[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]




VULNERABILITIES TO WASTE, FRAUD, AND ABUSE: VIEWS OF THE DEPARTMENTS OF 
                  DEFENSE, STATE, AND VETERANS AFFAIRS

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

                                HEARING

                               before the

                   SUBCOMMITTEE ON NATIONAL SECURITY,
                  VETERANS AFFAIRS, AND INTERNATIONAL
                               RELATIONS

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 2, 1999

                               __________

                            Serial No. 106-5

                               __________

       Printed for the use of the Committee on Government Reform


     Available via the World Wide Web: http://www.house.gov/reform

                                 ______


                    U.S. GOVERNMENT PRINTING OFFICE
56-508 CC                   WASHINGTON : 1999

For Sale by the Superintendent of Documents, U.S. Government Printing Office
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                     COMMITTEE ON GOVERNMENT REFORM

                     DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland       TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut       ROBERT E. WISE, Jr., West Virginia
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
STEPHEN HORN, California             PAUL E. KANJORSKI, Pennsylvania
JOHN L. MICA, Florida                GARY A. CONDIT, California
THOMAS M. DAVIS, Virginia            PATSY T. MINK, Hawaii
DAVID M. McINTOSH, Indiana           CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana              ELEANOR HOLMES NORTON, Washington, 
JOE SCARBOROUGH, Florida                 DC
STEVEN C. LaTOURETTE, Ohio           CHAKA FATTAH, Pennsylvania
MARSHALL ``MARK'' SANFORD, South     ELIJAH E. CUMMINGS, Maryland
    Carolina                         DENNIS J. KUCINICH, Ohio
BOB BARR, Georgia                    ROD R. BLAGOJEVICH, Illinois
DAN MILLER, Florida                  DANNY K. DAVIS, Illinois
ASA HUTCHINSON, Arkansas             JOHN F. TIERNEY, Massachusetts
LEE TERRY, Nebraska                  JIM TURNER, Texas
JUDY BIGGERT, Illinois               THOMAS H. ALLEN, Maine
GREG WALDEN, Oregon                  HAROLD E. FORD, Jr., Tennessee
DOUG OSE, California                             ------
PAUL RYAN, Wisconsin                 BERNARD SANDERS, Vermont 
JOHN T. DOOLITTLE, California            (Independent)
HELEN CHENOWETH, Idaho


                      Kevin Binger, Staff Director
                 Daniel R. Moll, Deputy Staff Director
           David A. Kass, Deputy Counsel and Parliamentarian
                      Carla J. Martin, Chief Clerk
                 Phil Schiliro, Minority Staff Director
                                 ------                                

Subcommittee on National Security, Veterans Affairs, and International 
                               Relations

                CHRISTOPHER SHAYS, Connecticut, Chairman
MARK E. SOUDER, Indiana              ROD R. BLAGOJEVICH, Illinois
ILEANA ROS-LEHTINEN, Florida         TOM LANTOS, California
JOHN M. McHUGH, New York             ROBERT E. WISE, Jr., West Virginia
JOHN L. MICA, Florida                GARY A. CONDIT, California
DAVID M. McINTOSH, Indiana           JOHN F. TIERNEY, Massachusetts
MARSHALL ``MARK'' SANFORD, South     THOMAS H. ALLEN, Maine
    Carolina                         EDOLPHUS TOWNS, New York
LEE TERRY, Nebraska                  BERNARD SANDERS, Vermont 
JUDY BIGGERT, Illinois                   (Independent)
HELEN CHENOWETH, Idaho

                               Ex Officio

DAN BURTON, Indiana                  HENRY A. WAXMAN, California
            Lawrence J. Halloran, Staff Director and Counsel
                  J. Vincent Chase, Chief Investigator
              Samantha Sherman, Professional Staff Member
                        Jonathan Wharton, Clerk
                    David Rapallo, Minority Counsel




                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on March 2, 1999....................................     1
Statement of:
    Toye, Nelson, Deputy Chief Financial Officer, Department of 
      Defense; Stanley Soloway, Deputy Under Secretary of Defense 
      for Acquisition Reform; Edward A. Powell, Jr., Assistant 
      Secretary for Financial Management, Department of Veterans 
      Affairs, accompanied by Mark Catlett, Deputy Assistant 
      Secretary for Budget, and Frank Sullivan, Deputy Assistant 
      Secretary for Finance; and Bert Edwards, Chief Financial 
      Officer, U.S. Department of State, accompanied by Patrick 
      Kennedy, Assistant Secretary of State for Administration...     2
Letters, statements, etc., submitted for the record by:
    Blagojevich, Hon. Rod R., a Representative in Congress from 
      the State of Illinois, prepared statement of...............    15
    Edwards, Bert, Chief Financial Officer, U.S. Department of 
      State, prepared statement of...............................    45
    Powell, Edward A., Jr., Assistant Secretary for Financial 
      Management, Department of Veterans Affairs:
        Information concerning remediation.......................    77
        Prepared statement of....................................    32
    Soloway, Stanley, Deputy Under Secretary of Defense for 
      Acquisition Reform:
        Information concerning operational and maintenance 
          savings................................................    59
        Information concerning overrun and costs.................    55
        Prepared statement of....................................    21
    Toye, Nelson, Deputy Chief Financial Officer, Department of 
      Defense, prepared statement of.............................     5

 
VULNERABILITIES TO WASTE, FRAUD, AND ABUSE: VIEWS OF THE DEPARTMENTS OF 
                  DEFENSE, STATE, AND VETERANS AFFAIRS

                              ----------                              


                         TUESDAY, MARCH 2, 1999

                  House of Representatives,
       Subcommittee on National Security, Veterans 
              Affairs, and International Relations,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10 a.m., in 
room 2247, Rayburn House Office Building, Hon. Christopher 
Shays (chairman of the subcommittee) presiding.
    Present: Representatives Shays, Mica and Tierney.
    Staff present: Lawrence J. Halloran, staff director and 
counsel; J. Vincent Chase, chief investigator; Samantha 
Sherman, professional staff member; Jonathan Wharton, clerk; 
Earley Green, minority staff assistant; and David Rapallo, 
minority counsel.
    Mr. Shays. I would like to call this hearing to order.
    Last week the General Accounting Office [GAO], and the 
Inspector Generals identified high risk programs and 
significant management challenges at the Departments of 
Defense, Veterans Affairs and State. They cited longstanding 
financial management and procurement weaknesses at DOD, 
inefficient health care infrastructure and slow benefits 
processing at the VA, and the need for enhanced security and 
information systems at the Department of State.
    Today, we invite those three important departments to 
address the same subjects. We do so for two reasons. First, 
these hearings give the subcommittee an opportunity to survey 
key issues with our oversight partners, and refine our agenda 
for this Congress. Second, this broader perspective helps us 
discern common problems that might yield governmentwide 
solutions.
    While each department faces unique challenges, all three 
have at their disposal the same powerful set of tools that can, 
if energetically applied, help fix broken systems, improve 
program performance and increase accountability. The Government 
Performance and Results Act, which requires clear performance 
goals and measurable results, offers troubled agencies and high 
risk programs an incremental but inevitable path out of 
bureaucratic thickets and inefficiencies once thought 
intractable.
    As the Results Act process matures, performance measures 
will have a greater impact on administration budgets, on 
authorizations and on appropriations, and on Congress as well. 
So we ask the departments to describe their Results Act 
compliance efforts and to identify the key indicators by which 
they, and we, will measure their performance in the years 
ahead.
    We welcome all our witnesses today, and it is my 
understanding that we will have two statements from the 
Department of Defense, and given the size of the budget that 
seems reasonable, and then one testimony from the Veterans 
Affairs and one from State. But, all of our witnesses at the 
table will be invited to respond to questions, and let me just 
introduce our witnesses.
    From the Department of Defense, Nelson Toye, Deputy Chief 
Financial Officer, and then we have Stanley Soloway, Deputy 
Under Secretary of Defense for Acquisition Reform, speaking 
about acquisition.
    And then from the Department of Veterans Affairs we have 
Edward A. Powell, Jr., Assistant Secretary for Financial 
Management, accompanied by Mark Catlett, Deputy Assistant 
Secretary for Budget, and Frank Sullivan, Deputy Assistant 
Secretary for Finance.
    Department of State, we have Mr. Bert Edwards, Chief 
Financial Officer, U.S. Department of State, accompanied by 
Patrick Kennedy, Assistant Secretary of State for 
Administration.
    Our practice is that we swear everybody in beforehand, and 
if you would stand and raise your right hands, please.
    [Witnesses sworn.]
    Mr. Shays. For the record, all our witnesses responded in 
the affirmative.
    Now, is anyone missing from that list? OK. We are going to 
start with you, Mr. Toye, and we will go from there. And if you 
would bring your microphones somewhat closer.

  STATEMENTS OF NELSON TOYE, DEPUTY CHIEF FINANCIAL OFFICER, 
DEPARTMENT OF DEFENSE; STANLEY SOLOWAY, DEPUTY UNDER SECRETARY 
   OF DEFENSE FOR ACQUISITION REFORM; EDWARD A. POWELL, JR., 
  ASSISTANT SECRETARY FOR FINANCIAL MANAGEMENT, DEPARTMENT OF 
VETERANS AFFAIRS, ACCOMPANIED BY MARK CATLETT, DEPUTY ASSISTANT 
  SECRETARY FOR BUDGET, AND FRANK SULLIVAN, DEPUTY ASSISTANT 
   SECRETARY FOR FINANCE; AND BERT EDWARDS, CHIEF FINANCIAL 
   OFFICER, U.S. DEPARTMENT OF STATE, ACCOMPANIED BY PATRICK 
    KENNEDY, ASSISTANT SECRETARY OF STATE FOR ADMINISTRATION

