    [Senate Hearing 106-743]
    [From the U.S. Government Publishing Office]

                                               S. Hrg. 106-743, Pt. 1 deg.

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 2001

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

                                    HEARINGS

                                    before a

                              SUBCOMMITTEE OF THE

                COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                           ONE HUNDRED SIXTH CONGRESS

                                 SECOND SESSION

                                       ON

                               H.R. 4576/S. 2593

      AN ACT MAKING APPROPRIATIONS FOR THE DEPARTMENT OF DEFENSE FOR THE
         FISCAL YEAR ENDING SEPTEMBER 30, 2001, AND FOR OTHER PURPOSES

                                   __________

                             PART 1 (Pages 1-650)

                             Department of Defense
                           Nondepartmental witnesses

                                   __________

             Printed for the use of the Committee on Appropriations

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

                                     ______

                        U.S. GOVERNMENT PRINTING OFFICE
    62-769 cc                   WASHINGTON : 2000
    _______________________________________________________________________
                For sale by the U.S. Government Printing Office
    Superintendent of Documents, Congressional Sales Office, Washington, DC
                                     20402
                          COMMITTEE ON APPROPRIATIONS

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

                            Subcommittee on Defense

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

                               Professional Staff

                               Steven J. Cortese
                                  Sid Ashworth
                                  Susan Hogan
                                   Gary Reese
                                 John J. Young
                                  Tom Hawkins
                                 Kraig Siracuse
                                Robert J. Henke
                                Mazie R. Mattson
                           Charles J. Houy (Minority)
                             Sonia King (Minority)

                             Administrative Support

                                 Candice Rogers

                                C O N T E N T S

                                  ----------

                            Wednesday, March 1, 2000

                                                                       Page

    Department of Defense: Department of the Navy: Secretary of the
      Navy...........................................................     1

                             Monday, March 6, 2000

    Department of Defense: Deputy Secretary of Defense...............    89

                            Wednesday, March 8, 2000

    Department of Defense:
        Medical Programs.............................................   127
        Surgeons General.............................................   149
        Nurse Corps..................................................   187

                           Wednesday, March 29, 2000

    Department of Defense: Department of the Air Force: Office of the
      Secretary......................................................   241

                           Wednesday, April 12, 2000

    Department of Defense: Ballistic Missile Defense Organization....   333

                            Tuesday, April 25, 2000

    Department of Defense: Department of the Army: Office of the
      Secretary......................................................   383

                           Wednesday, April 26, 2000

    Department of Defense: Office of the Secretary of Defense........   443

                             Wednesday, May 3, 2000

    Nondepartmental witnesses........................................   527

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 2001

                                  ----------

                            WEDNESDAY, MARCH 1, 2000

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

                             DEPARTMENT OF DEFENSE

                             Department of the Navy

                             Secretary of the Navy

    STATEMENT OF RICHARD DANZIG, SECRETARY
    ACCOMPANIED BY:
            ADM. JAY L. JOHNSON, CHIEF OF NAVAL OPERATIONS
            GEN. JAMES L. JONES, COMMANDANT, U.S. MARINE CORPS

                    opening statement of senator ted stevens

        Senator Stevens. We do have scheduled votes. There was to
    be a series this morning. They have now been joined together at
    2 o'clock, theoretically. They have not started yet. But the
    whole idea is that we are supposed to have these votes three in
    a row. So what I would like to suggest is that we proceed to
    your statements without interruption, and when it comes time to
    go vote, we will go vote.
        We will be gone roughly 20 minutes. As the vote is 20
    minutes long, we will vote last on the first one and first on
    the last vote and the middle one as we have to be there for 20
    minutes. So we will be about 30 minutes standing in recess, if
    that is agreeable to you. If any of you have really pressing
    plans or problems, we will have to deal with those.
        I should start off, Admiral Johnson, by saying I am
    informed this may be your last regularly scheduled meeting
    before our committee. Time passes too quickly, Admiral. We
    shall regret that. We have enjoyed our relationship and look
    forward to being with you for the balance of your term. I do
    thank you for what you have done.
        It is your first appearance before us, General, so we are
    happy to welcome you on board. And we hope you do not disappear
    as quickly as the Admiral has. Time just goes by too fast.
        Mr. Secretary, would you like to start off, sir?
        Mr. Danzig. Certainly, Mr. Chairman.
        Senator Stevens. You may use whatever time is available
    here until we have to go vote with just your statements, and we
    will get to questions as my colleagues come in. And Senator
    Inouye has asked that we proceed. He is on his way.
        Mr. Danzig. Thank you, Mr. Chairman. We all have formal
    statements to submit for the record, if that is agreeable to
    you. We will each talk informally for just a couple of minutes.
        I should say that I found myself thinking back to our
    appearance before this subcommittee last year. Thinking about
    the intervening year, I must say I regard it as one of
    considerable progress for the Department of the Navy. A lot of
    that progress is a consequence of the activity and the actions
    of this subcommittee, really everyone in this room, and of
    Admiral Johnson and General Jones.
        I note particularly the just extraordinary cooperation
    between these two service chiefs over the time that they have
    both been in office. I think the Navy and Marine Corps, as
    individual services, and the Department of the Navy as a whole,
    is really moving ahead because of this cooperation.
        On the personnel side, it has been, I think, a year of real
    achievement. I feel quite good about a number of things we have
    done. The pay innovations, the large 4.8 percent pay raise, the
    rollback in REDUX, the revision to the pay table, the
    substantial support of Department of the Navy bonuses--all I
    think had very positive morale effects. We see it as well in
    our retention statistics.
        I am very pleased that the three of us have managed to
    produce a fiscal year in which the Department of the Navy, both
    the Navy as a service and the Marine Corps service, met their
    recruiting goals--the only services to do that, and that we
    came in above end strength this last year, in striking contrast
    to some previous years. That remains very much a struggle for
    us in the year ahead, but it is very much our goal. We are, the
    three of us, very committed to it. And your support in that
    regard is very important.
        We are also very conscious of the fact that it is not pay
    alone that keeps our people and makes a success of what it
    means to be a sailor and a marine. We have emphasized, between
    us, the idea of improving the conditions of work. The Chief of
    Naval Operations (CNO) has put a lot of emphasis on reducing
    the unnecessary inspections and burdens associated with the
    inter-deployment training cycle. The Commandant has put a fresh
    emphasis in the Marine Corps on the importance of family.
        We are doing some, I think, quite innovative things. The
    Navy College Program, for example, gives college credits as a
    matter of course to people who come into the Navy in the course
    of their Navy training. The typical sailor will now get a road
    map as he or she enters boot camp of college credits that he
    can earn through Navy training. Typically he or she will earn
    30 college credits in his first term. You need 60 for an A.A.
    degree, so you are halfway there simply by virtue of the kind
    of training we are giving. And those credits are recognized by
    major universities through the American Council on Education.
        We are beginning to reshape the sense of what it means to
    be an enlisted person in the Navy and Marine Corps. We put a
    lot of emphasis on smart work kinds of programs, equipping
    sailors and marines with the right tools, using civilian labor
    where we can, for example, to paint ships on both coasts, where
    previously we were burdening sailors.
        We are automating where we can and saving manpower. A lot
    of proposals that we will talk about over the course of these
    hours save us a lot of money by reducing costs of ownership.
    They also go a fair way towards raising morale by letting
    people do what they came to the military to do--professional
    military jobs--and not second order kind of work.
        On the technology and platform sides, we also have made a
    lot of progress. I am very pleased that you see in the budget
    before you a request for building eight ships. The sustaining
    rate is higher than that. Over time, we need to get to a build
    rate of about 8.6 per year. But eight ships for these first 4
    years in the program represent a significant step forward in
    stabilizing the kind of program that we are pointing to.
        I would add that we have emphasized between us the idea of
    investments in research and development so that we really
    modernize our surface fleet. The Navy program has in it over
    these next 5 years some $1.5 billion of research and
    development to modernize the carrier, and almost $4 billion of
    research and development funds to modernize our surface
    combatants, the DD-21 particularly. And some of this spills
    over as well into real benefits for our submarine fleet. For
    example, electric drive, which is something we can talk about
    later this afternoon if you would like to.
        So, here again, I see a very significant improvement. Not
    all of it is just platform centered. The Navy-Marine Corps
    Intranet is something the three of us are very enthusiastic
    about, that may be useful to talk about. It represents an
    information technology investment that captures the phenomenal
    opportunity that this age gives us for both improved efficiency
    and also for much greater effectiveness in different ways of
    doing business.
        However, this is hardly a record of self-satisfaction. We
    can point to real achievements in all kinds of areas, but in no
    sense do we reach Nirvana. In the personnel area we have
    reduced gap billets at sea from 18,000 to 9,000. That is a very
    real benefit. Our carrier battle groups are deploying now at
    fill rates of 93 and 95 percent versus the high 80's 2 years
    ago. But still, 9,000 gap billets at sea is 9,000 too many.
        Improved recruiting in this last year is a very substantial
    benefit to us, but we need to do it again this year. And we
    need to do it steadily as we also need to continue with
    substantial pay raises year after year.
        Our procurement rates are not quite yet where we want to
    get them--we need to increase them and make them more vibrant.
    And I would add that our infrastructure investments need to
    become more robust. All three of us feel that that is the area
    that we have had the least investment relative to the need,
    that we have done the least kind of corrective work on. And you
    see that reflected in some dimensions of the priority list you
    have seen from the CNO and the Commandant.

                               prepared statement

        Having said that, Mr. Chairman, I will just conclude by
    saying that I do regard it as a year of great progress. And I
    think, really, everyone in the room has shared in that
    progress. And I think the challenge for us is, can we do as
    well in the year ahead?
        Thank you.
        [The statement follows:]
                   Prepared Statement of Hon. Richard Danzig
        I became Secretary of the Navy in November of 1998. I am both happy
    and unhappy with what we have accomplished over this period. Happy
    because I think we made evident progress towards three of our four main
    objectives. We improved the way we treat, develop and treasure our
    military personnel. We improved the way we work--both in training and
    in our combat operations. And we improved our investment strategies,
    buying more of what we need today and investing more in transformative
    information-age technologies that position us for the future.
        Our satisfaction on these counts is tempered, however, by the
    substantial work that remains to be done in all three of these areas--
    we are still not yet where we should be--and by our inadequate progress
    in the fourth area, the improvement of our infrastructure.
        Personnel.--We came, in 1999, face-to-face with the fact that our
    Sailors and Marines are working too hard, stretched too thin, and paid
    too little. The administration proposed a 4.4 percent pay raise, a
    rollback of Redux, a worthwhile revision in our pay tables, and
    numerous special pays. This committee not only gave us what we asked,
    but went further and very admirably secured a 4.8 percent pay raise
    (the largest in a generation), improved housing allowances, and better
    retirement arrangements. Together these steps conveyed a sense of
    concern and commitment to our military that is vital to our well being.
    All our military personnel are indebted to you. Personally, I thank you
    for your deep and deeply effective care for those who serve in our
    military.
        Together, we also used 1999 to embrace the proposition that the
    well being of our personnel is not determined by pay and benefits
    alone. In my view, when adequate pay and benefits are achieved, the
    conditions of work do more to determine military morale and retention
    than any other variables (including, even, incremental changes in
    benefits). Though we will lose people if they are paid too little, when
    they are committed to us it is not because of the pay, but because of
    what they do.
        Sailors and Marines have special opportunities to do important and
    exciting things: they represent America all around the world; they
    operate and maintain the most technically advanced and powerful
    equipment the world has ever known; they are empowered by shouldering
    immense responsibility at unusually young ages; the nation closely
    watches and strongly depends on their actions; they honor each other
    and are honored by their fellow-citizens. The most important thing we
    can do is to keep military work meaningful and honor it. For some, this
    may conjure visions of rhetoric and parades. For me and this committee,
    it meant in 1999, means in this year, and will mean, I think,
    throughout this century, that we need to master the everyday mechanics
    of supplying, maintaining, manning and operating the military--so that
    we support and make meaningful the work of our military personnel. That
    is the truest and most meaningful way in which we honor our personnel.
        Spare parts, for example, have a mundane character, not the ring of
    rhetoric. But when we have too few airplane spares, our pilots have
    fewer flying hours for training, and our mechanics are doomed to
    ``cannibalizing'' parts (moving them from one plane to another and then
    back again). For this reason, as well as to sustain operational
    readiness, over the last two years, we increased our investment in
    aviation spare parts by more than a quarter of billion dollars.
        In the same vein, I have put great stress on programs like ``Smart
    Work'' and ``Smart Ship'' that give sailors and Marines better tools,
    use civilians and automation where possible to alleviate military work
    loads, and redesign our ships to improve working and living spaces and
    reduce required manning and over-crowding. These are funded in the
    budget before you at almost $400 million. Equally fundamentally, both
    Marine and Navy recruiting met their goals in 1999 and we achieved end-
    strength above our targets in both services. We reduced gapped billets
    at sea from 18,000 to approximately than 9,200 today. Our battle groups
    are deploying with manning levels in the range of 93 percent, as
    compared with about 88 percent two years ago. EISENHOWER, for example,
    will depart Norfolk more fully staffed than any other carrier in the
    last three years at 96 percent manned.
        We can all be proud of these achievements. But they are not enough.
    A year's fine pay raise must be reinforced by a series of pay raises
    significantly above inflation. The budget before you proposes that.
    Incremental improvements in housing allowances should be accelerated
    looking to a goal, wonderfully embraced by the Secretary of Defense,
    for the elimination of out of pocket housing costs within five years.
    Recruiting remains demanding and precarious--it will take exceptional
    effort to exceed desired end strength again this year.
        9,200 gapped billets is still 9,200 too many. My goal is to bring
    that number close to zero over the next twelve months. Despite movement
    in the right direction, our personnel systems and our systems of
    shipboard life remain, in important respects, infected by the
    psychology of conscription. We need to dig deeper to maximize and
    protect the value of the truly skilled and high cost workforce that we
    employ. The budget before you does these things in ways that I hope we
    will discuss in the course of this hearing. But that we are not yet
    where we should be is underscored by the fact that our reenlistment
    rates, though improved, remain below our goals. In sum, our personnel
    situation has gotten better, but there is still a lot of work to do.
        Training and Operations.--Our operations have been universally
    successful, as befits the most powerful Navy and Marine Corps in world
    history. For the first time in history, the Navy is being used to
    influence events in land-locked countries--our missiles descended on
    Bin Laden's camps in Afghanistan, our planes and missiles provided a
    significant portion of the fire power in the Kosovo campaign. Our
    unimpeded ability to operate from the sea made the Navy and Marine
    Corps the forces of choice for first night operations against Iraq
    during Desert Fox. The flexible and versatile nature of Naval forces
    was aptly demonstrated by the 26th MEU's ability to both lead allied
    troops into Kosovo and then turn and assist relief efforts after a
    devastating earthquake in Turkey. As a part of our effort to protect
    our workforce, the CNO initiated a successful effort to reduce a
    quarter of the inspection demands on Sailors between deployments. The
    Commandant is taking similar steps within the Marine Corps to create
    more time for families, for professional development and mentoring.
        As a part of our effort to valuing our enlisted men and women, as
    traditionally we have valued our officers, we have reduced Navy boot
    camp and Marine first-term attrition and we have introduced a Navy
    College Program that is providing college credits for all Navy
    training. This will get a typical seaman half way to an AA degree
    during his first term in the Navy. We are using our broad band
    communications to facilitate shipboard ``distance learning'' and
    information age simulations to improve training. A thorough review of
    our pilot training program is cutting more than a year from that over-
    elaborate process.
        There is no question in my mind about the operational readiness of
    the Navy and Marine Corps. Still, we must not run a marathon as though
    it were a sprint. Strong foundation investments are required to sustain
    our capabilities for these operations over the longer term. Navy and
    Marine EA-6Bs are indicative of this requirement--they were strained
    severely in Kosovo. The program before you reflects investments both to
    bring another squadron on-line and to bring more aircraft to higher
    readiness in existing squadrons. Similarly, it is evident that we need
    more submarines than were envisioned in the 1997 Quadrennial Review.
    The budget before you allocates $1.1 billion to refuel either four
    additional Los Angeles class submarines, or as a down payment to refuel
    four Ohio Class submarines and convert them to fire conventional
    Tomahawk missiles. I regard both possibilities as very attractive and
    cost-effective and look forward to discussing them with this committee.
        Investment.--Obviously, I have touched on some important
    investments in what I have said earlier in this statement. Our
    investment in equipment is a primary method of improving things for our
    personnel. As our equipment ages, the sense of the importance of our
    work and our ability to do it, erodes; everything takes longer and too
    many things are done not to accomplish a valued mission, but instead to
    simply avoid losing ground. Investment in equipment is also, as with
    the EA-6Bs and submarines about which I have spoken, essential to
    maintaining our operating capabilities. The budget contributes to our
    operations by a vibrant buy of 42 F-18E/F aircraft, by procurement of
    11 V-22s and by procuring eight ships per year in each of the first
    four years of the program and seven in the last.
        Just as significantly, we have made a clear, and in my view
    crucial, investment in the future. Ship R&D budgets have been brought
    to $1.5 billion over the program years for redevelopment of our
    carriers and over $3.9 billion for our next generation surface
    combatant, DD-21. We are investing heavily in changes that will reduce
    manpower, reduce acoustic and radar signatures, improve damage control
    and increase fighting capability. Electric drive and integrated power
    systems, announced for the DD-21 last month, are exemplary of this
    transformation in all these dimensions.
        Concomitantly, the information age is opening wonderful
    opportunities for us. Our program for expanding communication and
    computer capabilities on ships, IT-21, yielded dramatic results during
    Kosovo operations. Not only will it expand, but also it will be paired
    this year with the Navy-Marine Corps Intranet for shore-based
    facilities. With an Enterprise Resource Plan next in the offing, we can
    weld our disparate communications, computing and data systems into a
    coherent whole. The result will be a Navy and Marine Corps that is
    substantially more effective as well as significantly more efficient.
        As in the other areas I have mentioned, our progress is not
    perfect. To conserve funds, we eliminated T-45 aircraft procurement in
    fiscal year 2003. We are making only halting progress towards replacing
    our aging helicopters and support aircraft. In our ship-building,
    increased investment in R&D for DD-21 has led us to delay the
    introduction of that program by one year, from 2004 to 2005, enabling
    us both to free up money for R&D and to reap the benefit of our
    ambitious plans. The delay, however, must be reconciled with our need
    to build surface combatants both to sustain the fleet and to maintain
    our industrial base. Our building rate remains in 2001 as planned, but
    in the program presented to you, the DDG-51 buy is stretched and
    expanded to compensate for the one year DD-21 deferral. Moreover,
    though our ship building program is much stronger than it was two years
    ago, it still does not reach the required sustaining rate and the DD-21
    deferral diminishes by two (to 39) the ships built during the program
    years (we deferred 3 DD-21s, but added 1 DDG-51 for a net diminution of
    2 ships).
        Infrastructure.--This is the area in which we have made the least
    progress. Our BRAC efforts have been invaluable, leading to savings we
    estimate at $2.6 billion per year. We are effectively managing to close
    bases and, as an added bonus, are often seeing civilian communities
    thrive with the land and facilities that we have turned over to them.
    We have, through our regionalization and strategic sourcing programs,
    introduced new methods of management that will conserve personnel and
    save money.
        Still, this is the area of our budget in which we have the least
    adequate funding. Our BRAC efforts imperatively require the
    environmental remediation funds sought in this year's budget in order
    to remove costly bases from our books. We also very much require
    further authorization to undertake public/private ventures and, over
    the longer term, we will need to spend more in our military
    construction budgets. We can point to dramatic successes in
    refurbishing housing and workplaces in bases as far apart as Naples and
    Hawaii, but the backlog of maintenance and repair continues to grow
    throughout our establishment. Over the longer term continued deferral
    is not sustainable.
        In sum, we have much to be proud of. The strength of our Navy and
    Marine Corps is improving. But I am equally struck by how much we still
    have to do. This committee is indispensable both to our progress to
    date and to our prospects. I thank you for the role you play.

        Senator Stevens. Thank you, Mr. Secretary.
        Admiral Johnson.
        Admiral Johnson. Thank you, Mr. Chairman. I certainly
    associate myself with all of the remarks of Secretary Danzig,
    and I will try not to repeat. But I would like to offer a
    couple of points.
        The first is just to offer my own thanks for the work of
    this subcommittee and the committee and the staff in terms of
    what we realized in the fiscal year 2000 budget. It really is
    making a difference for our sailors and their families. We felt
    that it would. We are seeing it in real terms now. And we are
    very grateful to you for that.
        The Fleet update, I could talk at length on. I will not,
    except to remind everyone that today, like every other day,
    half of our Navy is underway and a third of our Navy is forward
    deployed around the world. And if the metric is execution, then
    we are where we need to be out forward, because the mission
    execution, the planning and the morale out there is exactly as
    we would all want it to be, and they continue to make us proud.
        I will say, on the non-deployed side of our lives, that we
    are also hard at work unburdening our sailors so that they can
    spend time with their families and also empowering their
    commanding officers and working seriously, as we have been for
    a couple of years, to better resource them at home so that we
    can then turn that into combat capability out forward.
        One comment in the readiness area. And that has to do with
    our execution or implementation of the President's directives
    on the training range at Vieques. And that is only to say that
    Rear Admiral Kevin Green is now on watch in his post in Puerto
    Rico. He is already rebuilding the relationship that we know is
    so important to all of us. And while I certainly at this stage
    would not try to predict what the outcome of that very complex
    issue is, know please that we are committed in the United
    States Navy and Marine Corps and the Navy Department to doing
    everything we can to preserve this national training asset and
    to do so in a way which is especially supportive of the people
    of Vieques.
        In the meantime, we continue--our clock never stops--we
    continue to train battle groups and amphibious ready groups.
    And in the case of the Atlantic forces, for now, that training
    will be in other places. Soon, again, we hope it will be back
    in Vieques. In either case, I would like for the record to
    state that General Jones and I will never, ever put our sailors
    or marines in harm's way without their being adequately trained
    and ready to execute their missions out forward.
        The Secretary talked to recruiting. He talked some to
    retention. I am encouraged by some of the things we see in the
    recruiting area. I am very proud of our recruiting force, for
    making their numbers now 17 months in a row. In this
    environment, that is a heroic statement on their behalf. And I
    applaud their efforts.
        I take small comfort in that, though, because we all still
    have not done anything to fill up the delayed entry pool. So we
    have got more work to do.
        Retention is a mixed report. I can deliver some more on
    that later.
        The number one priority for us in the short term is our
    people. The number one priority for us in the long term is
    ships and aircraft in sufficient numbers and capabilities so
    that we can ensure the operational primacy of the United States
    Navy throughout this century.
        And finally, Mr. Chairman, as you point out, this is my
    last scheduled hearing before you. I would just like to express
    my sincere appreciation to you, to Senator Inouye, to the
    members of the committee and the committee staff. For the past
    4 years, in both the personal and the professional sense, you
    have made a huge difference to this CNO and to this service
    that I so proudly serve. And I am grateful to you for that. And
    I stand by for the questions, sir.
        Senator Stevens. Thank you very much, Admiral.
        General Jones.

                      Opening remarks--readiness overview

        General Jones. Mr. Chairman, Senator Inouye, I am very
    pleased to be with you today representing the 212,000 marines
    on active duty and in the Reserve, and the almost 17,000
    civilian marines that work with us side by side on a daily
    basis.
        I would also like to thank you and the committee for your
    support, and sending a very strong message of support last year
    to the marines and their families, which has made a quality
    difference in their lives and has sent expressions of support
    to those people who are on the edge of deciding whether they
    are going to stay in uniform or leave our ranks. It has had a
    profound difference, and we thank you for that.
        Our challenge, however, having had this good year, is to
    figure out ways to sustain it. Because my fear is that if we do
    not do this we are going to be meeting here year after year,
    talking about the challenges of modernization and readiness and
    how we rob from one account to pay for the improvements in
    another, and we will talk about retention and we will talk
    about recruiting problems, and we will not continue to emerge
    from the precarious position that we have been in for the last
    several years.
        It seems to me also a fitting time that, as we close the
    page on the 20th century, to really reflect a little bit on
    some of the fundamental lessons that that century has taught
    us, in many cases, the hard way. I fundamentally think that it
    is a really good time to reflect on the evolution of our
    history and our Nation as it emerged from a somewhat reluctant,
    but yet full of potential, power into the position of global
    influence that we enjoy today and that I think our citizens
    expect us to continue to be able to provide.
        Before any really good things happened in the latter half
    of the 20th century in particular, there were men and women in
    uniform who were on the ground making those things happen,
    through the hot wars, through the cold wars and the conflicts.
    But that umbrella of military power and national security
    commitment, which was funded and resourced, allowed the United
    States to emerge into its current position of global dominance.
        And I think it is important to understand and to have an
    appreciation, and maybe even a discussion, with regard to what
    level of funding is required to maintain that position of
    dominance, which is in our national interest and in our global
    interest in the 21st century. For me, the national security
    color is self-evident. But it is directly linked to, I think,
    the aspirations that we have to maintain our global economy and
    our role within that economy.
        It is important, I think, to sustain the exportation of our
    democratic models, which people seek to embrace. It is
    important to sustain the transformation and exportation of our
    culture. And as we go into the 21st century and we are the
    leader in technology, I think that element, that sustainment
    pillar of our national ethic if you will, is going to be also
    very, very important.
        But the idea that the national security pillar somewhat
    stands alone I think is false, and I think it has to be
    sustained. In the past 60 years of history, 8 percent of our
    gross domestic product was invested in national security. The 3
    percent that we choose to invest today pales somewhat in
    comparison.
        We are a global power. We have global responsibilities, and
    we have positions of leadership that I think our American
    citizens embrace. And I think that we need to make sure that we
    properly invest in that account in order to make sure that we
    do not keep having the same discussions year after year with
    regard to how we are going to sustain that element and that
    pillar that defines us as a country.
        Within that context and within that environment, naval
    forces play a role that this committee understands perhaps
    better than anyone. The ability to project forces and presence
    overseas directly affects not only the peace and the stability
    but the shaping of the environment. It directly affects the
    benefits that accrue to our economy. The wonderful example that
    our soldiers, sailors, airmen, and marines in uniform project
    to the population the world over has direct payback in terms of
    who we are as a people and how we are defined in the eyes of
    the world.
        We are able, through our mobility, to respond to crises
    and, in many cases, to defuse crises before they even start.
    Our scalability of forces allows us to impact immediately in a
    crisis area. And, finally, the credibility of our forces
    influences those who would wish us ill to modify their
    behaviors.
        The Marine Corps is basically a three-tiered operation in
    terms of combat power. The first tier, which is well
    understood, is the marine expeditionary units, which are aboard
    our amphibious ships and which deploy cyclically and regularly
    with our sailor counterparts, our Navy counterparts.
        The next tier is the marine expeditionary brigades, which
    we are now bringing back into being with identified commanding
    generals and identified capability. This is hinged to the
    maritime prepositioned ships. And when you marry them up with
    the force, they become the maritime prepositioned force. This
    is a robust, paid for capability that is resident within the
    warfighting capability of our armed forces, and will be
    increasingly understood and utilized by our warfighting
    Commanders-in-Chiefs (CINC's). And we are very much in the
    market of advertising that capability once again.
        Consider the marine expeditionary unit as the lead element.
    It is the lead element of the brigade, which is the lead
    element of the larger force, which is the marine expeditionary
    force, which has a major theater war contingency capability.
    Naval forces are funded to operate, not just funded to be. And
    we invest in that capability up front.

                            Recruiting and retention

        Finally, your marines' readiness rests on four pillars. The
    first one is its people. And with regard to that pillar, I am
    pleased to report to you that our recruiting and retention
    efforts are proceeding along very satisfactorily, both in
    quality and quantity. I would also like to signal to you the
    tremendous potential of the Junior Reserve Officer Training
    Corps (ROTC) program. The Marine Corps has 210 high schools
    signed up for this program, with 60 in waiting.
        This is a very cost-affordable program. We calculate that
    between 30 and 40 percent of the young men and women who join
    the high school Junior ROTC programs actually do wind up
    wearing the marine uniform. And I think the statistics for the
    rest of the services is in that category as well. There is an
    exciting possibility to expand those programs. And the idea of
    being able to teach values to our young high school students
    that could motivate them towards service is very powerful and
    very exciting.
        Finally, within your Marine Corps, we are returning 3,900
    marines in fiscal year 2001 to the operational force through A-
    76 competition and our own internal reforms. That is the
    equivalent of over a regiment of marines that will return
    without asking you for any additional funding.

                       Legacy systems and infrastructure

        Our systems are very important. We use the term ``legacy
    systems'' to describe older systems. We are at a crossroads
    right now. The budget last year allowed us to really make some
    serious inroads into modernization. We hope to sustain that. We
    are still working very hard on maintaining the older systems
    that we have. It is in some respects a quality-of-life issue,
    because parts are hard to come by and we do need to move on and
    get these older systems out of our structure.

