....................................................   188
    Trident submarines...............................................   314
    V-22.............................................................   201
    Vertical replenishment helicopter................................   325

                             National Guard Bureau

    A vital force adding value to America............................   335
    Additional committee questions...................................   407
    Air National Guard:
        Family.......................................................   374
        Operations...................................................   373
            Contemporary.............................................   372
        Role in national security....................................   371
        Status of....................................................   378
    Alaska National Guard:
        Additional funding for helicopters for the...................   388
        Expanded role in the Pacific.................................   387
    Allocation, balance of...........................................   335
    America, presenting the face of..................................   340
    ``America's vital force'' defining,..............................   336
    Army National Guard:
        Aviation modernization.......................................   382
        Funding......................................................   379
        Pilot retention..............................................   390
        Recruiting and retention versus OPTEMPO......................   377
        Shortfall status.............................................   379
    ARNG programs, details of the $634 million shortfall in..........   381
    Blackhawk helicopter shortfall...................................   382
    C-17's in Jackson, MS............................................   391
    Camp Shelby, MS, gunnery range, funding for......................   392
    Capabilities, maintaining a balanced force of....................   340
    Civilian technicians.............................................   383
    Combat-oriented force, sustaining a..............................   338
    Counterdrug mission..............................................   393
    Disaster relief..................................................   386
    Distance learning and communications.............................   380
    Engagement, promoting democracy abroad through...................   339
    F-16:
        Modernization................................................   386
        Upgrade....................................................383, 385
    Fiscal year 1999 posture statement...............................   348
    Funding shortfall................................................   379
    Happy Hooligans..................................................   384
    Homeland defense, remaining the first line of....................   342
    Military affairs, fueling the revolution in......................   344
    Military technicians budget......................................   384
    National Guard, representing the needs of the....................   381
    Operational tempo and retention..................................   377
    Pacific rim operations...........................................   387
    Pilot:
        Retention....................................................   378
        Turnover.....................................................   389
    Quality of life..................................................   390
    Readiness, state of..............................................   388
    Real property and depot maintenance..............................   380
    Retrograde program...............................................   392
    Schools and special training.....................................   379
    The path ahead--total force integration..........................   345
    UH-60 helicopters versus cold weather equipment, prioritization
      of.............................................................   387
    Weapons of mass destruction......................................   393

                                  Nurse Corps

    Additional committee questions...................................   500
    Air Force:
        Breast-feeding program.......................................   497
        Nurses, entry-level qualifications for.......................   496
        Overview of nursing in the...................................   472
    Career professionals.............................................   498
    Entry level degree...............................................   495
    Funding and leadership...........................................   487
    Health care, executing...........................................   486
    Nurse's role.....................................................   485
    Operational readiness............................................   485
    Physical training/breast feeding.................................   497
    Reserve forces, utilization of...................................   486
    Telehealth.....................................................499, 500
    Tri-service nursing program......................................   492

                         Office of the Deputy Secretary

    A-76 process for competition.....................................    23
    Additional committee questions...................................    36
    B-2 bomber.......................................................    42
    Base closures....................................................    45
    Bosnia--costs, strategy, and number of people involved...........    40
    BRAC:
        Disapproval, consequences of.................................    21
        Funding......................................................    11
        Savings--personnel cuts and environmental costs..............    16
    CBO reestimate...................................................    46
    CINC's, cost control and equipment needs of......................    19
    Contingency funding..............................................     9
        More flexible................................................    26
    Counterdrug training.............................................    36
    Defense reform initiative........................................    37
    Demining.........................................................    36
    Deployment.......................................................    43
    Depot maintenance privatization, restrictions on.................    24
    DSWA's Field Command, function of................................    37
    Federally funded research and development centers [FFRDC's]......    33
        Reductions...................................................    36
    Fiscal resources--balanced budget amendment......................     6
    Funding:
        Allowance, fiscal year 1999..................................    27
        Constraints..................................................    26
    Inflation:
        Adjustments..................................................    45
        Savings and outlay forecasts.................................    29
    Introduction by Dr. Hamre........................................     4
    JROTC, funding for...............................................    42
    Medical care for retirees and FEHBP coverage.....................    41
    Missile defense..................................................    25
        Procurement for..............................................    30
    National Guard:
        And military construction....................................    19
        Role in consequence management operations....................    38
    NATO expansion costs.............................................    17
    New agency, location of..........................................    37
    New defense strategy.............................................     5
    Nuclear:
        Responsibility, redundancy of................................    37
        Surety inspections...........................................    38
        Weapons stockpile, management of.............................    38
    Operation and maintenance [O&M] funding..........................     9
    Personnel end strengths..........................................    12
    Privatization:
        And DOD personnel cuts.......................................    27
        In DOD, status of............................................    22
        Selective....................................................    31
    Readiness initiatives, major.....................................     7
    Recruit and retain quality people................................    15
    Recruiting and retention.........................................    41
    Reserve component initiatives....................................    13
    Shipbuilding.....................................................    31
    $60 billion procurement target...................................    46
    Spare parts......................................................     8
    Supplemental, SAC hearing on.....................................    22
    Theater high altitude area defense [THAAD] missiles..............34, 35
    Tracking infrastructure savings..................................    45
    Veto override, status of spending resulting from.................    32
    Weapons modernization............................................    14