    Mr. Toye. Thank you, Mr. Chairman. With your permission, I 
ask that my formal written statement be included in the record, 
and at this time I would like to provide a summary of the 
statement.
    I want to thank you for the opportunity to be here today to 
discuss ongoing financial management reform within the 
Department of Defense. I welcome the opportunity to address 
what we have done and what we are doing to improve financial 
management within the Department.
    I want to begin by stating that financial management reform 
within the Department continues to be a high priority. The 
Department's ongoing financial management reform initiatives 
represent the most comprehensive reform of financial management 
in the Department's history. Our objective is to put into place 
policies, systems and practices that will enable us to produce 
accurate financial information in a timely manner.
    While we are proud of the significant progress that the 
Department has achieved to date, we are very well aware that 
much more remains to be accomplished. Today I want to briefly 
address the challenges we face, the progress we have made, and 
our short-term and long-term strategies for lasting reform.
    First, our challenges. The size and complexity of the 
Department alone makes financial management reform a big 
challenge. Compare us, for example, with General Motors, the 
No. 1 Fortune 500 company for 1998. GM had approximately $178 
billion in annual revenues and $228 billion in assets. In 
contrast, the annual budget for the Department of Defense is 
over $260 billion and we have over $1 trillion in assets.
    Beyond size, our complexity is equally challenging. We 
maintain over 500 bases in 150 countries and territories 
throughout the world. Additionally, the Department of Defense 
has hundreds of appropriations and accounts managed by 4 
military services, 14 defense agencies and numerous other 
subordinate organizations.
    Additionally, the standards that the Department now is 
asked to comply with are still evolving. As the Department 
strives to comply with standards that only recently have been 
established, still more changes are occurring. In fiscal year 
1998 alone, four new auditable financial statements were 
required for DOD's reporting entities. New reporting 
requirements also continue to be imposed. This is a significant 
challenge for the Department of Defense because it is akin to 
hitting a moving target. Despite these challenges, we have made 
significant progress.
    First, the Department has consolidated over 330 financial 
management field sites scattered throughout the world into 5 
centers and 18 operating locations. This was completed in July 
1998, almost 2 years ahead of the Department's original 
schedule.
    Second, to remedy the problem of numerous and incompatible 
financial management systems, we have embarked on a major 
streamlining effort. As of October 1998, we had reduced the 
number of finance and accounting systems by 66 percent. 
However, we are not simply reducing the number of finance and 
accounting systems. Our objective is to replace old, outdated, 
noncompliant systems with more modern systems that can meet 
today's standards.
    In addition to consolidating operations and reducing 
systems, the Department has over 150 other initiatives underway 
to improve and streamline financial management and to improve 
the timeliness and accuracy of its accounting data. Despite 
these accomplishments, the Department still faces significant 
obstacles in transforming its financial operations, but we are 
getting the job done one step at a time.
    The Pentagon of today is not the Pentagon that our fathers 
knew. In this new Pentagon it is no longer adequate to keep 
just a checkbook balance of the Department's funds. 
Increasingly, the Department of Defense is being judged by new 
standards, as generally accepted accounting practices prevalent 
in the private sector are being applied to the Federal 
Government.
    So how is the Department going to improve financial 
management? We are moving toward our goal with both a long-term 
and a short-term strategy.
    The Department's systems were not designed to meet current 
commercial-type standards and therefore are not capable of 
complying with recently enacted standards. To overcome this 
problem, the Department is taking a two-track approach. The 
first track is to improve or replace the Department's current 
systems with systems that will meet current standards. But the 
Department does not expect to have financial systems that can 
produce fully auditable financial statements prior to the year 
2003. Because of the desire and indeed the necessity to achieve 
progress before that date, the Department has undertaken a 
second track that is an interim effort, and includes the use of 
contractors to address many of the Department's more 
significant problems. As a result, the Department expects to 
make progress each year toward resolving its financial 
management challenges. Financial management within the 
Department is a work in progress. There have been notable 
successes, but it is impossible to reverse decades-old problems 
and inefficiencies overnight and implement necessary reforms 
without several years of initiatives.
    In summary, the Department of Defense faces significant 
financial management challenges in the near term. To be 
successful in our reform efforts, we need a dedicated effort 
from the Department's financial community and the cooperation 
of every community that feeds data to the Department's 
financial management systems. We are getting both. This is a 
Departmentwide management initiative involving participation 
across all functional areas. Success should enable us to 
generate better financial data for decisionmakers and 
ultimately get more ``bang for the buck'' out of the defense 
budget.
    Mr. Chairman, this completes my oral testimony, and I will 
be happy to answer any questions for the record.
    [The prepared statement of Mr. Toye follows:]
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    Mr. Shays. Thank you, Mr. Toye.
    Let me just mention at this time that we have Mr. Tierney 
from Massachusetts with us. And I don't know if the gentleman 
would like to make a comment, but I would like to do some 
bookkeeping while we have a Member here.
    I ask unanimous consent that all members of the 
subcommittee be permitted to place any opening statements in 
the record and that the record remain open for 3 days for that 
purpose. Without objection, so ordered.
    [The prepared statement of Hon. Rod R. Blagojevich 
follows:]
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    Mr. Shays. And I also ask further unanimous consent that 
all witnesses, which is your request, be permitted to include 
their written statements in the record, and without objection, 
so ordered.
    Let me now ask Mr. Soloway to make his statement.
    Mr. Soloway. Thank you very much, Mr. Chairman. It is a 
pleasure to be here.
    A little over a year ago Secretary Cohen launched the 
Defense Reform Initiative [DRI], a broad-based and ambitious 
program to fundamentally change the way in which the Department 
of Defense operates, internally and externally. His call for 
major departmental reform followed the completion of a 
comprehensive review of our national military strategy and 
defense posture. Although it was founded on four initial 
pillars--elimination, re-engineering, consolidation and 
competition--the DRI is now the Department's overall framework 
for change and reform in all aspects of defense.
    For the purposes of today's hearing, allow me to briefly 
touch on our progress in each of these areas.
    Base realignment and closure or BRAC is our No. 1 priority. 
Only through BRAC can we right size the Department and reduce 
unneeded infrastructure to free up the funds we need to meet 
the challenges of the 21st century. As such, we will be seeking 
congressional approval for two more rounds of base closure.
    Second, re-engineering, which includes both internal 
business processes and acquisition reform. In truth, real 
reform began to take shape some 6 years ago in a vital and 
rewarding partnership between the Department and the Congress 
which resulted in passage of the Federal Acquisition 
Streamlining Act [FASA], and the Clinger-Cohen Act, both of 
which signaled the common vision and commitment of the Congress 
and the Department.
    At the same time, within the Department, internal change 
had already begun. Then Secretary of Defense William Perry 
created a new demand for performance specifications rather than 
design-specific military specs and standards, and then Under 
Secretary of Defense-Comptroller, now Deputy Secretary John 
Hamre, had put into motion a substantial series of internal 
management reforms.
    The DRI embraced and expanded on all of these, and helped 
create within the Department a critical partnership committed 
to change and reform that encompasses all aspects of defense. 
For example, through the DRI the Department has put in place 
its first ever Financial Management Improvement Plan. We are 
working toward continuous improvement in the business practices 
associated with the Defense Working Capital Funds. We have 
increased, as well, our focus on electronic commerce, the 
electronic mall on the internet, and of course the purchase 
card. By the year 2000 we will be obtaining over 90 percent of 
our low-value purchases with the card.
    Acquisition reform has opened the door to important new 
flexibility and decisionmaking as well as a new focus on 
performance. Many programs, including the Defense Acquisition 
Pilot Programs, are reaping major benefits for both the user 
and the taxpayer.
    For example, the program costs of the Joint Air-to-Surface 
Standoff Missile or JASSM have been reduced 44 percent, and the 
unit costs of the Joint Direct Attack Munition or JDAM have 
been reduced by approximately 60 percent from the estimated 
cost. Cycle time for the JDAM has been reduced 35 percent with 
a 30 percent reduction in program staffing.
    In addition, the Single Process Initiative, where we seek 
to replace non-value added government specifications on 
contracts with commercially proven, performance-focused 
processes, is proving to be a real success as well. Overall, 
the Defense Contract Management Command reports that the Single 
Process Initiative has now gone past the half billion dollar 
mark in savings and long-term cost avoidance, and we have only 
just begun.
    We are also developing new strategies for reducing the 
long-term operations and support costs of both our new and 
existing systems, which today represent an enormous drain on 
our budget. As Congress has directed, for instance, we have 
identified 10 weapons systems as pilot programs for reduced 
total ownership cost and are pursuing a range of management 
actions to achieve that critical goal.
    These are but a few ways in which our acquisition world has 
changed for the better. However, we have a long way to go and 
our commitment to acquisition reform remains unabated. It is 
driven by our continued commitment to implementing best 
business practices, as well as our very real need to access the 
full range of technology and technology suppliers to help meet 
the challenges of the future. The barriers to doing so remain 
significant and must be removed. As such, the Department will 
be proposing a series of legislative initiatives designed to 
help us overcome those barriers.
    The third area is consolidation, where the story is shorter 
and simpler. At the outset of the DRI, Secretary Cohen made 
clear his commitment to re-engineer and reduce headquarters 
staffs. To date, the Department is right on target to reduce 
the Office of the Secretary of Defense by 33 percent by the end 
of this fiscal year; the Joint Staff by 29 percent by fiscal 
year 2003; the defense agencies by 21 percent by fiscal year 
2001; and the DOD field and related activities by 36 percent by 
fiscal year 2001.
    Competition is also a pillar of defense reform, and on that 
important topic I would like to make just a couple of brief 
comments.
    First, the key word here is competition. Our goal is to 
exploit the many advantages of the competitive environment to 
the benefit not only of the American taxpayer but the 
warfighters, our customers in the field. Competition saves 
money and can improve quality. Hence, our goal is not 
outsourcing, it is competition.
    Second, we must recognize that with innovation and 
creativity come vastly different ways of doing business. When 
many of the rules and statutes governing competitive sourcing 
were put in place, we were contemplating very clear choices. 
Today, particularly as we seek to access the best and most 
contemporary technologies, the choices are more complex and 
sometimes lead us to solutions that are virtually impossible to 
directly compete between the public and the private sectors.
    It is the Department's hope that the Congress will continue 
to work with us in support of implementing such innovation, 
while we at the same time seek to provide appropriate 
assistance in cases where the best solutions for the taxpayer 
and the warfighter result in adverse impacts for our work 
force.
    Third, what we seek is not just lower costs but the best 
overall value. We have collectively agreed that in selecting 
commercial suppliers, low cost does not always equal the best 
value to the government, and it is time for our statutes to 
recognize that fact for public-private competition as well.
    And fourth, as I stated earlier, one of our overarching 
goals in acquisition reform is our ability to access the full 
range of technologies and suppliers that exist for any given 
requirements. So too must this be our goal in competition. Our 
competitions must be fair, clear and conducted in such a manner 
that all parties, public and private, walk away, win or lose, 
feeling like they have been given a fair shake.
    The Department has also fully embraced the principles of 
the Government Performance and Results Act, as evidenced by its 
fiscal year 2000 GPRA performance plan. In the fiscal year 2000 
plan, DOD has established two corporate level goals.
    Shape the international environment and respond to the full 
spectrum of crisis by providing an appropriately sized, 
positioned and mobile force.
    And prepare now for an uncertain future by pursuing a 
focused modernization effort that maintains U.S. qualitative 
superiority in key warfighting capabilities. Transform the 
force by exploiting the revolution in military affairs and re-
engineering the DOD to achieve a 21st century infrastructure.
    Our two corporate goals form the basis for using GPRA as a 
management tool. The performance goals are supported and 
evaluated by quantifiable output, which is assessed by using 
performance measures or performance indicators. Performance 
measures and indicators quantify the output of the defense 
program for key measures associated with providing a ready 
force and preparing for the future. The Department's plan 
includes 41 performance measures and indicators, all of which 
have baselines and goals.
    Mr. Chairman, members of the committee, the Department of 
Defense is changing the way that we do business, and the 
Defense Reform Initiative provides the overarching framework to 
enable us to achieve these many and crucial goals.
    Yesterday, Secretary Cohen and Deputy Secretary Hamre 
reiterated their commitment to stay on course in the pursuit of 
real change in the Department. In so doing they also explained 
how the defense reform umbrella has expanded well beyond the 
initial four pillars to include quality of life initiatives, 
logistics reform and homeland security, all in an effort to tie 
together the many elements of reform and the reality that each 
is an important part of the Defense Department we envision for 
the future.
    At their press conference they also unveiled a new CD-ROM 
designed to communicate accomplishments to date and describe 
the challenges ahead. Further, the CD-ROM includes score cards 
for most major areas of reform that will enable us to track the 
progress that we are making. In this regard the Secretary and 
Deputy Secretary have firmly restated our commitment to 
performance measures and meaningful results. With your 
permission, Mr. Chairman, I would like to submit for the record 
a copy of the CD-ROM as well as a text version. Every Member of 
Congress did receive a copy of this CD-ROM yesterday prior to 
the press conference.
    In closing, it is fair to recognize that defense reform is 
not yet a way of life in the Department. We are, however, 
making real progress. As we continue to move forward, to 
encourage and adopt more and more innovation and creativity, 
mistakes will be made. And just as we have learned from those 
that we have already seen, so too will we continue to learn 
from our mistakes as we continue down this complex and 
difficult road.
    Defense reform would never have been possible without the 
support, encouragement, and partnership we have enjoyed with 
the Congress, and we are counting on that continuing 
partnership, that shared commitment to creating a Department of 
Defense that is optimally prepared to meet the challenges 
ahead.
    I thank you for your time, and we will be happy to answer 
any questions.
    [The prepared statement of Mr. Soloway follows:]
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    Mr. Shays. Thank you. Now we will hear from the Department 
of Veterans Affairs, Mr. Powell, who is accompanied by Mr. 
Catlett and Mr. Sullivan.
    Mr. Powell. Thank you, Mr. Chairman and Congressman 
Tierney. I am pleased to appear before you to testify on the 
actions we are taking at the Department of Veterans Affairs to 
address the management issues identified by the General 
Accounting Office and the VA's Inspector General. I have 
submitted my full statement to the subcommittee and request 
that statement be made a part of the hearing record.
    The VA is facing two major management challenges: improving 
the infrastructure of our health care system and resolving the 
shortcomings in our benefits claims processing. I believe this 