                               prepared statement

        Infrastructure investments are important for quality of
    life, as is modernization. And, Senator, I know you have to go,
    and I would be happy to expand on the modernization perhaps
    when you return. Thank you, sir.
        [The statement follows:]
                   Prepared Statement of Richard Danzig deg.
                 Department of the Navy 2000 Posture Statement
        This Posture Statement discusses the Department of the Navy's
    mission, the Naval Services' accomplishments during the past year, our
    direction for the future, and the priorities that must guide our
    decision-making.
        Last year, the Navy and Marine Corps conducted intensive operations
    in support of U.S. national strategy to shape the international
    security environment, to respond to the full range of crises, and to
    prepare for future challenges. Naval forces contributed heavily to
    operations in Kosovo, continued high-intensity operations in support of
    Operation Southern Watch, and participated in numerous humanitarian
    operations, while continuing to provide routine forward presence and
    engagement worldwide. Significantly, despite heavy operational
    requirements, naval assets were drawn mostly from normally deployed
    rotational forces rather than surge deployments.
        Even while heavily engaged in current operations, the Naval
    Services continue to lay the groundwork for the transition to the naval
    forces of the future. The Navy and the Marine Corps are closely
    examining the strategic, technological, operational, and organizational
    implications of the future security environment in preparation for the
    upcoming Quadrennial Defense Review. We are working systematically to
    take advantage of the latest advances in information technologies as
    they pertain to all aspects of our operations, assets and activities.
    Both services are significantly invested in organizations and processes
    dedicated to fostering innovation and successful transformation on an
    ongoing basis. All these efforts help drive the Department's
    modernization and recapitalization efforts.
        While keeping a weather eye toward the future, we also address more
    immediate issues associated with current readiness. We are cautiously
    optimistic that the recent compensation improvements as well as various
    ``Smart Work'' and other quality-of-life measures initiated by the
    Services are having the desired impact on recruitment and retention
    problems. We see some improvement in our effort to reduce maintenance
    and spare parts backlogs. And we remain heavily committed to
    implementation of the Revolution in Business Affairs and exploration of
    various efficiencies throughout its many activities.
        We invite you to read the discussion of these themes. You will see
    that ready Naval Services remain vital to the Nation's present and
    future security.
                      i. the navy-marine corps team today
        The Navy and Marine Corps provide the Nation with a continuous,
    adaptable, and active instrument of security policy with which to
    promote stability and project maritime power. Forward-deployed, combat-
    credible expeditionary naval forces are important to shaping the global
    security environment; helping assure access to regions of vital
    interest; and permitting timely and frequently the initial crisis
    response from the sea. The ability to reassure friends and allies,
    deter potential adversaries, and, when called upon, engage in combat at
    all levels of intensity makes the Navy-Marine Corps Team especially
    useful to the Nation in peace, crisis, and war.
    The Value of Naval Forces
        Inherently versatile naval forces can execute a broad range of
    missions and are relatively unconstrained by regional infrastructure
    requirements and restrictions by other nations. At one end of the
    spectrum, rotational naval forces are engaged daily to favorably
    influence overseas security environments. These same forces are thus
    immediately available for humanitarian assistance, disaster relief, or
    crisis response. Likewise, naval forces provide the most cost-effective
    and survivable component of our strategic nuclear deterrence triad of
    nuclear-powered ballistic missile submarines, manned bombers, and
    inter-continental missiles. At the other end of the spectrum, on-
    station Navy and Marine Corps forces can provide a timely and powerful
    response through the full range of strike and amphibious operations.
    They are central to the unimpeded flow and sustainment of follow-on
    forces in both small-scale contingencies and larger-scale conflict.
    Operations in 1999
        The flexible and scaleable nature of U.S. naval power as an
    instrument of national security policy was shown by the operations
    conducted during 1999. Five Aircraft Carrier Battle Groups (CVBGs) and
    five Marine Expeditionary Units (MEUs) embarked in Amphibious Ready
    Groups (ARGs) deployed during the year, manned by more than 55,000
    Sailors and Marines. Similarly, 33,000 Marines were deployed or based
    forward in support of other operations.
        Navy and Marine Corps units played key roles in the Kosovo
    operations. Sea-based strike aircraft from U.S.S. Enterprise, U.S.S.
    Theodore Roosevelt, and U.S.S. Kearsarge and land-based naval aircraft
    flew thousands of combat sorties as part of the air campaign, suffering
    zero losses and achieving remarkable levels of precision. Tomahawk Land
    Attack Missiles (TLAM) launched from surface ships and submarines
    struck some 45 percent of key command and control and politico-military
    infrastructure targets during the campaign. Also, TLAMs achieved a more
    than 80 percent success rate against assigned targets in all-weather
    conditions. The only standoff electronic warfare aircraft available to
    NATO forces, Navy and Marine Corps EA-6Bs accompanied all U.S.
    strikes--as well as those flown with allies--in over 1,600 missions.
    Land-based P-3Cs, carrier group-based S-3B aircraft, and SH-60B
    helicopters maintained a continuous anti-ship combat patrol in the
    Adriatic Sea throughout the campaign. Furthermore, land-based naval
    aircraft flew more than one-third of all reconnaissance missions
    despite constituting only 20 percent of the reconnaissance platforms
    in-theater.
        Combat-ready Marines embarked aboard the Nassau and Kearsarge ARGs,
    supported by Navy helicopters flying from U.S.S. Inchon, provided
    prompt presence ashore in support of humanitarian efforts to aid
    Kosovar refugees. Notably, Marines participated in the construction of
    a refugee camp for 20,000 displaced Kosovar Albanians at Camp Hope,
    Albania. As part of the Kosovo Force (KFOR), Marines of the 26th
    MEU(SOC) (Special Operations Capable) were among the first U.S. ground
    troops to enter Kosovo. While operating in the eastern sector of
    Kosovo, Marines conducted such missions as clearing mines and
    maintaining security.
        Immediately following hostilities in Kosovo, Navy Seabees from
    Naval Mobile Construction Battalion Three constructed living quarters
    and restored utility systems for U.S. forces involved in the
    peacekeeping mission at Camp Montieth and Camp Bondsteel. The Seabees
    were also involved with various civic action projects, such as
    rebuilding schools, as well as supporting Navy Medical Corps personnel
    who provided medical and dental care to Kosovar Albanians and Serbs.
        In the Pacific, Marines from Special Purpose Marine Air-Ground Task
    Force 31 embarked aboard U.S.S. Belleau Wood and 11th MEU(SOC) embarked
    aboard U.S.S. Peleliu participated in Operation Stabilise, providing
    communications and heavy-lift helicopter support of the United Nations-
    sanctioned, multi-national peacekeeping mission in East Timor.
        We maintained a continuous carrier presence in the Arabian Gulf
    throughout 1999. All six of the CVBGs that operated in the Gulf last
    year conducted strike operations in support of Operation Southern
    Watch. Surface combatants also continued Maritime Interdiction
    Operations in support of United Nations' economic sanctions against
    Iraq. Forward-deployed naval forces based in Japan continue to provide
    visible overseas engagement and project U.S. influence in East Asia.
    And, for the second consecutive year, the carrier and other ships
    homeported in Yokosuka, Japan deployed on short notice to the Arabian
    Gulf.
        Navy and Marine units contributed significantly to other
    humanitarian operations in 1999. In addition to their role in Kosovo,
    Marines from the Kearsarge ARG arrived quickly on-scene after Turkey's
    devastating earthquake and provided disaster relief and humanitarian
    assistance to the Turkish people. A key element of this support was the
    ability of naval forces to provide the assistance from the sea without
    placing an undue burden on Turkey's shattered infrastructure.
        Navy and Marine Corps Reserves also were readily employed during
    1999. During the Kosovo operation, Reservists provided more than one-
    third of the naval staff for the Joint Task Force headquarters, all of
    the Navy air maintenance and ground security augmentation, one-third of
    the Construction Battalion personnel, and flew EA-6B strike support
    missions. Reserve Civil Affairs Marines deployed continuously to Bosnia
    and Kosovo in support of both combat and humanitarian operations.
    Marine Corps Reservists also provided substantial humanitarian
    assistance in the Caribbean and Central America including relief
    efforts in the aftermath of hurricanes Georges and Mitch.
                      ii. naval forces in the 21st century
    The Changing Security Environment
                Threats to Regional Stability
        The events of the last decade demonstrate that we live in an
    uncertain time. While we are confident that no nation will match the
    U.S. on a global scale in the foreseeable future, some nations
    inevitably will seek to compete with U.S. influence on a regional
    level. Pursuing economic, political, and military policies designed to
    raise the cost of U.S. engagement, they may try to diminish the stature
    and cohesion of our regional partnerships. Such states--or non-state
    entities--are likely to invest in asymmetric military capabilities that
    they perceive can leverage their effect on our willingness or ability
    to remain engaged on behalf of friends and allies.
        Our ability to dominate the world's oceans and, when required,
    project maritime power ashore, may discourage the adventurism of
    unfriendly regional powers and afford us the means to defeat them
    should that be necessary. Forward-deployed U.S. Naval forces promote
    stability and reassure allies, and offer a counterweight to the
    influence of unfriendly regional actors. Such forces contribute to a
    security framework that complements other instruments of national power
    to build regional stability.
                Globalization's Impact
        The sea has always been the principal path of international trade.
    The ``Information Age'' has given rise to another path--cyberspace--
    that is becoming equally indispensable. The globalization of markets,
    networks, and information inextricably links U.S. economic and security
    interests more than ever. As the flow of information, money,
    technology, trade, and people across borders increases, the ability to
    distinguish between domestic and foreign policy will become
    increasingly blurred. We can best preserve our well-being at home by
    being effectively involved in the world beyond our shores.
    Globalization offers the prospect of widespread economic and political
    benefits, but requires a stable environment to make this a sustainable
    reality.
                Future Risks to Our Military Preeminence
        The trend toward globalization may provide state and non-state
    actors conventional and unconventional means to advance agendas that
    are opposed to this stability. Access by potential adversaries to a
    variety of sophisticated technologies with military relevance may, over
    time, reduce the technological edge of U.S. platforms, weapons, and
    sensors, while making our actions more transparent. The growing
    availability of commercial off-the-shelf (COTS) technologies with
    direct military application highlights this trend. Even with a strong
    intelligence program, we may be confronted by a sudden realization that
    a potential adversary possesses a significant capability to interfere
    with our operations.
        While U.S. naval forces will remain pre-eminent, challenges to that
    status are likely to increase and be fundamentally different in nature
    than in the past. U.S. forces increasingly may face enhanced threats
    posed by theater ballistic missiles as well as biological and chemical
    weapons. Our increased reliance on information systems in warfighting
    may also create a vulnerability to information warfare.
        The warfighting concepts and capabilities of potential
    adversaries--especially anti-access strategies--are of special concern.
    Unfettered access to all domains of the battlespace will be a key
    operational requirement and will hinge on control of the seas and the
    airspace over it--the cardinal prerequisite to theater access and force
    sustainment. Dominance in areas such as anti-submarine warfare,
    neutralization of mines, and defense against air and missile threats
    will be required to ensure such access.
    Warfighting in the Future
        Projecting U.S. maritime power from the sea to influence events
    ashore directly and decisively is the essence of the Navy and Marine
    Corps Team's contribution to national security. The strategic and
    operational flexibility of naval forces provides the U.S. extraordinary
    access overseas. Sea-based, self-contained, and self-sustaining naval
    forces are relatively unconstrained by regional infrastructure
    requirements or restrictions. Further, naval forces can exploit the
    freedom of maneuver afforded by the seas to respond to contingencies
    and remain engaged in activities that support our interests around the
    world.
        The Navy-Marine Corps vision, . . . From the Sea, steered us from
    the broad ocean areas into the littorals where most of the world's
    population resides and conflicts occur. Forward. . . From . . . the Sea
    broadened that shift in focus. The landward focus of those documents
    provides a bridge from strategic vision to programmatic priorities and
    operational concepts. The defining characteristics of naval forces
    suggest this vision will remain relevant in the future security
    environment. However, emerging threats and opportunities will require
    us to develop and assess new concepts of warfighting in the Information
    Age that may differ from those of the past.
                Characteristics and Attributes
        Naval forces have enduring characteristics and attributes that have
    evolved from constant exposure to the vastness, harshness,
    unpredictability, accessibility, and opportunity offered by the sea.
        Three defining characteristics differentiate the Naval Services
    from our complementary sister Services and make us a uniquely powerful
    asset. First, we operate from the sea. Second, we are an expeditionary
    force--our ships, aircraft, Sailors and Marines are forward-deployed,
    and they exercise power far from American bases. Third, in an age of
    jointness, the Navy and the Marine Corps are linked more closely than
    any other two Services in their structures, training, deployments,
    operations, equipment, and staffing.
        Four clusters of attributes derive from these defining
    characteristics:
        Mobility and Adaptability.--Naval forces can operate anywhere on
    the oceans, free of diplomatic restraint. As such, they have an
    unmatched ability to operate forward continuously, react to
    contingencies with power and speed, and act as the enabling force for
    follow-on Army and Air Force power projected from the U.S.
        Versatility of Power/Scalability.--Ships can be benevolent and
    welcome visitors, sending their Sailors and Marines ashore as
    ambassadors of U.S. interest and good will. Ships can also manifest our
    interest by re-positioning at high speed to areas of concern. The same
    ships can also deploy Marines to rescue our citizens or deter those who
    would harm them. And ships and submarines can be important platforms to
    gather intelligence. Ultimately, they can bring massive and precise
    firepower to bear and deploy Marine forces to deter and, if necessary,
    fight and win battles and campaigns.
        Presence and Visibility.--Ships can be purposely conspicuous or
    exceptionally difficult to detect. In peacetime, we value visibility
    for the sense of security and stability our forces convey by signaling
    U.S. interest, readiness, and ability to act if a crisis brews. The
    same ships, stationed close in, on the horizon, just over it, or in
    unlocatable places and circumstances, can be used as needed in crisis
    or conflict. With the ability to cumulate forces, naval power can be
    adjusted or scaled at will, increasing or decreasing pressure as our
    civilian leadership chooses to raise or lower U.S. commitment, and
    engage or disengage much more easily than land-based forces.
        Cooperative and Independent Capabilities.--Naval forces are
    important instruments of international cooperation. Navy ships conduct
    numerous exercises and interact with naval forces of allies, neutral
    nations, and even potential adversaries every year. The Marine Corps is
    a natural partner for many foreign land forces. At the same time, the
    Navy and Marine Corps are a powerful independent force, with little
    reliance on foreign bases or overflight rights to conduct strike or
    forcible entry operations around the world.
        In short, the enduring attractiveness of naval power is the
    flexibility that stems from these inherent characteristics and
    attributes. Investments in the Navy and Marine Corps are like money in
    the bank. We do not need to know precisely how and where we will use
    this resource in order to see its value--indeed our value is greater
    because we are useful virtually anywhere and anytime. Our expeditionary
    character, mobility, adaptability, variable visibility, and cooperative
    and independent capabilities combine with our immense firepower to make
    us an especially relevant and useful force.
                New Opportunities
        Historically, these advantages were developed over time and with a
    high cost in technology. Even then, communications between dispersed
    ships and land commanders were often sporadic. In years past, it was
    difficult for ships at sea to discern what was happening on and near
    land. Strike capabilities from the sea were limited by weapon bulkiness
    (as compared with the small size of ships) and small magazine capacity.
    Naval firepower and Marine combat forces could be projected onto and
    over the land only a limited distance.
        Entering this new century, the technology, information, strike and
    telecommunications revolutions are rapidly undoing these bounds on
    naval power. For example:
      --Communications capacity between ships, from ships landward, and
            from air- and space-based assets have increased by several
            orders of magnitude. Information processing capabilities have
            expanded concomitantly.
      --Sensor and surveillance systems provide ship-based forces with
            information about and insights into the land environment that
            can equal that of land-based forces.
      --The power, reach, and precision of naval strike assets exceed
            anything previously available in the history of warfare. For
            example, TLAMs, targeted within hours onboard ships and
            submarines, can fly hundreds of miles, hitting targets with
            precision measured in a few meters. Carrier strike aircraft
            deliver similarly precise ordnance far inland. When combined
            with the ability to insert Marine forces hundreds of miles from
            their ships without the need to first build up forces on a
            beachhead, our forces are able to maneuver and engage over
            great land areas, more precisely, and more quickly than any
            naval force in history.
      --Sustainment capacity has grown proportionately. Improved sea-based
            logistics capabilities and larger, better-outfitted amphibious
            platforms will facilitate operations of indefinite length and
            allow land forces to become less dependent on vulnerable, fixed
            bases or stockpiles.
                Investing for the Future
        Unique among the Services, the Navy-Marine Corps Team gains much of
    its combat power by coordinating operations in six battlespace
    dimensions: on the sea, under the sea, on land, in the air, in space
    and in cyberspace. Our challenge is to invest in a balanced fashion,
    shifting the emphasis as particular opportunities present themselves
    and seek optimum synergy between the Navy and Marine Corps and among
    the different dimensions in which we operate. To this end, we must
    invest wisely:
      --To have or assure access to, and maintain presence and maneuver
            within, areas where civilian leadership wants to assert U.S.
            interests. In seeking control of the battlespace, we will
            maintain and enhance mobility (shipbuilding capacity and a
            sustained build rate); counter anti-access strategies (mine
            warfare, anti-submarine warfare) and asymmetric strategies
            (Biological, Chemical, and Information Warfare); and maneuver
            on and over land (Advanced Amphibious Assault Vehicle (AAAV),
            MV-22).
      --To know what is occurring, identify threats, and be prepared to act
            quickly on that information. By investing in Unmanned Aerial
            Vehicles/Unmanned Underwater Vehicles (UAVs/UUVs), submarine
            intelligence collection and communications systems, space
            systems, Information Technology 21st Century (IT21), nodal
            analysis, and our Cooperative Engagement Capability (CEC), we
            will improve our ability to have superior knowledge of the
            battlespace and turn this knowledge into the capability to
            act.
      --To project power and strike, if necessary, with weapons and forces,
            unilaterally or in conjunction with joint or allied forces.
            Weapons and platforms such as Tactical TLAM, F-18E/F, DD-21,
            LPD-17, EA-6B follow-on, Joint Strike Fighter (JSF), SH-60R,
            MV-22, AAAV, Light-Weight 155 mm Howitzer will enhance
            precision and speed of attack and maneuver within the
            battlespace. deg.
      --To protect and sustain ourselves and, when required, others. This
            requires enhancing force protection (Navy Area Defense, Navy
            Theater-Wide); expanding sealift and combat logistics (Maritime
            Preposition Force Enhancement and Maritime Preposition Force
            Future programs); improving ``reach back'' capabilities (IT21,
            Navy-Marine Corps Intranet (NMCI)); and increasing use of
            robotics and automation.
        These are only a few examples of the necessary investments for
    conducting warfare in the Information Age. We invite you to examine in
    greater detail the actual weapons and support equipment being procured
    by the Department of the Navy in the Navy's Vision, Presence, Power and
    the Marine Corps' Concepts and Issues program guides.
    Connecting Strategy and Capabilities
        Transforming our Naval Services is a complex, ongoing process that
    requires priorities to be examined rigorously. The annual Navy
    Strategic Planning Guidance (NSPG) and its prioritized Long-Range
    Planning Objectives, provide the links between strategy and the CNO's
    Program Assessment Memorandum (CPAM) and the Integrated Warfare
    Architecture (IWARS) assessment process used as the Navy's program
    planning tool. The Marine Corps Master Plan provides the link between
    Operational Maneuver from the Sea, and the Marine Corps' doctrine,
    plans, policies, and programs. These Service documents and processes
    are developed in conjunction with the Secretary of Defense's Future
    Year Defense Plan and, internal to the Department of the Navy, the
    Secretary of the Navy's Planning Guidance (SPG).
        In Chapter II, we described our efforts to apply new technology to
    warfighting in the Information Age. However, warfare is, at its core, a
    clash of wills, thus the human dimension--the ability to take
    aggressive and decisive action faster than our adversaries--is all-
    important. In Chapter III, we discuss the important investments we must
    make in our people to prevail in future conflict.
                        iii. readiness and modernization
        Even as the Naval Services continue the transition to the
    capabilities needed for the future, today's Navy and Marine Corps must
    remain ready for missions and tasks that may arise at any time.
    Indispensable to our readiness posture are the men and women of the
    Navy and Marine Corps. We also know that many in corporate America
    characterize their search for quality employees--like the ones we
    seek--as being ``in a battle for people.'' Consequently, the Naval
    Services must be prepared to compete strongly in this ``battle.'' We
    must continue to put in place the resources to attract, train, and
    retain the people we need for the future. That said, we must also
    ensure that our Sailors and Marines have the ships, aircraft, and
    equipment necessary for the complex and demanding jobs that lie ahead.
    Strategic Manpower
        The recruiting, training, and retention of quality people are key
    to the Naval Services' continued success. Maintaining our talented and
    skilled workforce requires constant attention. During the 1990s, we
    reduced our force structure, postponed some modernization and
    recapitalization, and redirected our resources to maintain operational
    readiness. At the same time, the pace of operations and deployments
    continued unabated, and we began to see growing challenges in meeting
    the professional and personal needs of our Sailors and Marines.
    Clearly, a more equitable balancing of operational requirements with
    responsibilities to our people is required.
        One of the inescapable lessons we have learned from recent
    operations is that victory and success in the Fleet and field often
    hinge on actions taken at the lowest levels. To prevail on the complex
    battlefields of the future, Sailors and Marines will require judgment,
    strength of character, and the ability to make sound, timely,
    independent decisions. We must, therefore, invest wisely in the areas
    that together define not only the Quality of Life, but the ``Quality of
    Service'' in the Navy and Marine Corps.
        ``Quality of Service'' has several aspects. Some aspects are
    tangible, such as adequate compensation, a guaranteed retirement
    package, comprehensive health care, and other benefits traditionally
    associated with Quality of Life programs. Others, however, are
    intangible--and in some ways more important. Indeed, they are cardinal
    factors that make a career in the Naval Services attractive to talented
    people relative to other options they may have.
        These intangibles--job satisfaction, professional growth, high
    quality training and education, and personal recognition--comprise
    crucial elements of the Quality of Service. Sailors and Marines must
    have personal and professional pride and satisfaction from what they do
    throughout their service to the Nation. They must sense that what they
    do is important and worth the personal sacrifices they make and the
    ``opportunity costs'' they incur. Thus, we must ensure that they
    continue to hone their professional skills and enhance the combat
    effectiveness of their units. They must be afforded continual
    opportunities for professional growth and a physical working
    environment commensurate with those offered by competing careers. This
    is central to their Quality of Service--and ultimately to the
    operational readiness and combat effectiveness of the Navy-Marine Corps
    Team.
        Our recruiting efforts must extend to all segments of America's
    diverse population so that we not only get the people we need, but
    continue our connection to society at large. By making smarter and more
    effective use of our resources, especially technology, we will empower
    our people with rigorous and meaningful training and education, and
    help them increase their proficiency in the use of highly sophisticated
    weapons, sensors, and information systems. Regional experts must be
    cultivated: people who know the cultures of the world like they know
    their own. Finally, we must continue to act energetically to improve
    the Quality of Life of the entire Navy-Marine Corps Team--Sailors,
    Marines, retirees, civilians, and their families.
                Pay Package Reform
        The recent improvements in military compensation, including the
    ``Pay Triad'' (enhancements to basic pay, pay table reform, and reform
    of retirement benefits), and special and incentive pays, should have a
    positive effect on our ability to attract and retain high-quality
    individuals. Early feedback from the Fleet and operating forces on the
    financial initiatives passed in fiscal year 2000 seems positive.
        Such improvements, however, should not be viewed as a one-time fix.
    Rather, they are part of an ongoing commitment to a healthy standard of
    living for the members and the families of a smaller, busier force. In
    addition to special incentive bonuses for targeted specialties,
    consistent support for competitive across-the-board compensation will
    be a key factor in addressing recruiting and retention challenges for
    the total force. Continuous pay table analysis and, as needed, pay
    increases will be important in retaining Sailors and Marines.
                Reducing the At-Sea Billet Gap
        The Navy has significantly reduced its unmanned at-sea billets.
    These unmanned billets created additional burdens for units, often
    forcing other Sailors to be assigned out of their specialties or to be
    called upon to do double duty. As a result of our 1999 initiatives, we
    reduced that number by 35 percent to 12,000. This has already produced
    good results in the Fleet. For example, the John F Kennedy battle group
    deployed in September 1999 with 95 percent of their billets filled. The
    remaining billet shortfall will decline further as we meet our
    recruiting goals, gain ground on retaining our top personnel, and
    better shape our personnel structure.
                Recruiting Outlook--Challenges!
        Navy.--The Navy's end-strength requirement for the next several
    years is steady, but any force structure increases above Quadrennial
    Defense Review (QDR) levels will require an appropriate increase in
    end-strength. In the wake of a 7,000 recruit shortfall in fiscal year
    1998, the Navy met accession and end-strength requirements in fiscal
    year 1999. In fact, we exceeded our single-year needs in some of the
    Navy's highly technical ratings.
        Several initiatives contributed to this success. We increased the
    recruiting force by more than 30 percent in less than a year; we
    expanded the number of recruiting stations to improve accessibility and
    visibility; and we introduced a new series of Navy advertising
    ``spots.'' Additionally, we implemented several new or enhanced
    programs to improve our recruiting performance. These include:
      --Enhanced incentives.--The Navy College Fund and the Marine Corps
            College Fund, together with the Montgomery GI Bill, help
            Sailors and Marines pay for college education. The Navy and
            Marine Corps also offer enlistment bonuses, paying cash awards
            to qualified recruits. Recruits in selected programs are
            eligible to receive both.
      --Targeted general detail recruits for ``A'' schools.--To attract
            more recruits, we are guaranteeing advanced technical training
            after an initial 12-18 month sea tour as a general-detail
            Sailor. This increased time our first-term Sailors spend at sea
            enhances Fleet readiness, gives them valuable experience and
            motivation entering ``A'' school, and results in lower
            attrition from these schools.
        Nonetheless, the recruiting environment continues to be daunting.
    Unemployment is at record low levels, college attendance is increasing,
    and the propensity to join the military is decreasing. Although the
    Navy met end-strength and accession requirements for fiscal year 1999,
    we were not able to improve our recruiting posture entering fiscal year
    2000 as the numbers in the Delayed Entry Program, our recruiting
    reservoir, are at a record low. To overcome these developments, the
    Navy will maintain the increased level of recruiters and expand the
    recruiter support structure.
        Marine Corps.--The Marine Corps has met or exceeded its accession
    goals since June 1995. The Marines, however, are undertaking several
    recruiting initiatives designed to ensure continued success. Working
    with their advertising agency, the Marine Corps has contracted with two
    leading generational scholars to better understand what motivates and
    appeals to ``Millennials,'' the generation after ``Generation X,'' and
    will use this insight to craft the Marine Corps' message to resonate
    with America's 21st century youth.
        As demographics change and populations shift, the Marine Corps
    recruiting force will change along with it. This year, the Marine
    recruiting force initiated a nationwide restructuring effort, based on
    market research, advertising effectiveness, demographics, and the costs
    of relocating recruiters, to better align the distribution of its
    recruiters with target populations.
        With increasing costs in the advertising industry, the Marine Corps
    is exploring new advertising venues to reach the youth of America. The
    Marine Corps' long-range plan and focused, consistent message has
    served recruiting well; future success will depend on continued hard
    work and robust funding levels.
                Retaining Our Best People
        Navy Enlisted Retention.--Overall enlisted first-term retention
    during 1999 was approximately 30 percent, about eight percent below our
    long-term, steady-state retention target. Second- and third-term rates
    were also below steady-state goals. Despite these lower retention
    rates, the Navy retained enough good Sailors, in conjunction with a
    successful recruiting year, to end fiscal year 1999 about 1,000 Sailors
    over end-strength. Short-term extensions continue to maintain a high
    ``stayer'' rate, especially among first-term Sailors. In fact, since
    fiscal year 1996, the Navy has experienced a steady increase in the
    percentage of Sailors opting for shorter (less than 24 months)
    extensions. Our objective is to convert these shorter-term extensions
    into long-term contracts. Improving the Quality of Service in the Navy
    and Marine Corps, including overall financial compensation, better
    advancement opportunities, and maintaining personnel tempo within
    established goals, is fundamental to our efforts.
        Marine Corps Enlisted Retention.--Current enlisted retention is
    relatively stable. The Marine Corps is experiencing first-, second- and
    third-term reenlistment rates that are close to historical norms. In
    fiscal year 1999, 23 percent of our eligible first-term Marines re-
    enlisted into the career force. This represents 100 percent of our
    first-term reenlistment goal. Since 68 percent of our enlisted force is
    comprised of first-term Marines, in fiscal year 2000, we will need to
    retain 26 percent of our eligible first-term Marines. With the smallest
    enlisted career force in the Department of Defense, retaining high-
    quality, career Marines is key.
        Navy Officer Retention.--During the past few years, reduction in
    the number of ships masked the adverse impact of reduced officer
    accessions and lower retention. As the Navy approaches a steady-state
    force, some 53,000 officers will be required. In addition to the ``Pay
    Triad,'' the Fiscal Year 2000 Department of Defense Authorization Act
    included new bonuses specifically targeting unrestricted line officer
    retention. These included continuation pay for Surface Warfare and
    Special Warfare Officers. It also included enhancements to other
    special and incentive pays, such as a restructuring of Aviation
    Continuation Pay and legislative limit increases to Nuclear Officer
    Incentive Pay rates. While it is too soon to gauge the full effect of
    these initiatives, we are optimistic that these positive steps,
    combined with specific community programs discussed below, will help
    improve retention in several specialized areas.
        Aviation Warfare: As widely reported, Naval Aviator retention
    decreased significantly in the last four years. Various initiatives,
    including the enhanced fiscal year 2000 aviation bonus program, are
    beginning to have a positive effect. While continuation of mid-level
    officers remains our greatest retention challenge, we have seen a
    significant increase in resignations of senior aviators--up seven
    percent in the last year for aviators with 14 to 18 years of service.
        Surface Warfare: During the 1990s drawdown, the Surface Warfare
    Officer community had difficulty retaining enough junior officers to
    fill ship department head billets, reaching a low of 17 percent
    retention in fiscal year 1995 and improving only to 24 percent last
    year. We recommended and Congress enacted the Surface Warfare Officer
    Continuation Pay, which encourages officers to remain in the community
    through the department head milestone. As a result of this and other
    initiatives, Department Head School classes are full and the retention
    trend appears more favorable.
        Submarine Community: Submarine officer accessions remain below
    requirements. While retention rates improved slightly (30 percent in
    fiscal year 1999 compared to 27 percent in fiscal year 1998) and remain
    adequate in the near-term, they must reach 38 percent by fiscal year
    2001 to meet steady-state manning requirements for a notional force of
    50 attack submarines. The current Nuclear Officer Incentive Pay (NOIP)
    program remains the surest and most cost-effective means of meeting
    manning requirements. The Fiscal Year 2000 Defense Authorization Act
    raised the limits of the NOIP program, providing the Secretary of the
    Navy a flexible means to meet future accession and retention
    challenges.
        Special Warfare: Special Warfare Officer, or ``SEAL,'' retention
    rebounded slightly from the downward trend of the past few years,
    reaching 70 percent at the end of fiscal year 1999. Although this rate
    falls short of the required steady-state level of 74 percent, it
    suggests that the tide is turning. The recently enacted special and
    incentive pays, which include an increase in Diving Duty Pay, repeal of
    the restriction on drawing more than one Hazardous Duty Incentive Pay,
    and establishment of Naval Special Warfare Officer Continuation Pay are
    key factors in improving SEAL retention.
        Marine Corps Officer Retention.--Officer retention in the Marine
    Corps is stable, but we remain guarded about future trends. Although we
    attained our authorized officer end-strength for fiscal year 1999, the
    more than ten percent attrition rate was higher than the historical
    average of nearly nine percent. Higher than average loss rates may lead
    to an erosion of experience within the officer corps particularly in
    the mid-range, company-grade ranks. Many of our ground occupational
    specialties are already experiencing inventory imbalances, exacerbated
    by the higher than expected attrition rates. Our internal force
    management policies for assignments are sufficient, at present, to
    address these imbalances.
        Fixed-wing aviators continue to be the most serious Marine officer
    retention concern. Overall, Marine Corps aviation officer inventory is
    at 90 percent of total requirements for fiscal year 2000, with our
    rotary-wing and naval flight officer billets manned at near 100
    percent. However, retention of both fixed- and rotary-wing aviators
    with 12-16 years of service is much lower than desired. We believe the
    restructured Aviation Continuation Pay program will address our present
    shortages.
        Civilian Workforce Management.--More than 27 percent of the
    Department's civilian workforce will be eligible for retirement in the
    next five years, including a large percentage of our highly technical
    employees. With challenges such as regionalization, downsizing, and
    competitive sourcing changing the way we do business, a viable,
    flexible, and multi-skilled civilian workforce will continue to be a
    critical part of our total force. Multiple, innovative recruitment
    strategies designed to attract and retain young college graduates as
    well as a highly skilled technical professional talent pool will be
    needed.
                Smart Work/Smart Ships
        As a matter of principle, we need to treat our people as valued
    professionals even as we seek to employ them in demanding jobs. The
    Smart Work and Smart Ship programs are two key initiatives that
    allocate the right resources to help our Sailors and Marines do their
    jobs smarter. In this way, we can enrich the Quality of Service in the
    Navy and Marine Corps while concurrently enhancing overall readiness.
        Smart Work encompasses a host of initiatives that capture new
    technologies, seek better ways of doing business, and follow through on
    commitments we have made to our people. For example, Smart Manning
    entails improving personnel policies to achieve workload reduction
    through better use of manpower and enhanced training improvements.
    Substituting capital for labor means applying commercially available
    services for labor-intensive tasks such as painting. Sailor and Marine
    time is reserved for high value-added work and combat training--the
    sorts of things they joined the Naval Service to do. Acquiring off-the-
    shelf tools and ensuring safe, healthy, and efficient working
    conditions will save service members time and effort, and allow them
    the time to devote to their professional development. We will also
    invest in research and development to design labor-saving tools that
    are not commercially available.
        In the Smart Ship area, the Navy is moving rapidly to apply the
    lessons we learned in U.S.S. Yorktown in 1997, and more recently in
    U.S.S. Ticonderoga, and the first Smart amphibious ship, U.S.S.
    Rushmore. Installation of seven core technologies--Integrated Bridge
    System, Integrated Condition Assessment System, Damage Control System,
    Machinery Control System, Fuel Control System, Fiber Optic LAN, and
    Wireless Internal Communication System--is planned for most of the
    Fleet. Innovative ideas such as new watchstanding regimes and expanded
    inport duty sections are already replacing old ways of doing business
    and are yielding tangible benefits. Given the program's success, the
    Navy recently chartered a Smart Ship Summit. This top-level approach
    will provide a mechanism to ensure efforts are coordinated across the
    Navy in the most cost efficient manner.
        The Marine Corps is also looking for labor saving investments and
    processes to reduce the time Marines spend in activities not directly
    contributing to combat readiness. As an example, the Marine Corps
    recently identified nearly 1,200 positions as candidates for
    replacement with civilian or contractor personnel. Manpower savings
    realized from this and other initiatives will result in increased
    manning levels in our operating forces.
                Inter-Deployment Training Cycle (IDTC) Workload Reduction
        The imperative to ``work smarter'' is also being addressed by the
    Navy's Inter-Deployment Training Cycle (ITDC) Workload Reduction
    Initiative. Training and inspection requirements, many worthwhile, over
    the years became a burden on Sailors' time, generating a major Quality
    of Service issue for them and their families. This initiative has cut
    these requirements by 25 percent, thus helping to relieve the load on
    non-deployed crews. Commanding Officers have enhanced control and
    flexibility to maintain combat readiness. As such measures continue to
    come on line, Sailors will experience some relief, which, in turn,
    should contribute to higher morale and retention.
                DoN Education Initiatives
        The higher tempo and complexity of future operations will test our
    Sailors' and Marines' abilities to innovate, adapt, and apply their
    knowledge and experience to a variety of tasks in dynamic situations.
    Continuous learning is necessary for keeping our Sailors and Marines on
    the cutting edge, including an increased reliance on advanced distance
    learning systems. The Department will put career-long emphasis on each
    Service member's educational and training needs and accomplishments.
    Specific programs are described in Appendix A.
        Similarly, in order to maintain our high level of performance and
    improve retention, we are committed to making high quality education
    programs available to our civilian workforce. Likewise, programs such
    as the Defense Leadership and Management Program, the Executive
    Leadership Development Program, the Department of the Navy's Brookings
    Institute course, and the Presidential Management Internship program
    will continue to provide valuable opportunities for the professional
    growth and enrichment of our civilian employees.
                Quality of Life
        An important element of our new approach to Quality of Service in
    the Navy and Marine Corps, Quality of Life (QoL) programs comprise
    numerous services that add to the well-being of our people and are
    important factors in both overall readiness and retention. QoL programs
    traditionally include compensation, safety and health programs, medical
    care, military housing, PERSTEMPO, and legal, chaplain, community, and
    family services. QoL elements provide support for our families and
    enable Sailors and Marines to concentrate on their prime
    responsibility--mission accomplishment. Specific programs are discussed
    in the Navy's Vision, Presence, Power and the Marine Corps' Concepts &
    Issues program guides.
        Health care remains an integral part of our overall readiness.
    While TRICARE has been fully implemented, we have more to do before we
    truly deliver on our commitment to provide quality, accessible health
    services to the entire beneficiary population, including retirees. The
    Department of the Navy is working actively with the Department of
    Defense, the Joint Chiefs of Staff, and the other Services on ways to
    improve TRICARE and, while hard work remains, civilian and military
    leadership is committed to making the health care system responsive to
    its customers.
    Readiness Posture
                Deployed versus Non-Deployed Readiness
        To some extent, deployed naval forces are able to maintain a high
    level of readiness at the expense of non-deployed forces. However, the
    allocation of resources to meet the requirements of deployed forces
    creates difficulties for non-deployed units, which subsequently must
    overcome a larger readiness hurdle as they begin to prepare for
    deployment. The Navy's cyclical readiness posture is represented by the
    ``Readiness Bathtub,'' which illustrates how combat readiness varies
    with time. While the ``Bathtub'' chart focuses on air wing readiness,
    similar challenges confront the entire force.
        The readiness of Marine operating forces rests on four pillars:
    Marines and their families, current systems, facilities, and
    modernization. All need attention and resources in order to maintain a
    Corps that will be ready and relevant on the battlefields of the
    future. Similar to the ongoing trend in the Navy, the high state of
    readiness maintained for our forward-deployed forces comes at the
    expense of organizations with a lower priority, such as the supporting
    establishment. The pace of modernization efforts and the level of
    investment in infrastructure also remain concerns, affecting both
    readiness and Quality of Life. Indeed, projections of future funding
    levels do not fully support all that we know should be done.
        Nevertheless, the enhancements provided in the fiscal year 2000
    budget have already begun to address some of our most pressing needs.
    With the help of Congress, we have applied considerable resources to
    ameliorating the problem, but it will take time for the positive
    effects to be reflected throughout the Fleet and operating forces.
                Training Range Availability
        The use of live ordnance is a vital means of training our forces in
    combined-arms operations in preparation for deployment. The inability
    to train at the Vieques range has degraded the combat readiness of
    deploying Atlantic Fleet ships and air wings since the spring of 1999.
    The ability to conduct coordinated live fires from ships and strike
    aircraft is particularly crucial, given that four deploying battle
    groups over the past fifteen months engaged in combat operations
    shortly after arriving in theater. We are also concerned that if our
    friends overseas see that Americans are unwilling to support live fire
    ranges at home, they will be less inclined to share their ranges with
    us.
                Force levels
        The Navy and Marine Corps continue to meet their commitments
    primarily by drawing upon forward-deployed, ``rotational'' forces
    rather than requiring additional deployments of units that have just
    returned from, or are beginning to work up for deployment. We have been
    able to do this mainly by demanding more from our people and our
    equipment. But this cannot go on indefinitely. As we approach the next
    Quadrennial Defense Review (QDR), the Navy and Marine Corps will make
    the point that our force levels need to remain balanced with usage
    expected in the future security environment. For example, the Marine
    Corps' latest internal study suggests that an end-strength increase may
    be necessary to bring all units in the operating forces to a manning
    level of 90 percent. However, before formally requesting an increase,
    we are insuring that all personnel policies serve to employ our current
    Marine manpower in the most efficient manner.
        Already, there is growing evidence that our forces are stretched.
    Carrier underway time during deployments has risen steadily from
    historical norms. The aircraft carrier homeported in Japan had
    unplanned deployments to the Arabian Gulf twice in the past two years
    to cover our commitment there. While the last QDR specified a 50 attack
    submarine force, the engagement plans of our regional Commanders-in-
    Chief (CinCs) and the 1999 Joint Chiefs of Staff Attack Submarine Study
    suggest considerably more are needed than the 56 boats we have today.
    Further, a recent surface combatant study indicates that more ships
    could be required than the current QDR force level. On the aviation
    side, the Kosovo campaign illustrated the extraordinary demand for
    certain high demand/low density assets like EA-6Bs. Furthermore, as a
    result of the high operational tempo of the 1990s, Navy and Marine
    Corps aircraft and helicopters are more quickly reaching the end of
    their service lives than projected just a few years ago and must be
    replaced.
        The 1997 QDR stated that a fleet of slightly more than 300 ships
    was sufficient for near term requirements and was within an acceptable
    level of risk. Three years of high tempo operations, however, suggest
    that this amount should be reviewed in the next QDR. Many analyses
    point to a need for more ships than we currently have. Certainly the
    specific numbers and types of ships will--and should--be debated. While
    the capabilities of tomorrow's netted sensors and weapons will increase
    the potency of each ship and aircraft, numbers will always matter.
                Mid-term Modernization
        Although sustaining current operational readiness is a prime
    priority, maintaining equipment and infrastructure and modernizing our
    forces are growing concerns. The understandable call to pay for
    readiness first must be balanced with the imperatives to improve the
    equipment we have. Modernization enables our current forces to continue
    to be valuable warfighting assets in the years ahead while concurrently
    trying to mitigate escalating support costs of aging equipment. Also,
    as technological cycle times are now shorter than platform service
    life, it is fiscally prudent to modernize the force through timely
    upgrades.
        Solid, proven platforms are the best candidates for modernization.
    We plan to modernize the CG-47 Aegis cruisers and several aircraft
    types (F-14, P-3C, EA-6B, E-2C, and AV-8B), and extend the service life
    of our fast attack nuclear-powered submarines. SH-60B/F helicopters
    will be upgraded to SH-60R models, while the CH-60 will replace several
    older helicopter types. Additionally, the Marine Corps is upgrading its
    HMMWV fleet of vehicles, modernizing its main battle tanks and Light
    Armored Vehicles, and upgrading its current MM88 tank retrievers to the
    Hercules (Improved Recovery Vehicle).
                Infrastructure
        Shore facilities are important, but only select facilities
    (bachelor quarters, utilities, and waterfront, airfield, and training
    facilities) can be maintained in conditions of readiness that enable
    them to meet mission demands with minor difficulty. All other shore
    facilities are funded to lower readiness levels. Backlog of maintenance
    and repair of real property is currently over $2.5 billion and is not
    projected to stop rising until it reaches $2.8 billion in fiscal year
    2004. The Navy plans to demolish 9.9 million square feet of excess or
    obsolete infrastructure by fiscal year 2002 to help reduce
    infrastructure operating costs.
        Part of the problem, however, is that the Navy has excessive
    infrastructure. While the number of ships and Sailors has been reduced
    by 40 percent and 30 percent respectively since 1988, infrastructure
    decreased by only 17 percent. As a result of four Base Realignment and
    Closure (BRAC) rounds, we will spend more than $5.6 billion less on
    infrastructure through the year 2001 and $2.6 billion less per year
    thereafter. However, additional closings are the surest way to bring
    infrastructure needs and costs into balance.
                Environmental Challenges
        The Department continues its active program of environmental
    compliance and stewardship both afloat and ashore. We are pursuing
    research and development of technologies and innovative pollution
    prevention strategies to meet effectively our environmental
    requirements. This research has focused on marine mammal protection,
    contaminated site cleanup, and hull paints and coatings. Also,
    environmental planning is now an essential aspect of our acquisition
    efforts. Environmental considerations are explicitly taken into account
    when acquiring weapon systems and platforms and are reviewed
    periodically throughout each program's life cycle.
                Long-term Recapitalization Challenges
        We must recapitalize for three basic reasons. First, the risks to
    our future military preeminence described in Chapter II require prudent
    investment in new capabilities. Second, the aging of many of our ships,
    aircraft, and vehicles, coupled with the added wear and tear associated
    with use, mandates their systematic replacement. Third, the industrial
    base that supports our armed forces is still largely unique and, absent
    new programs, would likely not remain economically viable.
        To some extent in recent years, however, we maintained our near-
    and mid-term readiness at the expense of investments in longer-term
    capabilities. Resolving this tension between current imperatives and
    long-term requirements has been, and will remain, a challenge. In fact,
    it is becoming apparent that what was a long-term issue is now
    attaining some urgency, as we seek additional funding to keep current
    and future shipbuilding plans on track.
        Nonetheless, we are making substantial investments in programs that
    will be the core of our forces in the first decades of next century.
    The DD-21 destroyer, F/A-18 E/F Super Hornet, Joint Strike Fighter
    (JSF), CVN-77 and CVN(X) aircraft carriers, MV-22 Osprey, Virginia-
    class SSN, LHA Replacement, the San Antonio-class LPD-17, and the
    Advanced Amphibious Assault Vehicle (AAAV) are examples. Additionally,
    the Navy is studying the concept of converting of four Ohio-class SSBNs
    into cruise missile carrying submarines (SSGNs) with special operations
    capabilities. These programs are profiled in detail in the Navy's
    Vision, Presence, Power and the Marine Corps' Concepts and Issues
    program guides.
                Lift Requirements
        The Marine Corps amphibious lift requirement remains at 3.0 Marine
    Expeditionary Brigades (MEBs). The current plan is focused on the
    formation of 12 ARGs, which achieves the fiscally-constrained
    amphibious lift goal of 2.5 MEBs. The plan shapes the future amphibious
    force with the number and type of ships required for a flexible,
    crisis-response capability. Ultimately, the amphibious force will
    consist of 12 TARAWA- and WASP-class LHA/LHDs, 12 San Antonio-class
    LPD-17s, and 12 Whidbey Island- and Harpers Ferry-class LSD-41/49s,
    capable of forming 12 integral ARGs or operating independently in a
    ``split-ARG/MEU(SOC)'' configuration.
        Strategic sealift assets include afloat prepositioned stocks
    maintained around the world as well as ships earmarked for rapid surge
    deployment of forces from the U.S. Prepositioning supports all four
    Services and the Defense Logistics Agency. For example, each of the
    three Maritime Prepositioning Squadrons, stationed in the Mediterranean
    Sea, Indian Ocean, and Eastern Pacific Ocean, carries unit equipment
    and supplies to support a brigade-sized Marine Air-Ground Task Force
    for 30 days of combat. Enhancing our capabilities as defined in
    Operational Maneuver From the Sea, we continue to pursue both our our
    Maritime Prepositioning Force Enhancement (MPF(E)) and Maritime
    Prepositioning Force of the Future (MPF(F)) programs. With the fielding
    in fiscal year 2000 of the first of three ships, the Maritime
    Prepositioning Force Enhancement program will add one ship to each MPF
    squadron, creating space for a Navy Fleet Hospital, Naval Mobile
    Construction Battalion equipment and an Expeditionary Airfield. MPF(F)
    will combine the capacity and endurance of sealift with the enhanced
    speed and flexibility of airlift to marry-up forces and equipment in a
    forward area. With onboard cargo handling systems compatible with
    existing MPF ships and commercial systems, we will increase the speed
    and efficiency in reinforcing our assault echelons ashore.
        Surge sealift includes roll-on/roll-off ships, self-sustaining
    container ships, barge transport ships, crane ships, hospital ships,
    and other specialized craft that support contingency deployment of all
    Services. Nineteen Large Medium Speed Roll-on/Roll-off (LMSR) ships are
    being delivered through fiscal year 2002, adding approximately five
    million square feet of additional lift to current Army prepositioning
    and surge capacity, while a twentieth LMSR will provide additional
    Marine Corps lift as part of the MPF(E) program.
                              force of the future
        Addressing the challenges that confront the Department will require
    systematic innovation, the solving of difficult interoperability and
    integration problems, and the steady pursuit of promising scientific
    and technological initiatives. We are committed to allocating the human
    and fiscal resources to ensure that innovation, interoperability and
    integration, and scientific and technological goals are met in the most
    cost-effective manner possible. We are also intent on finding
    efficiencies in the way we operate and manage naval forces and their
    supporting organizations, which may permit us to free up additional
    resources for modernization and recapitalization.
    Navy-Marine Corps Integration
        The potential benefit from increased Navy and Marine Corps
    integration, from warfighting doctrine to procurement strategies, is
    compelling. As the two Naval Services integrate their complementary
    warfighting concepts more closely in support of a comprehensive
    forward-deployed naval expeditionary capability, a concomitant
    integration of force planning methodologies, resourcing, and innovation
    will be necessary.
        Through greater integration, the Naval Services seek increased
    flexibility of their striking power, for example, by restructuring
    Navy-Marine Corps carrier air wings. These new wings and their
    supporting units will be tailored to provide a range of crisis-response
    options. Carrier air wing composition will continue to evolve as the
    Navy and Marine Corps phase in new multi-mission aircraft. Likewise,
    the Department is exploring a common aviation plan to streamline
    acquisition and procurement strategies, training, and other areas.
        In the Information Technology world, the Department will replace
    its numerous independent local networks with a Navy/Marine Corps
    Intranet (NMCI) capable of more efficiently and less expensively
    supporting more than 400,000 Navy and Marine Corps users. The NMCI
    architecture will provide a state-of-the-art voice, video, and data
    network with end-to-end computing services for forces ashore. NMCI will
    be fully interoperable with both afloat and shore commands through the
    IT21 and the Tactical Data Network (TDN) initiatives. It will provide
    better ``speed of action'' and significantly improve security through
    implementation and enforcement of standardized information assurance
    practices. Although some immediate restructuring of our operating costs
    will be necessary to support this consolidated service plan, the
    benefits are impressive. The end result will be a Navy Department
    enterprise-wide global information infrastructure with a high capacity
    for effective management and sustainment of deployed forces around the
    world.
    Innovation
        The Navy and the Marine Corps have ongoing initiatives to translate
    such capstone concepts as Network-Centric Warfare (NCW) and Operational
    Maneuver from the Sea into reality. The Naval War College's Navy
    Warfare Development Command (NWDC) and the Marine Corps Combat
    Development Command (MCCDC) are tasked to refine these concepts and
    also develop future warfare ideas. NWDC's Maritime Battle Center (MBC)
    and the Marine Corps Warfighting Laboratory (MCWL) also explore
    candidate concepts, tactics, techniques, and procedures for the
    application of advanced technologies. Navy Fleet Battle Experiments
    (FBEs) and Marine Corps Advanced Warfighting Experiments (AWEs) test
    these new doctrines and ideas in the field, assess the utility of new
    technologies, explore new operational capabilities and organizational
    arrangements, and feed the empirical results back to the Development
    Commands.
        Both the Navy and the Marine Corps strongly support joint
    experimentation initiatives. Indeed, given their long history of
    innovation, they actively support the Joint Experimentation Program at
    all levels, from concept development to experimentation analysis. In
    addition, the Navy and Marine Corps seek to be the ``testbeds'' by
    which joint experimentation can leverage Service-developed integrated
    warfighting concepts. For instance, in April 1999, the Extending the
    Littoral Battlespace (ELB) Advanced Concept Technology Demonstration
    (ACTD) conducted the first of two demonstrations of a wireless network
    connecting ships at sea, aircraft, and ground forces (both small units
    and individual Marines). This test illustrated the exceptional
    potential that wireless network technology holds for increased
    information exchange among all forces in a Joint Task Force
    organization.
    Interoperability
        The Services are making significant investments in fielding only
    interoperable systems and migrating in-service, legacy systems into the
    ``netted'' world. For example, the IT21 initiative will provide a
    reliable and ubiquitous network to all afloat commanders for rapid data
    flow among sensors, weapons, and command and control nodes and is key
    to the reprioritization of Command, Control, Communications, Computers,
    Intelligence, Surveillance and Reconnaissance (C\4\ISR) programs to
    execute the NCW concept. The Navy is developing a Common Command and
    Decision (CC&D) capability that implements tactical command and
    decision functions within a common open architecture. The ongoing
    Cooperative Engagement Capability program is also the key to the Navy's
    Single Integrated Air Picture (SIAP) concept that will maintain common,
    continuous and unambiguous track information on all airborne objects
    within a specified surveillance zone. Other key interoperability
    programs include the Global Command and Control System--Maritime (GCCS-
    M), and the MAGTF Software Baseline (MSBL).
        Carriers and large-deck amphibious ships are also being fitted with
    identical or very similar command, control and communications (C\3\)
    subsystems. Improving configuration management and software
    standardization will result in better sharing of data among CVBGs and
    ARGs, improving speed of information flow, and providing a common view
    of the battlespace. To make sure these advanced C\3\ systems will work
    when and where it counts, interoperability testing begins long before a
    deployment, with a well-defined configuration management and a systems
    integration testing program for all deploying CVBGs and ARGs.
        C\4\ISR systems for joint, allied, and coalition forces must be
    analyzed and agreed upon to make interoperability a reality. Use of
    COTS technology, international standards, and ``plug and play''
    architectures offer ways to avert technology gaps with allies and
    provide the most economical course for achieving required capability.
    In many cases, policy and procedures can be improved to take advantage
    of emerging technologies that offer interoperable solutions. Security
    Assistance and Foreign Military Sales (FMS), Information Exchange, and
    Disclosure and Access processes, carefully administered, are also ways
    to enhance allied interoperability.
        Doctrinal interoperability issues may be even more complex than
    technological ones. One of the challenges facing the Naval Services in
    the next few years is thinking through the operational and
    organizational implications of employing netted systems and fully
    engaging in ``Network-Centric Warfare.'' Certainly, naval forces have
    been operationally netted via tactical data links for decades. However,
    the extraordinary advances in information technology, particularly the
    networking of multiple systems, leveraged through efforts like IT21 and
    the NMCI, promise to increase the combat effectiveness of naval and
    joint forces far beyond what earlier data links enabled.
    Reserve Integration
        Some 89,000 Navy Reservists and 39,000 Marine Corps Reservists
    serve the Nation today, indistinguishable from their Active
    counterparts. The effective integration of Reserve elements with Active
    components will be indispensable as demand for military forces
    increases and the Active force stabilizes at a reduced level. For
    example, the Marine Corps Reserve contributes approximately one-fourth
    of the force structure and one-fifth of the trained manpower of the
    total Marine Corps force.
        Recognizing the great potential in our Reserve communities, we are
    identifying scenarios and roles that could require short- or long-term
    activation of the Reserves. Many Reservists possess skills gained in
    the civilian workforce that can be called upon when required by our
    Active forces. Thus, we are introducing a mechanism to identify the
    skill areas for which there is no active Departmental occupation
    counterpart.
        In addition to the value of their military specialty training and
    training for mobilization, Reservists provide an essential link to
    American society. In many regions of the country, Navy and Marine Corps
    Reservists are the only symbols of Department of the Navy. They are
    recognized within their communities for the sacrifices of military life
    and their service to America, and as such they provide welcome feedback
    from their communities to Navy and Marine Corps leaders. Our ability to
    leverage all of these strengths is important for future mission
    capability, but we must be sensitive to the legitimate needs of
    Reservists to pursue their civilian vocations.
    Promising New Technologies
        Transformation of our forces is underpinned by advances in science
    and technology. Such advances may significantly affect disparate areas,
    from warfighting tactics and techniques to propulsion plants to overall
    platform cost and design. Some of these include:
      --Unmanned Aerial Vehicles (UAVs) and Unmanned Underwater Vehicles
            (UUVs).--Technology, especially in the areas of sensors and
            processing, has moved forward at an amazing pace.
            Correspondingly, the demand for battlespace information has
            increased even more quickly. Future roles for UAVs and UUVs
            include reconnaissance and targeting, environmental data
            collection, and, ultimately, direct combat.
      --Integrated Power Systems (IPS).--Electric propulsion, envisioned
            for future surface and submarine platforms, will enable
            integrated powering of all propulsion, combat systems, and ship
            services, thus enhancing warship capability. IPS is expected to
            save resources and enhance operational effectiveness through
            decreased fuel usage, reduced manpower requirements for
            maintenance, increased crew ability to handle combat battle
            damage, and will give greater flexibility to ship designers to
            use the ship's volume more efficiently.
      --Electro-Magnetic Aircraft Launching System (EMALS).--Beginning with
            the first of the next-generation aircraft carrier, CVNX-1,
            EMALS will replace steam catapults that are currently used to
            launch carrier aircraft. EMALS will significantly reduce
            weight, catapult manning requirements, and life-cycle costs.
    Revolution in Business Affairs
        Even as we seek the transformation of the warfighting capability of
    the Navy and Marine Corps, we also must fundamentally improve the
    supporting business processes of the Department. Frequently referred to
    as the Revolution in Business Affairs (RBA), our goal is to deliver
    state-of-the-art capability from equally modern and creative
    acquisition and support organizations, particularly in the commercial
    sectors of the U.S.
                Advanced Technologies
        By using advanced technologies in our next generation aircraft
    carrier program, we anticipate total life cycle cost savings of about
    30 percent for the second carrier of that class compared with today's
    NIMITZ-class carrier, which includes a 20 percent reduction in manpower
    (approximately 600 billets). Following an evolutionary approach that
    inserts advanced technologies into key areas of the carrier, including
    integrated combat suites, propulsion and electrical distribution
    systems, an electromagnetic aircraft launch system, and a completely
    redesigned interior arrangement, we will enhance combat capability
    while improving ``livability'' and reducing total ownership cost.
        Similarly, DD-21 will be the first major U.S. surface combatant
    designed as a single, integrated system. This holistic approach,
    encompassing the ship, all shipboard systems, crew, associated shore
    infrastructure, and all joint and allied interfaces, has the potential
    to reduce manning as well as operating and support costs by up to 70
    percent.
                Commercial Logistics Support
        Another important element of the RBA addresses the feasibility of
    commercial logistics support to military systems, which will replace a
    ``business-as-usual'' approach in which the Services themselves are the
    logistics support agencies. In this regard, the V-22 Osprey program
    awarded a highly innovative, fixed-price contract for commercial
    procurement and logistic support of its engine. The contract provides
    two base years and five option years of contractor logistics support
    for the engine through Allison Engine Company's revolutionary ``Power
    by the Hour'' program. The cost avoidance from this commercial support
    approach is estimated to be approximately $533 million over V-22
    program lifetime and is related directly to improvements presently
    experienced on commercial engine variants.
                Shifting Design Responsibilities
        The Navy is shifting more design responsibilities to the
    shipbuilder and relying more on commercial tools, such as computer-
    aided designs. The design/build program being used in the Virginia-
    class SSN program resulted in a stable design at the start of lead ship
    construction and should preclude costly design changes during
    construction. This program includes the disciplined application of
    commercial specifications and components, which we believe will also
    help to reduce design and acquisition costs while at the same time
    enable the Navy to stay on the leading edge in technologies and
    systems.
                Cycle Time Reduction
        Integrated Product and Process Development is a management tool
    that integrates all activities from product concept through production
    and field support. It uses multifunctional teams to optimize
    simultaneously the product and its manufacturing and sustainment
    processes to meet cost, performance, and schedule objectives. We will
    look to industry to team with combat system integrators to provide
    designs that will meet our requirements, provide the latest technology,
    and reduce cycle time as well as total ownership cost. This approach is
    being used in the LPD-17 and DD-21 programs.
                Teaming
        The first four Virginia-class SSNs are being built under an
    innovative teaming arrangement between General Dynamics Electric Boat
    Corporation (EB) and Newport News Shipbuilding (NNS). EB is the prime
    contractor responsible for the entire design/build process with NNS as
    the major subcontractor. Construction of the first four ships is shared
    by ship section: NNS builds the bow, stern, sail, and some forward
    sections of each submarine, while EB builds the hull sections, the
    engine room modules, and the command and control operating spaces. The
    two firms will then each assemble and deliver two submarines.
        The Navy's DD-21 program uses a team-based acquisition approach
    that leverages competition and innovation. By requiring competition
    between teams of shipbuilders and system integrators in the initial
    concept phase of the program, we are assured of a better weapon system
    at the lowest future production and support costs. Allowing the teams
    to enjoy maximum design flexibility helps us to mitigate risks and
    future costs while potentially optimizing system capabilities.
                Business Vision and Goals
        During the past decade, America's commercial sector has
    reorganized, restructured, and adopted revolutionary new business
    practices to maintain its competitiveness in the global marketplace.
    While the Department of the Navy is not a business, it maintains a
    large and diverse business infrastructure to support its warfighting
    forces. Published in 1999, the Department's Business Vision and Goals
    provides guidelines for modernizing its business operations to match
    more closely those of the private sector. This vision statement seeks
    to support future initiatives across the Department while encouraging
    local innovation.
        We already are improving our business practices through initiatives
    like Enterprise Resource Planning pilot projects, making costs more
    visible to decision-makers, and Electronic Business/Electronic Commerce
    which integrates business improvement efforts with enabling
    technologies. The Department-wide intranet will further streamline
    information flow. Additionally, capital investments in tools and
    materials, as demonstrated in the Smart Work program, will reduce labor
    burdens on our Sailors and Marines.
        The vision statement is supported by four strategic goals that
    provide an overall framework for the organizational and cultural
    changes needed to make our business side as effective as our
    warfighting side. These goals are:
      --Foster continued conceptual, technological, and operational
            superiority.--Develop business programs to complement
            warfighting. Leverage leap-ahead technologies that offer a
            warfighting edge into the 21st century and align acquisition
            processes to take advantage of global market forces driving
            information and technology.
      --Recruit, engage, and retain the best people--military and
            civilian.--Create an environment that fosters sense of purpose,
            innovation accomplishment, and personal development. Make
            laborsaving investments that enhance capabilities and improve
            working conditions.
      --Implement decision support systems that deliver recognizable value
            for every dollar spent.--Give decision-makers the capability to
            rapidly access data, knowledge, and expertise to enhance their
            understanding of complex situations.
      --Create a business environment focused on teamwork and outcomes.--
            Organize with a focus on outcomes versus activity. Adopt the
            best business practices for providing services and products to
            our customers.
        The Navy and the Marine Corps show remarkable strength and
    adaptability in executing missions in the national interest. Our
    business vision and goals seek to channel this same energy and
    flexibility into building a modern, efficient support structure that
    supports individual initiatives and corporate action simultaneously.
                                    summary
        This Posture Statement delivers two messages. First, today the
    Naval Services are actively and effectively supporting the Nation's
    national security strategy. Our operations in 1999 illustrate the scope
    and scale of Navy and Marine Corps action worldwide--and we have ample
    reason to believe the coming years will be just as demanding.
    Nevertheless, we face readiness and modernization challenges. With the
    help of the Administration and Congress, we are making progress in
    meeting these challenges.
        Second, the security environment is changing in the face of new
    political, economic, and technological developments. In response, the
    Naval Services are transforming how we operate under future conditions.
    While the defining characteristics and attributes of naval forces will
    endure in the Information Age, emerging threats and opportunities will
    require new investments and capabilities if we are to realize our full
    potential.
        In closing, we hope we have engendered the strong conviction that
    the Naval Services will continue to provide vital, indeed indispensable
    value to the Nation's security. The balancing of present needs and
    future imperatives will always be a complex endeavor. With your help,
    we will continue to successfully meet the Nation's commitments by
    investing wisely in future force structure and capability.
                      appendix a.--don education programs
    Officer Programs
        These programs and initiatives provide opportunities for career-
    oriented performers to receive funded graduate and professional
    military education (PME). They are largely directed at active-duty
    unrestricted line officers (URL) in order to align the URL with staff
    corps and restricted line officer communities which are highly
    successful at including education opportunities in their career paths.
    The Navy Washington DC Intern Program, Naval War College (NWC) Seminar
    Program, the Marine Afloat College Education Program, Tuition
    Assistance, new degree programs at the Naval Postgraduate School (NPS),
    and Distributed Learning (DL)/Advanced Distributed Learning (ADL)
    programs provide officers with the advanced education required to serve
    in the naval forces of the future.
    Foreign Area Officer (FAO) Program
        Close and continuous military-diplomatic interaction with foreign
    government defense and military establishments is essential to develop
    and maintain the capability to engage in constructive, mutually
    supportive, bilateral and multilateral military activities and
    relationships across the range of operations. The military and
    diplomatic offices at U.S. Embassies and diplomatic posts must be
    staffed with commissioned officers with a broad range of skills and
    experiences. The officers must also be versed in politico-military
    affairs; familiar with the political, cultural, sociological, economic
    and geographical factors of the countries and regions in which they are
    stationed; and proficient in the predominant language(s) of the
    populations of their resident countries and regions. As well, the
    Department of the Navy requires officers with similar capabilities to
    serve in their organizations.
    Enlisted Programs
        The Navy College Program simplifies and enhances the opportunity
    for every Sailor to earn a college degree during their career. In the
    past, young people often joined the Service to get money to go to
    college after their service. Now, they will have a greater opportunity
    to go to college while serving their country. Enhanced partnerships
    between the Navy and accredited universities and colleges will optimize
    the granting of college credit to Sailors for training and experience
    gained within their career fields, in addition to credits earned
    through traditional education programs. This program is geared toward
    the realities of life at sea, and allows Sailors to pursue a college
    degree anytime, anywhere.
        The Marine Corps addresses the educational needs of Marines and the
    Marine Corps family through a tailored Lifelong Learning (LLL) concept.
    LLL establishes an integrated, one-stop program for course enrollment,
    access to research tools and the internet, basic skills enhancement,
    and nonresident courses that is available to Marines on an ``anytime,
    anywhere'' basis. Marines may access the Marine Corps Satellite
    Education Network (MCSEN), which facilitates degree completion
    regardless of duty station. LLL addresses a wide range of educational
    interests, ranging from vocational to academic. Offerings encompass
    high school completion, the Military Academic Skills Program (MASP),
    Apprenticeship Program, Tuition Assistance, and Sailor-Marine American
    Council on Education Registry Transcript (SMART). These programs are
    greatly enhanced by the merger of Marine Corps Libraries with Voluntary
    Education as part of Marine Corps Community Services (MCCS).
    Civilian Programs
        In order to maintain our high level of performance, we are
    committed to providing civilian employees with the best education
    programs possible to meet their needs in the new work environment. To
    this end, we are developing strategies to improve the efficiency and
    availability of training opportunities for our civilian workforce.
    Involvement in programs like the Defense Leadership and Management
    Program, the Executive Leadership Development Program, and the
    Presidential Management Internship Program display our commitment to
    developing leaders. One of the Department's most significant challenges
    for our senior executives is keeping pace with the startling tempo of
    technological change. Constant and rapid updating, and continual
    learning, is essential. We have designed a corporate plan for the
    development of our Departmental executives. The employment of this plan
    will provide the Department with a skilled civilian workforce, while
    laying a solid foundation of success for the future.