                            Office of the Secretary

    Additional committee questions...................................   815
    Aircraft modernization...........................................   804
    Allies, burdensharing with.......................................   795
    Base closure and realignment.....................................   809
    Bosnia:
        Operations, funding for......................................   791
        The way ahead in.............................................   799
    Budget, overview of fiscal year 1999.............................   790
    Comprehensive Test Ban Treaty..................................801, 812
    DD-21 acquisition strategy.......................................   816
    Defense:
        Budget request, overview of fiscal year 1999.................   793
        Streamlining and reforming...................................   815
    India:
        International reaction to testing............................   811
        Nuclear testing by...........................................   810
    Indian nuclear capabilities and sanctions........................   801
    Israeli security.................................................   813
    Legacy Program...................................................   819
    Missile defense..................................................   807
        Deciding on deployment.......................................   808
    National missile defense system and THAAD........................   807
    NATO expansion and Russia........................................   813
    Nuclear weapons, development and testing of......................   800
    O&M funding and the President's budget amendment, fiscal year
      1999...........................................................   793
    Pacific region, importance of....................................   794
    Quality of life and pensions.....................................   806
    Secretary Cohen's opening statement..............................   789
    Theater high altitude area defense [THAAD] missile status........   796
    TRICARE..........................................................   798
    U.S. security, addressing multiple threats to....................   808
    Underwater Archeology Program....................................   819

                                Surgeon Generals

    Acute lung injury research.......................................   460
    Additional committee questions...................................   456
    Air Force:
        Humanitarian operations......................................   451
        Overview.....................................................   435
    Angio-CT.........................................................   448
    Army Medical Department:
        Cooperation with sister service medical departments..........   424
        Current status of the........................................   412
    Blood, freeze-dried..............................................   459
    Building healthy communities--intervention and prevention........   441
    Center for Naval Analysis [CNA] FEHBP-65/expansion of mail order
      pharmacy study.................................................   465
    Customer focused business process reengineering..................   433
    Deploying TRICARE: Better access and more choices................   439
    Facilitating service.............................................   453
    Federal Employee Health Benefits Program.........................   428
    Good news stories................................................   425
    Health care to the deckplates, taking............................   430
    Hepatitis C...............................................456, 460, 466
    Medical readiness.........................................456, 461, 467
    Medical technology, cost reduction of............................   454
    Mobile breast care center........................................   458
    Move information, not people.....................................   430
    Personal information carrier [PIC]...............................   459
    Quality and customer satisfaction................................   442
    Readiness........................................................   426
        Budget impact on.............................................   449
    Reengineering medical readiness..................................   438
    Research program funds...........................................   451
    Rightsizing our medical facilities and forces....................   440
    Technology and costs.............................................   453
    Telehealth.......................................................   468
    Telemedicine...................................................417, 426
    TRICARE...................................................418, 427, 468
        And Medicare.................................................   446
        Enrollment...................................................   446
        Making work..................................................   432
        Medicare subvention..........................................   445
    USUHS.....................................................458, 462, 467
        Graduate retention...........................................   451
    Women's health:
        Research.....................................................   463
        Studies....................................................429, 443

                              U.S. Pacific Command

    Additional committee questions...................................   600
    Amphibious ready groups..........................................   594
    Asia-Pacific Center..............................................   609
    Asian financial crisis.........................................603, 604
    China............................................................   602
    Cooperative threat reduction.....................................   589
    Crisis response force............................................   598
    Executive summary................................................   576
    Five key issues..................................................   571
    Ford Island development..........................................   593
    International military education and training [IMET]...........592, 601
    J-STARS..........................................................   600
    Landmines........................................................   610
    Looking ahead....................................................   581
    Missile defense..................................................   594
    1997 in the Asia-Pacific region..................................   577
    North Korea, situation in........................................   610
    North Korean:
        Ballistic missile threat.....................................   611
        Threat.......................................................   593
    Northern Edge exercise...........................................   599
    Okinawa update...................................................   598
    Pacific Command readiness........................................   573
    Pacific economics crisis.........................................   596
    Pacific force reductions.........................................   591
    Persian Gulf, impact of deployments..............................   589
    Readiness......................................................605, 608
    Strategy, resourcing the.........................................   582
    U.S. Pacific Command strategy in action..........................   578
    Wrap-up..........................................................   597

                            Youth Challenge Program

    Army National Guard, details of armories in the budget...........   406
    Education, alternative structure.................................   401
    Students, criteria on accepting..................................   403
    Youth programs:
        Support......................................................   396
        Success of...................................................   397

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