supports what you have already heard from our IG and the GAO. 
These challenges are not new, nor are they easily conquered. 
Indeed, we have been dealing with both issues for a long time. 
By their very nature, they may never go away completely. We 
will always be looking to identify and implement better ways to 
deliver our services and benefits.
    This morning I wish to update you on a few of the 
initiatives underway at VA which demonstrate our commitment to 
providing first class service to veterans and managing the 
resources entrusted to us.
    VA has long been regarded as a leader in the Federal debt 
management community. Over the past year, we have been moving 
closer to our goal of consolidating all major VA debt programs 
into one centralized automated collection system. We have made 
significant progress toward automating the billing and payment 
processing of first party medical receivables, and have laid 
the groundwork for consolidating the management of all debts at 
our Debt Management Center in St. Paul, MN. Debt collection is 
a high priority for the Department, and we expect to see 
continued success in this area in fiscal year 1999.
    VA has completed the year 2000 renovation of its entire 
mission critical computer software applications. This includes 
all payment related applications and applications supporting 
health care. We have placed 97 percent of these applications 
into production and have verified their ability to successfully 
process year 2000 dates. At the same time, all VA offices are 
verifying the readiness of their physical plants and workplace 
equipment, as well as other software, to ensure that they will 
continue to operate after December 31, 1999.
    We are collaborating internally and with other Federal 
entities such as Treasury and the U.S. Postal Service in 
preparing and implementing business continuity and contingency 
plans. These plans will ensure that payments to veterans, 
fiduciaries, employees and vendors are made without 
interruption on January 1, 2000 and beyond.
    It was gratifying to learn Congressman Horn awarded VA an 
``A minus'' for our progress in preparing for the year 2000. We 
are confident we can raise that grade to an ``A'' in the next 
reporting cycle.
    My top priority as the chief financial officer is to obtain 
an unqualified opinion on VA's fiscal year 1999 financial 
statements. We are down to one qualification, and we fully 
expect to resolve that issue before the end of this fiscal 
year.
    VA has made significant progress toward developing and 
implementing a results-oriented framework for managing and 
evaluating our programs. Major advancements are highlighted in 
our fiscal year 2000 performance plan which was delivered to 
Congress on February 1. Foremost among those advancements are a 
greater emphasis on outcomes; a greater focus on highest 
priority goals and measures; increased attention to validation 
and verification of data, and the identification of total 
budget resources for each program.
    Our medical care program deserves particular note in this 
area. The results of the Government Performance Project just 
conducted by Syracuse University gave VA's Veterans Health 
Administration an ``A'' for managing for results. As a side 
note, VHA received the only ``A'' among the 15 Federal entities 
evaluated.
    During the last year the issue of data validation and 
verification has been a major focal point for the Department. 
Our fiscal year 2000 performance plan includes a very frank 
discussion of VA's problems with data quality. However, it also 
identifies the actions we are taking to resolve those problems. 
We are working closely with VA's Office of Inspector General on 
a series of detailed performance audits.
    At GAO's invitation, we met with their staff last month to 
discuss our data validation and verification efforts. GAO is 
preparing a best practices report on this topic. They have 
identified VA as one of the agencies they intend to commend in 
their report.
    Finally, we have had notable success in identifying the 
total staffing and funding associated with each of our 
programs. We expect to make additional progress in this area as 
activity-based costing methodologies are implemented throughout 
the Department.
    Mr. Chairman, the Department of Veterans Affairs is fully 
aware of the challenges we face. We are proud of the progress 
we have made, but understand we have much work yet to do. I 
assure you we are approaching our challenges thoughtfully and 
resolutely, and look forward to continued success.
    This concludes my opening statement. I would be happy to 
answer any questions you or the Members may have.
    [The prepared statement of Mr. Powell follows:]
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    Mr. Shays. Thank you very much, Mr. Powell.
    Now we will hear from Mr. Edwards, who is accompanied by 
Mr. Kennedy.
    Mr. Edwards. Thank you, Mr. Chairman.
    Last week you heard from the GAO and the various Inspectors 
General, and I was responsible for the State Department's 
provision of information to the GAO's National Security and 
Internal Affairs Division which prepared the report ``Major 
Management Challenges and Program Risks--Department of State.'' 
Together, Mr. Kennedy and I have responsibility for many of the 
issues in the GAO report and the Inspector General's letter and 
testimony last week.
    I think it is significant in his transmittal accompanying 
the GAO report Comptroller General David Walker stated, ``The 
State Department has made progress in addressing the many 
challenges that GAO has identified. State is now devoting 
substantial resources to developing a strategy to enhance its 
information technology capacity and security as well as its 
financial management systems. In fact, State received an 
unqualified opinion on its most recent financial statements.''
    We would like to review today the challenges identified by 
the GAO and several additional ones in the letter to Secretary 
Madeleine Albright, that the subcommittee sent to her. I would 
like to review those in the order that the GAO report 
identified them.
    The first challenge was enhancing the management of 
security programs for our overseas personnel and property. 
Clearly the bombings in our embassies in Nairobi and Dar es 
Salaam last August have refocused attention on the safety of 
our people and our facilities. Congress worked quickly to enact 
an emergency supplemental appropriation to address State's 
immediate needs from this tragedy.
    The 1999 emergency supplemental provides a total funding of 
$1.4 billion for a total of six different program areas. In 
order to document how we are managing the emergency 
supplemental, we have established a coding structure in our 
financial management system to report obligations and 
expenditures against these six activities, and have established 
a monthly reporting internally to monitor our progress. Our 
objective is to expend these security funds both wisely and 
promptly. However, the scope of our financial needs to address 
these worldwide security requirements is daunting.
    As a result of our negotiations with OMB on the fiscal year 
2000 budget, the President has proposed $36 million in 
additional funding to begin planning on up to eight embassy 
construction projects to be commenced beginning in fiscal year 
2001. In addition, the President's budget proposes an advance 
appropriation for the construction of $3 billion for the fiscal 
years 2001 through 2005, with $300 million in 2001 and 
increasing by $150 million a year through 2005.
    Subsequent to the budget submission, the Accountability 
Review Board, which was chaired by Admiral Crowe, substantiated 
the Department's facilities and security deficiencies and 
recommended $1.4 billion per year for construction for 10 years 
to meet these needs. We are continuing our discussions with OMB 
on appropriate funding for security upgrades and facility 
relocations.
    Finally with respect to physical security, most experts 
agree that a principal factor is setback. The farther a 
facility is from potential blasts, the less damage results. 
Lack of this setback is a problem for 88 percent of our 
embassies and consulates; 229 of our 260 posts lack our 100-
foot setback standard. We are addressing this through a 
vigorous program to expand the setback around our facilities 
through adjacent property acquisitions, street closures, 
bollards and barricades, and other devices.
    The second GAO challenge was improving our information 
management systems. Certainly no other management area at State 
has received more extensive attention than information 
management. As the GAO report indicates, within the past 6 
months a number of substantial achievements have been attained.
    First, we created a separate Information Resources 
Management Bureau under a new Chief Information Officer who has 
25 years of experience in information technology.
    Second, we have implemented a total of six major 
improvements, and those are in my statement and I won't read 
them for you to enumerate those, but these are all very major 
information technology accomplishments.
    Third, we have instituted a capital planning process. Our 
Information Technology Program Board and our Information 
Technology Review Board have met numerous times over the past 
year to rigorously review and approve over 100 projects 
totaling over $200 million in funding. Furthermore, we will 
complete final enhancements to our capital planning process to 
fully comply with OMB's Circular A-11 guidance in time for the 
next budget cycle.
    Fourth, we have created an IT tactical plan that has been 
favorably cited by GAO and OMB and other agencies which 
describes in detail how we are carrying out over 70 key 
modernization projects this year and next year.
    Fifth, we have created an IT vision paper which contains a 
number of groundbreaking goals for the years 2001 through 2005. 
This paper was featured in an article in Government Computer 
News this past month.
    Last, we have enhanced our security program in a number of 
ways. We have a Departmentwide security infrastructure working 
group. We have appointed a Department-level information systems 
security officer; we have published a critical infrastructure 
protection plan; we have installed a state-of-the-art intrusion 
protection software; and we have developed a network security 
architecture plan. All of these are in accordance with GAO 
standards and guidelines.
    With respect to the Y2K issue, the Department is confident 
our program to achieve compliance will succeed and our systems 
will be ready before the year 2000. At the Department's monthly 
Y2K Steering Committee meetings chaired by Under Secretary 
Cohen and attended by all Assistant Secretaries with mission 
critical systems, and also attended by John Koskinen, chairman 
of the President's Council on the Year 2000 Conversion, Mr. 
Koskinen noted the great strides the Department has made toward 
meeting OMB's goals.
    Briefly, State has 59 mission critical systems, and at our 
February 19, 1999, meeting we reported that we had the 
following results: 21 legacy systems are compliant; 18 systems 
completed repairs and replacements by the February 19 meeting 
and are now compliant; 16 additional systems will complete 
implementation and be compliant by March 31, 1999; two systems 
will complete implementation in April; and two systems will 
complete implementation, one in May and one in the July or 
August timeframe.
    The systems that are beyond March 31, that will be 
completed in April and May, are sister systems to nearly 
identical systems already implemented elsewhere in the 
Department, and the July/August system is the last of a 
multiple system installed at a number of locations.
    To summarize, over 90 percent of our mission critical 
systems will be compliant by March 31, the OMB deadline; 95 
percent by April 30; 98 percent by May 31; and 100 percent by 
this summer.
    Moving on to financial management systems--and in your 
opening statement, Mr. Chairman, you cited that issue--I am 
happy to say, when I was asked to join the Department last year 
as the CFO, I was pleased to learn that we had made sufficient 
progress to permit our financial management systems to produce 
auditable financial statements, and we received an unqualified 
or clean opinion from our Inspector General and the IG's CPA 
contractor. We were only 1 of 11 agencies last year which 
received such an unqualified report, and we expect a similar 
result for the fiscal year 1998 audit which is now in the wrap-
up stage as we speak this morning.
    In addition, our Foreign Service Retirement and Disability 
Fund, which is a separate pension system covering 13,000 
retired Foreign Service employees and 11,000 active Foreign 
Service officers, has received an unqualified clean report for 
the past 5 years.
    Finally, State also operates the International Cooperative 
Administrative Support Services, the ICASS system, which 
manages and allocates over $700 million annually in overseas 
support costs for the 35 agencies which have employees in our 
embassies and consulates. ICASS is separately audited, and also 
received an unqualified or clean auditor's report in fiscal 
year 1997, and we expect the same this year.
    Our independent auditors and the Inspector General have 
identified a number of areas where we can achieve improvements, 
and we are working to resolve these issues. In addition, our 
1998 Federal Managers' Financial Integrity Act report will show 
that the Department has successfully resolved eight material 
weaknesses during the past 3 years, and we only have two 
remaining to be resolved.
    I am going to ask one of my colleagues to distribute our 
1997 accountability report to accompany this testimony. This is 
an experimental program authorized by the Government Management 
Reform Act, and provides in a single document information 
mandated under a total of seven different laws, including our 
audited financial statements and our GPRA comments. And also 
that report would be repeated for 1998. It is in process, and 
we expect that to be issued in June 1999.
    The third GAO challenge was effectively managing our visa 
process. We have an increasing number of visitors entering the 
United States each year. Our accountability report on page 10 
shows that for nonimmigrant visas we have----
    Mr. Shays. I am going to ask you to summarize your last 
three points.
    Mr. Edwards. I will be happy to do that, Mr. Chairman.
    Our visas are constant, but we have a visa waiver program 
covering 12 million visitors in addition to the 7 to 8 million 
who get visas, and this of course has impacted our economy 
favorably with a total of 20 million visitors a year.
    The fourth GAO challenge was effectively reorganizing our 
foreign affairs agency. Mr. Kennedy, who is here with me, 
prepared for the State Department that report which was filed 
by the President in late December, and can speak to your 
questions on that.
    Last, with respect to meeting GPRA standards, we have filed 
a 1999-2000 performance plan which amends the earlier 1999 
plan. We have made major efforts to improving our GPRA 
standards. We have the same issues that my colleagues spoke 
about earlier, and that is identifying appropriate baselines 
and benchmarks so we can link our expenditures to our 
performance outcomes.
    In summary, Mr. Chairman, the State Department faces 
daunting challenges, both in foreign policy and in improving 
our information technology and infrastructure. The GAO official 
who prepared the January report, who you heard from last week, 
acknowledged that State has been administering foreign affairs 
for too many years on the cheap. Particularly in the area of 
security, we must obtain the additional funding to have safe 
facilities for our employees, employees of other agencies in 
our embassies, and for visitors to our facilities. We need the 
continued assistance of Congress to obtain these resources, and 
I would be pleased to answer questions you and your colleagues 
may have at this point.
    [The prepared statement of Mr. Edwards follows:]
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    Mr. Shays. Thank you very much for accommodating our needs. 
All of your statements were very helpful. I realize that they 
are general in nature and somewhat short. I don't want Defense 
and VA and State to think that our common practice is going to 
be to bring you up in a line and you have to listen to 
everybody else's presentation. The purpose of today's hearing 
is to help us focus; to help guide this committee in the next 2 
to 4 years; where this committee is going to go in utilizing 
our very small resources and what we are going to focus in on.
    At this time I would ask Mr. Tierney if he has questions.
    Mr. Tierney. Thank you.
    Mr. Soloway, just a question generally. You talked about 
competition to a large extent and what you thought the benefits 
on that are. Perhaps it is my perspective on this thing, but it 
seems to me that the only area that we think that less 
competition is better for the consumer is in the military 
industries, where we are encouraging consolidation and merger 
so we have less people bidding on contracts. Has there been any 
rethinking on this particular direction?
    Mr. Soloway. I think if you look at the most recent history 
in terms of the Department's position on those consolidations, 
we have actually taken a stand on several, the most obvious 
being the Lockheed case not too long ago. We are now in the 
process of reviewing the most recent in the shipyard business 
with the General Dynamics/Newport News proposal which has been 
in the media over the last several weeks. So the Department is 
taking a very serious look at making certain that we can 
maintain competition, and to inject and intercede where we 
believe that competition is being threatened.
    And so from that perspective I think we are taking a very 
serious look at it, but I think it goes beyond--my comments 
about competition go beyond that. First of all, in the areas 
beyond that major tier of contracting, the prime contractor 