        Senator Stevens. Thank you very much, General.
        We will just stand in recess until we come back.
        [A brief recess was taken.]
        Senator Stevens. Thank you for your patience.
        General Jones, you were not quite finished when we had to
    depart. They vitiated the last vote, so we did not have to stay
    for three votes.

                           Marine Corps modernization

        General Jones. Thank you, sir.
        The last pillar I was going to discuss was modernization
    and our efforts with regard to Joint Strike Fighter, the
    acquisition of the V-22, the most important ground
    modernization program, the AAAV, are all proceeding apace and
    we are enthusiastic about the service life that they will give
    us and also the 21st century capability that this will do in
    terms of our power projection capability.
        I would also like to underscore and express my appreciation
    to the Secretary and the CNO for their unwavering support in
    the amphibious lift profile, and specifically the LHD-8 and the
    LPD-17 programs, which we are profoundly grateful for. And I
    finally close by talking about the capability of a base in
    Florida, called Blount Island, which is the home base of our
    maritime prepositioned ships that we currently lease. That
    lease will expire in 2004.
        It is a national asset. It is for sale. And I believe that
    it would be very prudent to discuss ways in which we could
    acquire ownership of that base either this year or in fiscal
    year 2004, whatever the timeframe is. The owner has expressed
    an interest in selling it, and selling it to the Government.
    That, coupled with our Army prepositioned ship base in
    Charleston, gives us an important national capability for power
    projection. And I would commend that to you, sir, for
    consideration.
        Senator Stevens. Where is that base in Florida?
        General Jones. It is near Jacksonville, sir. It is called
    Blount Island. And it is the original home port of maritime
    prepositioned shipping. But it is a leased facility, and I just
    wanted to signal to you that we are coming to the end of the
    lease. And the owner indicates that he wants to sell it.

                               prepared statement

        Senator Stevens. Have your people prepare a paper on that
    for the committee, would you please?
        General Jones. I gladly will, sir. Thank you.
        [The information follows:]
            Blount Island, Florida, Strategic National Defense Asset
        The significance of Blount Island (BI) to the National Military
    Strategy.--Blount Island is a vital national strategic asset, through
    its role in support of the Marine Corps' Maritime Prepositioning Force
    (MPF) program and mobilization in crises. Since 1986, the MPF
    Maintenance Cycle for prepositioned equipment and supplies has been
    conducted at BI. BI is part of the Strategic Enabler entitled
    ``Strategic Mobility'', and is an asset which is critical to the
    worldwide application of U.S. military power and our military strategy,
    under the strategic concepts outlined in the National Military Strategy
    of Forward Presence and Crisis Response. Under these concepts, the MPF
    program provides rapid and efficient strategic deployment options
    through strategic siting around the globe for the geographic and
    combatant CINCs. This enables MPF to be especially responsive to
    regional crises and disaster relief.
        Use of Blount Island was acquired through lease, based on the
    results of an extensive siting study in 1985. Of sixty different
    locations considered, all but BI were ruled out based on various
    considerations such as water depth, ammunition explosive arc, overhead
    clearance, acreage, cost, and climate. Since the Marine Corps began
    operations at BI in 1986, alternative sites to the BI location have
    been investigated. The Marine Corps has identified and considered more
    than 100 alternative site locations on DOD facilities and private
    property to provide suitable facilities to accomplish the MPF program
    mission. No other existing facility can provide the same capability and
    economic efficiencies.
        Lease costs for BI are over $11 million annually. The lease expires
    in 2004, subject to negotiable option periods, which could extend the
    lease through the year 2010. Lease costs are expected to rise
    significantly.
        Negotiations for the lease option will begin in February 2003. If
    negotiations for the lease renewal fail, any efforts to obtain a new
    fixed term lease requires that the total present value of the lease
    life-cycle costs would be ``scored'' or applied in the first year of
    the Total Obligational Authority (TOA), e.g., a 6-year firm term lease
    would be scored at $68.7 million (6 yrs @ $13 million/yr with a 3.75
    percent discount). Through fiscal year 2004, leasing will have cost the
    Marine Corps $154.7 million.
        Continuing to lease is risky, costly, contrary to DOD policy, and
    opposed by OMB. Cyclical lease renegotiations create cost uncertainty.
    Lease renewal for fiscal year 2005-fiscal year 2010 becomes more
    problematic if the rent rate exceeds our Congressional rent cap of
    $12.3 million on annual lease payments. Assuming long-term leasing is a
    non-starter, we could establish a year's lease with multiple annual
    renewals. However, this alternative is not a sound business choice,
    because it is inherently uncertain, has higher costs, shorter lease
    term, owner opposition, and continuing encroachment threats.
        Failure to acquire real property interests to control civil
    encroachment could seriously impede the Marine Corps' ability to
    support the National Military Strategy and ultimately jeopardize the
    nation's defense capabilities.
        Acquisition is currently planned in two phases. The first phase,
    the highest priority, is programmed in fiscal year 2002 at $35 million
    and would acquire approximately 362 acres outside the leased area,
    consisting of fee and easements to ensure no additional incompatible
    development occurs within the Explosives Safety Quantity Distance
    (ESQD) ammunition arc. The second phase at $119 million is currently
    unfunded but would acquire the Blount Island leased area, consisting of
    1,089 acres. Adequate funds to purchase Blount Island must be obtained
    soon because lease renewal negotiations must start by February 2003.
        Conclusion.--Acquisition is the Nation's best course of action and
    the most cost-effective means to secure long-term protection of this
    vital strategic asset.
                                     ______

    Blount Island Acquisition Brief to the Jacksonville, Florida Chamber of
                            Commerce, March 1, 2000
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                  National Strategic Asset, Blount Island, FL
                          the case for dod acquisition
               section i--the maritime prepositioning force (mpf)
        The MPF:
      --Supports National Military Strategy
      --Continues to be a Naval force power projection capability, major
            theater force enabler and/or multiplier, proven in global
            contingency operations
      --Delivers sustainable combat power to the CINCs
      --Provides core capability into the 21st century
      --Will evolve with operational concepts such as Operational Maneuver
            From The Sea (OMFTS) and MPF (Future).
        A vital underlying element of the MPF is the world class
    maintenance facility located at Blount Island, Jacksonville, Florida.
    In 1985, numerous sites were reviewed when Blount Island was selected
    as the site for our prepositioning maintenance operations. Several
    subsequent studies have expanded the number of facilities looked at and
    have continued to validate the long-term viability of Blount Island.
    Strategic Requirement
        The facility at Blount Island is the premier forward presence
    prepositioning maintenance facility in the world. Over 100 sites have
    been examined since the inception of the MPF program in various
    internal and external studies. Blount Island has been repeatedly
    validated as the best and most cost effective facility to conduct
    maintenance cycle operations.
        The Port of Jacksonville's additional throughput capabilities were
    clearly demonstrated during Operation Desert Shield/Storm when 59 ships
    and over 220,000 tons of unit equipment and sustainment cargo were
    shipped to Southwest Asia. Only the military ammunition port at Sunny
    Point, NC handled more tonnage than Jacksonville Port.
      --Blount Island was recognized as a national strategic asset during
            Desert Shield/Desert Storm. With the exception of ammunition,
            Jacksonville Port was the top throughput port in the country.
      --Blount Island has the ability to surge and berth up to seven ships
            simultaneously.
      --CINCTRANS, recognizing the strategic importance of Blount Island,
            has committed Mobility Enhancement Funds to complete the rail
            loop at Blount Island, making it even more effective for
            throughput and mobilization.
      --Recent CINC Integrated Priority Lists support continued permanent
            operations at Blount Island.
      --The Joint Warfare Integrated Capabilities Assessment (JWICA) has
            validated the strategic significance of Blount Island.
      --Continued operations at Blount Island support the National Security
            Strategy, Naval Forward Presence, the current Maritime
            Prepositioning Force Concept, Forward . . . From the Sea, and
            evolving Operational Maneuver From The Sea and Maritime
            Prepositioning Force Future concepts.
      --Blount Island Command is also designated a Required Operational
            Capability (ROC) 28 regeneration facility in the Marine Corps
            Capabilities Plan.
    Operational Requirement
        The MPF concept has earned a place as an essential element of the
    National Security Strategy. MPF provides rapid deployment of personnel
    and equipment of Marines and Sailors, by air to link up with
    prepositioned equipment and supplies embarked aboard Maritime
    Prepositioning Ships (MPS), which are forward positioned for rapid
    response to potential crisis and conflicts.
      --MPF provides flexible options for rapid deployment and employment
            of forces across the spectrum of conventional operations.
      --Maritime Prepositioning Forces are naval power projection assets
            that significantly support the employment of Naval
            Expeditionary Forces.
      --The three MPS squadrons provide the Nation a unique, operationally
            ready, geo-strategically prepositioned capability.
      --The MPF concept remains a relevant and proven capability which
            provides cost-effective crisis response capability, improving
            responsiveness to contingencies, and operational flexibility
            for combat, disaster relief, and humanitarian assistance
            operations.
      --Blount Island Command's mission focuses on attainment, maintenance
            and sustainment of all requirements in support of the MPS. MPF
            Maintenance Cycle operations conducted at Blount Island are
            vital to maintaining the readiness and continued capability of
            the MPF program.
        Blount Island remains vital to maintaining and sustaining the
    operational capability of the MPF, is the best site available, and
    offers the following capabilities:
      --Dedicated 1,000 foot pier and capability to berth seven ships
            simultaneously in crisis
      --Adjacent staging area (33 acres) for complete ship downloads/back
            loads, 262 acres exclusive use
      --Excellent road/rail network
      --Major airport only 15 minutes away
      --Close proximity to Marine Corps Logistics Base, Albany
      --Trained and dedicated local workforce in place
    Acquisition of Blount Island for the Department of Defense
        The acquisition will generate long-term savings and secures a
    facility that is vital to the Nation, Naval Forward Presence, the
    Maritime Prepositioning Force concept, and the future of the Marine
    Corps. Acquisition is currently planned in two phases.
      --Phase I would acquire approximately 362 acres external to the
            currently leased property to prevent additional incompatible
            development from occurring within the current explosive safety
            quantity distance (ESQD) arc.
      --Phase II would acquire approximately 1,089 acres of the current
            Blount Island leased property.
    Permanent acquisition of the Blount Island facility will ensure the
            continued viability of forward presence in the National
            Military Strategy
        No other facility can provide the nation the capability to perform
    the maintenance cycle operations as efficiently and effectively as the
    facilities and personnel at Blount Island without cost prohibitive
    investments and disruptive transfer of functions to another
    (undetermined and likely inadequate) site. Without securing Blount
    Island through acquisition, a key component of the National Military
    Strategy is at risk.
      section ii--the case for separate army and usmc prepositioning sites
        The paper addresses the vulnerabilities of moving to Naval Weapons
    Station, Charleston vice the Department of Defense permanently
    acquiring the world-class prepositioning maintenance and mobilization
    site at Blount Island, Jacksonville, Florida.
        The August, 1998 Joint Staff J-4 directed Institute for Defense
    Analysis (IDA) study, ``Cost and Operational Effectiveness Analysis
    (COEA) on Collocating the Army and Marine Corps Afloat Prepositioning
    Maintenance Sites at Charleston, South Carolina and Blount Island,
    Florida'', examined collocation issues in depth, and validated with the
    Combatant Commanders-in-Chief (CINCs) the strategic necessity to
    maintain two separate sites.
        The study concluded that collocation:
      --Increases vulnerability of prepositioning maintenance cycle
            operations to terrorism and major storm damage.
      --Decreases throughput capability and strategic flexibility via the
            loss of additional slip ways at Blount Island.
      --Results in the likely loss of a major mobilization site if Blount
            Island Command (BICmd) is closed through commercial
            development.
      --Disruption of organizations during transition.
      --Increases work stoppage vulnerability.
      --Loss of excess capacity for possible future expansion of
            prepositioning forces.
      --Could result in creation of a joint prepositioning command and
            recommended against it because:
        --Joint command would add another command layer.
        --Conflicting requirements were envisioned.
        In February 1999 the USMC site survey to update our own inhouse
    assessment of NWS Charleston re-validated the IDA study relocation
    concerns and determined relocation would be even more costly now (over
    $200 million). No positive reasons for collocating were identified.
    Results are summarized as follows:
      --With the exception of one excess building, only raw land is now
            available to support USMC relocation to NWS Charleston.
      --Over $200 million for development of new facilities,
            infrastructure, hard stands and pier expansion would be
            required for stand-alone Marine Corps operations at three on-
            base sites: the pier/marshalling area, maintenance area, and
            lighterage maintenance.
        --This does not include an estimated $70 million in relocation
                costs.
      --Collocation would also include scheduling conflicts.
        --The Army Afloat Prepositioning Force (APF) at end state will have
                19 Large Medium Speed Roll-on/roll-off Ships (LMSRs) and
                the Maritime Prepositioning Force (MPF) will have 16 ships.
                Assuming the APF will also move to a 36-month maintenance
                cycle, this equates to one ship per month for 36 months.
      --Sharing current Army facilities and infrastructure (as opposed to
            constructing usable facilities for the MPF program) is not a
            wise option for the Nation's defense, based on the envisioned
            scheduling conflicts and limited staging areas at both the Army
            maintenance site and near the pier. There would be no excess
            capacity in crisis.
        --APF and MPF operate under very different operational and
                maintenance concepts.
        --There is inadequate infrastructure for sharing the current
                facilities (Army still doing work outside, insufficient
                hard stands, etc.).
        --Surge and reconstitution conflicts.
      --Higher maintenance cycle costs.
        --Proposed MPF site is 5 miles from pier.
        --Road network to the pier is two lane, winding road through
                swampland.
        --Second destination transportation costs will be higher.
      --There will be a loss of skilled workforce at Blount Island.
        --We can anticipate disruption to maintenance operations at BICmd
                as USMC presence at the facility draws down.
        --Many contractor and government employees will not relocate.
        --Specialized maintenance skills are required in many commodities.
      --Bridge clearance. Both the Cooper River and Mark Clark bridges at
            Charleston are clearance hazards for the MPF AMSEA vessels to
            transit the Cooper River to NWS Charleston. The AMSEA vessels
            would require major ship modifications of approximately $5.25
            million total.
    Other Issues
        $37.7 million in facility improvement costs invested by the DOD in
    the Blount Island facility will now be lost.
        Tenant costs at Charleston will be higher than current out-sourced
    facility maintenance costs.
        DOD will lose use of ROC 28 reconstitution and regeneration
    facility.
    section iii--short synopsis of alternative mpf maintenance site studies
        Alternative siting for the MPF Maintenance Cycle invariably
    resurfaces whenever the issue of addressing continued use, procurement
    and acquisition of Blount Island Command is discussed. Initiating a new
    study is viewed by some as a panacea to the complications of acquiring
    BICmd. However, reviewing the body of historical work since 1985, four
    major surveys have been completed on potential MPF maintenance sites,
    and a study of current use of Charleston and BICmd for maintenance
    operations has recently been completed.
        These detailed studies have examined numerous commercial and
    government owned sites to perform MPF maintenance. All studies have
    concluded that Blount Island is not only the best, but the only viable
    place to accomplish the maintenance mission. Given the continued growth
    of civilian infrastructure in and around existing U.S. ports (both
    commercial and military), the likelihood that a new study will reveal a
    location at a reasonable price (under $200 million) which can support
    MPF maintenance operations is very remote. The studies are synopsized
    below:
        The USMC survey of 1985 recommending Blount Island, Jacksonville,
    FL considered 60 locations. All but five were eliminated for various
    limiting factors such as water depth, overhead clearance, acreage,
    available facilities (cost), and ammunition safety. The five remaining
    ports were physically surveyed.
        All except Blount Island were eliminated due to the aforementioned
    limitations or other factors such as annual weather patterns.
    The Center for Naval Analysis (CNA)
        In 1992 CNA evaluated the purchase of Blount Island verses moving
    to an alternative site. CNA reviewed the 1985 USMC study and also made
    use of a 50 port, Department of Transportation study of ammunition
    capable, commercial ports. All commercial sites were eliminated (for
    the same factors as above) with the exception of Blount Island. CNA
    physically surveyed ten ports: Blount Island, FL; Port Hueneme, CA; NWS
    Indian Island, WA; NWS Yorktown, VA; NWS Seal Beach, CA; Craney Island,
    Norfolk, VA; NWS Charleston, SC; NWS Earle, NJ; NWS Concord, CA;
    Military Ocean Terminal, Sunny Pt, NC (MOTSU).
        Six options were presented by CNA based upon physical capability
    and ranked by cost as follows: NWS Charleston, SC; Purchase of Blount
    Island, FL; Continue Lease of Blount Island, FL; NWS Yorktown, VA;
    MOTSU; NWS Indian Island, WA.
        MOTSU and Indian Island, although listed, were determined to be
    cost prohibitive, due to upgrades and operating costs required at those
    sites being many times greater than the first three options. NWS
    Yorktown, subsequent to this study, now has a bridge restricting
    overhead clearance of the five AMSEA class ships. Even though
    Charleston also restricts the AMSEA ships, CNA placed it on the top of
    the cost rankings. In order for AMSEA ships to enter Charleston major
    modifications are required to the mast and superstructure.
        In its ranking CNA ``cost penalized'' Blount Island for lack of
    troop support facilities (BEQ, mess, gym, etc.), even though there are
    less than 70 uniformed personnel assigned to Blount Island Command. The
    fact that there are two major naval stations (Mayport and NAS
    Jacksonville) in close proximity is one of the main reasons the Blount
    Island location was chosen in the first place.
    CNA Conclusion
        Buy or lease Blount Island.
    Logistics Management Institute (LMI)
        In 1993, the LMI conducted a survey for the Army to locate a site
    for Army afloat prepositioning maintenance. LMI reviewed previous
    surveys and physically surveyed the following locations: Port Hadlock,
    WA; NAS Yorktown, VA; MOTSU; Ft. Eustis, VA; Blount Island; Military
    Ocean Terminal Bayonne, NJ (MOTBY); NAS Earle, NJ; Wilmington, NC; NAS
    Charleston, SC; Four sites in the San Francisco Bay area.
        LMI found that only Charleston and Blount Island were suitable as
    prepositioning ship maintenance sites. LMI recommended Charleston
    because Army prepositioning vessels are not restricted by overhead
    clearance and the Army estimated their ships would carry 25 percent
    more ammunition than do USMC ships. This second item caused the
    potential explosive safety arc of Army ships to exceed the limits
    imposed on Blount Island. In reality, the Army ships now actually carry
    significantly less ammunition than MPF vessels.
    LMI Conclusion
        For the Marine Corps . . . use Blount Island.
                                     ______

                   Prepared Statement of Gen. James L. Jones
                      our role: a ready and relevant force
        Mr. Chairman, Senator Inouye, and distinguished members of the
    Committee, I greatly appreciate this opportunity to report to you on
    the state of your Marine Corps and its important contributions to the
    nation.
        Let me first offer my sincere thanks to the Committee, the
    Congress, and the Administration for your help. You sent a clear signal
    on national defense with your vigorous support for our fiscal year 2000
    budget. The resources you provided substantially reduced our
    modernization backlog and allowed us to reverse the decline in our
    infrastructure. We have turned an important corner, and we now need
    your help in sustaining and improving upon our progress. Marines and
    their families are grateful for your assistance. Among other things, it
    provided for the largest pay raise in 20 years, strengthened the
    retirement system, and overhauled pay tables.
        Pay and allowance increases are of great importance, but they alone
    do not suffice to attract young Americans to our ranks, or to retain
    them in sufficient numbers. Instead, it is the intangible qualities of
    military service that prompt Marines to join and remain a part of our
    uniquely demanding profession. These qualities include dedication to
    country and Corps, great career satisfaction for both a Marine and his
    or her spouse, and recognition and appreciation from our citizenry of
    the great value of such a commitment.
        Today, over 20,000 Marines are either forward-deployed with the
    Amphibious Ready Groups of the numbered fleets or forward-based in
    Japan. Other Marines of the Operating Forces are training at their
    bases and stations in the United States, in order to remain prepared
    for immediate deployment. Still others--to include both uniformed
    Marines and our 15,000 ``Civilian Marines''--serve in our supporting
    establishment, where their efforts to recruit, train, retain,
    administer, and supply today's Marine ``Total Force'' directly
    contribute to the readiness of our Operating Forces and provide the
    infrastructure that sustains our Marine families.
        This past year, our Marines participated in a wide range of
    missions. The most prominent of these were the operations in the
    Balkans, Iraq, and East Timor, and the humanitarian relief efforts in
    Turkey, Central America, and South America. Our Marine Expeditionary
    Units (Special Operations Capable) conducted continuous forward
    presence operations, including participation in exercises and
    engagement operations, along with their partnered Amphibious Ready
    Groups. Some Marines conducted training deployments to South America,
    Africa, and the equatorial Pacific region, and still others
    participated in counter-narcotics operations in support of Southern
    Command.
        In the United States, Marines performed many important missions.
    Following a series of hurricanes that struck the Atlantic seaboard, our
    units conducted relief operations in conjunction with local
    authorities. Our Chemical-Biological Incident Response Force (CBIRF), a
    unique military organization and a recognized national asset, remains
    prepared to assist state and federal agencies in responding to the
    possible use of weapons of mass destruction on American soil. In fact,
    we have proposed relocating CBIRF in the upcoming months, in order to
    increase its responsiveness to the national capital region.
        The Marine Corps Reserve continues to make an extraordinary
    contribution, both at home and abroad. As part of our Total Force,
    Reserve Marines augment and reinforce the regular component, performing
    a variety of missions. Recently, for example, they provided civil
    affairs expertise in the Balkans. Reserve Marines and units
    participated in a variety of exercises, while others trained in locales
    as distant and varied as Norway, Romania, Egypt, Japan, Korea,
    Thailand, and Australia. In the U.S., they train to maintain readiness
    for mobilization, and conduct community service projects in their
    hometowns, thereby strengthening the link between the military and our
    society. We are reviewing options for greater reserve integration with
    active units, to include participation in scheduled overseas
    deployments. The Marine Corps Reserve is in the midst of the last of
    its Quadrennial Defense Review-driven structural adjustments, and it
    should soon stabilize at 39,000 Marines.
        Our Marine Corps Junior Reserve Officers' Training Corps (MCJROTC)
    Program is yet another way in which we connect to our society. In our
    high schools in the United States and in Department of Defense schools
    overseas, we currently have 178 MCJROTC units, with a combined
    enrollment of 25,127 Cadets. Through this program, retired Marines
    provide instruction in the fundamentals of leadership and the core
    values that form the heart of our service culture. School
    administrators, parents, and communities celebrate the success of our
    MCJROTC units in instilling within young Americans the virtues of
    responsible citizenship. As an added bonus, approximately one-third of
    our graduating MCJROTC Cadets enter military service, to include
    commissioning programs in colleges and service academies. The Congress
    has authorized us to expand to 210 units, beginning next year, and we
    are enthusiastically pursuing that goal.
        Your Marine Corps, in partnership with the United States Navy, is
    prepared to execute its mission as a naval expeditionary force in
    readiness. With your continued support, we will remain ready for the
    challenges of today, while preparing to address those of the future.
                our legacy: vanguard of the new american century
        As the history of the 20th century reflects, the growth of our
    nation's influence throughout the world was preceded by Americans in
    uniform. During two World Wars and during the long struggle of the Cold
    War, the U.S. military stood as a bulwark against global and regional
    aggression, defending our interests and those of our allies, and
    facilitating the expansion of our economy, culture, and democratic
    values. The benefits of this undertaking accrued not only to our own
    citizens, but also to the people of many distant lands whose lives were
    transformed through exposure to America and Americans. Historically,
    this constituted a rare phenomenon: the extension of a nation's
    influence through ideas, rather than conquest, and for noble, rather
    than self-serving, purposes. Our military element of national power--
    and our willingness and ability to use it effectively, when
    threatened--provided the security environment that made possible the
    miracle of the ``American century.''
        With a legacy of contribution in the 20th century, and the
    knowledge that an active American presence around the world is both a
    vital component of our continued prosperity and of remaining a positive
    global influence in the 21st century, the influence of a strong
    American military is beyond dispute. What remains a point of debate is
    the proper level of investment in the ``maintenance and development''
    of this capability.
        An examination of our defense spending as a percentage of Gross
    Domestic Product (GDP) over the last half of the 20th century is
    informative. Following the U.S. rise to superpower status during World
    War II, our investment in defense, nonetheless, reached a low point in
    1948, when it was estimated to be 3.6 percent of our GDP. Spending
    levels rose during the Korean conflict and remained at 5.0 percent or
    higher through most of the Cold War. Since 1991, however, the defense
    share of the budget has steadily decreased. Our average level of
    investment over the past 60 years, as a percentage of GDP, was 8.8
    percent. Today's U.S. global military capability and responsibility is
    sustained at a cost of about 3 percent of our GDP.
        When comparing U.S. defense expenditures to that of other nations,
    it is clear that the U.S. spends as much on its military as many other
    leading nations combined, a comparison that makes our annual defense
    spending appear to be disproportionate. Reality is more complex. As the
    only nation with global interests, responsibilities, and capabilities,
    our defense requirements--the underpinnings of our status as a
    superpower--are correspondingly greater than those of nations whose
    interests are regional in scope. Interestingly, however, some of these
    other nations closely match our own commitment to defense. For example,
    the United Kingdom spends about 2.9 percent of its GDP on defense,
    France spends about 2.8 percent, Turkey and Greece each spend over 4
    percent, and some Persian Gulf countries--like Saudi Arabia, Kuwait,
    and Oman--spend about 12 percent. Thus, while none share our global
    responsibilities, several invest in defense a share of their national
    treasure that is approximately equal to, or greater than, ours. The
    difference is that only we have global responsibilities. The military
    component of those responsibilities is of vital importance.
        A number of factors underscore our requirement for adequate defense
    investment. First, it is essential that we recapitalize and modernize
    to maintain our current military strength. Over the next two decades,
    the cost of sustaining our older equipment will increase steadily. For
    example, many systems are rapidly nearing the end of their service
    lives. To simply maintain the status quo, we will soon face the need to
    replace ever-growing quantities of our materiel. However, prudence
    dictates that we modernize our military capability to maintain our
    current advantage over potential adversaries who will also invest in
    technologically advanced systems, or those who will attempt to confront
    us with asymmetrical challenges. While technology is costly, we must
    devote sufficient resources to extend our present military advantage
    into the future.
        Further, the cost of human resources is growing steadily. We spend
    increasing amounts to recruit and retain an all-volunteer force in a
    burgeoning economy marked by record-low unemployment. Training costs
    also continue to increase, as equipment becomes more sophisticated, and
    potential combat environments become more complex.
        A multiplicity of threats to our national security continue to
    require that we invest consistently and responsibly in the military
    pillar of national power. In many regions throughout the globe,
    virulent nationalism, long repressed during the half century of the
    Cold War, has re-awakened. Religious strife and regional radical
    fundamentalism overlay an already fractured political geography, giving
    rise to opportunists who have no compunction against orchestrating mass
    violence to preserve or expand their power. Similarly, the competition
    for the world's scarce resources is becoming increasingly intense as
    the gap between rich and poor nations continues to widen. The
    possibility of major interstate conflict remains a great concern, and
    major theater war scenarios in the Arabian Gulf or in Northeast Asia
    still fill the lion's share of defense planners' time and energy.
    Terrorism has occupied a prominent place in the history of inter- and
    intra-state conflict throughout recorded history. Today, the enormously
    destructive weapons at the disposal of the terrorist elevate our
    concerns to a much higher plane. Most ominous, perhaps, the
    proliferation of weapons of mass destruction raises the specter of a
    growing threat to our homeland.
        Clearly, if the U.S. is to maintain the global influence that has
    proven so beneficial for Americans and for the world, we must maintain
    the pillar of superpower status that sets and sustains the conditions
    for that influence to grow and to prosper: a capable and powerful
    military. Over the past decade, efforts to balance the budget and to
    reduce the federal deficit have resulted in increasing budgetary
    pressure on defense investment. These constraints have forced the
    military services to make difficult choices in prioritizing resources
    between force structure, near-term readiness, and modernization. An
    ever-increasing operational tempo during this period has complicated
    the prioritization effort. However, economic forecasts of a continuing
    budget surplus suggest that resources for increased discretionary
    spending will be available over the coming years. The armed services
    require sustained, steady support and growth; periodic ``spikes'' in
    resource allocation are not efficient over the long term. The question
    that you must consider--indeed, the question that our nation should
    debate--is this: What is the proper level of investment in defense, as
    a percentage of our Gross Domestic Product, that will enable the nation
    to maintain its superpower status in the 21st century?
           our culture: the qualities of a naval expeditionary force
        The Naval Services are well positioned to confront the national
    security challenges of the new century. Naval forces can help to defuse
    a crisis quickly by taking up position offshore or by conducting long-
    range precision strikes, when required. They can seize critical ports
    and airfields as part of an assault by a joint task force, or they can
    deliver critical supplies and services in order to assist with
    humanitarian or natural disasters. Because all of this can be done from
    the sea, with or without any host nation support, naval forces will
    continue to offer multiple options for shaping the national security
    environment.
        In his posture statement, the Secretary of the Navy highlights
    three characteristics that define the uniqueness of the Naval Services.
    First, we operate from the sea. Second, we are an expeditionary force:
    our ships, aircraft, sailors, and Marines are forward deployed. Third,
    the Navy and Marine Corps are inherently joint at the operational and
    tactical levels in their structure, training, deployments, operations,
    equipment, and staffing.
        From these characteristics, we can derive six attributes that
    capture the extraordinary value of naval forces to our geographic
    Commanders in Chief:
        Presence.--Whether on a visit to the port of an ally or stationed
    off a hostile shore, naval forces provide a visible indication of U.S.
    military power and the commitment to employ it in defense of our
    interests. There is no substitute for presence if one hopes to shape
    the outcome of events. The trendy notion of so-called ``virtual
    presence,'' in point of fact, amounts to ``actual absence.'' Forward
    presence is an understandable and unmistakable marker of American
    interest in a region. It provides the means for the ``on-scene
    shaping'' that is both the primary military mechanism for our strategy
    of engagement, as well as a tool for the creation and maintenance of
    stability. The physical presence of a credible and capable force deters
    aggression and encourages conflict resolution at levels short of war.
    It also advances American ideals, and presents a bright example of the
    positive aspects of military engagement in a democracy. It inspires
    emulation by example. Take it away, and you create a vacuum into which
    opponents may enter.
        Versatility and Scalablity of Power.--Naval forces operate across
    the full spectrum of conflict from peacekeeping to major theater war.
    They can transition quickly from the normal mix of forces in a given
    theater to a much more powerful force. This can be accomplished without
    deploying a large command and control system or creating land-based
    infrastructure. A forward-deployed Marine Expeditionary Unit (Special
    Operations Capable) can serve as the lead element of a larger and more
    capable Marine Expeditionary Brigade. Similarly, a brigade can pave the
    way for the deployment of an even more powerful Marine Expeditionary
    Force.
        Flexibility.--Naval forces possess latent combat power, the
    application of which can range from maritime interdiction through
    amphibious assault and strike operations, or operations as a part of a
    large joint or combined force. They can be fully engaged in an
    operation one day and withdrawn the next, quickly reconstituting their
    combat capability for follow-on missions. Further, they can conduct
    operations unilaterally, as part of a joint force, or in concert with
    allies.
        Credibility.--Naval forces are particularly well suited to the
    roles of compelling, deterring, and responding to hostile actions.
    There is ample historical precedent of the performance of these roles,
    a factor that potential foes around the world must always consider.
        Sustainability.--Naval forces are uniquely able to conduct long-
    term combat or contingency operations without the establishment of
    large, fixed bases on foreign soil and are free from excessive reliance
    upon extensive contractor support. Logistics support is part and parcel
    of the normal structure that is forward-deployed for peacetime
    operations.
        Affordability.--Naval forces are funded to operate, not simply
    funded to be. This is a defining quality of our expeditionary culture.
        While the Naval Services are expeditionary by nature and in
    culture, interest in such capabilities is growing in the Department of
    Defense and the military services. Indeed, with the extensive reduction
    of our overseas presence during the past decade, it is today necessary
    for each of our services to be able to deploy rapidly and to operate in
    austere environments. There has been much discussion of new, emerging
    expeditionary requirements and capabilities. In the Naval Services,
    however, an expeditionary force is much more than the narrowly defined
    entity described in the Department of Defense dictionary as ``an armed
    force organized to accomplish a specific objective in a foreign
    country.'' We believe that an appropriate definition of a naval
    expeditionary force is:
          A flexible and agile force operating from the sea and organized
            to accomplish a broad range of military objectives in a foreign
            country or region. This force must be able to deploy rapidly,
            enter the objective area through forcible means, sustain itself
            for an extended period of time, withdraw quickly, and
            reconstitute rapidly to execute follow-on missions.
        Service culture directly impacts upon the expeditionary character
    of a force. The Navy and Marine Corps have developed and sustained an
    expeditionary mindset and culture for more than two centuries of
    service. An expeditionary culture requires institutional flexibility
    and mandates continual preparedness for deployment on short notice. In
    the case of the Marine Corps, with 68 percent of our enlisted Marines
    on their first tour of duty, we have flexible ties to fixed geographic
    bases. Readiness for short-notice deployments is one of the principal
    articles of faith subscribed to by Marines assigned to our Operating
    Forces. Thus, Marines understand well the requirement to maintain their
    personal and family readiness. Despite recent concerns with regard to
    operational tempo, we find that our Marines who are assigned to
    regularly deploying squadrons and battalions are also the most likely
    to reenlist. Young men and women join our ranks expecting to be
    deployed. They want to respond to the nation's global challenges, and
    we do not disappoint them.
                        our focus: the operating forces
        The readiness of the Operating Forces is our highest priority. It
    rests upon four pillars: (1) Marines and their families, (2) ``legacy''
    systems, (3) infrastructure, and (4) modernization. Our challenge is to
    maintain the individual strength of each, while achieving a proper
    balance in our application of resources among the four.
        People will continue to be the most important pillar of our
    readiness. We continually develop and sustain preparedness for
    immediate deployment. This requires attention to the physical readiness
    of Marines and their equipment, as well as ``family readiness.'' We
    accomplish the former through physical means, primarily, rigorous
    training. The latter is the product of instilling in our Marines
    unquestionable confidence that their families are adequately supported
    in terms of pay, health care, housing, and schools--especially during
    deployments.
        The second pillar of readiness--legacy systems--requires continued
    attention to the maintenance of materiel fielded in the period spanning
    the last four decades of the 20th century. Much of this equipment is
    currently beyond its intended service life, resulting in a continually
    growing maintenance requirement. Still, it is this equipment with which
    we conduct operations today. It is essential that we support it
    properly, until it can be replaced.
        Our third readiness pillar--infrastructure--is likewise of critical
    importance to the accomplishment of our mission. Our bases and stations
    are the launching points for deploying units of the Operating Forces,
    and they are home to our Marine families. We must ensure that they
    provide adequate ranges and training facilities, are environmentally
    sound, and promote the overall health and well being of our Marines,
    our civilians, and our families.
        Finally, our fourth pillar--modernization--will ensure ready and
    capable Marine Air Ground Task Forces well into the future. We must
    procure key warfighting systems in a timely manner, and in the proper
    quantities. As our legacy systems approach the end of their useful
    lives, they become of increasingly marginal tactical use, and require
    modernization.
        Marine forces are joint, combined, and fully interoperable across
    the spectrum of potential conflict. With existing resources, we are
    breathing new life into our capabilities. Such measures include:
        Marine Expeditionary Units (Special Operations Capable)
    (approximately 2,200 Marines and Sailors, self-sustaining for 15 days)
      --Validated mission profiles as ``light weight warfighting
            capability''
      --Prepared to incorporate MV-22 Osprey
      --Acquired new light weight Interim Fast Attack Vehicle
        Marine Expeditionary Brigades (up to 17,000 Marines and Sailors,
    self-sustaining for 30 days)
      --Embedded brigade command element in each Marine Expeditionary Force
      --Validated mission profiles as ``medium weight warfighting
            capability''
      --Initiated development of standards of performance
      --Re-established brigade link with Maritime Prepositioning Ships
            Squadrons
        Marine Expeditionary Forces (approximately 50,000 Marines and
    Sailors, self-sustaining for 60 days)
      --Validated mission profile as ``heavy weight warfighting
            capability''
      --Completed requirements to augment organic fire support capability
      --Increased reconnaissance capability
        Our responsibility to the nation is to be successful in
    warfighting, and the single best expression of that task is found in
    our service doctrine. Our capstone warfighting concept for the future--
    Operational Maneuver From The Sea (OMFTS)--reflects our best
    understanding of the 21st century warfighting environment and how we
    can succeed in that environment. It is the foundation upon which we
    will build our doctrine of the future. Marines understand that OMFTS
    depends upon the Navy's complete support. To that end, during January,
    the Chief of Naval Operations and I co-hosted a Navy-Marine Corps
    Warfighting Conference at Quantico, Virginia. This exchange of ideas
    among the senior leaders of our two services will serve us well as we
    shape the naval warfighting capability of the 21st century.
        Navy-Marine Corps teamwork is the strength of the Naval Services.
    Allow me to cite some examples. First, as you know, a variety of
    manufacturing, training, and maintenance deficiencies converged on us
    last summer, resulting in a Corps-wide grounding and complete
    reassessment of the state of the AV-8B Harrier fleet. By April of this
    year, we will have returned the great majority of these aircraft to
    service. We could not have made such great progress in such a short
    period of time without the support of the Chief of Naval Operations and
    the Navy. Additionally, despite the constraint of available
    shipbuilding funds, the Navy has strongly supported the continued
    modernization of the amphibious force, at the cost of other projects.
    This clear commitment to the readiness of the overall naval force is an
    enduring characteristic of the Navy-Marine Corps team, and it bodes
    well for the future.
        In addition to our strong partnership with the Navy, the Marine
    Corps is a significant force provider and a major participant in joint
    operations. Our contribution to the nation's combat power is,
    proportionally, at an historical high. Marine units constitute about 20
    percent of the U.S. military's active ground maneuver battalions, 20
    percent of the active fighter/attack squadrons, 17 percent of the
    attack helicopters, and nearly one third of the ground combat service
    support in the active forces. When the United States commits
    significant forces to any military operation--combat or otherwise--
    Marines will be there * * * for about six percent of the defense
    budget.
               our direction: new capabilities for a new century
        We have a well-ordered plan to manage the transition of today's
    Marine Corps to a 21st century sea-based force. With the continued
    strong support of the Congress, Marine Air-Ground Task Forces, by the
    end of this decade, will offer a greater range of flexible and potent
    military capabilities to U.S. leadership. We have begun to build the
    doctrinal and educational foundation of the future Marine Corps. We are
    in need of your support to complete the task.
    Recruiting the Force
        While we have met or exceeded our recruiting goals for the past 55
    months, we do not take this success for granted. With 68 percent of
    Marines on their first enlistment, we are always the ``youngest'' of
    the four services. Although it is not widely known, we must annually
    recruit more young men and women into our enlisted ranks than does the
    Air Force. This year, our goal is to recruit 39,343 Marines for the
    Total Force, while next year this figure will rise to just over 41,000.
        Given those factors, we are concerned about the diminishing numbers
    of young Americans available for military service and their
    demonstrated low propensity to enlist. Competition from a strong
    economy exacerbates this trend, as does the higher percentage of youths
    who are able to attend college with the financial assistance of non-
    military related programs. The extent of the recruiting challenge can
    be quantified by recruiting costs. Today, the Marine Corps spends over
    $6,000 to complete a single enlistment contract--a ``bargain basement''
    amount--and that figure is rising continually.
        The unpredictable demands of modern conflict and the increasingly
    complicated technology we employ require that the Marine Corps seek out
    young men and women of character who are physically fit and
    intellectually prepared. The surest source of such high-caliber
    recruits is from among the ranks of the graduates of America's high
    schools and colleges. Accordingly, our recruiting program relies on our
    ability to reach the largest possible range of qualified young
    Americans. Unfortunately, our recruiters are not only experiencing a
    decline in access to school directory information, but in many cases,
    schools are denying them permission to conduct campus visits. Some
    school districts allow their individual administrators to establish and
    enforce restrictive policies. While these take many forms, it is the
    denial of directory information that is most damaging to our recruiting
    efforts. If this trend continues, it will not only have a negative
    impact on Marine Corps recruiting, but it will also threaten the
    viability of the All-Volunteer Force. Those who restrict the access of
    recruiters to their schools would probably be the first to object to a
    return of the draft. I believe that all services would benefit from
    assistance in getting our nation's high schools and community colleges
    to support military recruitment efforts. Therefore, I ask for your
    support in ensuring that school systems benefiting from federal funding
    reciprocate with access and directory information for our military
    recruiters.
    Retaining the Force
        The Marine Corps is very mindful of retention issues. As one might
    expect, retaining Marines who are trained in some technical skills
    presents a great challenge. Although officer retention appears to be
    experiencing a modest increase over last year, we remain watchful with
    regard to the retention of our fixed-wing aviators.
        Over the past several years, we have discharged about 8,000 first-
    term Marines per year prior to the end of their first enlistment. In
    fiscal year 1999, we achieved a 22 percent reduction in such early
    attrition, and it appears that this positive trend is carrying over
    this year. If we can sustain this effort, we can ease accession
    requirements for our recruiters. This is a task that has the attention
    of Marine leaders of all grades. While only a few can be
    ``recruiters,'' we are all ``retainers.''
        Recent quality of life enhancements have done a great deal to
    assist us in meeting our retention goals and we thank you for your
    support. The ``compensation triad'' of pay raises, Pay Table Reform,
    and REDUX elimination is having a positive impact in the Operating
    Forces. We must continue to invest in this area. Secretary Cohen's
    recent initiative to further improve Basic Allowance for Housing rates
    to cover 100 percent of the normal costs of housing by 2005 is exactly
    the kind of message we need in our retention efforts.
        On the list of needed improvements that influence retention,
    military health care ranks very high. Military families are faced with
    frequent moves as a condition of the profession. When faced with
    limited health care availability, poorly informed support staff
    personnel, and the out-of-pocket expense of today's TRICARE system,
    frustration is palpable. The retired military community feels this
    problem, as well, and their best efforts to settle near large military
    medical facilities are no guarantee of reliable access to health care.
    To them, adequate health care is part of a commitment made by the
    nation for their past service. We have a moral obligation to support
    our retired and disabled veterans. They, more than any other group in
    the 20th century, shaped our nation for the bright future we envision.
    In this time of unprecedented economic surplus, it seems to be both
    reasonable and fair to suggest that we should seize the moment to take
    care of them.
    Staffing the Force
        We are reviewing our practices in order to try to narrow the gap
    between our Operating Force structure and the manpower available to
    fill that structure. Through privatization or consolidation of
    functions, we can redistribute manpower to meet our most pressing
    needs. To date, we have identified almost 2,100 Marines who, beginning
    in fiscal 2001, will be returning to billets the Operating Forces. We
    are actively reviewing more billets for similar consideration. Still,
    we might not be able to narrow the structure-to-staffing gap
    sufficiently, and as we review our force structure, we might yet
    determine a need for more Marines.
        Your support in fiscal year 2000 for an increase in the end
    strength of the Corps by 370 Marines will make possible a significant
    improvement in the breadth and depth of our support for the Department
    of State, through the Marine Security Guard program. When this increase
    comes to fruition, we will be able to better protect our overseas
    diplomatic posts. While there is more work to be done in this area, the
    additional manpower allocation is an important step in the right
    direction.
        Among its many great reforms, the Goldwater-Nichols Act of 1986
    took aim at the size of service headquarters staffs. Legislation in
    1991 directed a four percent reduction per year from fiscal year 1991
    through fiscal year 1995. The Marine Corps complied with that
    legislation and follow-on legislation, and as a result we will have
    achieved a 27 percent reduction in our headquarters staff by 2001. We
    pride ourselves on being as ``lean'' as possible in this area, and we
    continually seek opportunities to transfer force structure from our
    Supporting Establishment to our Operating Forces. I do not, however,
    endorse further reductions in our service headquarters staff as
    mandated by Congress in 2000. The legislated reduction--15 percent
    between fiscal year 2000 and fiscal year 2002--will greatly limit the
    ability of our headquarters to fulfill its Title 10 and operational
    responsibilities. I respectfully request Congressional review of this
    mandate, and I ask the Congress to craft legislation that more fully
    considers the impact of reductions on each service and department.
    Amphibious and Naval Surface Fire Support for the Force
        The five Tarawa-class Amphibious Assault Ships (LHAs) are scheduled
    for retirement over the next 15 years and we need to closely examine
    options for their replacement. An LHD-8 transition ship and follow-on
    LHA replacement ships will better serve and meet Marine Corps
    requirements. The LDP-17 program represents a new generation of
    amphibious ships. In 2008, when the last LPD-17 class ship is scheduled
    to join the fleet, the amphibious force will consist of 36 ships or 12
    three-ship Amphibious Ready Groups (ARGs).
        We support the achievement of a 3.0 MEB amphibious lift capability.
    Current plans will bring the United States up to a fiscally constrained
    2.5 MEB-lift capability by fiscal year 2008. Dedicated amphibious
    forces have proven their worth in peace as a deterrent, and in war as a
    combat force multiplier. Such forces represent an invaluable and
    irreplaceable capacity to represent sovereign U.S. interests, whether
    operating independently or as part of a Naval Expeditionary Force. The
    forcible entry capability of modern amphibious forces simply cannot be
    replicated.
        The recent funding of the acquisition and conversion of the USNS
    Soderman to become part of the Maritime Prepositioning Force will offer
    Commanders in Chief a substantial increase in capability. The Soderman,
    along with its two predecessors in the Maritime Prepositioning Force
    Enhancement program, brings a unique set of naval construction and
    expeditionary airfield options to remote theaters of operation. The
    next generation of maritime prepositioning ships will further extend
    our ability to project and sustain U.S. military power in the world's
    littorals.
        A credible naval surface fire support (NSFS) program is a critical
    component of forcible entry from the sea. Under current plans, the Navy
    will begin construction in fiscal year 2005 of the DD 21-class ships,
    each to be equipped with two 155-millimeter naval guns. Additionally,
    the Navy has committed, in the interim, to installing the 5 inch/62
    caliber naval gun on 27 new DDG 51-class destroyers and retrofitting 22
    CG 47-class cruisers with the same system. Firing the Extended Range
    Gun Munition (ERGM), this gun will measurably improve our near-term
    NSFS capability. We have been at considerable risk in naval surface
    fire support since the retirement of the Iowa-class battleships. This
    situation will continue until the DD 21-class destroyers join the fleet
    in strength. This program must be accorded a high priority of effort.
    Sustaining the Force
        We must undertake the wisest possible course to conserve our real
    property and, when necessary, to acquire any additional property that
    is mission critical. The Blount Island facility in Jacksonville,
    Florida is truly a national asset that must be purchased to ensure its
    availability over the long term. Its peacetime mission of support to
    the Maritime Prepositioning Force has been of exceptional value to the
    Marine Corps, while its wartime capability to support massive logistics
    sustainment from the continental U.S. gives it strategic significance.
    In 2004, our lease of this facility will expire. In the near term, we
    request $35 million to secure the necessary easements in order to
    prevent further encroachment against the facility, but our long term
    national strategy should be to purchase this key facility outright.
    Independent studies--including one completed in 1997 for the J-4
    Directorate of the Joint Staff--have confirmed the importance of
    maintaining complementary Army and Marine Corps prepositioning
    maintenance sites and have highlighted the strategic value of Blount
    Island's throughput and follow-on sustainment capabilities.
    Command and Control for the Force
        We have entered an era of increasing reliance on high-end
    intelligence, surveillance, and reconnaissance systems and their
    associated communications suites. With new technologies introduced on a
    daily basis, our systems can quickly become obsolete. Our warfighting
    Commanders in Chief desire to field forces with the highest
    capabilities in this regard, but they will come at a significant cost.
        Two recent situations illustrate this trend. First, during combat
    operations in Kosovo in the spring of 1999, the Marine Corps planned to
    deploy two F/A-18 Hornet squadrons to Hungary to help fulfill the NATO
    operational plan. Unfortunately, these Hornet squadrons operated the
    early ``A'' model of the aircraft, and had not yet been upgraded with
    the technology provided by the Engineering Change Proposal 583, which
    would have enabled our F/A-18As to operate more effectively with the
    NATO air command and control system in theater. As a result, the Marine
    Corps was forced to substitute two F/A-18D squadrons in place of the
    two F/A-18A squadrons, and this in turn caused a great deal of extra
    wear on these already frequently-deployed aircraft and their personnel.
        The Kosovo operation further highlighted our dependence on
    satellites in modern warfare. The conflict there, involving an American
    force that was approximately 7 percent the size of our Desert Storm
    force, required an astounding 184 percent increase in military
    satellite communication bandwidth over that of Operation Desert Storm.
    The benefits of our command and control systems to our warfighters are
    tremendous, but we are experiencing difficulty in keeping up with
    growing requirements for fast, secure, and reliable bandwidth. The
    complexity of these systems and their networks adds to the challenges.
    Your continued support of highly capable ground, sea, and space-based
    command and control systems is critical to our success in modern
    warfare.
    Training the Force
        The need for the preservation of key training bases and ranges is a
    major issue involving the rights and responsibilities of our citizenry.
    Our citizens who live outside the gates of military training facilities
    generally gain immediate economic benefit from the military's presence.
    There is no guarantee of such benefit at every facility, however,
    because some--most notably, those at which live-fire training is
    conducted--were chosen specifically because of their relative isolation
    from large population centers. Economics can only be an ancillary part
    of the relationship. In the main, we rely upon the patriotism of our
    citizenry to support the training needs of our nation's military.
        Our bases are an integral part of community life across the country
    and overseas. Here at home, they enjoy broad community support. In a
    profession that can be rootless at times, bases often provide our
    strongest connection to the society we are sworn to defend. For
    servicemen and women without families of their own, their involvement
    in local school, church, and charitable activities are important
    qualities of their lives.
        As befits the actions of good neighbors, we will continue to do
    everything within our ability to address the legitimate concerns of
    local communities regarding noise, environmental, and other issues. We
    must, however, retain our ability to conduct core training in an
    efficient and effective manner, and we must conserve our precious
    maneuver areas against encroachment. Our record of stewardship
    demonstrates that Marines are responsible resource custodians, and
    strong supporters of the environment. We must work with civilian
    leaders to achieve a reasonable balance between our training
    requirements and our conservation efforts. At stake in this issue are
    mission accomplishment and the very survival of our servicemen and
    women in combat, both of which our nation demands.
    Modernizing the Force
        The Marine Corps' continued success through this century will rest
    upon our modernization effort. Even if every other concern regarding
    the preparedness of the Operating Forces is rectified, within a few
    years, we will be at risk of sending our men and women into combat with
    outmoded equipment. For this reason, we place great importance on
    modernization, and we have developed a plan to achieve our goals. It
    calls for upgrades and replacements for a number of aging legacy
    systems.
        The Advanced Assault Amphibious Vehicle (AAAV) is our highest-
    priority ground modernization program. It will provide extraordinary
    mobility, high water and land speed, increased firepower, and improved
    protection to assaulting Marines, thereby enhancing our already robust
    forcible entry capability, and extending the flexibility of our forces.
        A recent internal review of our ground-based fire support systems
    suggests that our post-Cold War reductions in artillery left us with
    serious deficiencies in that area. Our ultimate objective is to develop
    an appropriate mix of cannon and rocket artillery systems, in order to
    improve our ability to provide timely, accurate, and effective fire
    support for Marines. Our envisioned family of weapons is a triad of
    systems: the lightweight 155-millimeter howitzer (LW 155), a very
    lightweight cannon, and a mobile rocket system. Together, these weapons
    will provide our forces close and continuous fire support in any
    environment, across the spectrum of conflict.
        The Medium Tactical Vehicle Replacement (MTVR) will form the
    backbone of our ground transportation, providing greater capacity,
    mobility, and reliability to our forces. Paired with the second-
    generation High Mobility, Multipurpose Wheeled Vehicle (HMMWV), the
    MTVR will fulfill the great majority of transportation requirements for
    many years.
        Aircraft modernization is critical to our overall effort. The MV-22
    Osprey program has been a great success by any measure, with 30
    aircraft in existence or under construction and 16 requested in the
    fiscal year 2001 budget. After a model development and testing program,
    the Osprey is being delivered at the budgeted cost, within
    specifications, and with a high degree of customer confidence.
    Production is currently slated to increase to 28 aircraft per year in
    2003, but we believe that a goal of 36 per year is more efficient in
    the long run because of the increasing cost of maintaining the CH-46E
    and CH-53D aircraft during the long transition period.
        Our aircraft now in development--the Joint Strike Fighter, the AH-
    1Z, UH-1Y--will join the Osprey to form a Marine aviation combat
    element of impressive power, capability, and flexibility. The Joint
    Strike Fighter represents the future of Marine fixed-wing aviation. Its
    design is so promising that we decided to await the advanced technology
    it offers. The plan to build 3,500 of these aircraft will make it the
    workhorse of the joint fighter fleet, and it will serve well into the
    future at an affordable unit cost. As the first truly joint aircraft,
    it deserves your enthusiastic support.
        The AH-1Z and UH-1Y programs will provide significantly improved
    performance and reliability for our attack and utility helicopter
    fleets. By rebuilding existing aircraft, we will deliver to the
    Operating Forces helicopters that are virtually new, but at a very low
    cost.
        Given our success with the MV-22, the development of a four engine,
    or ``quad'' tilt-rotor (QTR) aircraft is of particular interest to the
    Marine Corps as a component of a future aviation fleet. The QTR might
    also have great potential in filling the Joint Common Lift (JCL)
    requirement in the future.
        The future offers remarkable promise and progress to those who can
    turn vision into reality. Our modernization plan is sound, and the
    initial steps are already underway. However, due to our projected
    funding levels, I remain concerned about the pace of our modernization
    efforts. The additional resources that are required to finish the task
    will undoubtedly be viewed as a wise investment by our children and
    grandchildren, many years from now.
                          our future: past is prologue
        The generation that fought and won the Second World War--as Tom
    Brokaw argues, our country's ``Greatest Generation''--committed the
    resources necessary to secure our liberty, and as a result, this
    generation has left us a tremendous inheritance. We begin the new
    century with the benefit of an economy that has brought relative wealth
    to an unprecedented portion of our society and an understanding of the
    best manner in which to extend that wealth to many more persons both at
    home and abroad. More important, we have gained the benefit of the
    hard-earned wisdom of that generation about the role of the United
    States in the world. Some of those great Americans earned that wisdom
    through experience and later applied it during long and distinguished
    careers in the United States Congress. Our continued efforts to build
    on those twin benefits are our best insurance that the 21st century
    will be the second ``American Century.''
        I am deeply encouraged by our nation's prospects for the future.
    Our citizens appreciate the benefits of our pre-eminent position in the
    world and are willing and able to sustain that position for future
    generations. Our young people are bright, talented, and will, if given
    the opportunity, measure up to the challenges of tomorrow. Your United
    States Marine Corps stands ready to respond to the nation's needs
    today, and we will continue to work closely with the Congress and the
    American people to preserve our readiness and relevance in the future,
    as we ``make Marines, win battles, and return responsible citizens to
    the nation.''

        General Jones. And, sir, thank you very much.
        Senator Stevens. We thank you very much. We are sorry about
    the interruptions. We are still waiting for the budget process,
    of course, right now. And I expect we will be waiting for a
    while. But we want to go ahead with these propositions and
    explore some of the matters that you gentlemen have spoken
    about.
        Do you have an opening statement at all, Senator Inouye?
        Senator Inouye. No, thank you, Mr. Chairman.
        Senator Stevens. I do not have an opening statement. Do you
    have an opening statement, Senator?
        Senator Hutchison. I will also wait, too. I have a few
    questions. Thank you.
        Senator Stevens. Thank you.
        Let me start off then. We will have a 5-minute round and
    just keep going. There will be others coming that will want to
    ask questions.
        Mr. Secretary, last year you testified, and I want to
    quote. You said: ``I think maybe ballistic missile defense does
    pose an opportunity in terms of national missile defense, but
    it is an opportunity that is technologically further out and
    more demanding.''
        Now, we do not see much that has changed since that time,
    except we do have the statements that were made by Admiral
    Johnson and we understand that. But let me ask you, has the
    Navy, to your satisfaction now, completed the flight test of
    the kill vehicle or an intercept test? Would you make the same
    statement today that you made last year?
        Mr. Danzig. Well, I think, Mr. Chairman, we have come along
    in our testing in a satisfactory and good way. The promise from
    Navy ballistic missile defense is maturing. We still have more
    testing and development to do. That will include significant
    tests over the course of this next summer and in the time
    ahead.
        Realistically, I think the point remains, though, as the
    CNO has also made it, that Navy ballistic missile defense
    offers good prospects and offers the potential of being a
    complement to land-based systems. It can be an increment to
    this Nation's national missile defense systems. We ought to be
    preserving that option and that opportunity and not trampling
    upon it in the near term.
        Senator Stevens. Thank you. Senator Inouye and I have
    visited the sites and have tried to keep up with that program.
        Admiral Johnson, in view of your statements, could you tell
    us why the Navy decided not to include missile defense
    capability in the DD-21 design?
        Admiral Johnson. Well, sir, as we stand right now, I would
    suggest that it is not precluded from that. But our clear focus
    of effort priority is to embed it in the Aegis fleet that we
    have. And indeed, that is what we are doing with the theater
    shots that the Secretary alluded to a moment ago. So between
    the area system and the DDG-51's and the theater system in the
    Aegis cruisers, we believe there may be an evolution then to
    DD-21, but we are not there yet.
        We have called it the first variant. The DD-21 is part of a
    family of surface combatants, wherein the first member of that
    family that we will see is the land attack destroyer, which is
    DD-21, to be followed down range by a cruiser variant of that
    same family. So, I say it does not preclude it, it is just not
    in the short term.
        Senator Stevens. Do you have the funds now to proceed with
    the Aegis class? Is a lack of funding holding up anything the
    Navy wants to do in national missile defense?
        Admiral Johnson. Right now, sir, we have the money we need
    to do the theater tests which we spoke of a moment ago. That is
    clearly priority one. In my unfunded requirements list, you
    will see some requests that I would apply to either risk
    mitigation on the theater side or additional missiles on the
    area side.
        So the short answer is it could use enhancement. But the
    clear priority which we have in the theater track for this year
    and next year is funded. And that is job one for us.
        Senator Stevens. Will you quantify for the record, please,
    what funds it would take for the second portion there?
        Admiral Johnson. Yes, sir.
        [The information follows:]

        In the unfunded requirements list the Navy is requesting additional
    resources for the procurement of missiles for Navy Area, and we are
    supportive of the Director BMDO Budget Enhancement List (BEL) which
    identifies items for both Navy Area and Navy Theater Wide.
    CNO Unfunded Requirements List
                Navy Area, Defense Wide Procurement ($42.6 million request)
        Procures an additional 17 SM-2 Block IVA missiles in fiscal year
    2001 for delivery in fiscal year 2003 to equip initial ship.
    Director BMDO Budget Enhancement List (BEL) includes:
                Navy Area, Defense Wide Procurement ($28 million request)
        Procures an additional 9 SM-2 Block IVA missiles.
                Navy Area, RDT&E ($75 million request)
        Additional Risk Reduction activities for entry into Engineering
    Manufacturing & Development (EMD) stage.
                Navy Theater Wide, RDT&E ($160 million request)
        Acceleration of NTW Block I deployment to increments of Block 1A
    Contingency Capability to fiscal year 2005, Single Mission Capability
    which meets Block 1 Threat Set (2 ships and 50 missiles) to fiscal year
    2007 and full Multi-Mission Capability (4 ships and 80 missiles) in
    fiscal year 2008.
      --Development of tactical AEGIS computer program modifications.
      --Acceleration of AN/SPY-1 Radar signal processor upgrades.
      --Acceleration of SM-3 Kinetic Warhead (KW) Infrared (IR)
            discrimination algorithm development.
        Procurement of additional SM-3 test missiles for Threat
    Representative Testing (TRT).
        Acceleration of SM-3 efficient production modifications.
        Acceleration of Advanced Radar Development.
      --Develop Prototype NTW Block II Radar Array.
        Acceleration of NTW End-to-End Test Bed Development.
        Initial funding for Japan Co-Development Phase II (Potential
    Demonstration and Validation phase).

                             Operational readiness

        Senator Stevens. General Jones, we have a situation now in
    readiness that Marine Corps funding is down, I understand, from
    the 2000 levels, and the Navy-Marine Corps non-deployed
    readiness declines. The real question is whether we have the
    training to deploy now or we are having training for war. Do
    you have the funds now to handle your assignments as far as
    deploying the battalion landing teams and marine expedition
    units? Really what I am saying is, how quickly could you deploy
    now the expeditionary brigade, the full bore of what your
    readiness calls for?
        General Jones. Mr. Chairman, the good news is that as the
    service chief of a rotational force, we are organized to deploy
    full-up forces on a regular basis. And across the three levels
    of our warfighting capabilities, the marine expeditionary unit
    (MEU), the brigade and the force, we do have the readiness
    capability and the training to sustain that deployment. The MEU
    (Special Operations Capable (SOC)) go out on a regular basis
    for 6-month deployments aboard Navy ships. They were used very
    successfully in the early days of the Kosovo operation. They
    performed magnificently. They backloaded and floated around to
    Turkey and assisted in a major humanitarian operation, all in
    the space of 2\1/2\ months.
        So our rotations are very good. The problem is that as we
    have drawn down the force over the years, the cyclic rate of
    utilization of equipment and men is of course a cause for
    concern in terms of replenishment, replenishment of the spirit
    and replenishment of the tools. And of those two, the cyclic
    rate of utilization of equipment is the one that causes us most
    concern. But we are meeting those tests.
        Senator Stevens. You said you have concern about the
    deployability of new units.
        General Jones. I think that the readiness levels of the
    units and the money that has been provided allows us to sustain
    that operation. We could always use more, but I cannot report
    to you that we are deploying units that are marginally trained
    or we do not have the money to train them. We are doing okay at
    the force levels that we have.
        Senator Stevens. Secretary Danzig, I just have one more
    question here. The LPD-17, the lead ship in the class, is 10
    months behind, I am informed, $185 million, or 30 percent, over
    budget. Is the report that I have been given true? And if so,
    what are the impacts on the second and third ships of this
    class?
        Mr. Danzig. The report you have been given is largely
    accurate. A combination of the innovations in design tools and
    in the application of those tools simultaneously to actually
    designing the LPD-17 has pushed the ship over the planned
    budget. In addition, we have requested changes in the design of
    the LPD-17. One of them I highly value is to reduce the
    manpower associated with that ship, from some 350 sailors, and
    therefore reduce the total ownership costs associated with that
    ship. But it has produced the effects you described in the
    first ship.
        The second and third ships will show some effects, but much
    more moderate. The second and third ships produced should be
    delayed on the order of 4 and 3 months. And the perturbations
    in the system should be diminished. The first ship design
    produced at Bath should not experience the delays as a result
    of this.
        I think the increase in cost and the delays are the up-
    front part of the program. Taking the program as a whole, these
    12 ships in this class to be produced over the course of this
    next decade, we are looking at a $9 billion to $10 billion
    program, with something on the order of a $400 million or 4
    percent cost increase.
        Senator Stevens. Senator Inouye.
        Senator Inouye. Thank you.
        Admiral Johnson, next year you will have 55 attack
    submarines. A recent staff study indicated that you should have
    maybe up to about 68 or 70. Most of your colleagues suggest
    that the higher number is a proper one. What does this budget
    do to your attack submarine fleet?
        Admiral Johnson. Thank you, Senator Inouye.
        In this budget, we are buying another Virginia-class,
    number three in the class. And it streams out at one submarine
    a year through the year 2005. We also are refueling in this
    budget an attack submarine SSN-688, with a stream in the coming
    years to refuel six others.
        We also are preserving the option in this budget, by some
    $31 million investment, to not decommission four of the seven
    remaining SSN-688's that could be refueled. We are maintaining
    the option to refuel them in this budget.
        We also have the option in this budget to deal with the
    SSBN to SSGN conversion, or some combination thereof. So my
    point is we take seriously the joint continuous strike (JCS)
    study. We accept the range of 55 to 68, as you discussed. And
    right now, the short term from a requirements standpoint, we
    want to keep our options open, not to go below that 55 number,
    and we believe that what we have invested in this budget in new
    program and options for refuelings will keep us there, sir.
        Senator Inouye. If the cost of refueling was comparable to
    converting Tridents to cruise missile submarines, which option
    would you prefer?
        Admiral Johnson. If it were comparable?
        Senator Inouye. Yes.
        Admiral Johnson. If the subject is SSN's, I would prefer to
    refuel the 688's. But it is not quite that simple, and there
    are other trades. That is what we are looking at in the context
    of the deliberations for fiscal year 2002.
        We have three things at play here, as I said. One is the
    688 refuels. One is the SSGN conversions. And one is the new
    buys of Virginia-class submarines. What we are looking at now,
    all of us, is the smartest way ahead, given those three phases,
    if you will, to the submarine force structure issue. But my own
    personal sense is we do not want to let go of an asset right
    now to take us down below 55. Because, if we do, we will have a
    dickens of a time getting back up there.
        And as you know, in the long run, out past where we are
    looking now in terms of budget years and program objective
    memorandums (POM's) and future years defense programs (FYDP's),
    we must increase the build rate on the Virginia-class
    submarines, as well, to stand a reasonable force structure out
    in the 2015 to 2020 timeframe.
        Senator Inouye. If you kept up with the present plan with
    the options you have, in 20 years, how large will your attack
    submarine fleet be?
        Admiral Johnson. I am going to waffle the answer, and I do
    not mean to do that purposely, but I hope to make a point here.
    It depends on how many Virginia-class submarines we come to in
    a sustained build rate after the year 2005. That really is
    going to determine that answer, sir. But in no case, with the
    options we have on the table now, would we take ourselves down
    to the 50, which was the number in the quadrennial defense
    review (QDR) last. It will keep us at that baseline of 55
    minimum.
        Senator Inouye. One of the major concerns, General, among
    the folks would be chemical/biological terrorist attacks.
    Recently, a couple of explosions were felt in Georgetown, and
    they all got excited. They thought it might have been a
    terrorist attack. From where you stand, because of the
    experience the Marines have had, do you believe that our
    forces--active, Reserve, National Guard--are prepared to
    counter any chemical or biological attacks on the United
    States?

                Chemical and biological incident response force

        General Jones. We have an emerging capability, but we are
    not certainly where we ought to be. Secretary Cohen has been
    very deeply involved in talking with the Chief of Staff of the
    Army and making sure that the National Guard and Reserve are
    attempting to reorient themselves in terms of their thinking on
    those issues.
        From the standpoint of the Marine Corps, my predecessor,
    General Krulak, had the vision to create a very special unit,
    which is a national asset called the Chemical and Biological
    Incident Response Force. He based it at Camp Lejeune, North
    Carolina. We have recently gone through the necessary approvals
    to transfer that unit closer to the National Capital region. It
    will be effective for worldwide deployment and used within the
    continental United States in August of this year.
        It is a very capable unit. It is a model that we must
    emulate and replicate elsewhere in the Nation. But I think the
    interagency service, the service chiefs, are coming to grips
    with this problem. But I do not think we are where we want to
    be.
        Senator Inouye. What is the mission of this special force
    that you have?
        General Jones. It can rapidly deploy. It was first deployed
    in support of the Olympics in Atlanta. And it was located right
    near the site where we had an explosion, or potential
    explosion. And its capability is to deploy and to diagnose the
    agent that is being used, if it is chemical or biological. And
    it provides, at least in the first instance, emergency
    assistance to the afflicted area and provides treatment. It is
    a roughly 350-man organization. It is air deployable. And I
    think it is a good model for what we need in the future, but we
    need more of them.
        Senator Inouye. We have had a lot of discussions about the
    Joint Strike Fighter. How important is it to you and what is
    the status now?

                              Joint Strike Fighter

        General Jones. The Joint Strike Fighter, sir, is very
    important to the Marine Corps. I would say, more importantly,
    it is important to the Navy, and also the Air Force as well. It
    is a revolutionary capability in terms of the technology that
    it will bring to the capability of the United States. For the
    Marine Corps, because we have chosen to skip a generation, that
    means we are going to stay with the F-18's for much longer,
    betting that the Joint Strike Fighter will in fact come on line
    at the right time and in the right amounts and with the
    capability that we want to have then.
        I am very excited about the program. I am very closely
    observing the competitors who are developing the capability.
    And along with the CNO and the Secretary of the Navy, we think
    it is going to be a good program, and we hope that the costs
    will not escalate as they typically do in other programs. And
    right now we are quietly optimistic that it will be delivered
    on time and at the advertised price.
        Senator Inouye. Mr. Chairman, I notice the red light is on.
    I am sorry.
        Senator Stevens. That is all right. We were enjoying your
    conversation.
        Senator Hutchison.
        Senator Hutchison. I liked your conversation, too.
        Did you finish your line of questioning, Senator Inouye? I
    am happy for you to finish.
        Senator Inouye. I will wait. I have a few more questions.

                                      V-22

        Senator Hutchison. While we are with General Jones, I am
    just going to ask you about the V-22 and if you believe that
    the funding is sufficient, that the procurement rate is
    sufficient for you to have the V-22's that you need at the time
    that you are going to need them?
        General Jones. Thank you, Senator.
        We are excited about the acquisition of the V-22. As you
    know, in fiscal year 2001, we have funding for 16. We really
    think that in the unfunded priority list, adding 2 more makes a
    lot of sense to get to our out-year acquisition strategy of 36
    a year as opposed to 30, which we think is more cost effective
    and gives us the capability sooner rather than later.
        We are scheduled right now to deploy the first operational
    squadron with our MUSOC's in fiscal year 2003. That will be an
    exciting moment for all of us who have been involved in the V-
    22 program since its inception.
        Senator Hutchison. So your preferred rate is 36?
        General Jones. At the end state, that would be what we
    would recommend. And in order to get there, we have 16 in this
    year's budget, and if we could get to 18, it would be helpful.
        Senator Hutchison. This year. Thank you.
        Secretary Danzig, last year was the year that the Navy
    announced that it was going to lower its recruitment standard
    to a general equivalency diploma (GED) from a high school
    diploma. I was concerned about it in our hearing last year, and
    I wanted to ask you if you have in fact enough experience with
    that? Approximately how many people have entered the Navy with
    that lower standard? And do you have enough experience to see
    if it is successful and if it is the standard today?
        Mr. Danzig. Senator, I appreciate your interest in this
    issue. It is a significant focus for us as well.
        First of all, 9 out of 10 of the people who come into the
    Navy now have high school degrees, not GED degrees. We require
    that at least 90 percent of the people coming into the Navy
    have those high school degrees. The change that you are
    describing was our decision last year that instead of taking 5
    percent that had only GED degrees, we would take 10 percent in
    that category, 1 out of every 10 of the recruits who come in.
        We made that decision because we concluded that we could
    screen people who did not have high school degrees but had
    other qualifications and make sure that these were
    exceptionally able people. We did not view it, and I still do
    not view it, as in any way a lowering of standards. We demanded
    that people in that category of not having had the high school
    diploma have higher than average scores on our tests, have
    employment histories, have character references. And on
    balance, my judgment was, taking some more of these
    exceptionally qualified people, as measured by test scores and
    character references and job experience and who were older than
    the norm, was a good thing to do rather than to try and get, at
    the margin, the last increment of people who had high school
    diplomas.
        In terms of our experience, I would say there is one
    obvious positive attribute and one negative one. The positive
    attribute is that we have recruited these people very
    successfully. We have met our recruiting goals. And in fact,
    they have, in boot camp, had lower attrition than was
    historically the norm for non-high school graduates. And I
    think it is because of the screening that we have described.
        On the other hand, they have had higher attrition than high
    school diploma graduates in boot camp. And I count that both
    ways. On the one hand, it suggests to me we are screening out
    people we should be screening out in boot camp. And on the
    other hand, I would prefer lower attrition.
        We are going to develop some formal data on this, and I
    would be happy to share it with you. But those are my
    impressions of this at the moment. I think it is well worth
    continuing. I think it is a step in the right direction. But
    the results have not been dramatic one way or the other.
        Senator Hutchison. So the standard is 10 percent?
        Mr. Danzig. Correct.
        Senator Hutchison. And are you over 5 percent in fact in
    the last two recruiting years? Have you gone beyond the 5
    percent?
        Mr. Danzig. In fiscal year 1999, we recruited, as we
    planned to, 90 percent high school graduates. Ten percent of
    what we are calling these proven performers, people who had the
    above average scores, did not have the high school diploma. We
    are continuing on that track in this year. That amounts to
    about a total of 6,000 out of the 57,000 that we recruit for
    all of our enlisted people this year.
        Senator Hutchison. I would be interested in continuing
    progress reports on this.
        Mr. Danzig. Good.
        Senator Hutchison. Because I am concerned about it still.
    But I certainly am open to what the results are.
        Mr. Danzig. Thank you, Senator. Senator, I would suggest
    also you might like to meet some of these people. And perhaps
    we could arrange that.
        Senator Hutchison. Thank you.
        Mr. Danzig. Thank you.
        Senator Hutchison. Admiral, your budget has some very good
    points in the increase areas, especially I am pleased that you
    are obviously increasing in the military personnel to
    accommodate the higher salaries that have been passed. And that
    is certainly what we intended. Family housing has increased.
    And having visited the bases, I know that that is the absolute
    probably first priority to increase. But in return for that, I
    assume research and development (R&D) and military construction
    (MILCON) are decreased in your budget. And I would like to know
    what are the short-term effects of that decrease and the long-
    term effects and what are we losing?
        Admiral Johnson. The R&D piece of it is generally--I guess
    the way I would characterize it is we are making huge R&D
    investments tied to the programs that are taking us forward
    with recapitalization. I think the Secretary mentioned earlier
    the DD-21 program. But, nonetheless, we have added $1.7 billion
    to that program alone in R&D because we are truly trying to be
    revolutionary. So there are lots of different pockets of R&D
    investment.
        Senator Hutchison. Are you saying that is in your
    procurement area?
        Admiral Johnson. That is correct, yes, ma'am.
        So we are making huge R&D investments for the revolutionary
    systems.
        Senator Hutchison. In other accounts?
        Admiral Johnson. Indeed. CVNX is one, Joint Strike Fighter
    is another one. The DD-21, the New Attack Submarine, virtually
    every program, V-22, all of them have significant R&D streams
    attached to them, mostly on the front end, to really leap us
    forward. So we feel, overall, very good about that. It is going
    to give us a lot.
        The MILCON is one that we continue to work with. We
    prioritize it. We are not there yet. I accept that. We ask for
    help every year. We will continue to do so.
        Senator Hutchison. Thank you.
        I see my time is up, Mr. Chairman.
        Senator Stevens. Mr. Secretary, I heard the comments of
    Senator Hutchison on the GED program. We had a hearing on the
    Challenge Program for the National Guard. When they are
    finished with that program, they get a GED.
        Senator Hutchison, I would urge you to take a look at that,
    because we found that the Citadel was willing to take graduates
    from the Challenge Program, but the military was not. And I
    think I am the one that raised the question of why is this the
    case. If they have come through programs where they have been
    rehabilitated, these disadvantaged kids, many of them kids from
    broken homes that have changed high schools and just do not
    adjust and do get into one or more of these federally sponsored
    programs, some of them sponsored by other entities that are out
    there trying to help these kids, you wonder why the military
    should be unwilling to take them if we are trying to urge the
    colleges to take them.
        Senator, I would urge you to talk to some of these people.
    And I would be glad to get you the hearing record of the
    hearing we had here about those young people and how marvelous
    they can turn out if they have been given an opportunity. But
    to put a stigma on the GED, after they have come through a
    rehabilitation program, I think is very unwise. And I would
    hope that you would continue to take as many as you can take,
    provided that they have come through and demonstrated that they
    have cleaned themselves up.
        I do not want to get too political about it, but I do not
    know of any reason why, if someone smokes a marijuana cigarette
    once cannot go in the military, we can elect a President that
    has. And it is time that we stopped this business of
    discriminating against these kids when the political system
    does not discriminate against anybody.
        Mr. Danzig. And if I could just add, Senator, I think the
    high school diploma is a very relevant credential. It is our
    best single predictor of ``stick-to-itiveness'' in the
    military. But it should not be the be-all and end-all. When we
    have extraordinary applicants for the military who have the
    kinds of characteristics in terms of test scores and proven
    character, ``stick-to-itiveness'' in the National Guard program
    or whatever, we ought to take account of that. We ought not
    lock ourselves so much into a category that we rigidly say,
    well, we are turning you away because we have taken x percent
    and cannot take x plus y percent.
        Senator Hutchison. Mr. Chairman, if I could just respond to
    what both of you have said. I have visited with some of the
    products of the Challenge Programs, and I absolutely agree that
    these kids are incredible. But I do think that we need to
    continue to monitor exactly what the standards are. I think
    your added assessment factors are very sound. I just think we
    should monitor it and make sure we are doing the right thing.
        Mr. Danzig. I completely agree.
        Senator Stevens. I would agree. But my mind goes back to
    the time I served with a Cabinet officer that quit high school
    after the sophomore year and became one of the largest
    publishers in the United States and a distinguished member of
    the Department of Defense Secretariat and the Secretary of the
    Interior for quite some many years. I do not put all of the
    stigma to not having a high school diploma that other people
    do. I have known a lot of people in my life who had other
    things they had to do, because of family and otherwise, who
    have turned out to be just excellent, excellent administrators
    and officers.
        Mr. Danzig. And senior chiefs and master chiefs in the
    Navy.
        Senator Stevens. That is right. And a few pilots I have
    known.
        Following on Senator Inouye's questions, Secretary Danzig,
    we have been wondering why we cannot go to a multi-year
    procurement for the Virginia-class submarines so that we could
    achieve a stable production and lower unit cost. Why has that
    not been recommended by the Secretariat?
        Mr. Danzig. I think that is a plausibly right position to
    be in. I would like to get a little more experience with the
    teaming arrangement that we have constructed in the Virginia-
    class submarine, between General Dynamics and Newport News and,
    if we can, discuss that topic further with you and come back to
    you with further analysis of it.
        Senator Stevens. Well, I think it should be tied to the
    industrial base concept. We have worked that out here. I think
    we are prepared to continue with a handoff between those two
    yards, or at least between two of the three yards. But, as a
    practical matter, it does seem to me that we are missing the
    multi-year savings that are there if we do not go into this
    project properly. We would prefer ending up with more rather
    than fewer submarines at the end of the program for the same
    cost. I do not know why we cannot proceed to adjust as quickly
    as possible the multi-year procurement.
        Mr. Danzig. I think the thrust of that is right, Mr.
    Chairman. I agree. The kinds of savings we have seen from the
    F-18 at the more than 7-percent level, and from the DDG-51's,
    where we have been buying them multi-year--and we have
    requested multi-year authorization further from you in this
    budget--suggests that things like this may work for the
    Virginia-class submarines. Recognize that the numbers are
    smaller--we are buying one a year--and that the teaming between
    the two companies creates additional complexities.
        But if we could get savings at the significant percentage
    levels that we see associated with other programs, we certainly
    ought to be looking very closely at that. And I will take this
    as encouragement.
        Senator Stevens. I do not see how we can avoid getting the
    savings. When you get multi-year procurement on the
    subcontracting level, those people just cannot afford to come
    in and out of this business on a one-ship basis.
        Mr. Danzig. Right.
        Senator Stevens. And it is the stability factor of
    procurement that gives you the savings, in my judgment. It has
    worked in the C-17. It has worked in many other programs. And
    this committee has defended multi-year contracting. I assume it
    will continue to do so, and I would hope that we could work
    with you on it.
        Can I shift to recruiting, though?
        Mr. Danzig. Certainly.
        Senator Stevens. Last year we were very disturbed when we
    heard the reports about recruiting. Tell us where we are now in
    recruiting and retention, reenlistment in the Navy and in the
    Marines.
        Mr. Danzig. Well, both the CNO and the Commandant I think
    will want to comment. Let me just say briefly, in terms of
    overview, that I view Marine Corps recruiting as the very model
    of what we want. We are now into our fifth year of month-by-
    month achievement of goals. As the CNO commented in his opening
    statement, the health of the delayed entry pool is very
    important. And the Marine Corps is achieving, I think,
    substantial increments in the delayed entry pool (DEP) to bring
    it to the kinds of levels that we want. I feel quite good about
    that.
        At the same time, Navy recruiting has grown healthier. We
    have increased the number of recruiters in the field, from
    3,500 to 5,000. We have increased the advertising budget, and
    the number of recruiting stations. Above all, we have gotten
    smarter about how we recruit. We have done things like look to
    former service members who are interested in returning to the
    Navy. This year, I think we will recruit as many as 3,000 such
    former service members--a very substantial change in the way we
    recruit.
        We are focusing more on community colleges, recognizing
    that some 70 percent of high school graduates we are interested
    in are going on to community colleges. That requires a change
    in the way we recruit. It is challenging for us to meet the
    Navy goal of 57,000 this year. It means we are recruiting more
    than 1,000 high school graduates every week. That is an
    extraordinary thing to go out and do. But, so far this year, we
    have been making that goal, and I think we have a good prospect
    of getting there. It is not a certainty, but I think Navy
    recruiting is steadily improving.
        Perhaps Admiral Johnson or, if it is all right with you,
    Mr. Chairman, the Commandant might like to add to that.
        Senator Stevens. Yes, sir, Admiral?
        Admiral Johnson. Just to add a couple of things. The
    Secretary's remarks characterize the active force exactly as it
    is. I would just further comment that we still--in terms of the
    challenge that he talked about--on the Reserve side we are
    struggling right now and are below the number. Back to this
    delayed entry pool, filling up that surge tank allows us the
    flexibility, as you level yourself through the year, to ensure
    you have got the right skill mixes and loads in all of your
    classrooms. Without that pool filled, it jeopardizes all of
    what I just described.
        Historically, you want to start the fiscal year with your
    DEP, your delayed entry pool, at about the 43 to 44 percentile.
    Right now we are in the high 20 percent. So that is a serious
    challenge that we have to continue to deal with.
        The Secretary mentioned the things about just to hold our
    nose at the water line on the active side, 1,500 more
    recruiters on the street, double the advertising budget, open
    179 more recruiting stations, et cetera, et cetera. So that
    just gives you some idea of the magnitude of the environment
    challenge we are dealing with out there.
        I can speak to retention as well, sir. Just to say briefly
    that, on the enlisted side, the critical skills, tied to the
    2000 budget, I would tell you there is good news and we are
    awaiting some good news. On the enlisted side, we really are
    seeing upturns in first- and second-term retention at 2 to 4
    percent. That is not much, but it is sure better than the way
    we were trending before.
        In addition to that, we are seeing in the selective
    reenlistment bonus program execution this year, we are 26
    percent ahead of what we had forecast. That translates to
    highly skilled technicians that we are able to ship over and
    keep on the team. That is really good news. So that is a
    positive trend, tied directly, we believe, to the goodness of
    the 2000 budget and some of the non-money things, but mostly
    the pay and special pays and bonuses.
        On the officer side, there are some parts that we are
    getting good feedback and others where we are still challenged.
    The best report I can give you I think is in the surface
    warfare officer side. We are filling department head seats
    right now. Classrooms, over the last 3 years, we have averaged
    half full classrooms. We had to increase the tour length for
    department heads, from a nominal 36 up to 55 months. We have
    been able to roll that back now. That is certifiable good news.
        On the aviation side, however, I would tell you that we are
    still, I think, extremely challenged. The bonus is having some
    impact, but it is certainly not what we were hoping for yet. It
    is early enough in the year, where we have got some time. But
    one data point that would be of interest to you, sir, is that
    whereas last year we had 120 aviator resignations in the fiscal
    year--I think that is the number--this year we are not halfway
    through the fiscal year and we are already three ahead of that
    and climbing. So we still have some challenges.
        Senator Stevens. General Jones, we will get back to you
    when my turn comes again.
        Senator Inouye.
        Senator Inouye. Thank you.
        Mr. Secretary, as a result of base closures and budget cuts
    on military health facilities, many of the over-65 retirees
    have been forced into Medicare. And Medicare does not provide
    the benefits that these men and women have become accustomed to
    while they were on active duty. So the letters I receive, they
    use the words, ``I have been betrayed.''
        Many of them are suggesting they would like to be enrolled
    in the Federal Employees Health Benefits Program (FEHBP). Do
    you have any views on that?
        Mr. Danzig. I am very sympathetic to those requests. I
    think that would represent a substantial improvement in health
    care benefits that veterans would receive. And that would help
    us in a number of ways, both in terms of the moral commitments
    that exist as well as in terms of the atmosphere that exists
    even with respect to the kinds of issues we were just talking
    about with Senator Stevens, about recruitment and the like. If
    veterans have good feelings about their military service, they
    are our best recruiters. If they do not, they are our strongest
    disincentivizers for people to enlist.
        The obvious questions are: What is the cost? And how is
    that carried? And who is paying it?
        This also applies to some other important things we could
    do, as, for example, prescription drugs for over-65 military
    retirees. My sense is that we are all trying to work our way
    through that situation. The bill that Senator Warner has
    submitted, with many cosponsors, is indicative of efforts in
    that regard.
        We are going to need to see, from the Office of the
    Secretary of Defense and from some others, some indication of
    the costs and the accounting, who would pay those costs
    associated with these good steps. But as a matter of principle,
    it strikes me as a desirable thing to do if we can figure out a
    way to fund it.
        Senator Inouye. We have been told that the pharmaceutical
    coverage would be about $500 million per year.
        Mr. Danzig. Yes.
        Senator Inouye. What would be the full Federal Employees
    Health Benefits Program costs?
        Mr. Danzig. I think we need to look to the Office of the
    Secretary of Defense to cost that for us, because obviously it
    is not simply a Navy matter. But I am sure that they will
    provide data like that to you directly, Senator. I do not have
    that number.
        Senator Inouye. Do you concur that we should have them
    enrolled in the FEHBP?
        Admiral Johnson. As you know, Senator Inouye, we have FEHBP
    pilots ongoing right now, as we have in other areas, with
    TRICARE Senior Prime, et cetera. Let me just say that the Joint
    Chiefs have been very much invested this year in this whole
    business of health care, as we were in the pay and retirement
    issues last year. And just to echo what the Secretary said in
    my own words, from the Joint Chiefs perspective and as a
    service chief, to me, it is irrefutable that we have a
    commitment to obviously our active duty folks, but also our
    retirees, including the over-65 retirees. We have to find a
    way.
        And so in all of this construct and the various programs
    that are being dealt with this year to take us there or to take
    us partway there, I think the imperative in this year's budget
    must be a clear, unambiguous signal to all of the people I just
    described, including the over-65 retirees, that we are honoring
    their commitment. It may take us a while to get there, but we
    are honoring that commitment.
        Senator Inouye. Will this budget send that signal?
        Admiral Johnson. I believe that it will, sir.
        Senator Inouye. Do you have any thoughts, General Jones?
        General Jones. Sir, I concur with the Secretary and the CNO
    emphatically.
        Senator Inouye. Mr. Secretary, I have another question. It
    is on the Aegis SPY-1 radar. Most of the surface combatants use
    that now. But the new DD-21 will be using the multi-function
    radar. When we begin to build a DD-21, what is going to happen
    to the SPY-1 radars?
        Mr. Danzig. Well, the multi-function radar is now subject
    to considerable research and development, it is an important
    part of the investment that DD-21 would give us. It does not
    render the SPY-1 radar irrelevant or outmoded for many
    platforms that use it. And precisely where we will go with
    regard to this is something that we need to focus on and
    develop as we understand better the research and development
    rewards that come from the development of the systems for the
    DD-21.
        One of the things I would hope we could accomplish over the
    time ahead is the development of a radar road map that would
    give us good developed answers to these questions. And the CNO
    may want to comment further now. But for myself, I do not feel
    as though we yet--I yet, at any rate--have enough information
    to give you a detailed sense of what that road map should look
    like.
        CNO?
        Admiral Johnson. I would only comment that you are right on
    with the road map. We are hard at work in developing such a
    road map. And we believe that will answer many of these
    questions. It will have to evolve, though. And I think as we
    get smarter on this first member of the SC-21 family, called
    the DD-21, that will help us shape the road map. But Aegis is
    an integral part, as the Secretary says, of our surface
    combatant force and will be for many, many, many, many years.
    So shaping that road map is our daily work right now.
        Senator Inouye. Phasing out the SPY-1 program would have an
    effect upon the industrial base, will it not?
        Admiral Johnson. Conceivably it could, yes, sir, depending
    on what came behind it or around it. But I will tell you, in
    the context of what we are doing at my house, at work every
    day, phasing out the SPY-1 radar is not something we give much
    energy to. In fact, we give no energy to it. We are looking to
    enhance it and make it even more effective.
        Mr. Danzig. I feel, Senator, that it is a little analogous
    to when we walk or we run. We have one foot on the ground in
    one place and we lift up one and move forward to another place.
    We need both legs. We stand on a system that exists at the
    present moment. It certainly, over the long term, would have
    industrial base implications if we cease to produce the SPY-1
    radar. But I think those are long-term questions we have not
    come to yet.
        Senator Inouye. I listened with great interest to your
    discussion on the GED students. My only concern is it was 5
    percent and now it is 10. I was here in the seventies when it
    was increased. Does that not concern you?
        Mr. Danzig. Yes, it does, Senator. I was here also in the
    seventies. I was in the Office of the Secretary of Defense
    (OSD), in the Office of Manpower, and I came to Congress and
    testified that I thought the standards were being lowered
    excessively. The ASVAB grading system had been mis-normed, and
    a number of us spent a lot of time saying we need to tighten
    this up. So I care very much about this.
        I would note, very importantly though, from my end, the
    levels we are talking about, in moving between either 90
    percent of high school diplomas, as the Army has, or 95 percent
    as the Marine Corps has, are both extraordinarily high levels.
    Historically, we have never been near those levels. The
    seventies and the like are levels in the 70 percentile of high
    school graduates kind of ranks, not in between 90 and 95. We
    are way up there.
        And when the idea of taking 2,500 more people in without
    high school diplomas was raised, my reaction was I am only
    interested in this if we do this in a way that in fact gives us
    some benefits in terms of the people who are coming in, that we
    are getting more of the kinds of people the chairman was
    talking about, that we are getting more people with high
    scores, that we are getting people who are, as we have labeled
    them, proven performers.
        And the proof of the pudding is in their records. And this
    is why Senator Hutchison is quite right: we really need to look
    at their performance in boot camp and in the field. But, so
    far, the evidence in boot camp is that our attrition has
    improved over the normal attrition associated with non-high
    school graduates. So there is a positive indicator there.
        I do not want to gild the lily. It is not as good as it is
    for high school graduates. But I am very comfortable that the
    Navy is in the right place, at 90 percent. And I am not
    proposing that we take 80 percent. You are not seeing that from
    us.
        Senator Inouye. Thank you, Mr. Chairman.
        Senator Stevens. Senator Hutchison.
        Senator Hutchison. I pass.
        Senator Stevens. Senator Inouye, did you have more
    questions?