that we all talk about every day, the competition continues to 
be fierce. For instance, more than half of our money goes to 
buying services, much of it in the information technology 
world, and that is a very robust marketplace where there is no 
issue of a lack or limit on competition.
    Second, the competition that I was referring to more 
specifically in my testimony is our commitment to competing 
those positions within the Department that we deem to be 
commercial in nature, in other words, positions that may well 
be able to be performed by commercial contractors versus having 
it done by government employees. Those competitions almost 
always are going to involve public-private competitions, where 
we have a process through OMB Circular A-76 which provides a 
methodology for those competitions.
    The history of that has demonstrated to us that just the 
injection of competition into that process achieves roughly a 
20 percent savings at minimum, as high as in the 40 to 45 
percent range, and that is a figure which has been pretty well 
documented in most of the studies that I have seen inside the 
government and outside. We have committed to competing upwards 
of 200,000 positions over the next several years and expect 
those positions to yield savings in excess of $11 billion, 
money which we have already planned for in the out year 
budgets.
    So the competition comes in many different levels. But to 
your specific question, I think the Department has made clear, 
particularly with the recent history, that we take seriously 
this question of competition and are reviewing it on a case-by-
case basis very seriously.
    Mr. Tierney. Is that something that you think that this 
committee ought to take a look at?
    Mr. Soloway. You are asking an agency official to tell you 
to look at something that we are doing.
    I don't think that it is necessary at this point, because I 
do think that the Department is taking a thoughtful and 
aggressive approach to it. As you acknowledge, there has been a 
tremendous degree of consolidation in our traditional supplier 
base.
    Mr. Tierney. Encouraged by the Department, I might say.
    Mr. Soloway. The initial phases definitely were. As 
indicated in the Lockheed case of this past year, it reached a 
point in some areas where the vertical integration became a 
matter of grave concern in the Department, and of course the 
Department of Justice intervened and said that we couldn't 
support those consolidations. So I think that our approach at 
this point is a very thoughtful one, and I don't know that 
there is any need to take it beyond that at this point.
    Mr. Tierney. Mr. Powell, we talked during the hearings last 
week about the prospect of taking some of your older buildings, 
your older assets, and finding a use for them, but at the same 
time moving a lot of the Veterans Administration service 
delivery to outreach clinics or something closer to the 
veterans. Does your Department have a particular plan in place, 
or where might we go with that concept of what we do with the 
older, more costly to maintain buildings and move to a more 
service-oriented regional delivery?
    Mr. Powell. To the best of my knowledge, this issue has not 
come to my office. VHA may be working on those plans because 
they are much closer to the issue. We are very concerned with 
the enhanced use opportunities that would allow us to 
effectively utilize our facilities. If we have underutilized 
buildings we can lease or sell within our facilities we should 
optimize their use. Obviously, we do have facilities which are 
not currently engaged.
    Mr. Tierney. Is it the plan looking forward, then, to 
maintain all of those buildings and go out to the community-
based outreach clinic concept?
    Mr. Powell. I don't mean to be evasive. We have not 
discussed that particularly as a specific plan. I do know if it 
is a priority for VHA, so I will get back to you on that.
    Mr. Tierney. Mr. Edwards, there was talk also last week 
about the identification of the number of personnel for which 
we are responsible which are located overseas and the cost of 
maintaining and providing security for them. Is there any plan 
in the works of making some identification, some thought of 
addressing whether or not there are too many people, too widely 
scattered, or has that been addressed at all?
    Mr. Edwards. As part of the security supplemental, we have 
established an Overseas Presence Advisory Panel, and they will 
be commencing their activities. March 9 is the initial meeting. 
The purpose of this group of distinguished individuals, led by 
an attorney from New York and some people from within State, 
Admiral Crowe has agreed to join the panel, they will be 
looking at how we should structure our posts overseas from the 
standpoint of having larger embassies perhaps serving a group 
of surrounding countries, and specifically the new facility in 
Nairobi will be a test case of that. As you know, we are 
rebuilding an entire new post.
    So the overseas presence has been a matter of concern; and 
of course our concern is that the growth of overseas people in 
our posts are largely in agencies other than the State 
Department, so we have the security of those people equally on 
our mind because they are, in essence, guests in our 
facilities. So we are taking a look at that. That panel has 
agreed to complete its work in June of this year with a draft 
report, so we are moving forward to examine that very issue.
    Mr. Kennedy. This is something of particular interest 
because only about one-third of all of the U.S. Government 
civilian employees assigned in our embassies and consulates 
abroad are actually from the State Department, the other two-
thirds are from other agencies. And so this is a crosscutting 
look at the U.S. Government's presence overseas, not just State 
Department.
    Mr. Tierney. Is State picking up the cost of security and 
maintenance for those individuals?
    Mr. Kennedy. We pick up a significant portion, and that is 
why we are interested in having the panel look at our presence 
overseas and how additional cost-sharing methods might be 
appropriate.
    Mr. Tierney. Thank you. Mr. Soloway, in your written 
testimony you had noted a number of acquisition programs in 
which cost and turnover time had been reduced. Can you speak to 
the cost of the F-22 program for me in that regard?
    Mr. Soloway. I don't mean to be evasive, but if you have 
specific questions about the program, I can take them for the 
record and I would be happy to get back to you. I don't have 
the details on the F-22 program with me.
    Mr. Tierney. I would like for you to get back with the 
amount of overrun and costs, and is it going beyond its 
original projected return dates.
    [The information referred to follows:]
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    Mr. Shays. Let me just say as a policy that the staff will 
make sure that the requests--you can give it to the committee 
and you can CC the Member, but we want to make sure that 
information does come in. And so if you make sure that the 
committee gets it and we will make sure you get it, but we are 
not going to ask frivolously for information and then forget to 
see that we get it. We will followup.
    Mr. Tierney. My last question, Mr. Soloway, is in regards 
to your weapons acquisition process in general. There are 
comments from the Inspector General that there were concerns 
there that there were premature commitments made to a number of 
technologies, moneys being applied before the technology was 
really ready at that point.
    Have you looked, has your Department looked at the national 
missile defense proposals to determine that in fact the latest 
request from the Department of Defense isn't doing just that 
with respect to putting money where technology is prematurely 
stated?
    Mr. Soloway. Specifically with regard to NMD, I think the 
Department is continually evaluating whether or not the money 
is being well spent, whether or not the technology is capable 
of achieving the performance requirement set forth, and that is 
an ongoing process. It is a continual discussion within the 
leadership of the Department, both military and civilian.
    In the broader sense of the term, taking it out of the 
missile defense area, the question of technology maturity and 
when we make buy decisions or no-buy decisions is something 
that we have looked at very extensively, because what we have 
found historically is that we have sometimes set a technology 
requirement way out here and then spent 40 or 50 percent of the 
money trying to get the last 10 or 15 percent of the way, 
rather than having a more flexible technology requirement, 
accessing technologies that were more immediate and being able 
to field systems more quickly and more quickly efficiently. 
That is an ongoing process in terms of reducing cycle times and 
focusing on the technology availability question. But with 
regard to missile defense, that is something that is an ongoing 
discussion in the Department and it is continually evaluated.
    Mr. Tierney. Are you saying that the Inspector General's 
concern is not well placed because the real problem is setting 
the goals too far out?
    Mr. Soloway. If we are not talking about the missile 
defense question specifically, but more broadly about how we 
make acquisition decisions, I think a criticism would be to say 
that sometimes we have established requirements that are simply 
unreachable in an appropriate or reasonable amount of time.
    And what we have going now, for instance, we have a team 
right now that is a rather unique relationship between the 
Joint Staff and the acquisition side, the civilian and military 
side, co-chaired by my boss, Dr. Gansler, who is the Under 
Secretary for Acquisition and Technology, and General Ralston, 
that is looking specifically at the impact of the requirements 
process on acquisition and how we can have a more flexible, 
iterative process, so we don't have this historic sort of over-
the-transom, this is what we need, and the acquisition 
technology folks try to figure out how to go get it and it 
takes 15-20 years.
    We have been very open about the fact that it takes us 15-
18 years to field a system not only drives cost, but it means 
that we often end up with systems that are not in fact 
reflective of contemporary technology, that technology passes 
us by because we have made those decisions way early. By making 
the system more iterative, more reflective of what is really 
out there in the technology world, we believe that we can 
substantially reduce cycle time and reduce costs, also field 
systems with better technologies quicker. I think that is a 
fair criticism of our history.
    Mr. Tierney. Thank you.
    Mr. Shays. All of you I think can speak to information 
systems and facilities, and I will be asking you questions 
about both. And all of you in one way or the other have 
acquisitions, but obviously DOD has more significant purchases.
    The first question I want to ask relates to facilities--
500-plus bases, give or take, owned by the DOD. When we look at 
base closure I want to go two stages, Mr. Soloway. What number 
do we hope to get those bases down to?
    Let me just tell you that I am going to be asking the other 
Members on the same issue. I am interested to know about your 
facilities, how many facilities you actually have, and then I 
want to have you speak to whether you've done assessments as to 
whether all of those facilities are needed or not. Mr. Soloway.
    Mr. Soloway. The additional BRAC rounds that we are 
requesting, we do not have a specific number of facilities 
because that will be determined by the commission itself. I can 
tell you what our projections are in terms of savings and what 
we think that we will gain, if that is what you are looking 
for, or I can give you some history.
    Mr. Shays. Why don't you start that way. But that raises 
another question. Let's start. I'm sorry.
    Mr. Soloway. Well, the request for two additional rounds of 
BRAC which would be a fiscal year 2001 and 2005 request, we 
expect the savings to approach about $23 billion beginning 
fiscal year 2008 through 2015.
    Mr. Shays. Is that an annual expenditure savings?
    Mr. Soloway. No, that would be a cumulative savings between 
fiscal year 2008 and 2015 for approximately $23 billion, with a 
steady state of savings of about $3.6 billion a year after 
that.
    Mr. Shays. That is your goal, and then you decide to see 
how many bases you have to close to meet that goal?
    Mr. Soloway. We don't decide how many bases to close. That 
is a determination by the Base Realignment and Closure 
Commission.
    Mr. Shays. I understand that. I am not looking to strain at 
gnats and swallow camels here, but it does beg the question. If 
you know what you are going to save, how are you going to know 
what you are going to save if you don't know what you are going 
to close? Do you basically say this is your goal and then you 
tell BRAC, and then they have to decide what they have to do to 
reach that goal?
    Mr. Soloway. The savings that we have identified are based 
on two previous rounds. We are asking for two more rounds, so 
it would be a similar scale.
    Mr. Shays. How many bases did we close in the last two 
rounds?
    Mr. Soloway. We have closed, total, we have closed 97 major 
bases and we have realigned 55, and we have had 235 smaller 
bases either closed or realigned.
    Mr. Shays. How many bases did we open up?
    Mr. Soloway. I am not aware that we have opened up any, but 
I can check on that. That is the cumulative total. What we have 
looked at in establishing the savings estimate were the average 
cost savings that were contained in the President's budget for 
fiscal year 2000 based on the BRAC rounds in 1993 and 1995.
    Mr. Shays. What I wrestle with is, the cold war is over but 
the world is a more dangerous place in the sense that in the 
past we were able to have a deterrent. So obviously we had a 
nuclear threat that seemed more frightening on a scale, but now 
we have the potential of a nuclear attack by a rogue nation or 
individuals, and we have a tremendous number of hot spots 
around the world. And so in some cases, a number of our 
soldiers and sailors and Marines--the Marines always tell me I 
cannot call them soldiers----
    Mr. Soloway. You forgot the airmen.
    Mr. Shays. And the airmen. Thank you. I have not met with 
them yet for them to tell me that. So they are being spread out 
to more hot spots and so on. But we are also manning a number 
of bases, and I wonder if that is not to our detriment. So, 
obviously, I am sympathetic to the need to begin to 
consolidate. I know we have to weigh--not concentrate too much, 
of our forces like we did in Pearl Harbor and then regret it 
later on when it was such a tempting target.
    But what I am hearing from you then, and then you can 
qualify the response, I am hearing that you have a sense of 
what you are going to save and yet we do not know the number of 
facilities we would close.
    Can I infer in this that there is not a document in DOD 
where the generals and admirals and so on have gotten together 
and said, Listen, in our world, if we did it without BRAC, this 
is what we would do?
    Mr. Soloway. I can't tell you for a fact. I don't have 
operational responsibility for base closure. But what I would 
be happy to do is take that for the record and find that out 
for you.
    Mr. Shays. I am not going to ask you to do that. We will 
get that from other sources.
    Mr. Soloway. Let me, if I could comment on your other 
statement in terms of the threats we face. I think that if you 
look at the strategic documents that have come out of the 
Department, not just the Quadrennial Defense Review but the 
Joint Vision 2010, which is the Joint Chiefs' of Staff view of 
the future defense requirement and the threats we face, I think 
we are very, very aware of the increasing nature of the threat 
that we face, but it is a very different threat. And what we 
are really trying to do and what Joint Vision 2010--which came 
out of the Joint Chiefs--talks about and Secretary Cohen talks 
about, the Revolution in Military Affairs, is really right-
size, and reorient ourselves so that we are optimally prepared 
to deal with that new type and new form of threat.
    It is not, for instance, a single, large conflict that we 
look at it. Is multiple, concurrent conflicts. As you 
mentioned, we are concerned about the threat posed by rogue 
nations and terrorist groups and so forth. We are also 
concerned about nuclear, chemical, and biological warfare. As I 
mentioned in my testimony, the whole concept of homeland 
security and how we protect the Nation from those kinds of 
threats is something that we are very focused on.
    So I don't believe that it would be appropriate to 
characterize the BRAC process, and I am not suggesting you 
have, but the interpretation could be that we are doing this 
without regard to the changing threat but just as a money-
saving venture. This is actually partially about right-sizing 
and identifying resources we can save, but it is also about 
reorienting the Department to more efficiently meet the war-
fighting need or the more war-fighting mission that we have, 
and that is something that we will be very focused on and very 
concerned about.
    Mr. Shays. I concur in that. And I would just say to you 
that I was trying to acknowledge the fact that it may be 
destructive for our military to have so many bases and spread 
our manpower resources so thinly and our financial resources, 
trying to keep all these bases open. But if you cannot give me 
a sense of the number of bases, you have given me a number of 
what you try to save. What would be the percent of the current 
or projected operational maintenance money that you would save 
through these two BRAC closings? You have given me the amount. 
Is it going to be a 1 percent, 2 percent overall savings?
    Mr. Soloway. I would have to go back and pull the budget 
figures again. I haven't looked at it from that perspective, 
sir, to be honest with you.
    [The information referred to follows:]