                           Futenma Air Base, Okinawa

        Senator Inouye. General, if I may ask you, in 1998, Okinawa
    elected a new Governor. And there is no question that many of
    us felt that the predecessor was not too friendly. Can you tell
    us where we are relocating marines from the Futenma Air Base to
    other locations? Is he cooperating with you?
        General Jones. Sir, the Governor of the prefecture of
    Okinawa and General Earl Hailston, who is the senior marine on
    island, have been working very skillfully and very successfully
    together to bring about what I consider to be an unprecedented
    state of harmony on that island, between our forces who reside
    there and the local population.
        The progression and development of the island since the end
    of World War II is such that the majority of the population is
    now in the southern part of the island, and that is where most
    of the development has taken place. And as a result, there are
    attendant pressures on our bases and stations.
        It has been the stated intent of the prefecture that the
    one base in particular, the Futenma Air Base, should be
    relocated to the north. We have been working closely with
    Governor Inamine. I have recently returned from Okinawa, and I
    can attest to the good situation that is there. It is, frankly,
    from a quality-of-life standpoint, one of our most modern
    facilities of any base. We have high reenlistment rates, high
    extension rates, great satisfaction expressed by families who
    live there on Okinawa, and a great people-to-people program. I
    am extraordinarily proud of the work that our sailors, airmen
    and marines on the island do in so many wonderful ways to
    bridge that gap between our two cultures and our nations.
        Our policy has been to be good neighbors and to make sure
    that our requirements are well understood by both the
    prefecture and the government. And they understand that. And at
    such time as they are ready to move forward with serious
    proposals that would meet our requirements for a presence in
    that very important part of the world, we will participate
    fully. But we must wait until the political situation is such
    that they desire to move forward.
        So there is a tripartite discussion between the Government
    of Japan, the prefecture and ourselves. But I can tell you that
    in the 33 years I have been in uniform, I have never seen a
    better relationship on the island.
        Senator Inouye. Thank you.
        One more question. Mr. Secretary, 20 years ago we began our
    debate on a 600-ship Navy. And today it is about 300. Are we
    going to be able to maintain that 300?
        Mr. Danzig. Yes. My feeling is that it is important to do
    that. There is a report that has been requested by the Senate
    Armed Services Committee of our long-term shipbuilding plans
    and what would be required to maintain that number. My hope is
    that that report will reach this body within the next few
    weeks.
        One of the things that it will show is that to maintain
    that 300-ship Navy, when you take into account different
    classes of ships, one needs to build at a rate of about 8\2/3\
    ships a year. One of the important things to do over the long
    term, in my view, is to get to that rate, on average. We have a
    little leeway at present because so many of our ships were
    built in the early 1980's and tend to have service lives of 30
    years or longer. So the need to replace the bulk of our fleet
    really begins to be felt especially intensely 30 years after
    the early 1980's. In other words, after 2010.
        But we need, in my view, to get ourselves into a better
    position to deal with that hump in those years. And I think
    that the basis for that kind of plan is indicated in the
    materials we will be sending forward to you.
        Senator Inouye. Thank you very much.
        Thank you, Mr. Chairman.
        Senator Stevens. Thank you.
        Senator Hutchison.
        Senator Hutchison. Mr. Chairman, I do have one more
    question. Back on the housing issue, I just wanted to follow up
    with Admiral Johnson. I have visited, both in Ingelside and
    Kingsville, the privatization efforts that are being made.
        Admiral Johnson. Yes, ma'am.
        Senator Hutchison. And I wanted to ask you if you have had
    enough experience to believe that that is going to be good for
    the Navy and if it is going to be used in other places?
        Admiral Johnson. The short answer, Senator, is yes. We went
    to school heavily on what you saw, and I have seen, down in
    south Texas and up in Everett, Washington. We learned a lot
    from those first two ventures, public/private ventures. We have
    retooled that into sort of what I call phase two. And in fact,
    right now, we have five more public/private ventures that are
    being worked, two in this year, 2000, and three more hopefully
    in 2001. Two of those in Texas, one in New Orleans and one
    escapes me right now. But, anyway, yes, we are very much
    interested in that. We like it a lot.
        Senator Hutchison. Are they staying up with wear and tear
    and maintenance?
        Admiral Johnson. Yes. Again, this was part of the lessons
    learned on the first ones and how you set the maintenance
    schedules and incentivize it. So we learned a lot. It also has
    to do with out-of-pocket expense. And as you know, Secretary
    Cohen has put forward a great initiative on the base allowance
    for housing (BAH) this year. So we are doing a lot in that to
    make it better for our members and their families. But the
    public/private venture piece I think is a fundamental part of
    our future and we like it.
        Do you want to add anything to that, Mr. Secretary?
        Mr. Danzig. That sounds fine to me. Thank you.
        Senator Hutchison. Thank you.
        Thank you, Mr. Chairman.
        Senator Stevens. Thank you very much.

                                   Recruiting

        General, let us go back to you, in terms of the questions I
    asked, basically about recruiting and retention. Could you tell
    me how you are doing?
        General Jones. Yes, sir. As a point that may be of interest
    to the committee, is that 68 percent of all marines are on
    their first 4 years of enlistment. In other words, 50 percent
    of all marines are first-termers all the time. Which means that
    our career force is roughly 32 percent of our force. This
    translates to a requirement to recruit about 35,000 marines
    every year. Equal to that of the Air Force, for example--
    actually, more than that of the Air Force.
        As the Secretary mentioned, for the past 5 years, we have
    successfully recruited first-term marines both in the quality
    and the quantity that we require. I was a captain in the
    1970's, and I well remember those days, and I would recognize
    the signals if we ever got back to those days. And I would be
    the first one to say we are in trouble.
        Happily, we are not at that point. We are doing very well.
    I have already talked in my earlier testimony about the
    potential of the Junior ROTC program, which I think is
    extraordinary given the relatively modest amount of money it
    takes to fund one of those.
        I would tell you that our recruiters are still facing
    impediments in access to some of our school systems. Over 40 of
    them around the Nation have, by policy, restricted access to
    our recruiters. And I think that is something that we should be
    concerned with and I think we should remove those impediments.
        Senator Stevens. High schools or colleges?
        General Jones. High schools.
        And this causes problems. It sends a bad signal. It makes
    the recruiters have to work much harder. And I think that that
    should not be a policy.
        Senator Hutchison. What is their stated reason for that?
        General Jones. It varies. Some are very overt, that they do
    not see any value to service in uniform. And by, as a matter of
    policy, a superintendent of an entire system can deny physical
    access to the schools or lists whereby our recruiters can
    contact them and explain the advantages of serving in uniform.
        Sometimes it is both. Sometimes it is one or the other. But
    it is troubling enough to mention it.
        Senator Stevens. Well, we will put a little rider on that
    education allowance this year and see if they can understand
    where their money is coming from. And besides that, the massive
    amount of educational opportunities for young people today is
    in the military.
        General Jones. Absolutely.
        Senator Stevens. We went to Bosnia, we went to Kosovo.
    Those guys are going to school 4 hours a day.
        General Jones. Absolutely. And we have such wonderful
    programs and opportunities for our young people to come in and
    not only get educated, but get ready to transition back to the
    civilian sector and be productive citizens for the rest of
    their lives and make a tremendous contribution across all walks
    of life. I know I speak for my fellow service chiefs when I say
    that we would be happy to work with you to eradicate that
    restriction. And that will make life easier for Navy
    recruiters, Army recruiters, Air Force recruiters, and Marine
    recruiters.
        With regard to retention, Mr. Chairman, there too the
    Marine Corps is having a success story. I would just say,
    though, that the booming economy does present attractions. And
    so there are niches of highly technological fields where we
    feel the pull of that attraction to the industry.
        We are working hard to make sure that the quality-of-life
    standards that our people in uniform expect for their families,
    the safe and secure environment of the base, the stable, good
    educational system and job satisfaction, and spousal
    contentment with the service life are some of the intangibles
    that we work hard to try to correct so that the serviceman or
    woman will stay with us. And we hope to be successful. But we
    do feel that tug. But, overall, as I sit here today, your
    Marine Corps, manpower-wise, is in good shape.
        [The information follows:]

                                                         March 3, 2000.
    The Honorable Ted Stevens,
    Chairman, Subcommittee on Defense, Committee on Appropriations, United
            States Senate, Washington, DC.
        Dear Mr. Chairman: At yesterday's fiscal year 2001 Navy and Marine
    Corps Budget Hearing, I spoke about the JROTC program, its great
    popularity with students, and the positive impact the program has had
    in the overall recruiting goals of the United States Marine Corps.
    During my testimony, I also indicated that there are schools throughout
    the United States that have an official policy of not allowing military
    recruiters access to school campuses and/or prohibiting the release of
    student directory information. There are 40 such school districts
    identified throughout the Nation.
        As a follow-up, I am providing you a list of those school
    districts. Let me again express my appreciation for allowing me the
    opportunity to respond to your questions and testify before the
    Subcommittee on Defense. I look forward to continuing our close
    relationship and if I can be of assistance, please do not hesitate to
    contact me.
                Semper Fidelis,
                                                James L. Jones,
            General, U.S. Marine Corps, Commandant of the Marine Corps.

        The following school districts have been identified as having an
    official policy that prohibits the release of student directory
    information or of allowing military recruiters access to school
    campuses:
    First Marine Corps District
        New York: Rochester City School District
        Massachusetts:
          Cambridge School District
          Wakefield School District
        New Hampshire: Exeter Regional Cooperative School District
        Connecticut: State-wide, prohibits access and lists from Vo-Tech
    schools
    Fourth Marine Corps District
        Virginia:
          Stafford County School District
          Fairfax County School District
          Loudoun County School District
        Maryland:
          Prince George's County School District
          Carroll County School District
          Anne Arundel County School District
        Kentucky:
          Shelby County School District
          Boone County School District
        Pennsylvania:
          Salisbury Township School District
          Northwestern Lehigh School District
          Pennridge School District
          Mechanicsburg Area School District
          Susquenita School District
          West Perry School District
          Central Dauphin School District
          Derry Township School District
          Governor Mifflin School District
          Muhlenberg School District
          Wallenpaupack School District
          Upper Moreland Township School District
          Centennial School District
          Southern York County School District
          East Lycoming School District
    Sixth Marine Corps District
        Alabama:
          Dekalb County School District
          Marshall County School District
        Florida:
          Miami-Dade County School District
          Citrus County School District
        North Carolina:
          Wayne School District
          Craven County School District
          Watauga School District
          Caldwell School District
        Tennessee:
          Hickman County School District
          Bedford County School District
    Ninth Marine Corps District
        Missouri: Bowling Green School District
    Twelfth Marine Corps District
        Oregon: Portland Public School District California
        Palo Alto: Unified School District

        Mr. Danzig. Mr. Chairman, if I could just add one word on
    the recruiters. General Jones touched on their well-being. I
    think there is a terrific opportunity to provide more support
    for recruiters, to give them better training, computerized
    capability to keep track of their work, more support in terms
    of use of cars and telephones, and civilian administrators in
    stations. Put it all together, and I think there is an
    opportunity that is both good for recruiters and good for
    recruitment.
        We are exploring this very actively in both services. You
    may have a chance to get ahead of us if that area interests
    you. And I think it might yield very rich rewards.
        Admiral Johnson. In that context, Mr. Chairman, in the
    unfunded priority list we have requested about $8.1 million in
    support of the active recruiters and about $2 million in
    support of the Reserves to exactly identify those things the
    Secretary just mentioned.
        Senator Stevens. That was going to be my next question,
    about that Commandant's unfunded list of $1.4 billion.
        Admiral Johnson. Yes, sir.
        Senator Stevens. We added last year some money. We added a
    substantial amount in this committee, $163.7 million. Most of
    it survived the conference. But we do not see much movement on
    your side, Mr. Secretary, of trying to up that attack on the
    unfunded list. Why is that?
        Mr. Danzig. I am sorry, Mr. Chairman, upping the attack on
    the unfunded list?
        Senator Stevens. Trying to reduce that amount.
        Mr. Danzig. Well, I think the unfunded list represents, in
    both the Navy and the Marine Corps instances, a representation
    of, in large measure, things that we have in our program but
    have not been able to buy in the fiscal year 2001 because of
    the same fiscal constraints that you experience. And I think it
    is an expression of our intent, on the one hand, to get there
    over these coming years, but, on the other hand, of the
    exceptional reward, if money is available, of bringing some of
    those things forward and doing them right now.
        You will be the best judge, of course, of whether money is
    available, but that is the way I read those lists.
        Senator Stevens. I wish I was the last judge on how much
    money was available.
        Mr. Danzig. So do I, actually, Mr. Chairman.
        Senator Stevens. I am afraid that is not the case.
        I have just a couple more questions, Admiral. I know I am
    sort of ending with you as you end your last official visit.
    Although I think we will see you before the year is out,
    Admiral. But I hope it will not be too burdensome.
        I have just come back from Alaska, where I found a strange
    thing. We are having a fight currently with some of the people
    over the 60-year mandatory retirement age on commercial pilots.
    The country is short of pilots across the board. About 40
    percent of our pilots are 55 years old. We do not have many
    roads. We do not use many boats in the wintertime. Pilots are
    our main, main industry. If we do not have pilots, we are dead.
        And as I talked to the Coast Guard out in San Francisco and
    down in Key West in the last 2 weeks, they have got problems.
    It just seems to me we are not wide awake about using the
    Federal system to train pilots like we used to. I find, for
    instance, we are not training any pilots in college ROTC for
    the Navy, the Army or the Air Force. We are training other
    officers in ROTC, and they go right in.
        And if you have people coming out of ROTC who want to go
    into pilot training, they have to go through subsequent
    education. There is a holdup. Why cannot we restore the program
    for Navy, Air Force and Army ROTC training for pilot schools in
    conjunction with going to college?
        Admiral Johnson. Yes, sir, I think that is something that
    we ought to look at. We do have some flying programs that are
    available. They are very spotty. We have some at the Academy.
    But I think that may be an area that would be a worthwhile
    investment, and we will be happy to take a harder look at that.
        Senator Stevens. Would you take on talking to your chiefs?
        Admiral Johnson. I would be happy to do that.
        Senator Stevens. You are the senior one and you are
    leaving, but I do think there is a spinoff there for the
    civilian economy. Not all of them end up going into the
    military, but they all end up as pilots if they complete their
    course. And we have to find some way to turn out more pilots.
    And I would like to be involved in that. I think that the whole
    committee would. If we can find some way to initiate a real
    forceful incentive to taking pilot training while you are going
    to college, both men and women, I think many would welcome
    that.
        Admiral Johnson. Let me take that. And we will give you an
    accurate lay of the land and we will represent it service by
    service, and then we will give you some recommended pathways
    forward and see what we can come up with. That is a great
    suggestion.
        Senator Stevens. I would really like to be involved in
    that.
        Admiral Johnson. Yes, sir.
        Senator Stevens. And you can train them in Hawaii in the
    summertime and we will take them in the wintertime, or vice-
    versa if you insist on it.
        We still have some problem about, as you mentioned, Mr.
    Secretary, the ships going to sea 90 percent manned. That is
    still not up to what it should be, in my judgment. What can we
    do about these seagoing billets? Did you have that question
    while I was gone?
        Mr. Danzig. No. I appreciate the question. I think there
    are several areas that can help. I note that we are getting
    close to where we should be. The U.S.S. Eisenhower, for
    example, deployed this last week. It has a ship's complement of
    about 3,000. It was 100 people short. The battle groups we most
    recently have deployed have been in the 93 to 95 percent range
    of fill.
        Still, we have asked you for authorization in this year's
    program for career sea pay that will give us the capability to
    increase that. That is a very useful asset for a Secretary of
    the Navy and a Chief of Naval Operations to have available,
    because it gives us, if we find that we are having trouble with
    our sea pay fills, the ability to encourage people to go back
    to sea.
        Another arena of activity that is very valuable to us are
    the kinds of bonuses that give incentives, particularly for our
    officers to return to sea. And we see a healthy bonus program
    in that regard.
        Finally, the kind of support we have talked about for
    recruiting and for retention, in general, builds up our end
    strength capability. For example, we have asked for
    authorization for the ability to give basic allowance for
    housing to single sailors who are on board ships while they are
    in port. That would give us an additional retention incentive
    for people down through the rank of E-4 to stay in the Navy and
    feel that while they are in port they were not disadvantaged by
    being condemned to shipboard life; they could move out into
    civilian housing. That is a tool that would be very useful.
        So there are a number of these kinds of tools that, if you
    can give us some opportunity here, I think we can get those
    fill rates up even better.
        Senator Stevens. It is my understanding, Admiral Johnson,
    that was one on your list to fulfill as well.
        Admiral Johnson. Yes, sir.
        Senator Stevens. And somewhere along the line we did not
    get it. I am not going to point fingers, but what would it cost
    us to start it? If we put it in this supplemental and we
    started that item on your unfunded requirements list, what
    would it cost us to complete it if it started up this year and
    then carried forward into 2001? You had 119 for the 2001
    figure, but for the half year.
        Admiral Johnson. Yes, sir, 118.7 is what I have got here on
    my list.
        Senator Stevens. How long does it take you to crank that
    up?
        Admiral Johnson. Not long at all.
        Senator Stevens. If we made the money available by the end
    of May you could crank it into this year?
        Admiral Johnson. Yes, sir, for sure we could. And the
    Secretary makes a key point. This is a distribution tool,
    actually, more than it is a retention tool. One kind of takes
    you to the other. But when you are talking about at-sea
    manning, this is powerful medicine.
        Senator Stevens. If we have our way, we will take part of
    the surplus that is available. We had to move some money into
    the next year, with the pay movement and things like that just
    to make sure that we did not invade social security. We are now
    told that there was money there that could have funded that and
    the budget recognized that too. We will move that backward. But
    there is some money here in this current year that we can make
    available to defense, I think, a portion of it.
        I wish you and the Commandant would take a look at your
    unfunded list and prioritize it a little bit. What would be
    your high priority, low dollar amounts? We are not going to
    have a lot of money but we will have money enough to meet some
    of those priorities on your list.
        Admiral Johnson. I will be happy to provide you with that.
        [The information follows:]

        My highest priorities as reflected in my Unfunded Requirements List
    of 9 February 2000 are in the areas of personnel and readiness. We are
    meeting our near-term obligations but not funding these priorities will
    place the Navy's long-term readiness at risk. These personnel and
    readiness priorities are as follows:

                                  [In millions]

    Personnel End Strength and Recruiting Incentives.................. $77.0
    Readiness APN-6 Spares............................................ 174.0
    Readiness AOE Ship Depot Maintenance..............................  40.0
    Readiness Ship Depot Maintenance.................................. 142.3
    Readiness Real Property Maintenance............................... 136.6
    Personnel Career Sea Pay.......................................... 118.7
    Readiness LHA Midlife.............................................  32.0
    Readiness Training Ordnance.......................................  26.0
    Readiness Laser Guided Bombs and Bomb Kits........................  20.0

        Any funding that can be appropriated to address these unfunded
    areas would be of great benefit to Navy preparedness.

        Senator Stevens. Would you prioritize the first 8 or 10? I
    certainly would like to know.
        Admiral Johnson. You bet.
        Senator Stevens. We look forward to working with you.
        Admiral Johnson. Yes, sir. Thank you, sir.
        Senator Stevens. Thank you again, Admiral Johnson, for your
    work with us and for your courtesy to us as we have traveled
    through your command. I think this has been a most important
    time for the Navy, with its deployments to the Persian Gulf and
    so many other things. As I said, I am just back from visiting
    the Coast Guard. I wish there was some way the Navy and the
    uniformed services could help the Coast Guard more on that
    interdiction concept, using some training missions to augment
    some of their equipment that are available to meet that.
        There is a surge now off the west coast as opposed to the
    Caribbean. I am sure you have been briefed, as we have. But I
    do think that your watch has been a very important one for the
    Navy, and we commend you for the job you have done and for your
    willingness to stand up and speak up for your people. It has
    been a very, very good time, I think, for the Navy and we wish
    you well when this tour is over.
        Admiral Johnson. Thank you, Mr. Chairman.
        Senator Stevens. Nice to have you back, Mr. Secretary.
        Mr. Danzig. Thank you.
        Senator Stevens. And we will weather the coming years with
    you, Jerry. We look forward very much to being with you in the
    years ahead.
        General Jones. Thank you, Mr. Chairman.
        Senator Stevens. As long as we survive, we look forward to
    it. Thank you very much.

                         Additional committee questions

        There are some questions others had asked us to give to
    you, as is the usual routine. We would appreciate it if you
    would give those to us in writing.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
                Questions Submitted to Secretary Richard Danzig
                  Questions Submitted by Senator Thad Cochran
                                     lhd-8
        Secretary Danzig, I am advised that the Navy recently submitted a
    request to Defense Comptroller Lynn for release of funds previously
    appropriated for LHD-8. $45 million was provided in fiscal year 1999
    for Advanced Procurement items and another $375 million was provided in
    last year's bill--along with language that would allow the Navy to
    contract for the construction of this important ship on an incremental
    basis.
        Question. Do you have any information on when the Comptroller may
    release those funds?
        Answer. The Department of the Navy has requested the release of
    funds from OSD. Currently, I understand the request is being staffed
    within OSD but I do not have a specific timetable as to when these
    funds may be released.
        Question. What are the Navy's plans for contracting for the ship,
    once the funds are released?
        Answer. Upon release of the funds, the Navy plans to award a sole
    source contract, after appropriate review, for the detailed design and
    definition of long lead procurement. The contract is expected to be a
    cost-plus award fee with a limitation of cost clause. We would then
    move forward with construction upon appropriation of the required
    funding.
                                     ______

                Questions Submitted by Senator Pete V. Domenici
        Question. Does the Navy support or oppose the acquisition of
    logistics ships through the lease purchase mechanism? Please articulate
    and explain the Navy's position on this issue.
        Answer. We support the acquisition of naval vessels, including
    logistics ships through a lease-purchase mechanism when it makes
    economic sense to do so. In the past, we have used this mechanism for
    procuring SEALIFT tankers and Maritime Pre-positioning Force ships.
        Given the current budgetary scoring conventions for capital leases,
    there would have to be significant cost advantages to pursue this
    approach. If that were the case, we would be hopeful that the Office of
    the Secretary of Defense and the Office of Management and Budget could
    arrange for the necessary budget authority to take advantage of such an
    arrangement.
        Question. What are the Navy's highest priorities for accelerating
    shipbuilding? If Congress were to fund additional ships in the 2001
    budget, should those ships be logistics ships?
        Answer. We are facing the need to significantly increase our
    shipbuilding rate just beyond the existing Future Years Defense Program
    (FYDP) to maintain the force structure approved in the last Quadrennial
    Defense Review. Accelerating any of our ongoing shipbuilding programs
    would be helpful in that regard. I note, however, that in the case of
    the TADC(X), the lead ship will be contracted for in fiscal year 2000.
    I would prefer to see that program mature somewhat before increasing
    the building rate.
        Question. Why should the acquisition of logistics ships be funded
    in the O&M (readiness) budget?
        Answer. Lease payments are considered expenses and would
    appropriately be funded in the O&M appropriation. This is the practice
    now when we pay for chartered ships through the Military Sealift
    Command. The purchase option would be funded in the Shipbuilding
    appropriation. If appropriate adjustments to O&M budget authority are
    made, use of this funding line should not have any negative
    implications for readiness.
                         readiness/air combat training
        Based on information made available to me, there are serious
    problems in the material support for the Navy's air combat training at
    Fallon Naval Air Station. Adversary and Topgun aircraft are old and
    inadequately supported by spare parts; compared to the past, there are
    relatively few adversary and Topgun aircraft, essential combat systems,
    and live munitions available for training, and the type of adversary
    aircraft available are not the types that our pilots are likely to meet
    in combat.
        Question. What is the Navy's plan, if any, to supply dissimilar
    aircraft, such as reserve component F-16s, stationed at Fallon NAS for
    adversary training?
        Answer. In my recent ``Report to Congress on Adversary Aircraft'',
    an annual Adversary shortfall of 26,000 sorties was highlighted.
    Included in this shortfall are 16,500 dissimilar Category IV (advanced
    threat) sorties. We are pursuing an Adversary aircraft strategy which
    includes the following elements:
        (1) Maintain a force of at least 36 F-5 aircraft.
        (2) Provide a minimum of 18 F-16 aircraft (28 aircraft optimum) to
    serve as advance threat fighter simulators. These aircraft could be new
    or from Foreign Military Sales accounts; such as the 28 Peace Gate F-
    16s that recently became available.
        (3) Pursue joint solutions with the U.S. Air Force.
        (4) Continue to employ the Naval Reserve component in the Adversary
    support role.
        If the fiscal year 2001 ``above core'' requirement for 18 F-16s is
    supported by Congress, the Navy's priority for basing would be Naval
    Air Station (NAS) Fallon. There are enough active duty pilots resident
    at Naval Strike and Air Warfare Center (NSAWC) to support an F-16
    program decreasing the pressure on the Naval Reserve component to
    support the F-16.
        In addition, the use of USAF Reserve component and/or Air National
    Guard (ANG) fighter units to supplement Navy Adversary requirements is
    currently being pursued through a Joint Adversary Initiatives effort.
        Question. What is the Navy's plan, if any, to increase the number
    of adversary and fleet representative Topgun aircraft, spare parts,
    essential combat systems (e.g. LANTIRN and other FLIR pods), and live
    munitions used for training at Fallon NAS?
        Answer. Current fiscal constraints have driven expansion of the
    Navy Adversary program to an ``above core'' issue for the fiscal year
    2001 budget proposal. While the requirement for additional Adversary
    assets are well documented, Congressional support above the current
    Navy TOA will be required to acquire additional Adversary aircraft.
        The Navy's plan to increase spare parts at NAS Fallon includes
    reducing the long lead times associated with Fallon's reliance on
    ``repair and return'' to host stations (NAS Lemoore, NAS Oceana and NAS
    North Island).
        The Navy has selectively increased Aircraft Intermediate
    Maintenance Department (AIMD) Fallon's repair capability for the F-14A.
    We have provided the station with HCT-10 F-14 adapters that have
    significantly increased their Hydraulic Component Test and repair
    capability. An F-14A generator test bench is currently in shipment that
    will provide generator capability. We have begun to provide F-14A
    avionics test and repair capability with the installation of the first
    two Consolidated Automated Support System (CASS) stations. The next two
    will arrive in March and April of 2001 and the last two in 2004. With
    the arrival of the Test Program adapter Sets (TPS) currently in
    shipment we will have capability on roughly 50 percent of F-14A
    avionics. Through selective increases in ``I'' level capability, we
    expect to reduce the impact of the long lead times on NAS Oceana, VA,
    repair and returns on significant readiness degraders.
        The CNO has included training ordnance as part of our above core
    requirements list for fiscal year 2001. Additionally, we intend to
    mitigate training ordnance shortfalls with programs such as Joint
    Tactical Combat Training System (JTCTS) and the Fleet Aviation
    Simulator Training (FAST) Plan, which take advantage of advances in
    simulation technology.
        Question. What is the Navy's plan, if any, to increase the number
    of flight training hours actually flown by pilots before and after they
    come to Fallon for training?
        Answer. The Navy's documented readiness ``bathtub'', a result of
    our austere funding environment, unfortunately constrains the number of
    flight hours a pilot can accomplish prior to arrival for Fallon
    training. The availability of aircraft during the Inter-Deployment
    Training Cycle [IDTC], the spare parts needed to maintain them, the
    availability and experience of maintenance personnel to keep these
    aircraft ready for training all contribute to limiting the hours of
    pilot flying experience, as does the timely arrival of new pilots at
    the completion of undergraduate flight training. Increasing the number
    of flight hours to squadron pilots while ignoring other contributing
    factors necessary to balance the readiness equation would accomplish
    little. Naval aviation leadership has identified the elements needed to
    balance this readiness equation and have developed a plan, Air Plan 21,
    that when resourced, will provide a path to improved readiness.
                                     ______

                Questions Submitted by Senator Patrick J. Leahy
        All of you discussed the problem of a historical increase in
    operating costs. To achieve the same level of capability, operating
    costs rise substantially every year. At a time when we are trying to
    find additional resources to modernize the force and maintain an
    intense global deployment schedule, it seems to me that one way to find
    the money to accomplish these goals is to stem that rising tide of O&M
    costs through the applications of new technology.
        Question. I would like to know what technological research efforts
    that Navy is making to bring down these costs?
        Answer. The Navy is investigating several technology areas to help
    reduce maintenance costs as part of the Navy's overall effort to reduce
    total ownership costs. We are looking at both the Sailor/Marine and the
    maintenance workload.
        First, we want to recruit and match Sailors and Marines to the
    right jobs at the right time while balancing individual and Navy-wide
    needs. Second, we are studying ways to design affordable warfighter-
    centered systems, organizations and jobs by applying knowledge of human
    capabilities, limitations, and needs. Finally, we are investigating
    technologies and processes to equip Sailors and Marines with effective
    mission-essential competencies when and where they are needed at
    affordable cost. Efforts to reduce maintenance workload include
    ``Smart'' systems for total asset management. A ``Smart'' system is
    computer-based maintenance that integrates smart sensors, advanced
    diagnostics, and advanced fault-prediction technology to reduce
    operating costs by rationalizing maintenance procedures in the
    operating forces.
        The Navy is also investigating--and now bringing into the fleet--
    very low maintenance components and long-life coatings and paints.
    Advanced materials, such as advanced composites, are more resistant to
    environmental damage than the steel and aluminum structures they
    replace. These zero or very low maintenance structures may
    substantially reduce the life cycle cost of the platforms on which they
    are installed. The Navy is also looking at novel materials and
    manufacturing processes for reduced costs. Finally, we are
    investigating new high temperature materials for engine components to
    improve thermodynamic efficiencies. These materials may prolong engine
    life and may reduce fuel costs. Science and technology will continue to
    contribute much to the Department of the Navy's efforts to reduce
    operation and maintenance costs.
        Question. How much savings does the Navy anticipate from the Health
    and Usage Monitoring System slated for installation in its helicopter
    fleet?
        Answer. The total cost avoidance for the H-53E and H-60 legacy and
    remanufactured aircraft is estimated to be approximately $1.0 billion
    (in constant fiscal year 1999 dollars) through 2020. This equates to a
    return on investment of 2.7 to 1 after considering the planned cost to
    acquire and sustain the system.
        Question. What savings does the service anticipate from electric
    drive and similar propulsion conversions?
        Answer. Integrated Power Systems (IPS) provide total ship electric
    power, including electric propulsion, power conversion and distribution
    and mission load interfaces to the electric power system. The Navy
    expects that the utilization of IPS with electric drive will achieve
    significant savings in ship operations and support costs over the life
    cycle of a ship class.
        The Navy estimates that a gas turbine combatant with IPS will have
    fuel savings of 15-19 percent compared to a typical gas-turbine
    combatant with mechanical drive and a Controllable Pitch Propeller
    (CPP) system. With an IPS a ship designer can select the number and
    ratings of the prime movers/generators to optimize the life cycle cost
    without the constraint of having propulsion prime movers evenly divided
    among the shafts. By combining the electric plant and the propulsion
    plant, designers can reduce the number of prime movers, which
    contributes significantly to initial acquisition cost, ship manning
    costs, maintenance costs, and training costs.
        Question. Mr. Secretary, can you please provide some detailed
    information for the record on the participation of the Navy in
    Department of Defense legacy programs? How many Navy personnel work on
    Naval archaeology matters in DOD's legacy program? What are annual
    expenditures for legacy programs over the past several years?
        Answer. The Navy has received funding for 555 projects since the
    program's inception in 1991. 308 of those projects were for natural
    resource programs and the remaining 247 were for cultural resource
    programs. The types of projects changed every year in accordance with
    the varying areas of emphasis, which were published by DOD. The Marine
    Corps did not ask for or receive Legacy funds from DOD during fiscal
    year 1996 through 1999. During fiscal year 2000, the Marine Corps
    received $100,000 of Legacy funds for one natural resources project at
    MCB Camp Pendleton, CA.
        The Navy's archaeological programs fall into two general
    categories, underwater and terrestrial archaeology. Navy legacy funding
    has historically been directed mostly to underwater archaeology.
        The DOD Legacy Program has funded the Naval Historical Center's
    Underwater Archaeology Program (UA), which is responsible for the
    inventory and protection of the U.S. Navy's historic ship and aircraft
    wrecks. This funding has allowed the Navy to meet its mandate under the
    National Historic Preservation Act and pursue a number of underwater
    archaeology projects: the recovery of the Civil War submarine H.L.
    Hunley; a survey and excavation of a Revolutionary War wreck in the
    Penobscot River, Maine; site mapping, excavation, and possible
    retrieval of at-risk artifacts from CSS Alabama off Cherbourg, France;
    a remote-sensing survey of the military wrecks at Utah and Omaha
    Beaches at Normandy; and a protection and management plan for the
    recently discovered Benedict Arnold gunboat in Lake Champlain.
        Since 1998, the Legacy Program has provided approximately $4
    million to fund the Underwater Archaeology Branch. This figure includes
    salaries for four full-time archaeologists, as well as funding for
    conservation, state partnerships, equipment, travel and other operating
    costs.
        In past years, the Legacy program has also funded archaeology
    projects outside the Naval Historic Center, including terrestrial
    archaeology. These projects covered a variety of archaeological issues,
    including curatorial needs assessments, artifact retrieval and
    conservation, and Historic and Archaeological Resource Protection
    Plans. These projects were completed by contract labor and overseen by
    cultural resource professionals employed by the Navy.
        Funding for Legacy programs over the past several years follows:

    ----------------------------------------------------------------------------------------------------------------
                                                                       Nat'l Resources Prjts    Cultural Resources
                                                                     ------------------------          Prjts
                                                                                             -----------------------
                                                                        Amount     Projects     Amount     Projects
    ----------------------------------------------------------------------------------------------------------------
    1997............................................................    $575,000           4  $1,680,968          15
    1998............................................................     350,000           5   1,151,000           6
    1999............................................................     771,000           5   1,552,760           7
    2000............................................................  \1\ 706,56           6  \1\ 2,487,           6
                                                                               2                     976
    ----------------------------------------------------------------------------------------------------------------
    \1\ DOD has not yet released all funding for fiscal year 2000.

        The number of projects funded in years 1997-2000 is relatively
    small when compared with the number of projects funded in previous
    years, 1991-1996. There are two reasons for this. Initially, Legacy
    funds were applied to a wide range of installation-specific projects,
    such as individual building rehabilitations or curation of an
    installation's artifacts. Over time, the Legacy program's emphasis has
    changed; it now seeks projects that have a broader scope, such as
    regional historic context studies or curation needs assessment for a
    region. In addition, the overall DOD Legacy program budget from 1997
    through 2000 was $10-15 million per year, whereas, for years 1993-1995,
    the total annual appropriation for Legacy projects was approximately
    $50 million.
                                     ______

                   Questions Submitted to Adm. Jay L. Johnson
                  Questions Submitted by Senator Thad Cochran
                               navy theater wide
        Last week, Navy officials briefed Congressional staff on a plan
    that would put the Navy Theater Wide system into the field with a
    contingency capability--as a few missiles on one cruiser--by fiscal
    year 2006.
        Question. Is that date determined by the projected pace of
    technological progress or by funding constraints.
        Answer. The Navy Theater Wide (NTW) program of record, baselined
    last year in May, had an initial capability with First Unit Equipped
    (FUE) as one cruiser and five missiles in fiscal year 2007. That
    program was never funded at an adequate level to meet the date
    specified.
        The Upper Tier Strategy at the time, split funding between the Army
    Theater High Altitude Air Defense (THAAD) system and NTW. Upon
    Congressional direction the Department revised the Upper Tier Strategy
    in December 1999 in an effort to move THAAD into an Engineering
    Manufacturing and Development (EMD) phase, and position NTW to complete
    the AEGIS LEAP Intercept (ALI) series. As this testing proves out
    technology the Department will make a decision to go forward with an
    incremental development and deployment of NTW. The revised Upper Tier
    Strategy NTW System deployment option is currently funded only for
    AEGIS LEAP Intercept (ALI) through fiscal year 2002 with some program
    development through fiscal year 2005. The current funding profile in
    the fiscal year 2001 President's budget only funds the following:
      --Program Definition Risk Reduction (PDRR) Flight Testing
        --Aegis LEAP Intercept (ALI) Flight Test Round series (FTR-1
                through FTR-7) will complete in fiscal year 2001
        --Threat Representative Testing (TRT) (FTR-8 through FTR-10) will
                complete in fiscal year 2004
        --TRT (FTR-11 through FTR-13) not fully funded
      --Minimally sustains industrial base capability through fiscal year
            2005
      --No funding for deployment capability
        The NTW Spiral Evolution ``block within a block'' development, when
    appropriately funded in fiscal year 2001 and out, can provide the
    following incremental capabilities:
        Block IA: Contingency Capability (fiscal year 2006)
      --Initiate Engineering Manufacturing and Development (EMD) work in
            fiscal year 2003
      --Single test Cruiser and remaining SM-3 test missiles (approximately
            4 to 6)
        Block IB: Single Mission Capability NTW (fiscal year 2008)
      --Deploys 2 single mission cruisers with 50 SM-3 missiles
        Block IC: Multi Mission Capability NTW (fiscal year 2010)
      --Deploys 4 multi mission cruisers with 80 SM-3 missiles
        Question. How much sooner could the system be fielded with adequate
    funding?
        Answer. As stated earlier the directed program requires additional
    resources to meet the development and deployment schedule as delineated
    in the revised upper tier strategy.
        With further resources there is a possibility that some amount of
    acceleration could be accomplished above the directed program
    capability introduction. The potential to accelerate development of NTW
    Block IA/IB/IC would move deployment of the increments from fiscal year
    2006/08/10 to fiscal year 2005/07/08, respectively.
        Question. Does the President's Budget contain sufficient funds to
    field Navy Theater Wide system by fiscal year 2006?
        Answer. No, as stated earlier the directed program requires
    additional resources in fiscal year 2001 and out. The current funding
    profile does not fund deployment of capability.
        Question. Are you concerned that there is not?
        Answer. Yes, but as indicated previously, the revised Upper Tier
    Strategy positions the Navy Theater Wide program to move from
    successful AEGIS LEAP Intercept (ALI) flight series testing to
    continued system development, when appropriately funded.
        Question. Given the current funding in the President's Budget, when
    will this system be deployed in a substantial way?
        Answer. With the fiscal year 2001 President's Budget there is not
    sufficient funding past AEGIS LEAP Intercept (ALI) testing. The fiscal
    year 2001 President's Budget funding provides for the following:
      --Program Definition Risk Reduction (PDRR) Flight Testing
        --AEGIS LEAP Intercept (ALI) Flight Test Round series (FTR-1
                through FTR-7) will complete in fiscal year 2001
        --Threat Representative Testing (TRT) (FTR-8 through FTR-10) will
                complete in fiscal year 2004
        --TRT (FTR-11 through FTR-13) not fully funded
      --Minimally sustains industrial base capability through fiscal year
            2005
      --No funding for deployment.
        Question. I'm told that interceptor missile being developed for
    Navy Theater Wide system will have capability that cannot be fully
    utilized because of the limitations in the AEGIS radar.
        Can you explain why the Cooperative Engagement Capability is
    important to getting the most out of this system?
        Answer. Cooperative Engagement Capability (CEC) is not required for
    the Navy Theater Wide system. The threshold requirement for
    interoperability is the joint LINK-16 data link.
        Only modest improvements to the radar are necessary because in most
    scenarios our ships are within a few hundred kilometers of potential
    enemy launch points, well within radar detection and tracking
    capability. That is why Cooperative Engagement Capability (CEC) is not
    a requirement for the BLK I NTW system. However, CEC has the potential
    to provide high quality data for NTW, since it provides fire control
    quality data to participating units as the threat ranges increase. For
    example, a ship that is deployed forward near an enemy launch position
    can detect and track a hostile TBM and pass accurate track data over
    CEC to assist a down range ship that cannot yet see the target. NTW
    Block IB (Single Mission Capability (SMC)) and NTW Block IC (Multi
    Mission Capability (MMC)) will both be capable of engaging the full set
    of anticipated Block I threats utilizing the operational requirement of
    Link 16. We are looking at possible upgrades in NTW Block II which
    include advanced radar, next generation SM-3s and command and control
    improvements as well as CEC, to meet an even more stressing family of
    threats.
        Question. Can you also explain what benefits the SBIRS-Low system
    will have for Navy Theater Wide?
        Answer. We are at present undergoing a thorough requirements
    analysis and definition process for SBIRS-Low and Navy Theater Wide.
    The planned introduction date for SBIRS-Low is scheduled to be very
    close to our development and deployment of NTW Block II. We are
    conducting our requirements analysis with preliminary Block II concepts
    and architecture in mind. Both the Block II Minimum Technical Data Set
    (MTDS) description and the SBIRS-Low Requirements Review (RR) process
    will be further defined in Summer 2000. In many scenarios, we expect
    SBIRS-Low to potentially provide track data necessary to engage longer
    range threats.
        Question. Is the Navy fully participating in the process by which
    SBIRS-Low operational requirements are being determined, so that Navy
    ballistic missile defense systems can be as effective as possible?
        Answer. Yes, we have Requirements Officers and technical program
    support personnel assigned and as participants in the Requirements
    Review (RR) process.
                                 sea-based nmd
        According to an article in the Washington Post earlier this week,
    you asked the Secretary of Defense to consider using sea-based
    interceptors as part of the National Missile Defense architecture.
        Question. Do you propose a sea-based element in lieu of a ground-
    based system, or in addition to ground based elements?
        Answer. A sea-based element to NMD would be complementary in nature
    to supplement the land-based system, not as in lieu of planned land-
    based elements.
        The Navy supports deployment of the initial land-based, single site
    C-1 system. Recently the Department of Defense has begun to consider
    broader NMD concepts, including different sites and more robust
    capabilities. If NMD postures beyond the original single land based
    site are under active consideration, then policy alternatives, which
    include providing a portion of our defense from ships at sea should
    also be considered.
        Decisions taken in the coming months are likely to have a profound
    impact on the course of choices made in fielding an NMD system for our
    nation. For that reason, I recommended consideration of a sea-based
    Navy adjunct be included in any policy and/or architectural designs
    under development. Clearly, much work remains before any NMD system is
    fielded. Foreclosing a Navy contribution at the front end of NMD
    development would not be in the best long-term interests of our nation.
    I believe the potential future naval contributions to National Missile
    Defense are as a complement to the land-based NMD system.
        Three different studies concerning Naval NMD have been completed
    over the past two years: a NMD Joint Program Office (JPO)--led
    Independent Assessment Panel, the DOD (BMDO) Report to Congress of May
    1998 on the ``Utility of Sea-Based Assets to NMD,'' and the Navy
    assessment. In each case, the conclusions included the following:
      --Naval forces could enhance NMD operational and technical
            effectiveness.
      --Land and sea based integrated NMD architecture is superior to a
            land only system.
      --Navy capability could protect against sea-based NMD threats.
        The fiscal year 2000 Authorization Act directed an in-depth study
    to explore more fully options for NMD, which include NMD configured
    ships for supplementing the initial land-based National Missile Defense
    (NMD) architecture. The overall objective is to define and evaluate
    sea-based NMD systems, and to assess their relative merits. The first
    Part of this study is nearing completion and potential Navy
    alternatives will be better defined upon completion of the study.
        Placing a portion of our NMD capability at sea allows us to
    position interceptors, or sensors, or both forward, where they can take
    advantage of a greater portion of a threat missile's flight path, and
    where they can contribute to early discrimination of warheads amidst
    debris and/or penetration aids. As a result of this forward placement,
    you have the opportunity to see the threat earlier in flight, from a
    different look angle, and for a longer period of time, providing you
    with the potential to engage that threat earlier and/or more often.
        Question. Is it your view that a sea-based element could be
    deployed before the ground-based elements, currently scheduled to be
    deployed in 2005?
        Answer. Today, the Navy has no NMD program in progress and has no
    assigned NMD mission. The fiscal year 2000 Authorization Act directed
    an in-depth study concerning options for supplementing the initial
    land-based National Missile Defense (NMD) architecture with ships at
    sea. The overall objective is to define and evaluate the feasibility of
    sea-based NMD concepts and to assess their relative merits. The first
    Part of this study is nearing completion.
        Deploying a sea-based NMD component, capable of complementing our
    planned land-based capability, will require development of an
    interceptor, sensors and BMC\4\I systems capable of working in concert
    with developing land-based hardware and software. Development of the
    interceptor, evolving from the proven STANDARD Missile family
    technology and capitalizing on our ongoing Navy Theater Wide Kinetic
    Warhead development, along with supporting BMC\4\I systems to provide
    essential connectivity, is certainly feasible in time to support C-1
    deployment. Sensor development could also pace the threat, and could be
    deployed during the C-1 fielding period. Sensor development would be
    done through radar improvements and depending on the threat, could be
    ready to support C-1, moving to C-3. Development of the connectivity
    and sensor netting needed to support integrating sea-based systems into
    land-based capability in time to support C-1 deployment is also
    feasible.
        A Naval adjunct NMD component is feasible and no major technical
    hurdles exist. Risks are similar to land-based design and development
    in the areas of missile and battle management concepts. Deployment and
    delivery schedules for this and other potential alternatives will be
    better defined upon completion of the study.
        Question. The ABM Treaty prohibits not only sea-based defenses
    against long-range ballistic missiles, but any National Missile Defense
    system, whatever the basing mode.
        Given the fact the administration is making formal proposals to
    modify the ABM Treaty to accommodate National Missile Defense, would
    you also like to see attempts made to modify the Treaty's prohibition
    on sea-based defenses?
        Answer. The Navy does not currently have an NMD mission, nor is it
    part of the current NMD program. If NMD's requirements expand beyond
    the original land-based sites under consideration, then alternatives
    that include providing a portion of our NMD defense from ships at sea
    should be considered. The Navy supports deployment of the initial land-
    based, single site system. It is important however, to begin Navy NMD
    analysis and research in a forthright and deliberate manner as
    permitted under the ABM Treaty.
        Question. If sea-based interceptors were to be made part of the
    National Missile Defense system, how important will it be to have the
    SBIRS-Low system in place to get the most out of sea-based interceptor
    missiles?
        Answer. Various naval components for a Naval NMD complementary role
    are being examined in-depth in the ongoing Navy/BMDO study. We are
    currently conducting a thorough requirements analysis and definition
    process for SBIRS-Low and Navy Theater Wide. The SBIRS-Low Requirements
    Review (RR) process is looking at both National Missile Defense and
    Theater Missile Defense requirements. The analysis and requirements
    definition, which will result from the combination of these two
    factors, will provide us with more insight to the warfighting value and
    robustness of SBIRS-Low support to Navy ballistic missile defense
    systems. We expect SBIRS-Low to be an integral part of any NMD system,
    on land or at sea.
        Question. Do you agree that the Navy's current and projected
    procurement rates do not meet the Administration's stated goal of
    sustaining a 300 ship Navy?
        Answer. Over a 30 year period the Navy would need to build on
    average 8 to 10 ships per year to sustain a 300 ship Navy. Inconsistent
    build rates over the last two decades have caused peaks and valleys in
    demands for replacements, as a result, the immediate needs happen to be
    slightly less than the 8 to 10 ship sustaining rate. Large numbers of
    destroyers and submarines were authorized in the late 1980's and
    delivered to the Navy in the early 1990's. These ships are therefore
    still relatively young. Replacing these ships to sustain a constant
    sized Navy, of any size, is going to be a large challenge requiring
    renewed industrial capacity and a significant increase in resources in
    the 2010 to 2020 time period. Desired options to maintain or increase
    loading of the current industrial base to more economically efficient
    levels have been unaffordable. Therefore, although inventory
    requirements are adequately met with current shipbuilding requests,
    pulling forward future requirements would make sense if additional
    resources were available.
        Question. Is 300 ships the right answer?
        Answer. The 1997 Quadrennial Defense Review (QDR) force structure
    of approximately 300 ships fully manned, properly trained, and
    adequately resourced was assessed to be the minimum acceptable to
    satisfy the Navy's warfighting and forward presence requirements. Since
    that time, operational demands have increased somewhat, reducing
    scheduling flexibility and increasing demands on personnel, ship's
    equipment and aircraft. To meet current Unified Commanders-in-Chief
    global presence requirements, without gaps in coverage now being
    experienced, a 10 to 20 percent larger force that includes up to 15
    Carrier Battle Groups and 14 Amphibious Ready Groups would be required.
    Given the considerable financial challenges to sustain the current
    force structure of approximately 300 ships in the future, such a larger
    force could not be considered without additional resources. The next
    QDR would likely be the best forum to evaluate any change in the
    projected size or composition of the Navy.
        Question. What is your view of the Navy's combatant ship
    requirements, as you look down the road and try to envision the Navy's
    role and missions over the next few decades?
        Answer. The Chief of Naval Operations noted in June 1999 that, ``we
    must analyze our experience in the years since the last Quadrennial
    Defense Review; specifically, in terms of how the force has been and
    will be used, to arrive at a credible, confident and coherent plan to
    make sure we have the force sized and shaped correctly for the
    future.'' In addition to capturing the lessons of recent experience, we
    must anticipate new or altered missions brought about by the evolution
    of national security strategy as well as opportunities arising from new
    technology such as ballistic missile defense and sea-based land attack.
    Such changes will require continued study and debate as part of the
    process of determining how these will ultimately affect Navy force
    structure.
        Question. Admiral Johnson, Recent testimony by high-ranking Navy
    officials emphasizes the need to meet the warfighting CINC's
    requirements for 15 carrier battle groups (CVBGs) and 14 amphibious
    ready groups (ARGs). This force structure includes more than 130
    surface combatants, a greater number than the current target of 116
    ships. This greater number would not appear to take account of possible
    future mission needs for surface combatants beyond escorting CVBGs/ARGs
    in current missions. Testimony also emphasizes the importance of
    retaining a production rate of at least three surface combatants per
    year to meet the more immediate needs of replacing older surface
    combatants--primarily DD-963s and FFG-7s--that are going out of
    service, and to maintain the surface combatant industrial base.
        (1) In light of these facts, what, in your view, should be the Navy
    requirement for DDG-51s?
        (2) In addition, what should the build rate for these ships be over
    the next several years?
        Answer. The DDG 51 program was established as a 57 ship program on
    02 Feb 94 by Acquisition Decision Memorandum (ADM) for DDG 51 Destroyer
    Program Milestone IV. In light of the recent programmatic decision to
    delay the start of DD 21 production from fiscal year 2004 to fiscal
    year 2005, the DDG 51 program was extended to fiscal year 2005 and
    expanded to include an additional ship, for a total of 58.
        The 1997 Quadrennial Defense Review (QDR) established 116 as the
    minimum number of surface combatants required to meet the CINC's
    warfighting requirements. The Navy has recently completed a study, now
    under review within the Department of Defense, which is expected to
    recommend a force structure greater than the QDR level of 116 surface
    combatants. Depending on the construction plan for DD 21, a portion of
    the additional ships called for by this draft study could be comprised
    of DDG 51 variants.
        The DDG 51 shipbuilding rate has averaged just over three ships per
    year since 1994. The surface combatant shipbuilders, Bath Iron Works
    and Ingalls Shipbuilding, have sized their workforce and facilities to
    most efficiently produce destroyers at this stable production rate. The
    President's Budget request for fiscal year 2001 slows the surface
    combatant build rate to two ships per year in fiscal year 2002-fiscal
    year 2004 with a single DDG proposed in fiscal year 2005. This reduced
    surface combatant shipbuilding rate, though not most efficient (i.e.,
    not ``best price for the taxpayer''), strikes a necessary balance
    between the Navy's overall shipbuilding program requirements,
    resources, affordability and industrial base considerations.
                                     ______

               Questions Submitted by Senator Christopher S. Bond
                                   f/a-18e/f
        Question. Admiral Johnson, would you discuss your unfunded
    requirement for 3 additional F/A-18E/F aircraft in fiscal year 2001?
    Could you discuss your views on the Super Hornet and its recent
    completion of its Operational Evaluation (OPEVAL)? I understand it
    received the highest possible rating from the Navy's test community?
        Answer. The Navy was forced to remove three aircraft from the
    fiscal year 2002 budget due to rising costs in maintaining current
    readiness within our top line. Procurement of three aircraft in fiscal
    year 2001 for a fiscal year 2003 delivery would put the Navy back on
    track to reach our procurement objective of 548 aircraft as validated
    by our most recent Quadrennial Defense Review (QDR). Our aging fleet of
    F-14s and older F/A-18s requires replacement in order to sustain
    overall strike fighter inventory to support CINC warfighting
    requirements. These aircraft would ensure the timely activation of the
    East Coast Fleet Readiness Squadron and mitigate risk to the current
    transition plan due to aircraft quantity shortfalls. If the present
    shortfall of aircraft is realized, non-deployed readiness will decrease
    because squadrons will have less than Primary Aircraft Authorized (PAA)
    when attrition rates and modification pipelines are considered,
    requiring them to accomplish their mission with less aircraft. The
    funding requested also includes provisions for spares and ancillary
    equipment that was also absorbed by the reduction of three aircraft.
        The F/A-18E/F Super Hornet will be the centerpiece of Naval
    Aviation's power projection capability in the littoral battle space and
    strike arena. During its operational evaluation, it demonstrated the
    capabilities that are vitally important to our battle groups,
    specifically: increased range, payload and payload flexibility, carrier
    recovery payload bring back, survivability and provisions for growth.
    The F/A-18E/F has undergone exhaustive scrutiny and has been subject to
    rigorous DOD procurement, acquisition and evaluation standards. The
    Navy's independent test activity certified that the aircraft was
    operationally suitable and operationally effective which was the
    highest possible ``grade'' in this test. In addition, the Super Hornet
    achieved all Key Performance Parameters that were established in 1992.
    The Navy expects to enter a multi-year contract for the production of
    222 aircraft that covers procurement in fiscal year 2000-fiscal year
    2004. All full rate production criteria has been met which included:
    operationally effective and operationally suitable OPEVAL, achievement
    of all KPPs and certification of a multi-year contract savings of 7.4
    percent over single year contracts for the same number of aircraft. The
    F/A-18E/F will be a tremendous warfighting asset to our Naval forces
    and a value to taxpayers.
                                      t-45
        Question. The Navy and Marine Corps Pilot Training program has been
    improved by the incorporation of the T-45 Training System into
    Meridian, MS and Kingsville, TX. It's my understanding that the T-45,
    produced in St. Louis, is performing above standards. The three
    additional T-45s that you have listed very high in your Unfunded
    Requirements list could benefit further your pilot training program.
    What is the future procurement plans for this aircraft?
        Answer. Fiscal year 2001 President's Budget shows a procurement of
    12 aircraft in fiscal year 2001 and 4 aircraft in fiscal year 2002 for
    a total program procurement of 169 T-45 aircraft. USN is refining
    requirements and will use the fiscal year 2002 budget development
    process to define the FYDP procurement profile.
                          joint direct attack munition
        Question. The Joint Direct Attack Munition (JDAM) has proven itself
    in the air war in Kosovo. You have requested 1,500 additional kits in
    your Unfunded Requirements list and placed it very high on the
    priorities. Could you comment on the Navy's need for this weapon?
        Answer. JDAM is a kit that upgrades existing general purpose bombs
    and provides the DON with a new accurate through-the-weather strike
    capability. Kosovo lessons learned highlighted the need for this all-
    weather capability. Following Kosovo, Sixth Fleet identified GPS-guided
    munitions as one of their two highest priority desired weapon
    improvements. Recently, the Navy has used JDAM with great success in
    Iraq, reinforcing the tactical significance of this weapon. JDAM has
    revolutionized Strike Warfare and is providing the warfighter with a
    true force multiplier.
                                    slam-er
        Question. CNO--SLAM-ER is currently operationally deployed in
    critical hot spots in the world. Additional follow-on operational
    testing was recently completed with five outstanding missile shots. The
    results verify that the weapon is a significant improvement over the
    baseline SLAM. The budget drops the number of missiles procured to 30
    in fiscal year 2001. Your Unfunded Requirements asks for 60 additional
    missiles, bringing SLAM-ER production into a very cost effective rate.
    Could you comment on the need for additional SLAM-ERs in the Navy
    inventory?
        Answer. We are extremely gratified by the recent test results of
    the SLAM-ER and confident it will fill an increasingly important role
    in our weapons inventory. The budget, reflecting a balanced warfighting
    approach within the available resources, precludes procuring everything
    needed in the desired quantities. Moreover, we are continually updating
    our inventory requirements for all weapons to ensure we have the proper
    mix for the anticipated needs. With this in mind, an increase in
    required inventory, particularly with a weapon providing the standoff
    and precision of SLAM-ER, can be expected.
                                     ______

                Questions Submitted by Senator Patrick J. Leahy
        Question. As experienced military leaders who deal with missile
    defense issues every day, I would like to hear your personal views on
    National Missile Defense. Do you think that it embodies that right
    strategy to deal with the possible threat from so-called rogue states?
    Based on your knowledge of the test program, would you be willing to
    share with us your thoughts on a possible recommendation to the
    President that he deploy a National Missile Defense in June?
        Answer. A decision to go forward with National Missile Defense
    deployment has to be made with a clear goal in mind and the benefit of
    test results not yet available. The Navy will support the Deployment
    Readiness Review (DRR) decision when determined.
        Our greatest operational interest is of course, in the potential
    role of sea-based systems. The Department of Defense has been
    considering broader NMD concepts including different sites and more
    robust capabilities.
        As the technologies mature, we will assume that consideration of a
    sea-based Navy adjunct be included in any policy and/or architectural
    designs for a NMD system.
        Clearly, much work remains before any NMD system is fielded. I
    believe the potential future Naval contributions to National Missile
    Defense are as a complement to the land-based NMD system. As the
    technology develops, we may find that in same situations, they could be
    more desirable.
        Question. Mr. Secretary and Admiral Johnson, would you provide for
    the record an estimate of the cost of building, deploying, and
    maintaining a sea-based national missile defense? When could the first
    interceptors be operational, and when could a sea-based system be fully
    operational? Also, what would the architecture of such a system look
    like? How many interceptors would initially be put at sea, and what
    might be an ultimate number? Would the sea-based interceptors be part
    of an integrated system with land-based interceptors, or could it stand
    on its own?
        Answer. Today, the Navy has no NMD program in progress and has no
    assigned NMD mission. The fiscal year 2000 Authorization Act directed
    an in-depth study concerning options for supplementing the initial
    land-based National Missile Defense (NMD) architecture with ships at
    sea. The overall objective is to define and evaluate the feasibility of
    sea-based NMD concepts and to assess their relative merits. The first
    Part of this study is nearing completion. The second Part of this
    study, scheduled to begin this summer, will address the cost and
    schedule in more detail.
        Deploying a sea-based NMD component, capable of complementing our
    planned land-based capability, will require development of an
    interceptor, sensors and BMC\4\I systems capable of working in concert
    with developing land-based hardware and software. Development of the
    interceptor, evolving from the proven STANDARD Missile family
    technology and capitalizing on our ongoing Navy Theater Wide Kinetic
    Warhead development, along with supporting BMC\4\I systems to provide
    essential connectivity, is feasible in time to support C-1 deployment.
    Sensor development could also pace the threat, and could be deployed
    during the C-1 fielding period. Sensor development would be done
    through radar improvements and depending on the threat, could be ready
    to support C-1, moving to C-3. Development of the connectivity and
    sensor netting needed to support integrating sea-based systems into
    land-based capability in time to support C-1 deployment is also
    feasible.
        I conclude that a Naval NMD component is feasible because all the
    technical challenges we have identified seem to resolvable. Deployment
    and delivery schedules for this and other potential alternatives will
    be better defined upon completion of the study.
                                     ______

                   Questions Submitted to Gen. James L. Jones
                  Questions Submitted by Senator Thad Cochran
        Last year Secretary Danzig, Admiral Johnson, and General Krulak
    testified that the Navy had a requirement for a new LHD sooner rather
    than later. As you know, $45 million in advanced procurement was
    appropriated in fiscal year 1999, and $375 million and language
    authorizing the Navy to contract for the ship was included in last
    year's bill. Hopefully the Defense Comptroller will favorably respond
    to the Navy's recent request for release of these funds, in order that
    the Navy can go ahead and contract for LHD-8.
        Question. Looking at a Marine Expeditionary Unit's (MEU)
    requirements to carry out its mission, what advantages, in terms of
    warfighting capability, does a more modern and better equipped LHD-8
    provide compared to an older LHA?
        Answer. The current plan is to decommission the five LHA-1 TARAWA
    class ships at the end of their 35-year Expected Service Life starting
    in the year 2012. The LHA-1 ship class replacement plan shows one ship
    funded approximately every 3-5 years with the last LHA-1 replacement
    ship funded in 2015. In replacing the LHAs, an LHD-8 Transition Ship
    and follow on LHX class ship will better serve and meet Marine Corps
    requirements.
        LHD-8 is a good transition ship for the USMC, providing increased
    reliability and support capabilities over the LHA-1 TARAWA class ships.
    The enhanced capabilities of the current LHD ships include the
    following:
      --Expanded C\4\I (Command, Control, Communications, Computers, and
            Intelligence) Capabilities.
      --Larger flight deck with enhanced aviation support facilities and
            expanded aviation fuel storage facilities specifically designed
            to support an Aviation Combat Element that includes a fix wing
            detachment of AV-8s.
      --Greatly expanded and redesigned well deck capable of landing/
            launching and supporting the LCAC, our primary over-the-horizon
            landing craft.
      --Designed with an enhanced damage stability capability by
            incorporating the Fuel Compensating System that corrects
            stability concerns identified with the LHAs.
        Question. Can the older LHA class ships accommodate the number of
    MV-22's required to support a Marine Expeditionary Unit?
        Answer. The LHA class ships as currently configured cannot
    accommodate 12 MV-22s required to support a Marine Expeditionary Unit.
    Deploying without a full complement of MV-22s, CH-53s, and AV-8Bs is
    unacceptable. The LHA ship class must be capable of safely deploying
    with our current/projected aircraft and equipment.
        In order for the LHAs to accommodate the MV-22s, the Navy plan is
    to install the Fuel Compensating System ship alteration to correct the
    LHA-1 TARAWA class ships' stability concerns. This initiative is not
    currently funded. Additional alterations to the flight deck,
    superstructure, and support facilities are also required. These
    alterations consist of the removal of a bridge wing and countermeasure
    washdown piping to ensure proper rotor tip clearance, modifying the
    flight deck markings to accommodate the MV-22, and enhancing the
    Aviation Intermediate Maintenance Department's capability to provide
    nitrogen gas in support of aircraft operations and maintenance. These
    alterations are funded.
        Question. What is the plan to support the Marine Expeditionary Unit
    with the MV-22s and when will you need a new LHD to accommodate the
    plan?
        Answer. The MV-22s are scheduled to begin shipboard deployments
    with the Marine Expeditionary Units from the East Coast in fiscal year
    2003 and from the West Coast during fiscal year 2006. Once V-22s begin
    deploying, the Marine Corps plans to maintain continuous V-22
    deployments from the respective coasts. The Marine Corps and Navy have
    been working together to ensure all requirements are met to support
    continuous MV-22 shipboard deployments.
        A separate but related issue is the need for an LHD-8 transition
    ship that will improve the Marine Corps' ability to respond to
    worldwide crises. Currently, the LHD-8 transition ship is partially
    funded with the balance of required funding scheduled in fiscal year
    2005.
        The centerpieces for Marine forces afloat are our Big Deck
    amphibious assault ships. These focal points of our Amphibious Task
    Force consist of five LHAs and six LHDs with a seventh LHD presently
    under construction with scheduled delivery during fiscal year 2001.
    These ships are critical to maintaining our amphibious lift and crisis
    response capability. The five LHA class ships reach the end of their
    35-year extended service life between 2011 and 2015. The LHD-8 is the
    transition ship to the LHA Replacement ship that will replace the aging
    LHA ship class.
        The LHD-8 transition ship will incorporate numerous and significant
    improvements over its predecessor. The ship will have a gas turbine
    propulsion system and a new robust electrical system, thereby
    eliminating steam service that is present on all existing Big Deck
    amphibious ships. These engineering advantages equate to improved
    reliability and maintainability that ensures the Marine Corps' ability
    to quickly respond to worldwide crises.
        In replacing the LHAs, the LHD-8 transition ship and follow-on LHA
    Replacement ships will better serve and meet Marine Corps requirements.
    The LHA Replacement ship class would be either of two options: continue
    to redesign the LHD to a modified variant or a new design LHX. This
    LHD-8 transition ship/LHA Replacement shipbuilding plan makes good
    warfighting sense.
        Question. Given the capability the MV-22 Osprey brings to a Marine
    Expeditionary Unit, please explain, the importance of replacing the
    older LHAs with the newer more modern LHD-8.
        Answer. The MV-22 is the future centerpiece of the Marine Corps'
    vertical assault capability. The MV-22 will enable us to provide faster
    force closure with reduced strategic airlift through self-deployment,
    increased operational reach, greater operational tempo, combat
    effectiveness and efficiency, and increased combat survivability. The
    Advanced Amphibious Assault Vehicle (AAAV), Landing Craft Air Cushion
    (LCAC), and ``Osprey'' will comprise the mobility triad that enables
    Operational Maneuver From the Sea (OMFTS).
        The centerpieces for Marine forces afloat are our Big Deck
    amphibious assault ships. These focal points of our Amphibious Task
    Force consist of five LHAs and six LHDs with a seventh LHD presently
    under construction with scheduled delivery during fiscal year 2001.
    These ships are critical to maintaining our amphibious lift and crisis
    response capability. The five LHA class ships reach the end of their
    35-year extended service life between 2011 and 2015. The LHD-8 is the
    transition ship to the LHA Replacement ship.
        The five LHA TARAWA class ships no longer meet designed damage
    stability criteria. LHA stability is a weight/growth issue with
    increasing higher topside weights over the life of the ship class
    compounding the situation. Newer and heavier equipment (antennas,
    radars, tanks, trucks, and aircraft, e.g., the MV-22) has contributed
    extensively to the stability problem. The Navy plans to correct the
    stability problem on four or five LHAs (depending on LHD 8 delivery) by
    installing a Fuel Compensating System to allow for the full complement
    of MV-22s to begin deploying in fiscal year 2003. However, this
    initiative is presently not funded. In addition, LHAs will require
    specific ship alterations to properly integrate the MV-22 onboard.
    These ship alterations include removing a bridge wing, adding a
    nitrogen plant, moving washdown piping, and remarking the flight deck.
    These alterations are funded.
        The current plan is to decommission the five LHA-1 TARAWA class
    ships at the end of their 35-year Expected Service Life starting in the
    year 2012. The LHA-1 ship class replacement plan shows one ship funded
    approximately every 3-5 years with the last LHA-1 replacement ship
    funded in 2015. In replacing the LHAs, an LHD-8 Transition Ship and
    follow on LHX class ship will better serve and meet Marine Corps
    requirements.
        LHD-8 is a good transition ship for the USMC, providing increased
    reliability and support capabilities over the LHA-1 TARAWA class ships.
    The enhanced capabilities of the current LHD ships include the
    following:
      --Expanded C\4\I (Command, Control, Communications, Computers, and
            Intelligence) Capabilities.
      --Larger flight deck with enhanced aviation support facilities and
            expanded aviation fuel storage facilities specifically designed
            to support an Aviation Combat Element that includes a fixed
            wing detachment of AV-8s.
      --Greatly expanded and redesigned well deck capable of landing/
            launching and supporting the LCAC, our primary over-the-horizon
            landing craft.
      --Designed with an enhanced damage stability capability by
            incorporating the Fuel Compensating System that corrects
            stability concerns identified with the LHAs.
        Question. General Jones, in your prepared statement, you support
    achievement of 3 Marine Expeditionary Brigades (MEB), but point out
    that current budget plans will only support a 2.5 MEB lift capability
    by fiscal year 2008.
        Can you elaborate on what this shortfall means and how the Nation's
    war fighting capability will be effected?
        Answer. A global superpower must possess an ability to execute
    unilateral action. The key requirement for unilateral action is the
    ability to project combat power ashore in a theater without forward
    bases and in the face of armed opposition. The current Navy Long Range
    Shipbuilding plan meets the fiscally-constrained, programmatic
    capability established for the Marine Corps in the Quadrennial Defense
    Review resulting in an amphibious force structure capable of lifting
    2.5 MEB assault echelon-equivalents by forming 12 Amphibious Ready
    Groups. Cutting, delaying, or inadequately funding amphibious ship
    procurement, will adversely effect our ability to conduct forcible
    entry operations and hinder our ability to comply with the current
    Secretary of Defense Global Naval Forces Presence Policy.
        Question. What does the Marine Corps require to reach the desired
    3.0 MEB Lift capability?
        Answer. Amphibious forces are the nation's most flexible and
    adaptive combined arms crisis response capability. The requirement for
    an amphibious ship force structure that supports 3.0 Marine
    Expeditionary Brigade (MEB) assault echelon-equivalents of lift, as
    originally stated in the Department of the Navy Integrated Amphibious
    Operations and USMC Air Support Requirements (DoN Lift II) and later in
    the Mobility Requirements Study, is based on five fingerprints of
    amphibious lift. Those fingerprints are: personnel, vehicle square
    feet, cubic feet of cargo, vertical takeoff and landing spots, and
    landing craft, air cushioned (LCAC) spots. Achieving the required
    fingerprint remains a priority requirement.
                                     ______

                  Questions Submitted by Senator Arlen Specter
        Question. The Marine Corps doctrine Operational Maneuver From the
    Sea is based on the triad of V-22, the Advanced Amphibious Assault
    Vehicle (AAAV), and the Landing Craft Air Cushion (LCAC). Is the Marine
    Corps making enough progress on the procurement of these three
    programs?
        Answer. Yes, the Marine Corps is making progress.
        The current MV-22 procurement plan provides a continuous Marine
    Expeditionary Unit ``Osprey'' capability in fiscal year 2003. This is
    followed by a projected Marine Expeditionary Brigade MV-22 ``Osprey''
    capability in fiscal year 2007. The complete tactical fielding of the
    MV-22 will occur around fiscal year 2013 with the transition of the
    last Reserve MV-22 Osprey squadron. Final deliveries of the MV-22 to
    the training squadron will continue through the beginning of fiscal
    year 2015.
        The Marine Corps desires to increase procurement to 36 MV-22s per
    year. This would allow the Marine Corps to increase the progress toward
    full Operational Maneuver from the Sea capability and to shorten the
    fielding plans by 2-3 years.
        The Advanced Amphibious Assault Vehicle (AAAV) Program is currently
    nearing the completion of the Program Definition and Risk Reduction
    (PDRR) phase of development. The Government accepted the first of three
    PDRR prototypes for Developmental Testing in January 2000. The Program
    will enter the Engineering and Manufacturing Development phase in
    fiscal year 2001 during which ten prototypes will be fabricated and
    tested. Low Rate Initial Production for 101 vehicles begins in fiscal
    year 2004 with Full Rate Production starting in fiscal year 2006 and
    continuing through full operational capability in fiscal year 2013. The
    projected procurement plan will provide an initial and continuous
    Marine Expeditionary Unit AAAV operational capability beginning in
    fiscal year 2006.
        Delivery of the final LCAC (total of 91) in December 2000 completes
    this procurement program. Currently, LCACs are scheduled to undergo a
    Service Life Extension Program (LCAC SLEP) that extends the useful
    service life of these craft an additional 20 years. LCAC SLEP
    encompasses the following:
      --Replacement of obsolete electronics with a new command module
            introducing open architecture to facilitate low cost commercial
            off-the-shelf insertion as technology continues to evolve.
      --Replacement of the buoyancy box solving corrosion problems while
            incorporating hull improvements.
      --Incorporating Enhanced Engines providing additional power capable
            of lifting all required Marine Corps loads.
      --Replaces current skirt design with Deep Skirt increasing craft
            performance under all operational conditions.
        LCAC SLEP is critical to the Marine Corps' expeditionary
    warfighting capability as part of projecting combat power ashore. To
    support the MAGTF of the next 20 years the LCAC must be able to operate
    with heavier loads, at faster speeds and further distances, under
    adverse conditions, and with higher reliability.
        Question. What level of funding is needed for the Marine Corps to
    satisfy the goal of 36 MV-22's per year?
        Answer. To ramp up to 36 aircraft in fiscal year 2006, $1,066
    million is required across the Future Years Defense Program (FYDP).
    This would reduce procurement in the outyears and achieve an overall
    savings of approximately $280 million. The following cost and profile
    adjustments are required to execute the desired 36 per year procurement
    of MV-22s by fiscal year 2006:

                                               [Dollar amounts in million]
    ----------------------------------------------------------------------------------------------------------------
                                                                             Fiscal year--
                           Quantity                       --------------------------------------------------  Total
                                                             2001      2002      2003      2004      2005
    ----------------------------------------------------------------------------------------------------------------
    Current Profile......................................       16        19        28        28        28       119
    Revised Profile......................................       16        24        30        32        34       136
    Delta................................................  ........        5         2         4         6        17
                                                          ==========================================================
    Current WpnSys Cost..................................   $1,208    $1,345    $1,746    $1,698    $1,637    $7,634
    Revised WpnSys Cost..................................    1,228     1,634     1,909     1,944     1,985     8,700
    Delta................................................       20       289       163       246       348     1,066
    Tooling Delta........................................     (+10)     (+25)     (+32)  ........  ........  .......
    Adv. Procurement Delta...............................     (+10)  ........      (+5)     (+10)     (+20)  .......
    ----------------------------------------------------------------------------------------------------------------

        Tooling and Advance Procurement Deltas are included in the Weapons
    System Cost Delta.
        The earliest that the MV-22 ramp could be increased to 36 a year is
    fiscal year 2003. Increasing the MV-22 in fiscal year 2003 will result
    in an estimated $500 million Weapons System Cost savings and reduces
    procurement by two years. The following cost and profile adjustments
    are required to execute the desired 36 per year procurement of MV-22s
    by fiscal year 2003:

                                               [Dollar amounts in million]
    ----------------------------------------------------------------------------------------------------------------
                                                                             Fiscal year--
                           Quantity                       --------------------------------------------------  Total
                                                             2001      2002      2003      2004      2005
    ----------------------------------------------------------------------------------------------------------------
    Current Profile......................................       16        19        28        28        28       119
    Revised Profile......................................       16        27        36        36        36       151
    Delta................................................  ........        8         8         8         8        32
                                                          ==========================================================
    Current WpnSys Cost..................................   $1,208    $1,345    $1,746    $1,698    $1,637    $7,634
    Revised WpnSys Cost..................................    1,238     1,820     2,172     2,129     2,126     9,485
    Delta................................................       30       475       426       431       489     1,851
    Tooling Delta........................................     (+10)     (+25)     (+32)  ........  ........  .......
    Adv. Proc. Delta.....................................     (+20)  ........  ........  ........  ........  .......
    ----------------------------------------------------------------------------------------------------------------

        Tooling and Advance Procurement deltas are included in the Weapons
    System Cost delta.
        Total funding required across the FYDP to increase the ramp rate to
    36 per year in fiscal year 2003 is $1,851 million.
        The procurement ramp can be adjusted to go to 36 aircraft per year
    anytime after fiscal year 2003. However, total program savings are
    highest if we reach the 36 aircraft annual procurement rate in fiscal
    year 2003. Projected savings streams lessen each year we delay getting
    to the 36 aircraft annual rate.
                                     ______

               Questions Submitted by Senator Christopher S. Bond
                                     av-8b
        In your fiscal year 2001 Unfunded Requirements List, you
    established a need for 4 additional Remanufactured Harriers. However,
    no mention was made of advance procurement for procurement beyond
    fiscal year 2001.
        Question. Do you have a need to remanufacture the remaining 30 or
    so Day Attack AV-8B's in your Harrier inventory? Would additional
    advance procurement in fiscal year 2001 be appropriate to support the
    remanufacture of the remaining Day Attack aircraft? How does this tie
    up with the future procurement of Joint Strike Fighter?
        Answer. Yes; the USMC is requesting a total of 16 additional Reman
    aircraft, 4 in fiscal year 2001 and 12 in fiscal year 2002. Yes; $18
    million in advance procurement in fiscal year 2001 is required to
    support the procurement of the additional 12 Reman aircraft in fiscal
    year 2002. These 16 additional Remanufactured aircraft will allow us to
    maintain the temporarily reduced PAA of 16 (desired 20) in our 7 Attack
    Squadrons until JSF IOC of 2010 (desired JSF PAA of 20 aircraft in 7
    squadrons).
                                  usmc ecp-583
        The Marine inventory of F/A-18A aircraft requires upgrades to bring
    them up to F/A-18C capabilities. You have identified funding for 20
    additional ECP-583 upgrades (10 Active and 10 Reserve) in your Unfunded
    Requirements List.
        Question. How important is this upgrade in modernizing your fighter
    attack capabilities?
        Answer. The primary factor driving the F/A-18A upgrade is the
    mitigation of the current F/A-18C/D inventory shortfall that becomes
    almost unmanageable beyond fiscal year 2006. The 28 active and 48
    reserve F/A-18A's represent 51 percent of the total single seat strike
    fighters in the USMC inventory. The F/A-18C/D is running out of service
    life faster than the F/A-18A due to operational demand. The F/A-18C/D
    is in higher demand for use by the CINCs and Marine Air Ground Task
    Force (MAGTF) than the F/A-18A because of its enhanced operational
    capability; mainly its ability to employ precision guided weapons.
        ECP-583 consist primarily of avionics and hardware upgrades that
    allow the F/A-18A to process and utilize the updated versions of the F/
    A-18C software and accessories. The modified ``A'' aircraft will have
    comparable capabilities to a Lot 17 F/A-18C aircraft; an aircraft 8
    years newer. ECP-583 will allow the ``A'' aircraft to employ all
    current and future POMed weapons available to the F/A-18C/D.
        ECP-583 will allow the Marine Corps to spread operational demand
    over its full inventory of F/A-18s. This will help to slow the rate of
    accumulated service life on the F/A-18C/D. The modification also
    enhances commonality between the ``A'' and ``C'' aircraft, which
    reduces logistical footprints, pilot and maintenance training.
        ECP-583 is the most cost effective means to bridge the warfighting
    capability required of Marine tactical aviation from present until the
    arrival of the Joint Strike Fighter in 2010.
                                     ______

                Questions Submitted by Senator Patrick J. Leahy
                               roles and missions
        General Jones, as we continue to maximize the resources we allocate
    to the military, it seems to me that we need to ensure that the roles
    and missions of the Armed Services do not overlap substantially. Right
    now, the Army is refining its new vision for the future. The general
    outlines of the vision indicate the Army is going to be a lighter force
    that is much more deployable. This process of transformation raises a
    number of questions in regard to the roles and missions of the
    services. I would like to know whether the Army is taking advantage of
    the Marine Corps' expertise as in its development of doctrine and force
    structure plans.
        Question. Do you believe that this new force will duplicate the
    capabilities you can already provide? Speaking from experience, can the
    Army balance this new role with its historical role as a heavy,
    sustained-fighting force?
        Answer. Your Marine Corps and the Army have many professional
    commonalties; which includes shared types of equipment, training
    resources and requirements, and warfighting skills, tactics and
    techniques. Both of our services work diligently to ensure that we
    maximize economies of scale in obtaining common resources. To this end,
    we maintain liaison offices and cooperate on experimentation and
    acquisition programs to ensure that our doctrines and requirements
    complement one-another whenever possible. The development of
    redundancies cannot be ruled out and would not prove a major challenge
    to address so long as each of our services focuses on its core
    competencies.
        Secretary Cohen has been very deeply involved in working with the
    Chief of Staff of the Army and making sure that the Army is focused in
    the right direction. In the long term, the Army's modernization will
    benefit your Marine Corps. The exact extent to which the Army is
    leveraging off of the Marine Corps experiences for developing its
    future doctrine and force structure is an issue that I will have to
    defer to Secretary Cohen and the Chief of Staff of the Army.
                                     ______

                Questions Submitted by Senator Richard J. Durbin
        Despite Congressional concerns about the cost viability of the
    LW155, the Marine Corps keeps telling us that the LW155 program has
    sufficient funding. I'm told that the Marine Corps budgets which fund
    the ceiling priced development contract, that includes the first two
    production years, are the basis for your conclusion that the program
    has sufficient funding. One contractor has already walked away from
    this ceiling priced contract and I understand that the current
    contractor does not have the ability to live up to the requirements of
    the contract.
        Question. Have you had a ``should cost'' study done on this effort
    to determine if you are being overly optimistic on this critically
    needed system due to your ceiling priced contract?
        Answer. The previous prime contractor Cadillac Gage Textron would
    not honor the ceiling price options originally negotiated and was
    unable to perform prime contractor responsibilities for the LW155. That
    contract was novated to Vickers Shipbuilding and Engineering, LTD
    (VSEL) (now British Aerospace (BAE) Systems) who was the developer of
    the weapon. The new contract with VSEL (signed Dec. 1998) established
    ceiling price options for the first two years of production which BAE
    has every intention of meeting. The USMC has fully funded the LW155
    program consistent with the ceiling price renegotiated with VSEL. BAE's
    corporate commitment to meeting the ceiling prices was reiterated to
    the GAO by BAE during GAO's visit to the Joint Program Office on March
    9th, 2000. There have been several Government cost studies conducted
    which supported the ceiling prices negotiated with VSEL. It is our
    intent to try and negotiate those prices down from their current
    ceiling levels. To support this, the contract requires BAE to submit
    revised numbers two more times prior to option award. Based on the
    previous cost estimates and BAE Systems commitment to meeting the
    negotiated ceiling price options, we do not feel another ``should
    cost'' study is prudent at this time.
        Question. Maintaining a viable U.S. howitzer industrial base should
    be a goal of all of us responsible for our National Defense. I agree
    with the current contractor's intent to subcontract 70 percent of this
    contract to U.S. sources. I am concerned, however, that this 70 percent
    intent has been abandoned due to the current contractor's cost
    problems.
        Is the Army and Marine Corps ready to accept having this critically
    needed howitzer system produced offshore? If not, when is the Marine
    Corps going to stop giving Congress the same ceiling priced contract
    answer and take the necessary steps to ensure maintenance of a viable
    U.S. howitzer industrial base?
        Answer. The Marine Corps is fully committed to maintaining a viable
    U.S. industrial base for howitzers. The contractor's intent to produce
    up to 70 percent of the weapon in the U.S. has not been abandoned and
    there are no contractor cost problems influencing this matter. It is
    still British Aerospace (BAE) Systems' intent to procure material,
    fabricate parts, weld and machine assemblies, integrate assemblies into
    a complete weapon and test the end item in the U.S. They believe the
    sum total of this work will equate to 70 percent of the total weapon
    cost minus the GFE cannon and fire control. In fact, this intent was
    reinforced only last week when representatives from the General
    Accounting Office discussed this very issue with BAE Systems. There are
    numerous commercial activities that are capable and qualified to
    accomplish this work to include Army Arsenals. The national industrial
    defense sector is fully capable of producing the LW155 and of
    maintaining the U.S. howitzer industrial base. The Marine Corps
    understands the Senator's concern for maintaining the expertise
    resident at the Army Arsenals. The Army Arsenals do possess a wealth of
    experience in the area of howitzer development and production and they
    will be given every opportunity to compete with U.S. industry for the
    work.

                              subcommittee recess

        Senator Stevens. We will have Secretary Hamre here on
    Monday, March 6 at 2 p.m.
        Thank you very much.
        [Whereupon, at 4:10 p.m., Wednesday, March 1, the
    subcommittee was recessed, to reconvene at 2 p.m., Monday,
    March 6.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 2001

                                  ----------

                             MONDAY, MARCH 6, 2000

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 3:12 p.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Ted Stevens (chairman) presiding.
        Present: Senators Stevens, Domenici, Inouye, and Harkin.

                             DEPARTMENT OF DEFENSE

                          Deputy Secretary of Defense

    STATEMENT OF DR. JOHN J. HAMRE, DEPUTY SECRETARY OF
                DEFENSE

                    OPENING STATEMENT OF Senator TED STEVENS

        Senator Stevens. Dr. Hamre, I apologize for being late, and
    this is a sad occasion for us.
        Dr. Hamre. Me, too.
        Senator Stevens. As a matter of fact, it has been a long
    time, my friend, since I recognized you at a committee meeting,
    and you were what I called the spy of the Armed Services
    Committee at the appropriations process.
        Do you remember those days?
        Dr. Hamre. I do, indeed.
        Senator Stevens. I think you have appeared before us more
    than any other person in the last 7 years representing the
    Department of Defense (DOD), and you have provided us an
    unfailingly candid, honest, and really meaningful testimony,
    and we thank you very much.
        As a matter of fact, we just could not have you leave
    without having a meeting and putting it on the record how much
    we have appreciated your service for our Government, whether
    you have discussed overseas contingencies, improving the
    Department's financial and accounting systems, or sparring with
    us over base closures. Things we still do not like, but beyond
    that, your service in the Department, your assistance to
    Congress, and your absolute devotion to the men and women of
    our Armed Forces has not gone unnoticed. John, we really do
    thank you. You have served with great distinction.
        I think the committee is aware, all the members of this
    committee are aware you will now become the chief executive
    officer of the Center for Strategic and International Studies
    here in Washington. Despite the fact they interviewed all of
    us, you got the job.
        We do wish you well. You have a tough job in the year 2001.
    You and the Secretary have presented us a budget much different
    from last year's. There are no gaping holes in the 2001
    request, no unspecified rescissions, no split funding of
    military construction, and the early assessments from the
    Congressional Budget Office (CBO) and the Office of Management
    and Budget (OMB) indicate that they are very close. I cannot
    say the same thing about the rest of the budget, but this
    year's defense budget is one we can work with easily.
        However, that does not mean we have an easy year, and it is
    going to be very difficult for us to go forward. The House will
    report their supplemental bill, I am told, and provide more
    than the $2 billion in emergency funds for the Kosovo
    contingency operations, and these are matters covered also by
    the 2001 budget.
        It is no secret that around here some people think we ought
    to just move into the 2001 budget and forget the supplemental.
    The request for the first time since 1994 for DOD exceeds the
    estimate forecast by Congress in last year's budget resolution,
    and there are some problems as we will go ahead, but I do think
    that everyone should know that the resources available to the
    Department of Defense because of your work on this bill as a
    swan song really has been very excellent, and one that we can
    look forward to dealing with.
        We would welcome comments on the unfunded priorities
    presented by the service chiefs, as well as your assessment of
    how the Department is doing on financial management reform,
    defense reform initiative, and the Y2K effort. If you do not
    wish to make comments on those we will call you back as a
    witness from one of those other entities later, but I think it
    will be a very pleasant afternoon.
        Senator Inouye.

                     STATEMENT OF Senator DANIEL K. INOUYE

        Senator Inouye. Thank you very much, Mr. Chairman. I wish
    to echo your sadness in noting the departure of John Hamre. We
    really hate to see you go. You have been extremely helpful to
    all of us. Your wise counsel and your innovative suggestions I
    think have helped all of us immensely, but, as noted by the
    chairman, you are going to be just a few blocks away from us,
    so you can be expecting us to call on you quite often for your
    advice and counsel.
        Dr. Hamre. I will come any time.
        Senator Inouye. And, as noted by the chairman, we are very
    pleased with the budget and also the fact that it is an
    increase for the past 2 years now, 2 fiscal years, but there
    are a few things we have discussed in the past, and I suppose
    we will continue to discuss.
        The chairman and I have been traveling to visit our forces
    overseas, and we have come to the following conclusions. These
    are old hat to you. Retention, recruiting, readiness remain
    serious concerns. Overseas deployments continue at historically
    high levels. Spare part shortfalls and cannibalized equipment
    problems persist. Military departments are beginning to lower
    the standards for recruiting purposes.
        Military families and retirees are concerned about the
    state of military health care. Some of the families have
    expressed concern about being relocated in the middle of the
    school year. Our military and civilians are concerned about the
    prospects for careers in an institution that is still talking
    about downsizing. When is the ax going to fall? And if these
    were not enough, our military live and work in buildings that
    are literally crumbling.
        Simply put, we are still not doing enough, although we are
    trying our very best to resolve these matters, so as we begin
    our hearings this year these are a few of the concerns that
    some of us in the Congress have and I for one believe we need
    to redouble our efforts to improve the living and working
    conditions of our men and women in uniform.
        Yours has been a difficult challenge, I know, but you have
    done your best, and we are grateful for all you have done. In
    many ways, the fault lies with us here. You have consistently
    over the years shared with us your concerns, your concerns with
    world affairs, and we are the ones who decide how much you can
    spend.
        I think something has to be done to further educate us. I
    discussed this just a few minutes ago with the Chief of Naval
    Operations (CNO), and maybe I will do that with others also,
    but as you prepare to depart we welcome the opportunity to hear
    your final thoughts, and was this statement cleared by OMB, or
    since this is going to be the last one----
        Dr. Hamre. I always clear the written statement with them.
        Senator Inouye. Thank you very much, Mr. Chairman, and we
    hate to see you go, John.
        [The statement follows]:
                 Prepared Statement of Senator Daniel K. Inouye
        Thank you Mr. Chairman and welcome again to you Mr. Secretary. As
    the chairman noted, we expect this will be your last appearance before
    this subcommittee. I think I speak for all the members of the committee
    when I say that we are sorry to see you go.
        We have come to rely heavily on your counsel over the past several
    years.
        Mr. Chairman I would like to add that Dr. Hamre has been a true
    friend of this subcommittee. His willingness, in fact eagerness, to
    assist the committee in finding solutions to very difficult problems
    has made him a great asset both to DOD and to those of us in the
    legislative branch.
        John, thank you for all you have done during your many years of
    public service. We are very grateful for your dedication and tireless
    efforts on behalf of our nation.
        I understand that you will be staying in the Washington D.C. area.
    Let me assure you we will continue to seek your counsel and assistance
    in finding creative solutions to difficult problems. Dr. Hamre, we
    salute you.
        Mr. Chairman, today we continue our review of the fiscal year 2001
    budget for the Department of Defense. I want to congratulate the
    administration for requesting a significant increase in funding for the
    Department of Defense for the second straight year.
        The DOD request is $12.2 billion higher than this year's funding.
    It is obvious to us on this subcommittee that an increase is sorely
    needed.
        Mr. Secretary, as we visited our troops in the field during the
    past year and spoke with our military leadership, we have come to the
    following conclusions:
      --Recruiting, retention, and readiness remain serious concerns.
      --Overseas deployments continue at historically high levels.
      --Spare parts shortfalls and cannibalized equipment problems persist.
      --The military departments are changing (lowering) their standards
            for military recruits.
      --Too many troops are still voting with their feet and leaving the
            military in large numbers.
      --Our families are disturbed about health care, but little has been
            done to achieve meaningful improvement.
      --Our military and civilians are worried about the prospects for
            careers in an institution that is perpetually talking about
            downsizing.
      --Our families worry about being relocated in the middle of the
            school year.
      --And, if these were not enough, our military live and work in
            buildings that are crumbling. Simply put, we are still not
            doing enough to repair and modernize our bases.
        As we begin our hearings this year, these are a few of the concerns
    that some of us here in the Congress have. I, for one, believe we need
    to redouble our efforts to improve the living and working conditions of
    our men and women in uniform.
        Dr. Hamre, yours has been a difficult challenge to help manage this
    immense agency. We are grateful for all that you have done and continue
    to do.
        As you prepare to depart the government we would welcome the
    opportunity to hear your final thoughts on the challenges that face our
    military and their families and your personal views on what we need to
    do to ensure that our nation's security remains intact.

        Senator Stevens. Senator Domenici.