    Operations and Maintenance savings represent approximately 
52% of the total savings generated in the previous two BRAC 
rounds, based upon the FY 2000 budget data. One could make the 
case that this is an indication of future BRAC results. 
However, only a detailed BRAC analysis can determine this data.

[GRAPHIC] [TIFF OMITTED] T6508.038

[GRAPHIC] [TIFF OMITTED] T6508.039

    Mr. Shays. I would ask you to do that. In other words, our 
committee has to decide whether we want to dip our toe in this 
issue of base closures, because it is so controversial and 
would require us to utilize some resources. One opportunity is 
for our committee to begin to look at what the requirements are 
and try to put a number on it. In an ideal world, what we 
should be doing is closing to meet all the threats that we 
face. I just do not know if we want to get into it.
    Mr. Soloway. I would be happy to get that for you. But I 
will reiterate again, I think the key point that there is 
nothing we can do in terms of change and reform that will more 
directly affect, both from a financial and an operational 
standpoint, our ability to meet those threats than to pursue 
additional rounds of base closure.
    Mr. Shays. I know the Secretary is very determined that we 
proceed. And I think Congress is a little reluctant, but I do 
know that we need to proceed.
    As it relates to the veterans' affairs, when you say 500 
bases, is it 500 major bases? For instance, when we went out to 
Seattle a few weeks ago, it is basically a weather station that 
is under the command of the admiral in the Center, but do I 
consider that one of your bases?
    Mr. Soloway. We have closed 97 major bases.
    Mr. Shays. In your statement you had 500.
    Mr. Soloway. I don't believe so. Maybe Nelson did.
    Mr. Toye. That's 500 installations. And an installation 
could be a major installation, but not necessarily.
    Mr. Shays. Thank you. That would not necessarily be, when 
you go to Idaho for the pilots, that is not necessarily a base. 
It is owned by the government, but would you consider that a 
base, or an installation?
    Mr. Toye. The 500 number includes DOD-owned and operated 
installations. And some of those installations may have at one 
point in time been a major installation and in the current 
environment may no longer be a major installation.
    Mr. Shays. Could it also be a bombing practice range?
    Mr. Toye. It could be, yes.
    Mr. Shays. Thank you very much.
    How many facilities does the VA have?
    Mr. Powell. We have 172 hospitals and approximately 400 of 
the outpatient clinics, with 89 more opening this year. We 
don't own those facilities, Mr. Congressman, we lease those.
    Mr. Shays. You said 400 outpatient clinics?
    Mr. Powell. Right. Those are leased, however.
    Mr. Shays. I am delighted the VA has those outpatient 
clinics. But Mr. Tierney has made reference to what we heard 
from the Inspector Generals at the GAO last week, and one of 
the points was that the 172 hospitals are really providing 
service in a facility that is not designed for the needs of 
today's health care. You had representatives here. I am sure 
that is an issue you all discussed. What was your reaction to 
that?
    Mr. Powell. Actually, if I could revisit Congressman 
Tierney's question just a bit, we are seeking new legislation 
this year for the authority to dispose of excess property. Our 
capital asset disposal plan as an agenda item will allow us to 
retain most of the revenue from the disposition of these 
properties, which we could then apply for other internal uses. 
This allows us to manage these decisions much more effectively 
at the local level where decisions regarding which properties 
to use versus renovate, et cetera, is made at the local level 
and comes up through the chain that way. We feel that is an 
appropriate way to deal with that.
    We continue to make significant improvements in our capital 
investment process, which requires much better documentation 
than we have ever had before, and allows for us to conduct a 
much more critical assessment of any new proposal capital 
investment. We have a much more formal process now of 
identifying where we spend our capital dollars, particularly 
with regards to facilities.
    Mr. Shays. The legislation that you are bringing forward, 
is it going to allow for the VA to use the sale of an asset for 
operating expenditures or for another asset? I am happy to have 
anyone answer the question.
    Mr. Powell. It is generally for operating and nonrecurring 
costs. And 10 percent of the proceeds, as I understand it, 
would be set aside for homeless programs.
    Mr. Shays. I just wonder, the wisdom of taking a capital 
asset and then transferring it into an operating cost. Is that 
what you are basically saying?
    Mr. Powell. Yes, sir.
    Mr. Shays. Again, the reason why we are asking this 
question in a general way, we are not going to nail down all 
the answers. It is just to begin to see if Mr. Tierney and I 
and others want to get into this whole issue. And it is a big 
issue because I know the service groups and veterans like their 
facilities, and we like the veterans.
    But the question is: Is there a better way to provide them 
health care? And we need to be willing to ask that question. 
And one of the questions we may ask ourselves to undertake is a 
very thorough study of really how well does the VA--with the 
infrastructure it has had for decades and decades and decades 
and decades, does it meet the need of today's veterans?
    Is there any study that the VA has undertaken, or has the 
VA had any dialog that is trying to reappraise the facilities 
that we have and to see if some of them should be sold and some 
of them should be converted and so on? Is this anything that 
the VA is beginning to undertake?
    Mr. Powell. That issue has not come to the Secretarial 
level yet. One consideration is to convert from our high-
maintenance fixed assets to leased facilities. This would 
reduce ongoing operating costs, which is really the objective. 
The combination of these locally-based decisions and the 
allocation of resources through the VERA model, encourages 
local officials to pay more attention to how their facilities 
are utilized for and how to best serve their client's needs, in 
this case the veteran.
    Mr. Shays. Do we have any statistics to say how many 
veterans are alive today from World War II versus, say, 10 
years ago or 20 years ago?
    Mr. Powell. I'm sure that we do, sir. I'll have to get that 
specific number for you. I don't have it with me.
    [Note.--The information requested was not provided at the 
time of print.]
    Mr. Shays. I am just curious to know what that peak period 
was. I realize that we had a larger group, but they were 
healthier. Now we may have a smaller group, but they are not as 
well. So I realize these are all factors. But I would like to 
see that. So that would be a request that I am making.
    As it relates to the State Department, how many facilities?
    Mr. Kennedy. Mr. Chairman, the State Department has about 
265 embassies, consulates, and missions overseas, plus another 
two dozen or so, consular agencies, which are small one-person 
facilities staffed by a locally hired American, mainly in major 
tourist centers, who are the first line of intervention if an 
American is injured or in jail, such as in tourist resort areas 
in Mexico for example.
    We also have some 30 facilities throughout the United 
States, including passport agencies in Connecticut and 
Massachusetts, diplomatic security field offices and three 
major regional centers: One in Fort Lauderdale, FL, which 
provides support throughout Central Latin America and the 
Caribbean; a major finance center and new passport production 
facility in Charleston, SC; and a major passport and immigrant 
visa processing facility in Portsmouth, NH.
    Those latter two, if I might, are products actually to our 
benefit of the Base Closing and Realignment Commission, because 
as DOD closed the former Pease Air Force Base in New Hampshire 
and the Charleston Naval Station, the State Department, looking 
for ways to economize, streamline, and create efficiencies in 
economies of scale, picked up, with Congress assistance, 
facilities in those two locations.
    Mr. Shays. Let me ask you this: The 265 of the embassies 
primarily, are they also the residences of the Ambassadors?
    Mr. Kennedy. No, sir. I said there are 265 cities in which 
the United States has diplomatic and consular representations. 
If you added in the other leased facilities, the number comes 
up, Mr. Chairman, to 12,000. When you add in the embassies, 
annexes, consular operations, warehouses, and the residences of 
U.S. Government personnel overseas, it could come to as much as 
12,000.
    Mr. Shays. Are all the residences leased?
    Mr. Kennedy. Some are owned, Mr. Chairman. Some are leased. 
We own about 2,000 properties and lease another 10,000.
    Mr. Shays. You cannot go to 10,000?
    Mr. Kennedy. 2,000 owned, 10,000 leased, for a total of 
12,000 properties.
    Mr. Shays. I am making an assumption that is 12,000 
separate locations. One of the things I was thinking of doing 
is having my staff go and see all these facilities.
    Mr. Kennedy. Mr. Chairman, seriously, we always welcome 
congressional staff visits.
    Mr. Shays. Seriously, you try to say that and try to feel 
that way, but I do not know if you always welcome us. You would 
be crazy if you did.
    Mr. Edwards. Many of those 12,000, of course, would be 
individ- ual apartments and homes in which State Department as 
well as other U.S. Government employees at the embassies are 
living. So it sounds like an enormous number but most of those 
would be individual residents' units.
    Mr. Shays. It is just so that technically we are 
responsible for the safety of the people in those facilities. 
When we went to Colombia--and this was after they lost the 700, 
their DAS building was destroyed about 8 to 10 years ago. It 
was their FBI building. They lost 700 people and 70 were 
killed. And we went down there--a delegation from Congress, to 
visit with some of the Colombians, who are truly fighting a 
drug war. I mean, for them it is not theory. But when we saw, 
for instance, the Ambassador's home--it was a lovely home and 
it was kind of in a valley, there were probably 80 structures 
above it so that any sniper could just knock off whomever they 
wanted. So I could say, that is just one little home. I mean, 
obviously it is a home, but it is a facility that many people 
use. So that is why I was thinking of that.
    Let me go back to Mr. Tierney, and then I am going to talk 
about information systems when we get back.
    Mr. Tierney. I only have one other question.
    Mr. Powell, I do not mean to beat a dead horse and I hope I 
am not on an area that you do not have any information on, but 
I am sort of fascinated by the prospect of properties, VA 
hospitals and the like, that if they are too expensive for us 
to maintain or if they are not serving the purpose of providing 
medical care in today's environment, has there been any process 
or consideration to dealing with the surrounding communities 
where they are located and some public-private partnership type 
of thing of trying to create long-term care facilities or 
assisted-living facilities, all of which there is a 
considerable need for, that would help with the financial end 
of things and serve our needs with another 1.3 million veterans 
who are going to be over the age of 85 over the next 10 years, 
and help the surrounding areas with their similar demographic 
problems?
    Mr. Powell. Yes, sir. We have a number of projects that we 
are looking at under the category of ``enhanced use.'' We are 
looking at partnerships with, for example, State veterans 
organizations where we can allow facilities that we aren't 
currently using to be converted for long-term care, or other 
programs that may be run by the State veterans groups. We have 
a number of those projects that are in the process of being 
identified. Hopefully, they will be approved for that type of 
conversion.
    Mr. Tierney. And do you go beyond that, too, to look into 
some private partnerships with people that might come in and 
renovate an entire thing and then lease back at a favorable 
rate for our veterans' use?
    Mr. Powell. Yes, there are a number of those that we look 
at from time to time. Again, most of that is driven from the 
local level and it is something that we encourage.
    Mr. Tierney. Thank you.
    Is there anything that any one of you feels compelled that 
you should share with us that we have not asked you?
    Mr. Kennedy. Mr. Tierney, if I could add something on the 
property issues. The State Department does have the authority 
to sell its properties overseas and to retain the proceeds of 
sale and to turn those proceeds toward new properties. And this 
is a stewardship we take very, very seriously.
    For example, last year we sold over $58 million worth of 
property and purchased another $58 million worth of property. 
We try to identify properties which are obsolete or not serving 
their highest value and then take those assets and sell them, 
avoiding several million dollars of lease cost every year. But 
obviously those lease costs repeat and mount every year, so the 
savings become significant.
    Another example would be in Singapore several years ago, we 
actually sold the United States Embassy, which is a very old, 
small building, but on a very, very valuable downtown lot, and 
took those proceeds and were able to build an entirely new 
embassy, Ambassador's residence, Marine guard quarters, without 
having to request a single dollar in appropriated funds, 
because we were taking an asset and converting that asset to 
its highest and best use. And this is something we do very, 
very rigorously.
    Our Office of Foreign Buildings examines properties 
overseas. We even availed ourselves of what we call the Real 
Estate Advisory Board to help with this process. And that 
membership, to make sure we draw on real estate professionals 
from the intelligence community, the General Services 
Administration, and the U.S. Postal Service, so that we can 
look at properties and decide the best way to convert a fixed 
asset to its highest and best use so we do not have to come 
back to the Congress for additional appropriations.
    Mr. Tierney. That is interesting. I am glad you shared that 
with us.
    I assume there is not the same kind of authority with the 
Veterans Administration. I assume that you do not have that 
same authority to be able to sell and buy properties without 
coming back to us for approval on that. But do you have 
advisory groups that help you deal with your real estate 
issues?
    Mr. Powell. No, sir, we don't. That is one of the issues in 
our enhanced use proposal we would like you to look at.
    Mr. Tierney [presiding]. Let me ask you a question for the 
absent Mr. Shays.
    The GAO testimony last week indicated that the Results Act 
Performance Goals and Measures should provide us and you with 
clear indicators of progress and problems. The VA testimony 
today indicates that the Department has made significant 
progress in identifying performance targets and collecting 
valid data to measure progress. VA has focused on a small 
number of goals and performance measures VA leaders identified 
as critical to the success of the Department.
    Would each of you please identify the three performance 
measures in your fiscal year 1999 plan that you see as critical 
to your Department's success?
    I will give you time to prepare if you want. But State is 
ready to go?
    Mr. Edwards. We have had some very interesting challenges 
on GPRA, because in many cases our programs are designed to 
have things not happen versus supposed to happen. But certainly 
in our accountability report we have some very solid data on 
issuance of passports, issuance of visas, which of course is a 
service to Americans and to people who are coming here to visit 
or to emigrate. So we have those data. And it is clear that 
we're delivering an increasing number of passports and visas 
with a decreasing number of personnel. And we are using some 
very high technology to minimize fraud.
    At our new plant, I guess not too far from your district, 
Mr. Tierney, in Portsmith, NH, we have a new passport system 
where your photograph is actually part of the printed material. 
It is not an embedded photograph. And there are about four 
different vendors involved in producing that passport. So the 
chance of fraudulent passports, once we get that system in 
throughout the Nation, is very, very much diminished. So we can 
measure our effectiveness there.
    We can measure land mine removal. But the problem is we 
don't know how many land mines there are. There are still land 
mines from World War I, believe it or not.
    And we are faced in Central America with the Hurricane 
Mitch aftermath of land mines floating down mud rivers, and 
people putting their hands in the mud and the mine going off, 
because these mines were in fields and roads which were 
devastated. That hurricane, as you may recall, is probably the 
most severe hurricane in the Western Hemisphere since Europeans 
have been here.
    So we have some very, very difficult tasks and we're 
struggling to be able to measure each of our 16 objectives and 
3 diplomatic readiness objectives, and we have a way to go. But 
we are committed, as a service agency, to find a way to measure 
that to show that there is payoff for the dollars that we're 
spending.
    Mr. Tierney. Thank you.
    Mr. Soloway. Congressman, as I mentioned in my testimony, 
we have two overall corporate goals, if you will. The first one 
really focuses on force structure and strategic issues. The 
second one is more directly related to what you are interested 
in, which is the reengineering and performance management 
within the Department.
    Let me just mention a few of the performance measures that 
we have established that we are tracking and that would 
obviously be included in our GPRA reporting: Our annual 
procurement spending, which is investment in new systems; the 
percentage of the DOD budget that is spent on infrastructure, 
which of course we are trying to reduce; public-private 
competitions, which is that number of positions that we are 
able to effectively compete and thereby achieve efficiencies 
whether the work is done, one, by in-house government workers 
or by contractor; and where we are going in terms of cost 
growth and cycle times with our major defense acquisition 
programs.
    If there were some key ones, those would be the ones that I 
think are really the highest on the list. As I mentioned, I 
think there are about 41 that we've established.
    Mr. Tierney. We will not ask you to go through all those, 
but thank you.
    Mr. Powell. The VA performance plan, that was submitted 
with the budget on February 1st, lists slightly over 100 
different outcomes that we are looking at, with 24 that the 
Department considers as key.
    I happen to be very interested in three that really measure 
outcomes, and deal with the quality of what we deliver.
    One is the accuracy of the processing of VBA claims. The 
other two relate to health care, which are issues that are also 
very important to Dr. Kizer. The first of these is the Chronic 
Care Index, which really consists of 14 medical aspects and 
gets to the issue of quality of patient care. The other issue 
would be the Prevention Index, which consists of nine medical 
interventions measuring how well the VA follows nationally 
recognized primary prevention and early detection. Both of 
those go to the essence of serving the needs of our community.
    Mr. Tierney. What progress are you having on the claims 
issue? I know that I can report, hopefully, that I am hearing 
less in this last year than I heard several years ago on that. 
What has the Department done to try to address the backlog in 
the claims?
    Mr. Powell. Again, this is a little out of my purview as 
CFO. We do have the balanced score card that Under Secretary 
Joe Thompson has been talking about, and there are now 
published, on a web site, monthly updates on performance. I 
know too that the Veterans Benefits Administration has a number 
of initiatives underway to try to reduce the backlog but I'm 
not familiar enough with those to give you an answer. I can get 
that answer back to you.
    Mr. Tierney. No. I can go to another source. Thank you.
    Mr. Shays [presiding]. As it relates to information 
systems, all three of you have your challenges, obviously, in 
this area even if we did not have the Y2K problem. But let me 
first ask as to it relates to the Y2K problem. I want you to 
give me what would be the worst-case scenario from each of your 
stand-points on what could happen if we did not address this 
issue properly, and then I make assumptions that you try to 
take the worst case first to deal with that.
    But, for instance, let me just go backward and start in 
reverse order and start with State. What could be the worst 
inconvenience or the worst challenge that could happen if we 
are not getting a handle on the Y2K problem for State?
    Mr. Edwards. Well, there is no question, since we are a 
very labor-intensive organization, the inability to pay our 
people both domestically and to pay not only our people, but 
Americans and SFNs overseas. So we've remediated all four, our 
three overseas and our domestic payroll system, and we've also 
remediated our retirement system.
    As I indicated in my comments, we have 13,000 retirees that 
we pay at State that aren't in an OPM-administered plan. Not 
only would it be devastating to us but you'd hear about it 
almost immediately if we failed to pay them.
    Mr. Shays. One of the problems could be, they did not get 
paid at all or they got paid an amount that was not 
commensurate; they could have received a $10,000 check when 
they deserved a $2,000 check, these kind of scenarios. They 
might be disappointed if you solved the problem.
    Mr. Edwards. Not getting any check at all, Mr. Chairman, 
would probably be the problem of processing.
    Mr. Shays. I am being serious here. Is the problem that 
they would not get any check if you did not solve it, or they 
might get an inaccurate amount?
    Mr. Edwards. If the system crashed, you would not get the 
output--which would be principally not checks but electronic 
transfers into their bank accounts. We pay almost everybody, 
even overseas, electronically.
    Mr. Shays. I am going to ask others. But what I am trying 
to understand is, do we even know? Is the issue that it would 
be inaccurate, or it is just that they would get nothing, or 
don't you know?
    Mr. Edwards. Well, in the Y2K bugs that we had, it would be 
very difficult right now to know, since we've remediated the 
systems and they are essentially compliant, what would happen. 
But normally when you have a meltdown of a system, the output 
stops, so that means you wouldn't get the electronic transfers.
    Mr. Kennedy. On the substantive side, Mr. Chairman, in 
addition to our administrative process, the State Department 
provides a number of services to the public such as passport 
services, and visa services to foreigners, which is why we put 
the remediation, the Y2K compliance issues of those systems, at 
the head of our list, and why they have been remediated.
    I'll give you one example. We maintain a data base of 
criminals and terrorists who, when they apply for a visa at a 
U.S. facility abroad, that visa is denied. But that is a large 
data base that we work on jointly with the Immigration and 
Naturalization Service and other law enforcement officials.
    So we have taken great steps to make sure that when 
somebody comes in, applies for a visa, and we run their name 
against our name check system in a highly, as I said, 
computerized and automated process, we want the right answer to 
come up, either a record or clean.
    So that is an example of something we take very seriously, 
because we do not want to admit any criminal or terrorist 
elements into the United States because our computer process 
has somehow been flawed by the Y2K bug. And that system is 
remediated, and we are in the process of installing the modern 
hardware around the world. The only reason it is not fully 
certified is not because the hardware and software hasn't been 
approved, but it's just that we are in the process of literally 
putting the new terminals at all of our 260 locations. This 
will be complete by July of this year. But the system is tested 
and in place at a number of posts.
    Mr. Shays. Right.
    You still have Wang word processors in some State 
Department facilities?
    Mr. Kennedy. That is a system that will be completely 
phased out by July of this year.
    Mr. Shays. One of the things that I have heard from people 
who work in our embassies, from the Ambassadors on down, is 
that we have not yet developed a system for them to communicate 
through e-mail quickly from State to overseas; that they cannot 
communicate quickly from one embassy to another.
    Is there a plan in place to begin to totally--and would you 
say is it just a plan or is it a possibility that it is done?
    Mr. Kennedy. We have begun already implementing that. And 
we will have one system in place that is commercially based, 
robust, Y2K compliant, completely installed around the world by 
July of this year.
    Mr. Shays. That will allow an ambassador in France to talk 
to the Ambassadors in England?
    Mr. Kennedy. Yes, sir. But there is a complication there, 
and that is a complication that most other agencies do not 
have, and that is level of security required.
    The State Department essentially maintains three separate 
systems and that is because no one, including the National 
Security Agency, has been able to certify a firewall that would 
allow us to combine national security, classified information, 
and what we call sensitive but unclassified information. An 
example of that would be the anti-terrorism data base we 
maintain, and then the internet. So we have deployed three 
enclaves to deal with these problems. And our Chief Information 
Officer and his colleagues are in constant communication with 
DOD and the National Security Agency, looking for that magic 
firewall that would allow us to merge all three systems 
together, on one terminal, on the Ambassador's desk.
    But, yes, if the Ambassador wishes an unclassified terminal 
on his desk and wants to work in that world, we will have that 
in July. The classified systems are taking a little bit longer 
because of the complexity of ensuring that we never expose 
national security information to those who should not be privy 
to it.
    Mr. Shays. Thank you.
    Defense, it seems to me if we just talk about the computers 
in the airplanes, the computers in the air traffic control, 
there are a hundred different ways that you all must have to 
focus your time and energy on. But in different areas, what 
would be the worst-case scenario if we do not succeed? I 
realize we are making progress.
    Mr. Soloway. I think, Congressman, the question of progress 
is key here, because certainly Defense is one of those agencies 
that was viewed with great concern both by ourselves and by the 
Congress and others looking at it as recently as this past 
fall, where we had a number of mission-critical systems that 
had not yet passed muster, and there was great concern as to 
whether or not we were going to be able to overcome the 
problem.
    I think what is important to note is that now, today, about 
83 percent of our systems have not only been fixed but tested. 
We will be at 90 percent in the March-April timeframe and 100 
percent by October. So we have made, I think, dramatic 
progress.
    In fact, Deputy Secretary Hamre, who is testifying right 
downstairs this morning on Y2K, made the comment yesterday that 
he himself, as I think he testified before Congress earlier 
this year, had been deeply concerned about whether or not we 
are going to be able to overcome the problems associated with 
the Y2K bug, but now has tremendous optimism that we will be 
able to get there.
    Really where our focus is now, in addition to continuing 
our attention to that last 17 percent, which is not 
unimportant, but really a lot of our attention now is focused 
on working with our NATO partners and also with Russia on the 
early warning systems and so forth, because, as has been 
reported in the media, there has not been perhaps as much 
aggressive addressing of these issues overseas as here. And so 
that is, in addition to our focus on our own problems, a much 
increased level of activity, if you will, with regard to 
overseas allies to ensure that we don't have any problems in 
that regard.
    I don't have, nor does Mr. Toye, operational responsibility 
for information systems. That is under the purview of our CIO. 
Dr. Hamre has personally directed the Y2K efforts in the 
Department. So I can't give you specifics in terms of a worst-
case scenario. But I can tell you I think from a progress 
standpoint, we are substantially ahead of not only where we 
were, but where we thought we would even be by now, or well on 
track, and much of our attention now has been focused overseas.
    Mr. Shays. Some of the systems are basically run by DOD. 
But a system, for instance, in a fighter jet would be the 
manufacturer's challenge, not your challenge?
    Mr. Soloway. It is a common challenge. It is a joint 
challenge, sir.
    Mr. Shays. I realize that. But let me just try to 
understand who has that responsibility, rather than year 2000 
no one having it. Is it the manufacturer's responsibility?
    Mr. Soloway. That's a very good question. Specifically, 
from a legal standpoint, I don't know the answer to that. I do 
know that we have been working with our suppliers to ensure 
that systems are updated and are capable of overcoming the Y2K 
problem in those cases where they face it. And as we look at--
certainly with mission-critical systems, our guidance systems 
and targeting systems and so forth clearly would fall into that 
category.
    I don't know from a legal standpoint who has those 
responsibilities. I know that we are certainly requiring that 
anything new that we purchase clearly would be compliant when 
we purchase it. But in terms of actual legal responsibility for 
legacy systems from a legal standpoint, I would have to 
hesitate to answer and would probably take that for the record 
and get back to you.
    [Note.--The information requested was not provided at the 
time of print.]
    Mr. Shays. Mr. Horn, his subcommittee, is doing an 
extraordinary job and, as you point out, have created each of 
the departments and we have really deferred to them. The one 
area where they have not gotten as much involved is areas where 
there is--particularly with the intelligence community, because 
of the nature of the information, but it impacts DOD. I know 
they have been focusing on DOD--and I am happy that he has done 
this and it is not on our shoulders. His Government Management, 
Information, and Technology Subcommittee is focusing on that.
    I just want to get a handle as to whether we are leaving 
anything out as it relates to DOD. As I think of all the number 
of areas that you have to focus in on, did you have a method in 
which you went through each area to know if you were able to 
comply or not? In other words, what is the structure in which 
you begin to even know if you have a handle on this?