                     STATEMENT OF Senator PETE V. DOMENICI

        Senator Domenici. Thank you, Mr. Chairman.
        Mr. Secretary, I have some questions about some of the
    research aspects of the budget, in particular with research on
    directed energy, laser energy, and laser hardware. But first, I
    wanted to come particularly to thank you for the time you
    served here. One of my best friends in this place, as you well
    remember, was Sam Nunn, whose success in military matters we
    all understand. I remember you back when both you and I were a
    little bit younger, and looking back on it, there is no
    question that part of Sam Nunn's success was because he had you
    around. There is no question about that.
        He had a few other critical staff members, but you were
    number 1. I look at the military and what you have done since
    you have been there, and I cannot imagine doing the job you
    did. We changed things. The world changed. Technology changed
    so rapidly in such a short time. You never would have expected
    it when you took the job.
        The missions of the military are still in the process of
    evolution. I am not sure we have defined yet what we expect of
    you and them, and as a consequence, some things are going very
    well and some things are not. As well, I am not sure that we
    are capable of defining exactly what we expect of the military,
    because any time something happens in the world that is
    untoward, something that strikes at our principles or our
    common sense of humanity, the first people we think of as
    having an impact are the military.
        I am not sure that we yet understand the impact and
    frequency on our military of these long episodes overseas which
    are totally disruptive to their lives.
        In addition, it seems to me we never expected the all-
    volunteer Army to come into competition with an economy like
    this one. If anybody would have ever said your ability to
    recruit and maintain will come into focus with an economy
    growing at 4 percent a year, where many States have 2 percent
    unemployment, you would not have believed them. And if anybody
    told you to continue to get young men and women in abundance to
    come and sign up for the military, and then, after we have
    given them great education, stay in, obviously you would have
    said it would be a tough, tough job. So, you danced to very
    different tunes than you expected when you came in, and I do
    not know that anybody could have done it much better. I thank
    you as one Senator, and my questions will be very focused and
    brief.
        Thank you, Mr. Chairman.
        Senator Stevens. Thank you very much. Dr. Hamre, we would
    be happy to have your statement. The lights are not on today.
    There is no limit.

                         dr. hamre's opening statement

        Dr. Hamre. Thank you so much, Chairman Stevens, Senator
    Inouye, Senator Domenici. I am very grateful to be here and,
    frankly, I find myself surprisingly emotional about coming. I
    have enjoyed being before this committee more than anything I
    have done, and I am just very grateful for it, and I thought
    about preparing some words about how I felt, but someone beat
    me to the punch and, if I may, I would like to share these
    words. It only takes about 90 seconds.
        It was, I think, the best little speech that has been given
    in 25 years, and it was given by Bob Dole when he was awarded
    the Presidential Medal of Freedom, and he had a very brief
    acceptance speech and it says absolutely everything that I am
    feeling right now, so if I may I would just like to read it. I
    think this speech has not gotten the attention or the credit
    that it deserves, so if I may, I would just like to read it. It
    is how I feel about being here today.

        At every stage of my life I have been a witness to the
    greatness of this country. I have seen American soldiers bring
    hope and leave graves in every corner of the world. I have seen
    this Nation overcome depression and segregation and communism,
    turning back mortal terrorists to human freedom, and I have
    stood in awe of American courage and decency, virtues so rare
    in history and so common in this precious place.
        I can vividly remember the first time I walked into the
    Capitol as a Member of Congress. It was an honor beyond the
    dreams of a small town. I felt part of something great and
    noble. Even playing a small role seemed like a high calling,
    because America was the hope of history. I have never
    questioned that faith in victory or in honest defeat, and the
    day I left office it was undiminished.
        I know there are some who doubt these ideals, and I suspect
    there are young men and women who have not been adequately
    taught them, so let me leave a message to the future. I have
    found honor in the profession of politics. I have found
    vitality in the American experiment. Our challenge is not to
    question American ideals or to replace them, but to act worthy
    of them.
        I have been in Government at moments when politics was
    elevated by courage into history, when the Civil Rights Act was
    passed, when the Americans With Disabilities Act became law. No
    one who took part in those honorable causes can doubt that
    public service at its best is noble.
        The moral challenges of our time can seem less clear, but
    they still demand conviction and courage and character. They
    still require young men and women with faith in our process.
    They still demand idealists captured by the honor and the
    adventure of service. They still demand citizens who accept
    responsibility and who defy cynicism, affirming the American
    faith and renewing her hope. They still demand the President
    and the Congress to find real unity in the public good.
        If we remember this, then America will always be the
    country of tomorrow, where every day is a new beginning, and
    every life an instrument of God's justice.

        I think that is the best little speech in 25 years, and it
    says absolutely everything I feel about you, about this
    committee, about what it means to have served this country
    either in the Department of Defense, or especially here in the
    Senate, and I would thank all of you for what you are doing and
    for giving me a chance to be here, and I would also thank the
    remarkable staff that serves with you.
        They do not get the credit, frankly, that they deserve
    working the countless hours that make it happen around here,
    and I know that because I was lucky enough to be one of the
    staff members for the United States Senate, the proudest time
    of my life, and I will always think back with gratitude for
    having had that kind of an opportunity, and to have had an
    opportunity to work and to serve with people like you who have
    done what too few Americans are willing to do, and that is now
    serve in elected office, and I thank you for that, and I thank
    you for letting me come today.
        Mr. Chairman, if I might turn----
        Senator Stevens. You could have just given the statement
    that you made the day that you were sworn in in your present
    position and have matched Bob Dole's statement. I was there. It
    was a marvelous statement.
        What do you want to do now?
        Dr. Hamre. I want to go through a few charts to introduce
    our budget and use it more as a basis to highlight some of the
    strengths and some of the weaknesses in the budget we have
    given you, and to point out some of the things, especially as
    you are coming up on preparing the supplemental, and if I might
    ask, Captain, if you would start.
        Senator Stevens. Senator Inouye wants a copy of that
    speech.
        Dr. Hamre. Absolutely. I frankly think this is the kind of
    speech that should be carved on a wall some place.
        Senator Stevens. Give us your statement you made when you
    were sworn in and we will put it in the record and let other
    people see it.
        [The information follows:]
        DOD News Briefing, Monday, September 8, 1997, Acceptance Speech
        Deputy Secretary Hamre: Secretary Cohen, General Shalikashvili, I
    thank you for your remarkably generous words. I'm so pleased my
    parents, Mel and Ruth Hamre, are here because at least two people
    believe what you just said.
        I'm very honored to be here today, and I'm very honored especially
    to have so many very, very fine leaders of Congress to join us here
    today. You honor the Department by coming. I'm so very grateful. And my
    colleagues especially from other Departments of the Executive Branch.
    It's a great honor that you've given the Department of Defense that you
    would come today. Thank you.
        The German philosopher Goethe once said that if you discard what he
    owed to others, there wouldn't be much left of him. I am indebted to so
    many people who are here today, and I'm fortunate to have them here to
    share the joy of my time with you.
        I start, again, with my parents, Melvin and Ruth Hamre, and I'm so
    delighted they're here. My brother, sisters; my larger family; and I'm
    especially happy to have my large church family who's here with me
    today. I'm very grateful that you're all here.
        I also would have to say thank you to my friend and my partner in
    life, Julie--my wife. I thank you for joining me on this latest leg in
    our journey through life together.
        The great humanitarian Albert Schweitzer once told a group of his
    friends, ``I do not know what your destiny will be, but one thing I do
    know, the only ones among you who will really be happy are those who
    have sought and found how to serve.'' I stand here before you today as
    the happiest man in America. Words cannot capture what an honor it is
    for me to be here today.
        As Secretary Cohen said, I grew up in a very small town in South
    Dakota where none of the houses had numbers and none of the streets had
    names, and to think that someone like me could end up being the Deputy
    Secretary of Defense really speaks volumes about the greatness of this
    country and its unbounded opportunities for all.
        I'm grateful to my country for this opportunity to serve. I'm
    grateful to you, Mr. Secretary, and to the President for the confidence
    that you have placed in me. I'm very grateful to the Congress, to the
    leaders of the Congress, who have extended to me their trust and their
    willingness to work with me. Finally, I'm very thankful to all the
    members of the armed services for this opportunity to lead them, and
    I'm very grateful, indeed.
        I pledge to all of you my complete loyalty, my honesty, and every
    ounce of my energy as we, together, set about the process of defending
    America.
        This month marks the Golden Anniversary of the Department of
    Defense. We celebrate 50 years of guarding America--a half a century of
    excellence. Created at the dawn of the Cold War, this remarkable
    Department has protected America during its darkest hours, and saw us
    through to the dawn of a new and brighter era. Today, in the twilight
    of the 20th Century, this nation is blessed with unprecedented
    opportunities to build peace and a better tomorrow.
        Secretary Cohen, on behalf of the President, has set us on a clear
    path for our nation's defense today and in the future. Working with the
    Congress, the Department will retain the ability to meet all
    conceivable challenges to America and to our allies today and in the
    future. We will give America a Department that is ready in the future
    to meet the demands for defense that we think will emerge. We will
    emphasize and promote the innovation inherent in the American spirit so
    that the Department can adapt to unforeseen challenges that lie ahead.
        We will give highest priority to our greatest natural resource--our
    talented men and women who comprise this remarkable force. We will
    eliminate needless spending by streamlining and reengineering the
    Department, especially in the areas of support and administration. And
    we will emphasize the values that constitute the foundation of this
    great country and of this Department--duty, honor, integrity, honesty,
    faithfulness.
        As President Clinton has said, ``America is the indispensable
    nation.'' You, the men and women of the armed forces--and I include all
    civilians here in that--are the indispensable people of this
    indispensable nation. Because of your willingness to serve and
    sacrifice, America will accomplish much in coming years. I pledge that
    I will seek with every fiber of my being to support you and to live up
    to your trust.
        As I begin this challenge, I'm inspired by the words of a very
    great American who is also a fellow Mid-Westerner, and that is Senator
    Bob Dole. Last January, President Clinton honored Bob Dole by
    presenting him the Presidential Medal of Freedom. Senator Dole, in
    turn, gave America a great gift with a lovely little speech that he
    used to acknowledge that gift. I would like to read to you a few
    portions of it because it says everything that I feel today.
        Senator Dole said, ``I have seen American soldiers bring hope and
    leave (inaudible) in every corner of the world. I have seen this nation
    overcome depression and segregation and communism, turning back mortal
    threats to human freedom. And I have stood in awe of American courage
    and decency, virtues so rare in history and so common in this precious
    place.
        ``I have been in government at moments when politics was elevated
    by courage into history. When the Civil Rights Act was passed; when the
    Americans with Disability Act became law. No one who took part in those
    honorable causes can doubt that public service at its best is noble.
        ``The moral challenges of our time can seem less clear, but they
    still demand conviction and courage and character. They still require
    young men and women with faith in our process. They still demand
    idealists captured by the honor and adventure of service. They still
    demand citizens who accept responsibility and who defy cynicism--
    affirming the American faith and renewing her hope. They still demand
    the President and Congress to find real unity in public good.
        ``If we remember this, then America will always be the country of
    tomorrow where every day is a new beginning and every life an
    instrument of God's justice.''
        Thank you all very much for coming today.

        [GRAPHIC] [TIFF OMITTED] T02MA06.000

                             dod funding increased

        Dr. Hamre. The budget we are submitting to you builds on
    last year's initiative by the Secretary, with the President, to
    get an increase, the $112 billion that was added, and you can
    see that is the difference between the shaded portion, the
    adjusted 1999 budget, and the dashed line that says the $112
    billion increase.
        Now, you can see the solid top line is the budget we have
    submitted, and it is slightly higher. Of course it is higher in
    2000 because you added funds with the supplemental, and it is
    because of that it was a significant increase that made it
    possible for us not only to pay for the Kosovo operation but
    also, frankly, to patch some other holes, and you did that last
    year. It is higher in 2001, and I will show you--why don't we
    go to the next chart to show the actual numbers.

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

                                               FINANCING THE DOD INCREASE
                                             [Budget Authority in billions]
    ----------------------------------------------------------------------------------------------------------------
                                                                           Fiscal year--
                                             -----------------------------------------------------------------------
                                                2000      2001      2002      2003       2004       2005     2001-05
    ----------------------------------------------------------------------------------------------------------------
    Fiscal Year 2000 Budget.................     267.2     286.4     288.3     298.7     307.6      318.9    1,499.8
        Contingenies........................  ........       2.2       1.0       1.0       1.0        1.0        6.2
        Fuel Costs..........................  ........       1.4        .6        .4        .5         .5        3.4
        Other Increases.....................  ........       1.2        .4        .2        .2         .2        2.2
        Re-phasing..........................  ........  ........       4.5        .6       (.9)      (4.2)  ........
                                             -----------------------------------------------------------------------
    Fiscal Year 2001 Budget.................     277.6     291.1     294.8     300.9     308.3      316.4    1,511.6
        Supplemental Request................       2.3  ........  ........  ........  .........  .........  ........
    ----------------------------------------------------------------------------------------------------------------

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

        As you can see, Mr. Chairman, in the 2001 column we have
    added about $4\1/2\ billion compared to where we said we would
    be last year. Now, that is in the three areas, the
    contingencies, and I will talk about the contingencies in just
    a moment. It is very important, if we can, to get early action
    on the supplemental request, because we for all practical
    purposes were borrowing our funds against our readiness
    accounts in the final quarter of the year.
        The fuel cost--and you will remember last year, when we
    submitted the budget, we said we are really getting $12
    billion, but we only asked for $4 billion, and there were all
    the kind of funny financing things that got everybody so ticked
    off at us. Well, part of that was that we had lower fuel cost,
    and we assumed lower fuel cost.
        Well, of course, fuel costs have gone up, and one of the
    arguments we made to OMB, and they honored it, was that we
    needed to increase it above our top line if the fuel prices
    went up, and so we added the $1.4 billion in 2001, $3.4 billion
    across the Future Years Defense Program (FYDP). Now, we will
    still have to take a look at that to see if that is right,
    because fuel prices are high, as you know, and it is going to
    be a big bite on us.
        Senator Stevens. I understand that is not only the case for
    2001, but we also have to go back and readjust this current
    year because at least half of this year will be at this
    enormous cost of over $30 a barrel. What was your dollar-a-
    barrel fuel cost in your projection for 2001, do you know?
        Dr. Hamre. Our projection in preparing the fiscal year 2001
    budget was $18.62 a barrel during fiscal year 2001. And then we
    had some other minor increases, but as you can see the budget
    is up a bit. It is not a dramatic amount. There was this
    important thing, rephasing. As you see, we moved up about $5
    billion from 2004 and 2005 and moved it up, and of course that
    let us get the aircraft carrier, and that is why we were able
    to have it earlier in the FYDP.

                    Fiscal Year 2000 Emergency Supplementals

                              [Dollars in millions]

    Contingency Operations............................................$2,123
    Colombia Supplemental.............................................   137
    Storm Damage......................................................    27
                            -----------------------------------------------------------------
                            ________________________________________________
          Total Fiscal Year 2000 Request.............................. 2,288

                         fiscal year 2000 supplementals

        Now, the contingency operations, we are asking for $2.3
    billion, and we do need this as an emergency. We have submitted
    it, and we would ask for your help in passing this
    supplemental. As you know, we are borrowing from our Operation
    and Maintenance (O&M) dollars, and it really is hitting the
    Army very heavily. The Army for all practical purposes has
    given out to the field the dollars that it requires to execute
    the full year, but if we do not get the funds they are going to
    pull them back and we are going to have a readiness crisis in
    the Army unless we get the supplemental passed, so I would ask
    for your help in any way for that.
        There is, of course, some money in our budget for Colombia,
    the Colombia supplemental. The Colombia supplemental, of
    course, is much bigger, but this is just the portion that is
    DOD, and it is relatively modest, and then we had some storm
    damage, and it does not cover all of it, but it covers the
    essential things, about $27 million.

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

                    How the Budget Supports the QDR Strategy
    Budget increases supported each element of shape-respond-prepared
    strategy
    Highest priorities
      --Readiness requirements funded
      --Quality of life programs enhanced
      --Procurement goal achieved
      --Efforts to reshape the force supported
      --Defense reform initiatives continued

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

                  Quadrennial defense Review (qdr) priorities

        Very briefly, I am just going to talk about these highest
    priorities, or really in essence the following charts. We talk
    about readiness, quality of life, procurement, et cetera. Let's
    go to the next one.
    [GRAPHIC] [TIFF OMITTED] T02MA06.001

                               current readiness

        O&M has been going up consistently each year. You see that
    very bottom line, where that is the 1998 budget, and that was
    the O&M funding level, and then it went up in 1999, up in 2000,
    and up again in 2001, and we have been underbudgeting for
    operations. I mean, I think we had been incorporating some
    hopeful assumptions that we thought would come to pass, and
    some of them have and some of them have not, and as a result
    each year we have had to go back and add additional funding to
    cover O&M.
        I have said many times the main reason that we have slipped
    procurement is because every year we have to go back and cut
    something in procurement in order to put it back into O&M, and
    the best way to fully fund your procurement program is do not
    underfund your O&M accounts.
    [GRAPHIC] [TIFF OMITTED] T02MA06.002

                               o&m funding trends

        If I could show you the next chart, which shows you what we
    are doing in trends is a very steady increase from over the
    last 15 years in O&M dollars per soldier.
        Now, there is a study that was done by the Center for
    Strategic and International Studies that talks about needing
    another $100 billion a year. I am caught in a pretty awkward
    spot talking about that. I do not think we need another $100
    billion a year, but we certainly need more because of exactly
    this phenomena.
        You see the cost of doing business in real terms increases
    every year, and if you do not budget for that increase, you cut
    out procurement in order to pay for it, and that is one of the
    reasons our modernization program has been lagging. We have had
    this procurement holiday period which has gone on quite a
    while, and I will show you some charts subsequently that
    indicate the impact of that, but we really are putting a good
    deal more money into O&M on a per-soldier basis to reflect the
    higher cost of doing business.

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

                               People Come First
        Basic Allowance for Housing (BAH) plan will eliminate out-of-pocket
    expenses by fiscal year 2005
        Fiscal year 2001 pay raise equal to ECI +\1/2\ percent
        Military retirement restored
        TRICARE reforms proposed

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

                              putting people first

        These are some of the bumper stickers about people and
    Senator Inouye, you said this. We place such a premium on
    getting good people, and we cannot afford to lose them. I mean,
    that is America's true secret weapon. It is the quality of the
    people that are willing to serve right now, but that means you
    do have to take care of them when they come in, and these are
    some of the things we have done. I will talk about the basic
    allowance for housing in just a second. The pay raise, I think
    we have charts on each of these. Let's go to the next chart.

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

                                          BASIC ALLOWANCE FOR HOUSING INCREASED
    ----------------------------------------------------------------------------------------------------------------
                                                                                    Fiscal year--
                                                               -----------------------------------------------------
                                                                  2000     2001     2002     2003     2004     2005
    ----------------------------------------------------------------------------------------------------------------
    BAH Absorption (percent)..................................     18.8     15.0     11.3      7.5      3.5  .......
    Additional Costs (millions)...............................  .......     $160     $350     $600     $885   $1,140
    ----------------------------------------------------------------------------------------------------------------

        $3 billion initiative to lower average out-of-pocket costs from
    18.8 percent in fiscal year 2000 to 15 percent in fiscal year 2001, and
    to zero by fiscal year 2005
        Three-part plan benefit:
      --Increases tax-free allowances for service members
      --Reduces demand for base housing
      --Improves prospects for privatization

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

                               housing increases

        This is the housing increase. Now, we have two ways in
    which we house people. One is on base, military housing, and
    where we build houses, and we are only able to house about a
    third of our population. The other two-thirds of the population
    lives on the economy. By custom and actually by law we do not
    fully pay them the cost of living on the economy. As a matter
    of fact, there is a legal restriction. We cannot pay more than
    85 percent of what it costs to live on the economy.
        Well, that is an incredible disincentive for someone. No
    wonder people want to get on-base and live in substandard
    housing, if you only get paid 85 percent of what it costs to
    live off-base and you have to pay your utilities on top of it,
    so the Secretary said, we really need to tackle that both as a
    kind of equity issue, but also this is the most important thing
    we can do to rejuvenate the private sector housing initiative
    that we are trying to promote.
        Mr. Chairman, you recall how we almost lost the housing
    project up in Alaska, and that is because the basic allowance
    for housing was too low, and so if we can get this number up,
    then builders are able to count on a healthier cash flow in
    order to subsidize the construction of housing. This is an
    enormously important initiative.
        Next chart.

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

                                   PAY RAISES
                             [Annual Percent Change]
    ------------------------------------------------------------------------
                                                     Fiscal year--
                                         -----------------------------------
                                             1999        2000        2001
    ------------------------------------------------------------------------
    Pay Raises..........................         3.6         4.8     \1\ 3.7
    Employment Cost Index...............         3.6         4.3         3.2
    Consumer Price Index................         1.9         2.6         2.4
    ------------------------------------------------------------------------
    \1\ Fiscal year 2001 Pay raises exceed inflation and ECI.

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

                                   pay raises

        You see the pay raises, and we thank you for the pay raise
    last year. It made a big difference. As you can see, in the
    2000 column we had asked--the employment cost index is only 4.3
    percent, and you provided 4.8 percent, and you should compare
    that with the cost of living, which is at the bottom chart, so
    finally we are getting on the positive side of paying people
    more than the cost of living, and it is showing up here in this
    year and then 2001, and again we are one-half percent above the
    cost of living adjustment for employment.

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

                                  Medical Care
        $80 million added in fiscal year 2001 to improve access to health
    care
      --Lower out-of-pocket costs for active duty families who do not live
            near military treatment facilities
      --Eliminate co-pays for all active duty families
        $369 million added in fiscal year 2000 and $348 million added in
    fiscal year 2001 to Defense Health Program for:
      --In-house pharmacy
      --Managed care support contract costs
      --Newly legislated custodial care benefits
        DHP issues:
      --New contractor claims
      --Health care coverage for over-65 retirees

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

        This is probably the weak spot in our budget. I will be
    honest. We certainly did a couple of things, and these
    highlight positive things we tried to do with the budget. We
    have added funds so that we can improve access to the managed
    care program. We have taken care of the underfunding in the
    current contracts. That is for the Defense Health Program
    (DHP), and that is where we added about $400 million to do
    that, and we have got to try to improve the quality of the
    service, the face that appears to the service personnel.
        Nothing is more irritating when you call to the medical
    center and you just get into one of those endless holds, you
    know, on the phone, or for this dial 1, for this, dial 2, that
    sort of stuff, and too much of that has been going on in our
    world, and the service members and their personnel are ticked
    off. They do not feel like the system is responsive to their
    needs. We need to change that.
        One of the problems, for example, is if a service member
    was leaving one of the regions in the West Coast and moving to
    Norfolk, segueing from San Diego to Norfolk, they were going
    out of one contract into another contract, and we made them
    reenroll. When you think about it, that does not make any
    sense. They ought to have total transportability of their
    benefits without having to reenroll at another location. That
    is obviously something we need to change.
        We need to change the way that we are paying people when
    they make out-of-pocket expenses, and we are slow in
    reimbursing them, and we actually have members that have debt
    collectors hounding them to make payments when we have not
    reimbursed them, and that is a shame. We have got to do better
    than that, so this is a major priority for the Secretary and
    for the chairman.
        I know you are going to have a hearing next week. I think
    you have Mr. Lynn and Mr. de Leon coming up next week, and of
    course the big problem and the big hole in this budget is that
    we have only fully funded the health care program for 2001 and
    2002. In the out-years we underfunded, and we underfunded by a
    significant amount of money, and that is before we changed the
    benefit package.
        We tried to get our arms around it, and we could not. It
    was too big of a problem to try to do it in the last months of
    this fiscal year, and I am not pleased to tell you, but we did
    get at least this year properly priced and next year properly
    priced, but we are going to have to do something about the out-
    years, and I think you will go into that in greater detail at
    the hearing later this week.
    [GRAPHIC] [TIFF OMITTED] T02MA06.003

        Sir, we are very proud that we were able to meet the target
    of getting to $60 billion for our procurement budget, and that
    was a target that was put in front of all of us by General
    Shalikashvili 3 or 4 years ago. There is nothing magic abut $60
    billion and, indeed, what you will see just shortly, $60
    billion does not provide enough money to actually capitalize or
    recapitalize the force.
        Let me go to the next chart, just to show you what I mean.
        [GRAPHIC] [TIFF OMITTED] T02MA06.004

                           recapitalization progress

        In this case, I am showing you ships, helicopters, TACAIR
    fighters and armored vehicles, and in every case you see a
    vertical bar which represents the numbers of things we are
    buying, and then a horizontal bar or band. Any time that you
    fall below the horizontal band, we are falling behind, because
    you need to be in that horizontal band if you are going to be
    buying things roughly on the basis that you are wearing them
    out in terms of age.
        And so any time that you are below it--and so let us take
    helicopters. In 2003 and 2004 and 2005 we are submitting to you
    a budget that buys enough helicopters to keep the force current
    on a steady state basis, but look at the bow wave from the
    past.
        Every time--that white space between the vertical bars and
    that horizontal space, it means we took an IOU out. We were not
    buying enough to stay current with our current level of force
    structure, so we have gotten in a deeper hole, so at some point
    to make up for that the vertical bars have to go above that
    horizontal band, and as you can see we do not have any in that
    category, so we continue to have a problem.
        Even though we got to $60 billion in our modernization
    budget we are still not really making up for the hole that we
    dug for ourselves during the nineties, and that is just the
    reality, actually the second half of the eighties and the
    nineties, and we are going to have to do a better job later on.
    This is where--people said, well, what will it cost to do that?
    I again do not believe it is $100 billion a year to do that,
    but I think it is in the $10 to $15 billion a year more for
    procurement in order to start getting out of that hole.

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

                                                     MISSILE DEFENSE
                                                [In billions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                                      Fiscal year--
                                                                    ------------------------------------------------
                                                                      1999   2000   2001   2002   2003   2004   2005
    ----------------------------------------------------------------------------------------------------------------
    NMD............................................................    1.1    1.5    1.9    2.6    2.1    2.0    1.8
    Upper Tier:
        THAAD......................................................     .4     .6     .5     .7     .8     .8     .8
        Navy Theater-wide..........................................     .3     .4     .4     .3     .2     .2     .4
    Lower Tier.....................................................     .7    1.0     .8     .6     .6     .8     .8
    All Other \1\..................................................    1.2    1.4    1.1    1.1    1.0    1.1    1.2
                                                                    ------------------------------------------------
          Total....................................................    3.8    5.0    4.7    5.3    4.7    4.9    5.0
    ----------------------------------------------------------------------------------------------------------------
    \1\ Includes Air Force funding for Airborne and Space-based Laser program.

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

                                missile defense

        I wanted to show you where we are on missile defense. We
    have funded a missile defense program that presumes the
    deployment at some point when the President authorizes it of a
    national missile defense system. That decision still is going
    to be made sometime this summer whether or not we go at this
    time, but we have put it into the budget, and over the 5-year
    period the resources that it takes to deploy a national missile
    defense system.
        As you know, it will be in two phases. The initial phase,
    which is funded, is the phase that would put the fire control
    system in place, move the interceptor field to Alaska and put
    the fire control radars in place in order to have the command
    and control of that system, and that is in the budget.
        What you also see are the upper tier and lower tier
    systems. We were able roughly to keep the Theater High Altitude
    Area Defense (THAAD) program and the Navy upper tier program in
    roughly the same time cycle within a couple of years of each
    other. A year ago, when we had so much trouble with THAAD, we
    had proposed that we combine the funding for THAAD and Navy
    upper tier into a single account in order to put pressure on
    the system. A little competition, we thought they would do
    better. They did. Congress did not like that we put it
    together, and so you gave us instructions to split it apart,
    and we have done that, and that is the way the budget appears
    at this stage.

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

                           Defense Reform Initiative
        Complete and reengineer to ensure that functions are performed in
    the most efficient organization
        Reengineer processes and business practices
      --New travel system, reformed financial management, purchase card,
            paper free procedures
        Eliminate unnecessary infrastructure
      --2 new BRAC rounds
            Excess overhead threatens readiness and force structure

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

                                 defense reform

        I will be very brief on defense reform. The Secretary was
    adamant that we really do try to adopt more modern business
    practices, and I think we have a mixed bag on how we have done.
    I think it has been good in certain areas. Let me give you an
    example. We tried to commit to buying many more of our goods
    and services with commercial credit cards. We make about 10
    million purchases a year, and 70 percent of those purchases are
    for less than $2,500.
        Now, in the old days we used to write contracts for every
    one of them, and it cost us about $250 to write a contract for
    $2,500. That did not make a lot of sense. We have now shifted
    over and about 5 million of the 10 million actions this year
    will be with a credit card, so I think we are making good
    progress. I think we have made good progress on trying to get
    to a paper-free acquisition environment and we set a goal of
    trying to be paper free by this year. We missed that, but we
    are about 90 percent paper-free in this environment.
        We have got a new travel system. We are about 1 year behind
    schedule, but we are going to have it in place, that will be
    state-of-the art. It will be as good as anything in the world.
        We have done, I think, a fairly good job on moving the A-76
    process to get competition into public-private competitions for
    work. When we started this we had some people that said you
    should just privatize everything and we said no, we think that
    Government employees have a right to compete for it.
        Up until 1995 there had been a total of about 13,000 jobs
    that had been competed through the A-76 process. We have now
    done over 100,000, and we will commit to do almost 200,000
    before it is over, so a major commitment to get efficiencies
    through competition, and it looks like it is working. We are
    getting between 25 and 30 percent savings on the average across
    the entire inventory, and so I think that has been good. I am
    not going to dwell on base closures. Everybody knows where we
    are, and we will await the will of the Congress on whether we
    are going to do base closures or not, and I think that is our
    last chart.
        Sir, again, if I may say something about Y2K. First, it was
    unusual in that this was one of those problems where the
    Government and the private sector saw a shared problem and
    worked together.
        Now, it took your passing legislation that took the
    liability ax away from everybody's head, and once that happened
    the world opened up and we were able to get information and
    insight, and share information. It was very powerful. I hope we
    think of this as a model for how the Government and the private
    sector ought to work together on the complex, cross-cutting
    issues of the future.
        Almost all of the problems we face are really horizontal in
    nature, and cut across individual departments. The Department
    of Defense has only a part of the problem, and we have to
    cooperate with others, and it frankly was the reason you
    created a standing committee just for purposes of looking at
    Y2K. I thought it was a great success, and I think it probably
    is one of those models we should think about for Government in
    the future.
        Sir, let me end with this and open up to questions. Again,
    I would tell you how grateful I am for having a chance to come
    here, how much I value having been a part, a small part of this
    very great activity, which is the way in which this country
    every year puts its priorities together through you that are
    elected representatives who give them the priorities for the
    future, and I think you have always struggled with the hard
    problem of how do you invest in the future, and how do you
    support what exists today, and I do not know anyone who has
    worked at it more hard or more diligently than have you, and I
    just thank you for having let us be a partner to you in this,
    and I am gratified that I could do that, and I am gratified
    that you will let me be a participant maybe in the future in a
    different way.
        Thank you so much, sir.
        Senator Stevens. We look forward to those days, Mr.
    Secretary. I am going to yield to my good friend from New
    Mexico and the Senator from Hawaii, because I know the Senator
    from New Mexico has an appointment, and I will come third, and
    we are not running a clock, but if we just think of each other
    when we are asking our questions.

                         release of kirtland afb funds

        Senator Domenici. Thank you, Mr. Chairman. I want to first
    raise two questions. One is very parochial, one is semi. Last
    year, we earmarked some Air Force O&M funding for the theater
    air command and control simulation facility at Kirtland Air
    Force Base. These have not been released, and contractors on
    the ground are going to start laying off people. I wonder if
    you would take a look at that.
        Dr. Hamre. I will call you before the day is out.
        Senator Domenici. Thank you very much.

                         science and technology funding

        Now let me talk a minute about science and technology in
    this budget. Frankly, I think you are well aware one of the
    real problems we have, looking at the past few years, is that
    science and technology budgets have fluctuated over the past
    decade from a 17 percent increase, to a 21 percent increase.
    Then it drops to a 7 percent decrease, to end at the $1 billion
    we appropriated last year.
        As I look at this budget I wonder if my analysis is even
    close to correct, but it does not appear to me there are any
    patterns in the science and technology (S&T) funding. Or is
    this simply a question of money?
        Dr. Hamre. Sir, I think the variability from year to year
    usually reflects a different base. Congress usually gives us
    more money in this area, and then the budget we submit is
    usually off of our previous year's plans and not Congress'
    previous year's action, so this year, for example, we are $1
    billion less than Congress appropriated last year, but we are
    $250 million more than we said we were going to submit in the
    budget this year, than we said we were going to ask for this
    year last year.
        So I think the difficulty is we did not have enough money
    to meet the goal. Congress had been saying we ought to be
    putting more money into it, and we protected these accounts for
    inflation, and it is the only area of the budget that gets a
    kind of a guaranteed protection, but it looks like it is less
    because you added additional funds last year and we were not
    able to use that as a starting point.
        Senator Domenici. Well, I note that the bill, which we
    called the Strom Thurmond National Defense Authorization Act,
    could not bind everybody in the future, but it said sound
    policy would require at least 12 percent a year increase in the
    S&T budget. I assume when that was passed you thought it to be
    sound policy, if we could achieve it.
        Dr. Hamre. Yes. We would love to have more money if we
    could do it, but in the case we just ran out of dollars before
    we ran out of things that were worth spending it on, but we
    were balancing it across a range of things we had to do.

                         military construction funding

        Senator Domenici. One further question before I get to
    lasers and directed energy is, as we look at the budget for
    this year, the military construction request has gone down from
    the fiscal year 2000 appropriation level. Now, part of the
    reason for this decrease appears to be the absence of
    contingency funding included for unforeseen construction cost.
    Will the Department be able to execute all the military
    construction projects appropriated without contingency funding?
        Dr. Hamre. Well, we hope so. In the past we had budgeted
    for contingencies, and I believe we took it out this year
    because Congress 1 year ago took out the contingency money and
    we thought we were putting it at risk if we left it in the
    budget, so that was part of how we got the additional $250
    million for S&T, for example, but I do not think--I think there
    is some risk of not having contingency funds in. You know what
    construction is like. There are always cost increases, and you
    would like to be able to have some cushion to be able to
    accommodate that rather than have to cancel projects to
    accommodate it, so there is some risk, I think, with that.

                            directed energy programs

        Senator Domenici. My last question to the Secretary, I
    think, is a very important one. The Department of Defense is
    considering centralizing and consolidating its directed energy
    programs. I would be interested in hearing from you the most
    recent ideas and plans regarding directed energy within the
    Department. Do we currently desire to create a centralized
    function for all its efforts in directed energy, and what sort
    of synergies would be leveraged, or advantages could be derived
    from this? I believe you know what I'm talking about.
        Dr. Hamre. I sure do, and you gave me a heads-up on this
    issue, and unfortunately I was only able to get part of the
    information for you. There is a study that was underway inside
    the Department. Dr. Etter had been conducting the study, and I
    am told had reported it up to her chain of command, and it is
    now with Dave Oliver or with Jack Gansler, that looks at what
    should be our prioritization and how should we resource it. Do
    we need to make any organizational changes?
        Unfortunately, I have just now told you everything I know
    about the subject. I do not know anything about the content of
    it, and what I will do is go back and learn more about it,
    share it with you, and then we will find out are we on the
    right path or not on this issue.
        Senator Domenici. Do you know enough to tell me whether it
    is time to centralize because of the diffused nature of these
    programs?
        Dr. Hamre. Sir, I probably should not say what I am going
    to, but the problem we have had is, we have tended to have
    projects that get started and then, for whatever reason, they
    do not get funded in subsequent years by a service, and so the
    lab directors go off and sometimes come up here to ask for
    money for that, and then that gets added.
        Then, of course, the services tend to say, well, if
    Congress is going to add money let's not put it in ourselves,
    so then we tend to have programs that are not kind of
    rationally constructed, because we have intended to integrate
    them into the priorities of the Department and they tend to go
    off on their own.
        I do not think that is healthy. I think it would be a lot
    better for us to get our arms around it, find out what we
    really need to do, are we doing it the most efficient way, and
    then present you a coherent plan. I do not think we have
    probably done that. I think what we have tended to do is to let
    1,000 bloom, and when all of a sudden there gets to be a dry
    spell the people go off and try to find resources where they
    can, and in the long run I do not think that is as effective or
    as efficient as it should be.
        Now, that reflects my personal view about it, and let me
    study it and find out what we should be saying more
    constructively about organizational changes.
        Senator Domenici. Thank you very much. Mr. Chairman, thank
    you for yielding. I very much appreciate it. I have no further
    questions.

                              army transformation

        Senator Stevens. Senator Inouye.
        Senator Inouye. Mr. Chairman, I have a whole flock of
    questions, but I will submit them, but if I may ask just one.
    Before I do I must admit my Army bias, having had some service
    in that service. There is a new program in the Army
    transformation.
        Dr. Hamre. Yes, sir.
        Senator Inouye. You worked with the Armed Services
    Committee in the Senate. You have been with the CBO. You have
    been Comptroller, and now the number 2 Secretary, so the word
    modernization and streamlining, they are all common to you.
        I have been told by some that the bureaucracy in the Army
    and those who feel some of their activities are being
    downgraded, such as those in the heavy armor, just do not want
    to see this go through, but I for one believe that our Army has
    to be streamlined. We have to be able to respond as fast as we
    can. It has to be lightened. It has to be fast and mean.
        Now, with your background and your involvement in
    modernization, I would like to know what you think about this
    transformation program.
        Dr. Hamre. Senator, I think General Shinsecki and Secretary
    Caldera deserve great credit for having tackled a problem that
    most people said was too big and was impossible. I think the
    Secretary, the Secretary asked General Shinsecki to make this a
    priority, and to General Shinsecki's great credit he did that.
    It is enormously hard, because he is telling the culture of an
    Army that feels so proud about how they did in Desert Storm--
    and they should be proud. They did a wonderful job, but to say
    you are too big, you are too heavy, it takes you too long to
    get you to the combat theater and it takes too big a footprint
    logistically to sustain you when you get there. We have got to
    get lighter and more quickly deployable, and I think in theory
    everybody in the Army agrees with that. It is the practical
    problem which you next meet, which is to say, well, if I am
    going to do that, does that mean I do not build a new artillery
    piece, I go into combat with a tank that cannot go 40 miles an
    hour over rough terrain and shoot 2 kilometers and hit a bull's
    eye? It is when you start getting into the engineering details
    that the consensus starts to get questioned as to whether that
    is something that you want to do.
        The Army has laid out a very complicated transformation
    program which really is going to take multiple years, and I
    think it is so important that they enjoy your confidence,
    because it is going to take the continuing part of the
    Government--that is, the Congress--that overrides the changes
    from one administration to the next, or one chief of staff to
    the next to put a priority on this, and to make sure that this
    remains a priority for the Army to stay on the modernization
    plan.
        Part of it is to upgrade what they currently have so that
    they can still field the best heavy forces in the world and
    beat anybody if they have to go out tank-to-tank, but in the
    long run they have got to develop new equipments and a new
    approach to warfare, because the lethality of armor and
    missiles today is so great that you cannot do it with the
    lightly armored vehicles unless you can afford being hit, and
    that takes a whole new approach to going into combat, ground
    combat.
        The Army needs to have this transition period where they
    experiment with new types of equipment and new doctrinal
    concepts, and some people will say, well, that sounds like it
    is just an experiment. We do not know that we need to
    experiment, but I think the Army needs the time to get it
    right, to design the right sort of equipment for the future.
        This is unprecedented, to see such a fundamental, major
    change. I have not seen one in the 25 years that I have been
    working on military issues. This is unprecedented, and there is
    going to be a lot of challenge to the Army both inside and out.
    People are going to say they do not have this completely wired
    together.
        I do not know, maybe we should just wait 1 year. That would
    really be the wrong thing to do for the Army. They need to step
    up. They need to get going on this, and they need your support
    to give them encouragement to do it. I think they are doing the
    right thing.
        Senator Inouye. From that, can I assume that it is of the
    highest priority in your Department?
        Dr. Hamre. For the Army. I cannot place it at a higher
    priority than missile defense or health care or F-22. I mean,
    those, that gets complicated, but for the Army it is the
    absolute highest priority.
        Senator Inouye. Thank you very much, sir.

                           overseas u.s. commitments

        Senator Stevens. Dr. Hamre, we all have our little
    occasions where we have explored new things. I have been
    reading a lot about Hannibal lately, and one of the things that
    struck me about Hannibal was, he kept losing support at home
    because he was keeping so many forces overseas, and he
    gradually lost complete support at home because he was overseas
    so long.
        Are we not getting to the point now where we are going to
    lose support here at home if we do not start keeping our
    commitments, the length of time of these deployments? Bosnia
    was supposed to be home by Christmas. They are still there.
    Kosovo was supposed to be just a year. We have not even
    initiated the civilian side of it within a year.
        And again I am asking you to get a little philosophical
    here on your last day with us, but how can we keep support for
    the American people of our programs for modernization for this
    military if they do not see us keeping our promises about how
    long we keep their sons and daughters deployed overseas?
        Dr. Hamre. Sir, that is a very hard question, and to give
    you my personal view here, I was just in Kosovo last week, and
    talking to our senior officers who are there. They are very
    frustrated, because they have done their job and they have
    brought a security structure to the theater, but I was talking
    to General Sanchez. He is supposed to have 350 policemen
    provided by the international community in his sector, and
    altogether he has got 100.
        It is very hard for us to get out if the structure of
    replacing our forces does not show up, and Secretary Cohen has
    said very specifically that the civil implementation side is
    our exit strategy, and when that does not happen, when we only
    get a third of the policemen that the international community
    has promised, we only get a third of them into the theater, we
    are caught for a longer period.
        Now, so far I think the American public has been tolerant
    because the troops have done so well. They have done a good
    job, but we do worry that we are going to be caught in a long
    period of time if we cannot get the civil reconstruction effort
    going, and that means we have to stay for a longer period than
    we think is appropriate.
        We will do our best to scale back the size of the
    deployment, as we have in Bosnia, and we have done a good job
    of getting the numbers down in Bosnia without accepting undue
    risk to the troops that are there, but in the long run we all
    have to put a priority on getting the civil reconstruction side
    going more effectively earlier in the process, and I think that
    is a priority for us in the Department as well.

                          police operations in kosovo

        Senator Stevens. Well, we were there just before you were
    there, Mr. Secretary, and we saw American soldiers on foot
    patrol, and they were guarding individual civilian residences,
    directing traffic at corners, and guarding people who went from
    one country to another, literally to shop.
        Now, they were the people we have trained to be the
    toughest, most well-equipped, and most fearsome force in the
    history of the world, and they were doing what the local police
    do in almost every city in the country. In addition to that,
    our American soldiers were assaulted when they went to help the
    French forces.
        We have just been lucky so far we have not had any body
    bags come home from over there. I do not know how we can keep
    our support for our modernization program if the people are
    getting so disturbed about the policies of these deployments. I
    do hope that somehow or another in your new job you can help us
    think over those issues.
        I worry about the lack of support. Our forces are down in
    number. They are out of the country. One of the things that is
    for the military to be seen, whether it is on holiday or some
    place else, in some patriotic activity. Even that is being cut
    back now to an absolute minimum. I do hope we can get a hold of
    that and do something about the concept of how do you maintain
    support from the civilian community if they do not really have
    some real vision of it. You do not have daily coverage on the
    nightly news with young men and women just standing guard or
    walking with children as they go to school. That is just not
    something we have in our American vision of what you do in
    uniform, military uniform.
        Dr. Hamre. That is exactly what there are supposed to be
    civil police forces to be doing, and that is why we all have to
    demand that the international community honor their commitments
    to put those policemen on the ground. That is holding us and
    making our troops do things that really are police activity.

                          funding army transformation

        Senator Inouye. Senator Inouye asked you about the
    transformation of the Army called the New Vision. General
    Shinsecki I think rightly has taken off on that, but we have a
    difficulty fitting this new concept into our national military
    strategy in view of the funds that you have just outlined. Did
    the Department really review what the chief of staff of the
    Army was doing and plan to fund it accordingly?
        Dr. Hamre. Sir, as a matter of fact this was one of the
    large issues we had when we were closing out the budget, and we
    moved about $1 billion a year around to cover these costs. Some
    of them came from outside of the Army's resources, and some of
    them came from inside the Army's resources by reprioritizing
    them. They canceled a couple of programs they would rather not
    have canceled. In some cases we were able to bring them dollars
    when we got to keep the inflation dividend that showed up
    again, so there were very significant resources that were
    added.
        Now, the budget justification material is going to look
    thin to you this year because they were running so fast and so
    hard at trying to get it together that it does not have the
    same richness that we do for normal programs that have been
    around for years, and you are going to have to give them the
    benefit of the doubt, I think, this year on a fair amount of
    the program that they really do have their act together. It is
    going to take a little while for us to be able to demonstrate
    that in the field.
        They would like to have more money than we had for them,
    and we had fairly blunt conversations, should we take dollars
    away from another service in order to put it into those
    accounts, and we decided that we could not do that, that we
    were able to give them additional resources from outside
    without taking it away from anybody else.
        But this ultimately has to be the Army transitioning
    itself, or its own future, and that does mean they are going to
    have the reprioritize some of their resources.

                  air transportability and army transformation

        Senator Stevens. Well, this morning I was talking to some
    people about the transformation in the Air Force. The
    transformation in the Air Force in terms of its functioning
    with the Army is something that worries us also, because if you
    look ahead a few years, our 141's will be gone. Our C-5's will
    be ready to retire. We have just a few C-17's.
        Some people here put limits on the construction of the C-
    17's, which I did not think was very good news then, and it is
    worse news now, and I do not see how we can get along with a
    deployment strategy unless we do go through the Army's New
    Vision. That's the only way it can fit together, by using the
    C-17's to take our people, along with the Civil Air Reserve
    Fleet, to distant locations, and then using the 130's within
    the theater to transport them around. There is not enough long
    distance transportation to initiate them all from here, or to
    lift heavy divisions.
        I do not think we will have deployment capability unless we
    go through the New Vision, but I really do not see the support
    for it yet that is needed. I think Shinsecki is one of the most
    distinguished soldiers we have had in that position. He is a
    Hawaiian, by the way, and he has really got the bit in his
    mouth, but I am afraid that there is going to be a real deep
    disappointment and disenchantment with the whole service if we
    do not find a way to carry out that vision.
        Dr. Hamre. Sir, if I may, I think we all agree with you. I
    think that it is very clear that right now the footprint of the
    Army is too big and too heavy, and it needs to be lightened up
    for these sorts of deployments. You are still going to need a
    heavy, very capable Army to go into a Desert Storm in the
    future, and so we are always going to keep a heavy corps, but
    the deployment part has got to get lighter.
        Sir, you mentioned the airlift, and one of the real
    problems that we and, frankly, the next administration is going
    to have to wrestle with is what do we do about modernizing the
    C-5 versus replacing the C-5? This is a major question, because
    it will be very expensive to update and modernize the C-5. On
    the other hand, replacing the C-5 inventory capability with C-
    17's will be expensive, too.
        You rightly pointed out it is not just a case of military
    airlift. It is also about Civil Reserve Air Fleet aircraft. At
    the very time that we are going to try to replace the current
    airlift capacity of the C-5's the commercial sector is going to
    expand by about fivefold the number of aircraft in the
    freighter business. We are not going to be able to take
    advantage of that unless we get lighter equipment so that we
    can get on commercial aircraft, and that is why it is so
    important for the Army to go through this.
        Senator Stevens. Absolutely, and General Shinsecki sees
    that, and I think he sees the limitations on the Air Force as
    far as being able to transport his people as rapidly as they
    must be taken to destinations throughout the world.