    Mr. Soloway. The Deputy Secretary, Dr. Hamre, took personal 
charge of this at the Secretary's request, and he conducts 
monthly meetings of the Y2K Steering Committee that involves 
the very senior leadership for covering the entire Defense 
Community, going through from a community-by-community 
perspective, if you will, the systems that they have in place, 
the challenges that they face, the progress that they are 
making, and so forth. So it has been managed at the very most 
senior levels at the Department.
    You are correct, of course, we have systems that cut across 
many areas. We have 500 that support the intelligence 
community. But internally it has been managed as a very senior 
level effort to make certain that it is very clear in the field 
that this is an absolute top priority and to make certain that 
the leadership has its arms around the full scope of the 
problem.
    We have looked at our Defense Finance and Accounting 
System, the intelligence, the readiness issues, and all of 
those things as they relate to one another and each individual 
system. It has been organized at the most senior levels of the 
Department.
    Of course, our money--our senior civilian official, and our 
Chief Information Officer, Mark Langston, have had direct 
responsibility. But it has been managed and overseen 
personally, as I said, by Dr. Hamre, who is downstairs 
testifying again on the topic.
    Mr. Shays. Before I recognize Mr. Mica, let me just ask 
each of you, what is the key information system challenge that 
you have that is not related to Y2K? And Defense could probably 
give me two. But put your heads together. What is the key 
information challenge that you are faced with? Actually, let me 
ask each of you. I think it would be easier that way. The two 
key issues.
    Mr. Kennedy. Mr. Chairman, I think that of the two major 
challenges to the State Department, the first is obtaining 
qualified information technology professionals in sufficient 
numbers that can do both the domestic jobs and deploy to our 
many overseas locations to provide the national security 
services we provide.
    I believe the second challenge that we have is to stitch 
together both all our locations and all our systems across 24 
time zones around the world, including operating in countries 
that have the highest degree of information technology 
capability, just as in the United States, down to the Third and 
Fourth World, operating across all systems, across all levels 
of technological competence overseas and around the globe, 
which is our second major challenge.
    Mr. Shays. It is very difficult for government, given the 
pay level sometimes, to bring in the quality of competence that 
we need. But even in industry in the area that I represent, we 
have 1,900 information system type jobs available, unfilled, 
because we do not have the people to fill them. And that is the 
private sector competing with price. And you have limits that 
way, correct?
    Mr. Kennedy. We have limits. And we just had a big job fair 
last weekend, and we did get a rather large and qualified 
turnout because we were emphasizing the ability to serve and 
work for the U.S. Government overseas. So the salary levels 
worked against us, but we do have potential inducement of 
talking about offering people an opportunity to serve their 
country abroad.
    Mr. Shays. And you also have the ability to hire some 
people with high skills overseas, I would assume.
    Mr. Kennedy. Yes.
    Mr. Shays. But in this country, hiring Americans, from the 
moment that person comes to that job fair--what is the earliest 
that you could, even if you knew then that you wanted them?
    Mr. Edwards. We made 50 offers Saturday, and we started the 
background investigations yesterday.
    Mr. Shays. So how long would it take you to get them?
    Mr. Kennedy. We would say probably 90 days, sir, because of 
the need to conduct the rigorous national security background 
investigation pursuant to statute and Executive order.
    Mr. Shays. It is interesting, because I was thinking 90 
days from the government's standpoint was pretty good. So 
congratulations. Larry Halloran, my counsel, was saying, ``my 
God, 90 days is 3 months, and think of that person having to 
wait and all the other people are going to be tempted to 
apply!''
    Mr. Kennedy. It is a real burden. But because of the 
information that the State Department processes and handles, 
especially everything that moves through the conduit of our 
Information Technology System, we have to take those steps. It 
is a challenge and a burden that we accept, and we try to 
streamline as much as we can.
    Mr. Shays. Your first answer on the people was not a 
surprise I was not expecting. I was happy to ask the question.
    Mr. Sullivan. I believe that our critical problem is 
ensuring that all of our systems at VA are seamlessly 
integrated. We have been struggling with this for a while. We 
are coming close with the interfaces we developed. But that's 
not the answer. We need to look at the newer technology and see 
how we can better seamlessly integrate these systems.
    Mr. Shays. And you are working with three time zones.
    What is the second problem? Besides the integration, what 
would be the second challenge to information systems?
    Mr. Sullivan. I can speak from the finance side. I think 
our other biggest challenge is to get data on a more timely 
basis to our management decisionmakers out there. We haven't 
been doing a very good job of that at all, and a lot of it is 
because of our legacy system and some of it is because we need 
to reengineer some of our processes up front.
    Mr. Soloway. Congressman, I have two and then Mr. Toye has 
two more. But being a reformer, I would like to break the rule 
and add another to build on your comment.
    First and foremost I think the biggest challenge we have is 
cyber-security. As Dr. Hamre and I think others reiterated 
several times, we are very concerned about the security of our 
systems as we more and more use the internet and so forth and 
our ability to maintain truly secure fire walls and so forth. 
That has clearly got to be our No. 1 priority.
    The second one, actually I want to build on your point 
about people. Our ability to recruit and retain true technology 
skills is a very serious challenge and one that concerns us 
greatly. It is very difficult to compete with the commercial 
world. We do not always have the opportunity to offer people 
the opportunity to go and serve in embassies overseas or what 
have you. And we certainly don't have internally the structure 
to maintain that technological refreshment that is needed. 
That's a major concern.
    But it leads me to really the second big area, which is in 
our business logistics information systems. Logistics is a huge 
cost-eater in the Department of Defense and we are still living 
with variable logistic systems. And if you analyze supply chain 
management, if you look at velocity of systems and so forth, it 
is really the information technology which is the first step, 
the absolute key to improving efficiency, reducing cost, 
getting materials and supplies to the field more quickly and so 
forth.
    So we face enormous challenges in modernizing our logistics 
and information systems with truly contemporary technologies so 
we can better serve the folks in the field.
    Mr. Shays. Thank you. Mr. Toye.
    Mr. Toye. Within DOD, financial systems, or the lack of 
adequate systems, is indeed the biggest single impediment to 
improving financial management. Our systems were not designed 
to meet current standards. They were designed to track the 
Department's execution of the budget as appropriated by the 
Congress, and they do those things very well. And at one point 
in time, that may have been good enough, but it certainly is 
not good enough in today's environment.
    So our first priority is to overhaul or replace our 
financial systems. And we have a plan that we are executing, as 
was mentioned earlier, that will not be completed until the 
year 2003. But even upgrading our financial systems by itself 
is simply not good enough. A substantial portion of the 
information that ends up in our financial reports comes from 
what we call feeder systems. These are systems in non-financial 
areas that provide information to DOD.
    We need to, and we are working with those other communities 
in DOD, to get them to make the changes in their systems to 
ensure that the information that they pass to the financial 
systems also will meet today's current standards. That is a 
long-term effort. It is a significant effort, but it is the 
most effort and it needs to be accomplished to bring financial 
management to the point where it should be.
    Mr. Shays. Thank you very much.
    Mr. Mica, it is great to have you here.
    Mr. Mica. Thank you, Mr. Chairman, and thank you for the 
opportunity to ask a few questions. I think my questions are 
going to divert here to the Department of State. And I guess we 
have got the Chief Financial Officer, Mr. Edwards, here to 
answer.
    Mr. Edwards, first I want to address the question of the 
security of our diplomatic facilities and posts overseas. I 
know Rear Admiral Crowe had recommended, I guess, some $14 
billion be expended over 10 years for that purpose. It is my 
understanding also that I think this year there has been a 
recommendation of a lower amount; if we had to do that over 10 
years, it would be about $1.4 billion or something like that.
    What is the dollar amount you all are recommending?
    Mr. Edwards. Well, as I indicated in my statement, the 
President's budget recommends an advance appropriation of $3 
billion for 2001 through 2005, and that is ramping up from $300 
million in the first year to $900 million.
    Mr. Mica. $3 billion for 2001?
    Mr. Edwards. Through 2005. Fiscal year 1999, we got an 
increase over our previous construction budget of $36 million, 
and that is to do the advanced planning on the first, up to 
eight embassies or other facilities for that advance 
appropriation that would come in 2001.
    Mr. Mica. How are you picking or prioritizing the 
facilities for upgrades?
    Mr. Edwards. Well, we had a very extensive examination 
following the embassy bombings. Each of the Ambassadors 
notified Washington of their immediate needs. We sent out teams 
of diplomatic security and our building people, to a total of 
36 posts which were clearly at the high end of risk.
    So we have now come up with quite a number of posts for 
each of those 5 years that we would either relocate, rebuild, 
or otherwise reinforce weaknesses, so that in the event the 
appropriation is approved we are ready to spend the money 
appropriately.
    Mr. Mica. Has the State Department issued any kind of 
advisory as to small measures that can be taken to prevent 
death or damage, to your knowledge?
    Mr. Kennedy. Mr. Mica, my name is Pat Kennedy. I am the 
Assistant Secretary for Administration, and I supervise our 
Office of Foreign Buildings and also was the Acting Assistant 
Secretary for Diplomatic Security for some period of time. And 
the answer to your question is an emphatic ``yes.''
    We have a series of standards in place. We have notified 
our posts. We have made funds available to them for everything 
from what is called ``shatter-resistant window film,'' which 
the trade name usually used is Mylar, and telling them how to 
do it and making the money available to them.
    If I might give you one example that combines two things we 
have done, both making that available and a rigorous training 
program: There was a bomb blast about 2 weeks ago in the 
capital city of the country in which there was a local problem, 
not against the United States. There was a noise in the street. 
Some of the local nationals working in the embassy started to 
go to the windows to look out. The Americans who had been 
through the training said, ``No. No. Get away. Move inside.''
    When the bomb exploded moments later, all the windows were 
blown out, but no one was hurt, for two reasons: One, the 
Americans had pulled everyone toward the inner part of the 
building and when the windows shattered the Mylar treatment 
kept----
    Mr. Mica. That is exactly what I am talking about, some 
commonsense things.
    This subcommittee in its previous life did quite a bit of 
work on force protection, particularly after the Kobar Towers 
incident, and we found some simple things. Of course, we spent 
a third of a billion dollars on enhancing our force protection, 
and we have been out looking at what was done.
    It is interesting when you have a problem how you throw 
money at it. We bought every kind of gadget in the world. I 
remember going to Saudi Arabia with Mr. Hastert, who is now the 
Speaker, and saw every kind of equipment you could possibly 
imagine, most of it foreign produced, which is kind of 
interesting to address the foreign protection problem; but some 
simple measures that we were advised, like the Mylar on windows 
and the other advisories that folks can do. Because I am not 
going to criticize you for not spending a lot of money. I think 
that sometimes the small amount can do a lot of good.
    And we overreact on some of these, I think. I think even 
Admiral Crowe is an overreaction. With $14 billion, I do not 
know how many embassies we could harden. But that does not give 
us any protection when we have American schools, we have 
American facilities, we have American tourists, we have 
American businesses all throughout the world.
    I just got back from visiting South and Central America. 
And when you take precautions in one area, they will come after 
you in other areas, we have seen in Tanzania and Kenya. So just 
some commonsense things and not spending the entire Treasury on 
things that may look good and satisfies people's wish lists 
would be desirable.
    Mr. Chairman, if I may, I have some questions in a couple 
of other areas.
    As a financial officer, I have been involved in the 
narcotics effort; and one of the reasons we are having such a 
problem right now in the United States is the diversion of some 
of the funds, particularly State Department funds, from the 
Andean strategy. In particular, I was told about $40 million 
was taken out of the Andean strategy and diverted at one point 
several years ago to Haiti.
    How does this happen? Who is making the decisions in 
diverting some of these funds in that manner?
    Mr. Edwards. Well, it can come about several ways. First of 
all, if our base funding isn't sufficient to do everything we 
want, we have to, for example, absorb salary increases and FICA 
tax increases and so forth, we have to start reducing programs.
    Mr. Mica. This is taking money out of a program 
specifically appropriated by Congress and putting it into 
another area.
    Mr. Edwards. Well, if the Congress would appropriate it 
directly for foreign assistance in a program as you have 
described, that's where the money obviously would go.
    Last year in the accountability report, we have a citation 
of drug interdiction. We had a major year in fiscal year 1997 
of inderdicting drugs coming into the country, and I think the 
street value of those drugs was something in the billions of 
dollars if you took the tons of drugs interdicted, and priced 
it out at street values.
    Mr. Mica. That does not address my question specifically. 
And I will get my subcommittee staff to give your subcommittee 
staff the specifics. But I want to know how that $40 million, 
thereabouts, were diverted.
    Mr. Shays. So let me just say that that would be a request 
that we would have and we will followup on that.
    Mr. Edwards. We can certainly respond to that question on 
that specific issue, Mr. Chairman.
    [The information referred to follows:]

    Responsibility for Y2K system remediation depends on the 
system status. Remediation of operational systems unique to the 
Department are the responsibility of the owning Service or 
Agency. They may use the developing contractor, other 
commercial organization, or may rely on organic resources to 
effect the required changes.
    For commercial systems in use by the DoD, the owners must 
rely on the commercial vendors to effect the change.

    Mr. Mica. The Haiti money particularly bothers me, because 
some of that money was spent for institution building as far as 
their police and judicial system, and now we are told that 
Haiti has become a center for drug trafficking. So you diverted 
money out of an Andean strategy to stop drugs at their source, 
and money was used in Haiti for institution building and they 
were barely certified, I think with reservations, the other day 
by the President, because the programs that we diverted money 
for have basically failed.
    I have the same problem with the money that we were trying 
to get and resources to Colombia. Colombia has now turned into 
the major producer of cocaine in the Western Hemisphere, and 
this administration and the State Department have blocked 
equipment, helicopters, material, resources, from going into 
Colombia.
    They had, I know, some disagreements on human rights and 
our pattern of conduct of the past administration. But I am 
wondering if you can give us an update--it does not have to be 
now, but to the committee--on what you are doing now to see 
that there is a new government in place, and hopefully a new 
attitude by the administration to give resources to Colombia, 
which is now the major producer of cocaine in the entire world. 
The major. We have turned it into the major.
    It is also the major producer of heroin in the entire 
world. Since none of that equipment went down to eradicate the 
crops, they have poppy fields growing from one end of Colombia 
to the other and they are producing heroin in unbelievable 
quantities of high purity.
    So I am anxious, Mr. Chairman, and I would request the 
subcommittee, and will submit a letter and request to see what 
is being done to expedite the finances, resources.
    Mr. Shays. Would the gentleman yield? This is a good 
opportunity to acknowledge the fact that Mr. Mica's 
subcommittee has jurisdiction over the whole drug effort in 
this country, both domestically and overseas; and instead of 
our saying, well, State and DOD report to this committee 
solely, you report to us on every issue except the drug issue.
    So what I am going to do is, even with the first question, 
because I think it really is important to get right to the 
committee of jurisdiction. Mr. Mica and I, by the way, serve on 
each other's subcommittees as well, so I think this is a very 
important question. It is good that he used this opportunity 
now when you are before us. And we will send a memo to your 
committee, in fact, just making sure. And we would like this 
information sent to the committee.
    The title of the committee now is what?
    Mr. Mica. It is Criminal Justice, Drug Policy, and Human 
Resources. Only a shadow of its mere former.
    Mr. Shays. If you would send that information directly to 
that committee. You do not need to send it here. I am not going 
to ask you to do it twice.
    Mr. Mica. And through the committee, Mr. Chairman, I will 
redraft those questions very specifically and address them to 
the agencies, with your permission.
    Mr. Shays. Exactly. So you just have been given a public 
notice.
    Mr. Edwards. We will be happy to respond, both in writing 
and also have our Assistant Secretary in that area meet with 
your subcommittee.
    Mr. Mica. I have two other questions in a couple of areas.
    One, I was recently in discussions with a member of the 
Ukraine Parliament who came to us with allegations that the 
United States foreign assistance, foreign aid to Ukraine, is 
being given and going into the pockets of basically thugs that 
are in charge of the Ukraine activities.
    Is there some kind of an enhanced oversight mechanism for 
grants, assistance, aid projects in the emerging Eastern Bloc 
nations?
    I was appalled by what I heard. In fact he said that--he is 
a member of parliament. He is also a banker, and he can 
document this corruption with our money. He said it would be 
better if we terminated all of the assistance for his country 
because it is actually--it is hindering their development. Do 
we have any kind of an enhanced check or oversight IG 
inspection of these activities?
    Mr. Kennedy. Mr. Mica, we deal with this on four levels. 
There is an Agency for International Development [AID] mission 
in the Ukraine that is on the ground and immediately 
responsible for program development. It has Washington 
oversight.
    Mr. Mica. I was told that it is corrupt from bottom to top, 
and all of our assistance programs there have been subverted.
    Mr. Kennedy. Mr. Chairman, this is not specifically within 
the State Department's jurisdiction because it is an Agency for 
International Development program, but the State Department 
does have a policy coordinator for assistance to the countries 
of the former Soviet Union.
    Mr. Mica. Can your IG go in, or does he not have that 
authority?
    Mr. Kennedy. The AID IG, sir, would be the relevant 
authority.
    Mr. Shays. I am sorry to interrupt. The AID will be under 
State when, October?
    Mr. Kennedy. The Administrator of AID, effective April 1, 
will be under the foreign policy authority and direct control 
of the Secretary of State, but pursuant to the legislation it 
retains its status as an independent entity with its own IG.
    Mr. Shays. So it is just for administrative purposes, but 
the bottom line is that we oversee that subcommittee.
    Mr. Mica. I would like to start with the Ukraine and maybe 
we can work on. But I had an investigator from the 
International Relations Committee and an investigator from my 
subcommittee of the Government Reform Committee, listen to this 
detail of corruption with our funds that was absolutely 
appalling, and I think we have the responsibility to followup 
in some fashion, whoever is in charge, whenever. And maybe we 
can start right there, and we will be glad to give you 
additional details after the hearing.
    Mr. Kennedy. The Secretary is concerned about the best use 
of all overseas funds, especially for sustainable development. 
And I will take this up with the coordinator for the Newly 
Independent States and pass this on, and your offer to share 
this information to the AID people as well, sir.
    Mr. Mica. Possibly in your jurisdiction or oversight, is it 
true, and I don't know if this is accurate, did a Japanese firm 
get the new passport contract to produce the passports?
    Mr. Kennedy. An American firm won the contract. However, 
this American firm does buy some of its materials from Japanese 
sources. And that competition was an open competition and we 
brought in evaluators, I believe it was from the National 
Institute of Standards and Technology, to evaluate the process 
we are using, which is a photo digitalization process to 
literally spray the picture onto the passport book, to 
eliminate the threat caused by criminal and other terrorists 
who are trying to extract the picture from under the laminate. 
So an American contract was awarded to----
    Mr. Mica. You said some of the material?
    Mr. Kennedy. I would have to get back to you.
    Mr. Mica. I need to get back with Mr. Traficant. He has 
some interest in this Buy American provision. It is interesting 
that I was told that Americans will soon be walking around with 
Japanese content passports.
    Mr. Kennedy. The passport booklets, themselves, Mr. Mica, 
are produced by the Government Printing Office.
    Mr. Shays. May I ask the gentleman, my sense is that we 
have reciprocal agreements with our allies, that they get to 
bid on certain things that we do and we bid on certain things 
that they do. In this case it could have been a foreign 
corporation that could have won this bid or not, but didn't?
    Mr. Kennedy. I am not a contracting specialist, but I 
believe, sir, that you are correct.
    Mr. Shays. I'm sorry?
    Mr. Kennedy. General Agreements on Tariffs and Trade do 
permit cross-bidding.
    Mr. Shays. We have that same issue in Defense as well, 
where we bid on things that are used by our allies.
    Mr. Soloway. There is a globalization in industry in 
general, and if we want to access the most contemporary 
technology there is a need to access that full global 
marketplace.
    Mr. Shays. But Mr. Traficant is rightfully concerned that 
we have as much U.S. participation as possible. Do you have 
another question?
    Mr. Mica. I do, but I think I have done enough damage.
    Mr. Shays. You can go ahead.
    Mr. Mica. Are you going to keep the record open?
    Mr. Shays. Sure.
    Mr. Mica. I would prefer to do that.
    Mr. Shays. But as it relates to the drug issue, would you 
report to Mr. Mica's committee. I also serve on that committee.
    AID, we are going to be doing some looking at that; and Mr. 
Mica can join, as he sits on this committee, to pursue that. I 
am happy that he mentioned it, and we need to get a handle on 
that.
    I am going to conclude, but let me just say if there is 
anything that any of you had wished--anything in particular 
that you wished that we had asked, this would be your 
opportunity to put it on the record.
    I thank you. This was a general hearing in nature, but it 
is helpful in helping us sort out where we go. I thank you very 
much. This hearing is now closed.
    [Whereupon, at 12:10 p.m., the subcommittee was adjourned.]

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