                           C-17 production and costs

        I am worried about the C-17, and this will be my last
    question, Senator Harkin. We have reached a full rate of
    production now. We have had delivery of 34 airplanes on an
    average of 35 days early, and it is below the cost. Now we are
    getting into real stride with the C-17, but I am told now the
    British are considering canceling their orders, which had
    something to do with the overall full production line.
        If Great Britain does not purchase its three C-17's, have
    you figured out, can anyone tell us what is the effect on the
    cost of our production line? What will it do to that production
    line?
        Dr. Hamre. Well, it would drive it up if we do not buy
    replacement aircraft.
        Senator Stevens. By how much?
        Dr. Hamre. Sir, I do not, but I will find out, but I have
    not heard that they were thinking of doing that. Originally,
    the plan was that they were going to lease the aircraft with an
    intention to buy them, and we would like to encourage them to
    buy them.
        [The information follows:]

                                      C-17

        If Great Britain does not purchase or lease three C-17s in
    fiscal year 2001, USAF production line costs for airframes
    remains the same. The USAF and Boeing have taken steps to
    ensure the production rate, contract delivery schedule, and
    total airframe costs over the remaining 35 aircraft of the 80-
    aircraft multi-year contract remain unchanged. These steps
    include protecting the advance procurement to the original 15-
    15-5 buy profile and rephasing $60 million of fiscal year 2003
    aircraft procurement into fiscal year 2002 advance procurement,
    to protect the vendor base and ensure no break in the original
    aircraft delivery schedule.

        Dr. Hamre. We think it is exactly the right airplane for
    them, and they have a plan to buy--I forget the number, 17, or
    something of that nature. It is exactly the right airplane for
    them, and this was the way to start, but if they do not do it,
    we will probably ask you to consider plugging that hole for us,
    or at least we will have to come up and talk to you about how
    we would realign dollars to plug that hole.
        Senator Stevens. Well, they have got their A-400. We all
    know that, and there is a little bit of intracontinental
    rivalry here in terms of the aircraft producers, but I would
    hope we all realize the C-17 is our only hope for the future in
    terms of the deployment of forces by air, and we have got to
    keep that on schedule.
        Dr. Hamre. Sir, that A-400 cost them $600 billion to get
    the first one. You could buy C-17's, a lot of C-17's for that
    kind of money.
        Senator Stevens. It sounds like some of the cost--I heard
    the other day about some of the--I am not getting into the
    latest procurement stories. We will get into that with someone
    else, John, but I am sure you all heard that, and that is not
    something that is music to my ears.
        Senator Harkin.
        Senator Harkin. Thank you, Mr. Chairman.

                           iowa army ammunition plant

        I have a couple of items I want to go over with Dr. Hamre,
    and the first has to do with the Iowa Army Ammunition Plant
    near Burlington, Iowa.
        This is a plant at which nuclear weapons were assembled
    back in the forties and fifties and sixties. It has been closed
    now for 25 years. Well, the nuclear line has been closed. It is
    still an ammunition plant. The Defense Department has a policy
    to ``neither confirm nor deny'' that nuclear weapons were ever
    at any site, including this one.
        Well, we know they were there. The Department of Energy
    (DOE) is quite clear about that, and they have got the records
    from the old Atomic Energy Commission (AEC) to help us on that.
    Quite frankly this has to do with exposure of workers who were
    exposed to beryllium and things like that, at Paducah and
    places like that.
        When I first wrote a letter on this about 1 year ago I was
    told also by the Department of Energy that nuclear weapons were
    never assembled there. Well, we found out that is not right. I
    recently had a town meeting there with Secretary of Energy
    Richardson to talk about the weapons work that occurred there.
    The Energy Department is dealing with this openly, and trying
    to get people tested and all of that, but the Defense
    Department is still basically denying, or they say they will
    not confirm or deny that that work ever went on there.
        Now, the Army, as I understand it, even petitioned the
    Pentagon to lift the restriction in a similar case, but the
    petition was denied by the Department of Defense. I hope you
    will before you leave get something going to review this
    policy.
        I understand you have got to strictly enforce secrecy when
    it is necessary for protection, but something that has been
    closed for 25 years? We know full well what was done there. I
    mean, I took a tour of the place. The Department of Energy has
    all the records, so they are on the one hand saying all this
    happened, and the Defense Department is saying, well, we do not
    know. We do not confirm, we do not deny.
        What implications does that have? Well, good, hardworking
    people that worked there took an oath of secrecy and signed it,
    that they would never during their lifetimes talk about what
    they did there. This was top secret stuff, and a lot of them
    being patriots and good citizens still wonder whether or not
    they can talk about it. They want to go to the doctor, and they
    want to describe what they were doing, and yet they do not know
    if the Army or the Defense Department will let them do that,
    and so they are caught in a kind of a cross-fire here.
        The Department of Energy has been very open. They are
    talking about it, trying to get people checked and tested. And
    I get the question from Iowans, well, here is one Federal
    agency that is openly talking about it, that was in charge of
    this, the Atomic Energy Commission, now DOE, but the Defense
    Department that was in charge of the place and is still in
    charge down there through a private contractor it is a GOCO,
    Government-owned, contractor-operated--the Defense Department
    will not talk about it. And so it sends out really confusing
    signals.
        Anyway, my question is, should a worker who worked there,
    who took an oath of secrecy, be able to talk about what they
    did there with a doctor or anybody else, maybe family members,
    discuss it among themselves? It just seems to me once it has
    been closed for 25 years the Department of Defense ought to say
    yes, we did assemble nuclear weapons there. I mean, everybody
    knows it. It is no secret any longer, and the Department should
    at least let these workers know that whatever oath of secrecy
    they took does not apply any longer.
        Dr. Hamre. Sir, in this case, when I say neither confirm or
    deny it, what it really means is, I do not have a clue. I have
    never heard of this before.
        Senator Harkin. I am sure you have not, but some of your
    people have.
        Dr. Hamre. I have never heard about it, but I will look
    right into it, and I will call you.
        Senator Harkin. It has been going on for about, well, a
    little over 1 year now, about 1 year.
        Dr. Hamre. I was totally unaware until you just raised the
    issue. I am sorry about that. I will get on top of it.
        Senator Harkin. It is just, I would like to get the policy
    changed.
        Dr. Hamre. I understand. I understand very clearly what you
    want.
        Senator Harkin. It just does not seem to make sense, and it
    is causing problems in terms of letting these workers know they
    can openly go ahead and discuss what they did.
        Dr. Hamre. Sir, I will find out.
        Senator Harkin. I appreciate that, and you do not have to
    get back to me personally.
        Dr. Hamre. I will.

                                 army trailers

        Senator Harkin. The other issue I have is one that I have
    been on now for some time, and it has to do with trailers.
    There is a recent report by the General Accounting Office
    (GAO)--and I asked for this study to be done. We purchased
    6,550 trailers for the Army over the next 5 years for $50
    million. They are sitting in storage because they are unsafe.
    They cannot be used. Some TV show did a show about it sometime
    last year.
        Now they say they may have to modify every Humvee to pull
    them, all 100,000 of them. A letter from Paul Hoeper of the
    Army to me stated the Army needs at least 18,412 more trailers,
    but there is no money to purchase these in this year's budget
    or in future years' plans, so we are sitting there with--the
    initial buy was supposed to be 10,000. I think they got 6,550.
    They are sitting there. They cannot be used. They need 18,000
    more, and there is nothing in the budget to do anything about
    it.
        So again, you do not have to respond here. I do not mean to
    catch you flat-footed on this, but I will send you a letter on
    it and see what you can do.
        Dr. Hamre. This has not been our finest hour, I know.
        Senator Harkin. That whole trailer thing is a mess, and I
    just would like to know what you are going to do in the future
    on the 18,000.
        Dr. Hamre. That is a fair question, and I will find out.
        Senator Harkin. Thank you very much, Dr. Hamre. Thank you
    for your service.
        Senator Stevens. Dr. Hamre, because of the timing of the
    last scheduled hearing and this one, there are many of our
    members who could not be here. There is a little
    extracurricular activity taking place in the country, I am sure
    you know, so I have been asked by many of your friends to say
    they were sorry they could not be here, but they look forward
    to seeing you at one or more of your events that are held here
    in this city.
        But we do thank you, and in deep sincerity, for the very,
    very great help you have given us, and for the feeling you give
    us that what we do is worthwhile in connection with what you
    are doing.
        The mutual admiration society here is obvious, but there is
    a lot of hours that go into a job like you have held here both
    in the Senate and over in the Department of Defense. The public
    does not know about those hours. We all know about the hours
    that you spend, and you know about the ones we spend, so we
    thank you for working with us.
        [The statements follow:]

               Prepared Statement of Senator Christopher S. Bond

        Good morning Dr. Hamre. Welcome to what appears to be your
    last appearance before this committee. I would like to take
    this opportunity to make a brief statement on the Defense
    Budget and what should be our priorities.
        First, we must improve readiness, recruiting and retention,
    and the state of our equipment. This requires an investment.
    That investment should include the best equipment we can design
    and build consistent with budget realities, a pay raise, and
    improvements in our training and readiness accounts.
        Second, we must continue to plus-up our full-time manning
    accounts for the National Guard. The threat from rogue nations
    and others with potential serious conflicts with the United
    States is real and growing. Consequently I am confident our
    reliance on the Guard and Reserve will continue to grow
    unabated. Therefore it is imperative we continue to increase
    the number of full-time support personnel who serve our
    National Guard and Reserve forces.
        Dr. Hamre, I look forward to discussing these and other
    important defense issues with you and your staff as our hearing
    process continues. Again, welcome sir. You have served our
    nation's Defense Department faithfully for over seven years and
    I wish you well in your new endeavors.
                                    ------

                Prepared Statement of Senator Richard C. Shelby

        Good morning Dr. Hamre. It is a pleasure to see you here
    before the Committee. I am sorry that it will be your final
    appearance in your current position. As you prepare to move on,
    I would like to commend you on your past seven years of service
    as Comptroller and Deputy Secretary of Defense. It has been a
    pleasure to work and travel with you to ensure that our armed
    forces remain the finest in the world. You have always been
    professional and responsive to requests and questions from me
    and my staff. Your knowledge of national security issues and
    dedication to this country are second to none. The Center for
    Strategic and International Studies is very fortunate to be
    acquiring your expertise. I wish you the best of luck in your
    future endeavors and I look forward to your continued insights
    on issues affecting national security. Congratulations on a job
    well done.
        Mr. Chairman, I have a few brief comments concerning the
    defense budget and the state of our military. While there is
    some improvement in this year's defense budget, I remain very
    concerned about this nation's military readiness and our
    spending priorities.
        First, the decreased defense budgets of the past ten years
    coupled with an increased number of missions of questionable
    national interest, have had a corrosive effect upon our
    military readiness. I believe that we are fast approaching the
    hollow military of the 1970s. Recently, it has come to light
    that two of the Army's ten divisions are unprepared for war.
    The Air Force continues to have a shortage of pilots and spare
    parts. The Navy does not have enough attack submarines to
    execute basic contingency plans nor to conduct vital
    intelligence collection missions. Additionally, the recruitment
    and retention of trained personnel have become problematic.
    This difficulty affects active duty, guard and reserve.
        Second, I am concerned about a number of the budget
    priorities in this year's request. While I am pleased that the
    Administration made National Missile Defense a priority I am
    concerned about the continuing need to increase investment in
    support technologies. These technologies are essential to
    ensure that our missile defense systems and other weapons
    systems are effective against future and as yet unknown
    threats. Additionally, I will be closely scrutinizing the
    Army's transformation to a lighter medium force. I am concerned
    that the Army is rushing to procure equipment for this as yet
    undefined medium force, at the expense of readiness for the
    forces needed to fight the wars of today and in the immediate
    future.
        Dr. Hamre, I look forward to discussing these and other
    important defense issues with you and your staff as our hearing
    process continues. Again, welcome sir.

                         additional committee questions

        Senator Stevens. There will be some additional questions
    which we will be submitting to you for your response.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
                  Questions Submitted by Senator Thad Cochran
                                 airborne laser
        Question. According to senior Air Force officials, for reasons of
    ``affordability'' the Air Force submitted a budget request to the
    Office of the Secretary of Defense cutting $256.7 million from the
    Airborne Laser (ABL) for the period covering fiscal years 2001 through
    2005. Is it correct that OSD then increased the Air Force cut by $638.7
    million in PBD 743, which you signed, for a total cut to the program of
    $895.4 million over the 2001 through 2005 period?
        Answer. The Air Force budget request for fiscal year 2001-2005
    contained many unfunded requirements. At our request, Air Force
    provided several different options for resolving these budget problems.
    Through deliberations with the Air Force it was decided that ABL would
    be reduced to fund higher priority Air Force requirements.
        Question. Was your additional cut of $638.7 million also for
    ``affordability'' reasons?
        Answer. Yes. As mentioned above the Air Force had significant
    funding shortfalls and provided a viable solution to support their
    highest priority requirements. Several major Air Force acquisition
    programs that had funding shortfalls that were fixed during the budget
    review were the Joint Standoff Weapon (JSOW), the Joint Direct Attach
    Munition (JDAM), the NAVSTAR Global Positioning System (GPS), and the
    Joint Surveillance, Targeting, and Reconnaissance (JSTARS) aircraft.
        On December 6, 1999, the Secretary of the Air Force signed a
    certification to Congress stating, ``the ABL program continues to meet
    or exceed every technical and programmatic milestone and remains on-
    cost and on-schedule.''
        Question. Are you aware of any technological problems with this
    program that the Secretary of the Air Force was not aware of?
        Answer. No. ABL reductions were not based on technical problems.
    The current fiscal environment drove difficult decisions and ABL was
    used to partially offset higher Air Force requirements.
        Question. Can you explain why the Air Force's proposed cut of
    $256.7 million was more than tripled by OSD?
        Answer. The Air Force recommended using the additional ABL
    reduction as an offset to fund higher priority requirements. The
    Department used this recommendation so that Air Force could fund higher
    priority requirements.
        Question. Of the approximately 100 programs designated by the
    Office of the Assistant Secretary of Defense as Major Defense
    Acquisition Programs, in addition to ABL, how many others are on
    schedule and budget?
        Answer. At the time when we prepared the budget, which was nearly
    six months ago, most of our MDAPs were on schedule and budget. Of
    course, estimates and schedules change over time, and when an MDAP
    breaches cost, schedule or performance parameters, we provide the
    required notifications to the Congress as required by the Nunn-McCurdy
    legislation. The ABL program, although on track, was offered as a
    proposal to support higher priority Air Force programs. It was
    discussed and decided that using ABL funding to offset other
    requirements would have the smallest impact to the Air Force and the
    Department.
        Question. The proposed $895 million cut to ABL over the fiscal year
    2001-2005 period amounts to 52 percent of its budget over that period.
    Are there any other MDAPs for which you have proposed a budget cut of
    over 50 percent?
        Answer. We have not proposed budget reductions of over 50 percent
    to any other MDAPs.
        Question. Can you explain why you propose ABL for the greatest
    funding cut--in percentage terms--of any MDAP when it is on schedule
    and budget?
        Answer. As mentioned earlier it was due to current fiscal
    constraints to support higher priority requirements.
        Question. Do these budget cuts in any way reflect you questioning
    the requirement for this program?
        Answer. Nobody is denying the fact that there is a valid
    requirement for this futuristic program and that it would be a great
    asset to our theater missile defense arsenal--particularly to support
    boost phase intercept. However, with ABL being an unproven technology,
    it made more sense to use those resources for higher priority Air Force
    requirements and still maintain a robust theater missile defense
    capability through Patriot Advanced Capability (PAC)-3, Navy Area
    Theater Ballistic Missile Defense (NATBMD), Theater High Altitude Area
    Defense (THAAD) and Navy Theater Wide (NTW).
                   theater high altitude area defense (thaad)
        Question. The unclassified summary of the National Intelligence
    Estimate on the ballistic missile threat to the United States states,
    ``The proliferation of MRBMs [Medium Range Ballistic Missiles] driven
    primarily by North Korean No Dong ales has created an immediate,
    serious, and growing threat to U.S. forces, interests, and allies in
    the Middle East and Asia, and has significantly altered the strategic
    balances in the regions.''
        Do you agree with this assessment?
        Answer. Yes; North Korea's development of the No Dong and Taepo
    Dong-1 enable it to threaten U.S. forces, interests, and allies not
    only throughout Korea, but also Japan, to include Okinawa. Likewise,
    Iran has used ballistic missiles against Iraq as a punitive measure,
    and its development of the No Dong-based Shahab-3 gives it a capability
    to threaten U.S. forces, interests, and allies throughout the Gulf.
        Question. Do you also agree that more capable theater range
    threats, like Iran's Shahab-3, are becoming available sooner than had
    been projected by the Administration only a few years ago?
        Answer. More capable theater range threats are available for use
    sooner than previously expected, because countries such as Iran and
    North Korea are not following traditional (i.e., Russian and U.S.)
    development timelines.
        Question. The current schedule for THAAD has the ``First Unit
    Equipped'' in fiscal year 2007. But my understanding is that by adding
    $400 million to THAAD over the fiscal year 2001-04 period--money that
    was previously removed from the program by OSD--the ``First Unit
    Equipped'' date can be moved forward by two years, to fiscal year 2005,
    with no increase in the program's level of technological risk. Is that
    your understanding, too?
        Answer. In fiscal year 2001, $150 million could accelerate the
    first unit equipped/early operational capability (FUE/EOC) by
    approximately 9 months. However, with continued added funding in fiscal
    year 2002/03, it is conceivable you could accelerate the FUE/EOC by 12-
    18 months.
                         national missile defense (nmd)
        Question. Mr. Secretary, I note that the budget request for
    National Missile Defense has increased significantly this year, but
    this represents both the need to catch up after chronic underfunding,
    and the funds required to begin deployment of the system. If more
    funding were provided, are there additional activities that could be
    undertaken to reduce technical risk in this program?
        Answer. As you know, the Department has already added an extra $285
    million to the National Missile Defense program in response to the
    recommendations of the second Welch Report. Our measures included
    adding two more risk-reduction flights and a second target launcher.
    Budget enhancements would provide further risk reduction in a variety
    of efforts aimed at maintaining schedule should problems appear in the
    execution of our program plan.
        Question. Is it correct that a single site system based in Alaska,
    supported by one X-band radar, does not meet the full approved
    operational requirement for National Missile Defense?
        Answer. No, that is not correct. Our detailed analysis shows that
    the NMD C1 architecture, which consists of a single weapon site in
    Alaska, one X-Band radar, five Upgraded Early Warning Radars, and DSP/
    SBIRS-High, will meet the approved Operational Requirements Document
    (ORD) threshold performance requirement. Future evolutions of this
    architecture are designed to meet the ORD objective performance
    requirement (same level of protection against a larger more
    sophisticated threat).
        Question. If our NMD system were to be deployed at a second site in
    addition to Alaska, what are the advantages of putting that site in the
    Northeast--for example, at Loring Air Force Base in Maine--instead of
    at Grand Forks?
        Answer. The single site in Alaska will meet the User requirements
    for all 50 states. An additional site in the northeast U.S. will add
    robustness to the system by increasing the opportunities for shoot look
    shoot, which allows for reducing the number of interceptors fired
    against each threat. Also, an additional site allows for protecting
    against some variations in the threat launch trajectories which could
    be outside the current design envelope.
        Question. Secretary Hamre, do you agree that there is a potential
    long-range ballistic missile threat from both North Korea and Iran
    between now and 2005, when the National Missile Defense system could
    first achieve operational capability?
        Answer. During the 2001-2005 period: North Korea, Iran, Iraq could
    test ICBMs of varying capabilities--some capable of delivering several
    hundred kilogram payloads to the United States.
      --Most believe that non-flight-testing aspects of the Taepo Dong-2
            program are continuing and that North Korea is likely to test
            the system as a space launch vehicle unless it continues the
            freeze. If flight-testing resumes, the capabilities would
            increase.
      --Some believe Iran is likely to test some ICBM capabilities in the
            next few years, most likely as a Taepo Dong-type space launch
            vehicle.
        Question. Assuming both of these countries develop long-range
    ballistic missiles, is there any reason to believe that one of these
    countries would deploy these missiles in lower quantities than the
    other?
        Answer. There is no data to suggest that one state will deploy a
    larger ICBM force than the other. Neither state would be expected to
    field a force greater than a few to tens of missiles by 2015.
        Question. If there is, what is the evidence supporting this belief?
        Answer. There is no data to suggest that one state will deploy a
    larger ICBM force than the other. Neither state would be expected to
    field a force greater than a few to tens of missiles by 2015.
                              rd-180 rocket engine
        Question. Can you explain why it is important to the Defense
    Department to have Lockheed-Martin competing in the EELV program?
        Answer. It is important for the United States to maintain two
    Evolved Expendable Launch Vehicle (EELV) contractors. If Lockheed-
    Martin were no longer competing, then once DOD finishes launching the
    last of the heritage Delta, Atlas, and Titan vehicles, the United
    States would be left with only a single launch provider. This is a
    situation similar to the one the nation faces today with Titan where a
    single launch failure can shut down the United States' heavy lift
    access to space for months for accident investigation/recovery efforts.
    And if the results of these efforts should call for a major redesign,
    it could be years before the United States would be ready to launch
    again. Further, two EELV competitors assure the United States a healthy
    industrial base as well as competitive pricing.
        Question. How important is the approval of this manufacturing
    license to Lockheed-Martin's continued viability in this competition?
        Answer. The potential damage to Lockheed-Martin's viability is
    significant. The Lockheed Martin program has already experienced
    serious delays and cost impacts in obtaining the licenses they
    currently require. Their U.S. RD-180 engine production facility,
    required so that U.S. access to space cannot be denied by a foreign
    supplier, is already more than one year behind schedule due to delays
    in obtaining the brokering license. Other related licenses, that are
    also part of the Congressional notification package submitted on 20
    March, have been held up awaiting notification, causing Lockheed-Martin
    to develop work-arounds, resulting in an additional six month delay.
        Question. Why was it necessary for you to send a memorandum to the
    Secretary of State urging her to issue this license?
        Answer. As stated in the memorandum, it was clear we had come to
    the end of a process, agreed to in December, of working to address the
    concerns of the Senate Foreign Relations Committee (SFRC) and House
    International Relations Committee (HIRC) staffs about the proposed
    licenses. Further delays would not have changed the minds of the
    program opponents, but would have added additional risk to the
    viability of the Lockheed-Martin/Pratt & Whitney RD-180 co-production
    program for the reasons stated above.
                                     lhd-8
        Question. Dr. Hamre, I am advised that the Navy has formally
    submitted a request to Comptroller Lynn for release of funds previously
    appropriated for LHD-8. $45 million was provided in fiscal year 1999
    for Advanced Procurement items and another $375 million was provided in
    last year's bill--along with language that would allow the Navy to
    contract for the construction of this important ship on an incremental
    basis.
        When will these funds be released to allow the Navy to put the ship
    under contract?
        Answer. The Navy's request for release of the funding is still
    under review. The Department's shipbuilding plan, as outlined in the
    fiscal year 2000 and fiscal year 2001 President's Budget submissions,
    includes $1.5 billion for the construction of LHD-8 in fiscal year
    2005. Although Congress provided approximately $400 million to the Navy
    to begin construction of the ship sooner, the Department has not yet
    determined how modernization requirements can be reprioritized to
    finance the more than $1 billion in follow-on costs to ensure an
    executable and efficient construction program. Once this review is
    completed, I will inform you soonest of the Department's execution
    plan.
                                     ______

                Questions Submitted by Senator Pete V. Domenici
                             science and technology
        Question. Science and technology budgets have fluctuated over the
    past decade. After a 17.4 percent increase in 1992 over 1991, the S&T
    budget changes have ranged from positive 21.1 percent in 1994 to
    negative 7.7 in 1997. The DOD budget for 2001 is $1 billion below what
    Congress appropriated last year, even though it reflects a 2 percent
    increase over the Administration's fiscal year 2000 budget proposal.
        There does not appear to be any pattern to S&T funding. Can you
    explain these fluctuations? Or is this simply a question of money?
        Answer. Successful businesses, intending to stay in business,
    invest in the future. Our downsized military needs its technological
    edge now, more than ever, and we place high priority on our S&T
    investment as a hedge against future uncertainties. As you know, the
    Department has several important objectives including: high readiness;
    forces adequate in size to sustain our strategy of global engagement;
    and increased resources for procurement to underwrite our modernization
    program--as well as a robust science and technology program. The
    fluctuations you cited in S&T funding are not, ``simply a question of
    money'' but are the result of balancing the Department's competing
    resource requirements within a constrained fiscal environment.
        Question. The 1999 Strom Thurmond National Defense Authorization
    Act called for the DOD to increase S&T budgets by at least 2 percent a
    year above the rate of inflation.
        Would you agree that this is a sound policy?
        Answer. Determining a sufficient level of S&T investment is not a
    precise science, rather I believe it is a strategic decision. Our
    downsized military needs its technological edge more now than ever. It
    has always been our goal to fund S&T at a level adequate to ensure the
    technological superiority of our armed forces. However, we also need to
    ensure that the funding levels of the various components in the
    Department are balanced based on our assessment of the most urgent
    requirements at any given time. The S&T funding in the fiscal year 2001
    President's Budget reflects a program that maintains its buying power
    and continues to explore new technologies and applications, but has
    been balanced against our compelling desire to increase the
    modernization budget while sustaining readiness at a high level.
        Question. As I mentioned, I am concerned about the loss of
    scientific expertise due to inadequate budgets.
        Do you believe that you can maintain the scientists and
    infrastructure required for success at the present level of resources?
        Answer. Yes. The resources are adequate to sustain our current
    scientific workforce. The more serious threat to our having sufficient
    scientific expertise is the same problem facing all technical
    organizations today--how to successfully compete for technical talent
    in this booming economy. A number of initiatives are underway to
    improve the Department's competitiveness, but the scarcity of national
    technical personnel suggests this problem will persist for the
    foreseeable future. Resources for the infrastructure are also
    considered adequate. However, the Department's position is that further
    BRACs are required to eliminate unwarranted excess capacity. The
    current technical infrastructure footprint is larger than we need and
    this results in unnecessary expenses that could otherwise be used for
    infrastructure revitalization.
                                directed energy
        Question. As you know, the DOD is now considering its plans to
    centralize and consolidate its directed energy programs. At present, I
    believe that Albuquerque is viewed as the best location for this
    initiative in light of the resources, assets, and capabilities already
    at Kirtland and White Sands.
        I would be interested in hearing from you the most recent plans for
    directed energy within the Department of Defense.
        Does the Defense Department currently desire to create a
    centralized administration for all of its efforts in directed energy?
        Answer. Currently the Department of Defense (DOD) has no plans to
    consolidate all of its efforts in directed energy. Both High Power
    Microwave (HPM) and High Energy Laser (HEL) efforts are underway within
    the DOD, but each of these technology areas has its own unique
    problems. We have separate management constructs for dealing with HPM
    and electronic warfare, and we see no immediate benefit in combining
    these development efforts with HEL efforts. HPM and electronic warfare
    programs are well defined. The needed focus, as discussed in the High
    Energy Laser Master Plan (HELMP) report that was presented to Congress
    on March 24, 2000, is on HEL technologies. The HELMP report recommended
    that the Defense Department implement a new DOD-wide coordinated
    investment and execution strategy and a new management structure for
    HEL technologies which centralizes and consolidates leadership in a new
    Joint Technology Office (JTO). The office will be tasked with
    developing and managing a join-services-program for revitalizing HEL
    Science and Technology (S&T) and serving as a clearinghouse for new S&T
    initiatives proposed by DOD components. The office will not be
    responsible for either HPM or electronic warfare activities.
        Question. What sort of synergies could be leveraged or advantages
    could be derived for directed energy programs?
        Answer. This question presumably speaks to the synergies among
    specific topics that fall under the more general designation of
    ``Directed Energy'' programs. The directed energy investments within
    the Department fall primarily into one of two topical areas--High
    Energy Lasers (HEL) or High Power Microwaves (HPM). Grouping these two
    together in the past has provided scant synergistic advantage or
    opportunities that were enabled from doing so. The HEL and HPM
    technical communities are distinctly different with minimal crossover.
    HEL and HPM are vastly different in terms of device technology,
    propagation effects and target lethality. HPM weapons are designed to
    induce damage to electronics; HEL weapons impart material or structural
    damage through thermo-mechanical effects. We currently treat these
    programs separately and we see little advantage to be derived from
    combining HEL and HPM under a single management or program structure.
        Question. What weaknesses or strengths does Albuquerque provide as
    a location for an OSD-led National Energy Center?
        Answer. Albuquerque is geographically well suited to be a national
    center for high energy laser technology. Kirtland Air Force Base is the
    location of several key Air Force laboratory and test range facilities.
    Also, the Army HELSTF facility and the Air Force North Oscura Peak
    facility, both located on the White Sands Missile Range (WSMR), are
    within reasonable driving distances from Albuquerque. However, as we
    embark on a new Department-wide coordinated investment and execution
    strategy to take full advantage of the opportunities presented by high
    energy laser weapon technologies, we believe it is important, at least
    initially, to centralize the new OSD management structure. This will
    convey neutrality that will assure the active participation by all
    stakeholders and will hopefully lead to a more balanced investment
    strategy for the Department.
        Question. What role can the DOE laboratories play in achieving the
    military objectives of our directed energy efforts?
        Answer. The DOE laboratories are developing solid state laser
    devices and beam diagnostics that, properly leveraged, may be highly
    relevant to future DOD High Energy Laser (HEL) weapon systems.
    Additionally, the DOE laboratories have conducted experiments that
    suggest the presence of new lethality mechanisms that require much
    lower laser power than more conventional approaches. There is no
    question that both Departments could benefit from a closer,
    collaborative technical relationship in these areas. Developing such a
    relationship would be greatly facilitated by the ability to cost-share
    joint new initiatives.
                       release of $14 million for taccsf
        Question. Would you see to it that the O&M funds for this facility
    are released as soon as possible?
        Answer. Operations and Maintenance (O&M) funds are used in the
    Theater Air Command and Control Simulation Facility (TACCSF) only for
    Civilian Pay and those funds have been issued and are executing.
    Congress added $14.0 million in R&D funds for TACCSF which were
    released on 10 March 2000.
                             military construction
        Question. Since this is the first defense budget request since 1985
    to request real growth in the defense budget I am disappointed to see
    that the Military Construction request has gone down from the fiscal
    year 2000 appropriation level. Part of the reason for this decrease
    appears to be the absence of contingency funding, included for
    unforseen construction costs, in your military construction projects.
        Will the Department of Defense be able to execute all the Military
    Construction projects appropriated without contingency funding?
        Answer. Yes. Removing funds for contingency will provide an
    incentive for Department of Defense Components to improve their cost
    estimating techniques and monitoring procedures. However, there is some
    element of increased programmatic risk associated with eliminating
    contingency, but this risk is more than offset by the greater good
    gained by using the funds elsewhere.
        Question. My staff has identified almost $90 million in mission
    critical, worthwhile projects.
        Why, for the second year in a row, is there no military
    construction for New Mexico in the President's budget?
        Answer. For fiscal year 2000, Congress authorized and appropriated
    $41.1 million for four construction projects for installations in New
    Mexico. While these projects are of value to defense and were added by
    Congress, they were not high enough in the Department's overall
    priority requirements to have been included in the fiscal year 2000
    President's budget request because of current year budget constraints.
    The Department's Future Years Defense Program (FYDP) includes $67.8
    million of military construction projects for installations in New
    Mexico programmed throughout fiscal year 2002-2005 that could not be
    funded in the fiscal year 2001 budget request due to current year
    budget constraints. There are simply not enough dollars to fit all our
    valid requirements in the budget year.
                                     ______

                 Questions Submitted by Senator Mitch McConnell
                         manning the force initiatives
        Question. What is the Department going to do to ensure that TRADOC
    units--that is non-deployable units--do not serve as the sole bill-
    payer in the effort to fully staff TO&E units?
        Answer. The manning task force initiative is a four-year plan to
    fill all Army organizations to 100 percent of their authorizations.
    This year for instance, only the 10 divisions, 2 Armored Cavalry
    Regiments and Separate Brigades will be filled to 100 percent. All
    other units, to include both the TOE and TDA Army will fair share the
    remaining inventory. TRADOC and the rest of the TDA Army (non-
    deployable units) will fair no worse this year than the rest of the
    Army that is not part of the group of units that will be filled to 100
    percent. Next year, the early deploying units will be added to the 100
    percent fill with the rest of the TOE and TDA sharing the remaining
    inventory. The year after (fiscal year 2002) the rest of the TOE Army
    will be brought to 100 percent and then by the end of fiscal year 2003
    the HQDA approved TDA, which includes TRADOC, will be manned at 100
    percent. Spreading this transition out over four years was designed to
    ensure that we had sufficient time to grow the inventory necessary to
    man all of our forces to 100 percent. It is not the intent to break any
    unit during this transition period.
        Question. Is there a breakout of how these reductions will impact
    TRADOC posts?
        Answer. The most significant impact throughout TRADOC during this
    transition period will be at skill level one (E1-E4). This is due to
    our inability over the past couple of years to recruit enough soldiers
    to fill our skill level one requirements. For the non commissioned
    officer grades, TRADOC will continue to be filled between 96-98
    percent, with drill sergeants, classroom instructors and recruiters
    manned at 100 percent.
        Question. Isn't part of the answer that we need to increase our
    overall end strength?
        Answer. That option is certainly being considered, along with
    several other initiatives to drive down the requirements throughout the
    Army. At present there are several task forces studying the issue of
    turbulence, well being, perstempo and manning and how they impact on
    our ability to sustain the force. There are a certain percentage of
    faces that must exceed the structure in order to fully man our units.
    The task at hand is to find the right number.
                                  army vision
        Question. The Army is having to reduce funding on a number of
    programs in order to pay for its proposed new vision, it is also
    standing up two medium brigades in Fort Lewis--brigades which will now
    be unavailable for potential deployment. What does the Department view
    as acceptable risk as this vision is implemented?
        Answer. Army recognizes that there will be additional risk
    associated with conducting Transformation. The additional risk is,
    however, manageable and the Army, in close coordination with the Joint
    Staff and the geographic Commander's in Chief (CINCs), has developed a
    number of strategies designed to accommodate and reduce the risk
    associated with Transformation. These strategies encompass, but are not
    limited to, greater integration and use of the Reserve Component (RC)
    and more flexible, dynamic management of wartime force flows to war
    theaters. Regarding the two brigades at Fort Lewis, only one brigade
    will transition at a time. The armor brigade (3d Brigade, 2d Infantry
    Division) is first followed by the light infantry brigade (1st Brigade,
    25th Infantry Division).
                                     ______

                Questions Submitted by Senator Richard C. Shelby
                         national missile defense (nmd)
        Question. Dr. Hamre, the National Missile Defense Program had its
    ups and downs over the past few months. A successful test in the fall
    was followed by a failed intercept in January. I have been told that
    the recent failure was probably caused by a simple mechanical failure
    in the kill vehicle, one that can be rectified. I have also been
    briefed that the primary objective of the test, the integration of the
    varied and complex segments that constitute the NMD system, was deemed
    to be successful. I believe that the successes of our testing programs
    are many times lost on the public when a target is not destroyed.
        Dr. Hamre, would you please comment on the successes, as you view
    them, of the recent NMD test.
        What is your prognosis for the system's next test in May?
        Answer. Integrated Flight Test 5 is now scheduled for not earlier
    than 26 June 2000 and will be the third intercept attempt. (The first
    succeeded and the second failed.) This is a two month delay from the
    previous target date of 27 April 2000. This two month period has
    involved comprehensive efforts to analyze the failure, determine
    corrective action, bring to bear the best experts on the subject to
    review the results and implement the corrective action. We fully expect
    IFT-5 to meet all of its' objectives including intercept. This
    expectation is based upon both the corrective action to eliminate the
    IFT-4 mechanical failure as well as the extensive pre-flight analysis,
    testing, and check out currently under way.
        Question. Dr. Hamre, assuming that there is a successful test and
    intercept in May, what is your assessment of the Administration's
    readiness to order the deployment of the National Missile Defense
    system?
        Answer. The data from this test will be a significant contributor
    to the criteria used in determining a deployment readiness decision.
                                   technology
        Question. Dr. Hamre, I have repeatedly expressed my concern about
    this nation's lack of investment in BMD related support technologies. I
    believe that we must invest more robustly in technology today so that
    our defensive systems can meet the emerging missile threats in the
    future.
        Do you agree that during the development of the fiscal year 2002-
    2007 future year defense plan, the Pentagon should consider increasing
    the overall missile defense technology budget?
        Answer. Robust technology investment is our hedge against potential
    surprises that the evolving and dynamic threat might pose. While
    research and development remains a critical component of the overall
    BMD program, it continues to be difficult to maintain an aggressive
    technology program in the face of competing demands presented by our
    BMD acquisition programs. The Director of the Ballistic Missile Defense
    Organization (BMDO), Lt. Gen. Ronald Kadish, is addressing the issue by
    implementing a new management structure for BMD Science and Technology
    in order to revitalize the program. BMDO's Chief Scientist and his
    staff will concentrate on planning an integrated technology program, in
    collaboration with the Services and other government agencies.
    Execution of the approved program will be decentralized and performed
    by the Services and other appropriate Executing Agents. We are also
    strengthening the BMDO Chief Architect's and System Engineer's roles in
    the process, to better focus our technology development on our most
    critical future needs. This new management structure will allow the
    technology program to better compete for increased resources within the
    Department.
                                     ______

                Question Submitted by Senator Richard J. Durbin
                        unutilized plant capacity (upc)
        Question. The fiscal year 2001 Defense Budget includes funding for
    unutilized plant capacity (UPC). UPC allows facilities like the Rock
    Island Arsenal, Illinois to be more price competitive. Specifically,
    the budget includes $4.3 million for Rock Island Arsenal and $25.2 for
    the Watervliet Arsenal in New York under UPC. The Illinois, Iowa, and
    New York congressional delegations asked the Administration in December
    1999 to include $50 million in the fiscal year 2001 budget for UPC,
    divided equally between Rock Island and Watervliet Arsenals. Why is
    there such a significant difference between Rock Island and Watervliet
    UPC funding? What is the UPC funding need at both arsenals?
        Answer. In recent years, both Watervliet Arsenal and Rock Island
    Arsenal (RIA) have been faced with dwindling workload that has strained
    their ability to pay for unutilized/underutilized capacity thereby
    increasing their composite labor rates. This situation will reach a
    critical point at Watervliet in fiscal year 2001. Without additional
    Industrial Mobilization Capacity (IMC) (formerly UPC) funding,
    Watervliet would have to charge over $5,600 per Direct Labor Hour to
    recover its costs in fiscal year 2001. With the additional funding, the
    rate at Watervliet is $197.11 per hour. The budgeted rate at RIA for
    fiscal year 2001 is $158.29 per hour. Subsequent to developing the
    fiscal year 2001 budget, it became apparent that RIA is expected to
    reach a similar critical point within the next 12-18 months. The Army
    is currently conducting a study on the rightsizing of its ordnance
    facilities to determine the required capacity for mobilization and to
    recommend options regarding excess capacity, such that unutilized
    capacity is reduced to minimum essential levels. For fiscal year 2001
    Rock Island's required IMC funding is $11.670 million and Watervliet's
    is $30.137 million.

                              subcommittee recess

        Senator Stevens. The hearing will be in recess until
    Wednesday at 10 a.m.
        [Whereupon, at 4:17 p.m., Monday, March 6, the subcommittee
    was recessed, to reconvene at 10 a.m., Wednesday, March 8.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 2001

                                  ----------

                            WEDNESDAY, MARCH 8, 2000

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:08 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Ted Stevens (chairman) presiding.
        Present: Senators Stevens, Hutchison, Inouye, Leahy, and
    Durbin.

                             DEPARTMENT OF DEFENSE

                                Medical Programs

    STATEMENTS OF:
            HON. RUDY DE LEON, UNDER SECRETARY OF DEFENSE FOR PERSONNEL AND
                READINESS
            HON. WILLIAM LYNN, UNDER SECRETARY OF DEFENSE (COMPTROLLER)
            ADM. DONALD L. PILLING, U.S. NAVY, VICE CHIEF OF NAVAL
                OPERATIONS AND CHAIRMAN, DEFENSE MEDICAL OVERSIGHT
                COMMITTEE

                    OPENING STATEMENT OF Senator TED STEVENS

        Senator Stevens. My apologies. I am pleased this morning to
    have a chance to, with my colleagues, to review the Department
    of Defense (DOD) medical programs, the defense health program.
    We have three panels today, allowing for a full and deliberate
    review of DOD medical programs. We welcome the gentlemen of our
    first panel: Rudy de Leon, the Under Secretary of Defense for
    Personnel Readiness; Bill Lynn, the Under Secretary of Defense
    and Comptroller; and Admiral Donald Pilling, the Vice Chief of
    Naval Operations, who is appearing here today in his capacity
    as Chair of the Defense Medical Oversight Committee.
        We do appreciate your coming here today. You are here as
    you are going on to something new, right, Bill? Rudy, you are
    the one, Rudy?
        Mr. de Leon. Yes.
        Senator Stevens. Pardon me, yes.
        Senator Inouye. He is going up.
        Senator Stevens. Going up.
        We look forward to working with you in your new capacity,
    and this is twice for you in 1 week. That is service above and
    beyond the call, Bill.
        We welcome you, Admiral. It is your first appearance before
    the committee, I believe. I hope I have pronounced your name
    right. I am bad at that. You represent the uniformed military
    leadership and this hands-on active involvement in medical
    issues by the leadership is absolutely vital to what we are all
    trying to do, and we thank you for your efforts.
        The President's request for the defense health program is
    $11.6 billion, a 4 percent increase over this year's enacted
    level. The request provides health care for about 6 million
    beneficiaries and for the operation of 81 military hospitals
    and 500 military clinics. In this year of housing and health
    care, there are many challenges facing the defense health
    program, the foremost of which is full and robust funding for
    the current program and current benefits.
        Your request is $446 million more than this year's
    appropriation, but it is our understanding that that may be
    insufficient and we want to ask you questions about that.
    Looking down, or really ahead, beyond fiscal year 2002, there
    are reports of shortfalls that we may face out there that we
    ought to explore now. We are aware of unpaid and unfunded
    liabilities from previous years in TRICARE contract claims.
        Senator Inouye and I know first-hand the value of military
    medicine, he more than I, and we intend to honor the commitment
    that our Nation made to our service members, their families,
    and our veterans. We are committed to working with you to find
    sound solutions to the challenges we face and make them on our
    watch.
        Senator Inouye.

                     STATEMENT OF Senator DANIEL K. INOUYE

        Senator Inouye. Thank you very much, Mr. Chairman. I join
    you in welcoming Secretaries de Leon and Lynn and Admiral
    Pilling.
        Mr. de Leon, I understand you are going to be the number
    two man in DOD and congratulations, sir.
        I wish to echo what the chairman has stated, but put my
    word in to suggest that it is very important that we provide
    the finest medical care because we have noted that it plays a
    major role in the retention and recruiting of quality
    personnel. With that, I look forward to receiving your
    testimony.
        Senator Stevens. Senator Leahy, do you have a comment?

                     STATEMENT OF Senator PATRICK J. LEAHY

        Senator Leahy. Just briefly, Mr. Chairman.
        I think you put together a great panel here discussing
    military health care. I think the panel reflects what both you
    and Senator Inouye and all of us feel about ensuring that the
    men and women in uniform are receiving the highest quality
    health care possible. I completely agree with what both of you
    have said.
        There are a number of important issues I want to discuss. I
    will wait either to ask questions or, if I have to go to
    another committee meeting, to submit them. There are a couple
    of areas we should be looking at, though. One is the rising
    cost each year to give servicemembers the same level of care. I
    would hope that in the military health care system that somehow
    we could build up some immunity from the pressures that drive
    up costs in the private sector because of quantities of scale
    and so forth. That is something I think everybody is going to
    have to look into, that issue of scale.
        The other is a troubling trend that we are seeing both in
    private areas but also in the military, and that is the
    persistence of medical errors. I know that the military is not
    immune to mistaken diagnosis and misunderstood prescription
    requests that plague the U.S. medical systems. We hear it
    everywhere and I know it is a great concern of hospital
    administrators, both in the private sector and in the
    Government sector.
        There are a number of innovative technologies that can be
    used to reduce these errors and we should be looking at what
    alternatives are used. My wife is a nurse and I know she tells
    me that reading the handwriting of doctors who leave
    prescriptions for nurses is worse than trying to read notes
    that I leave around the house. Also, sometimes the resistance
    of medical personnel to use computers and all, we might want to
    look at that.
        On the second panel, General Blanck is going to be on that.
    I do want to encourage you, General, even though your daughter
    has graduated now from the University of Vermont, that you will
    continue to visit our State. You do not have to during mud
    season, but the rest of the year feel free.
        Thank you, Mr. Chairman.
        Senator Stevens. Yes, sir.

               PREPARED STATEMENT OF SENATOR CHRISTOPHER S. BOND

        The subcommittee has also received a statement from Senator
    Bond which he asked be included in the record.
        [The statement follows:]

               Prepared Statement of Senator Christopher S. Bond

        Mr. de Leon, Mr. Lynn, and distinguished military leaders,
    thank you for joining us today. It is a pleasure to offer a
    brief statement on the Military Health Care Program and what I
    believe should be our primary focus as we address health care
    requirements for the military. Above all, we must improve the
    quality of health care for all military beneficiaries--
    retirees, service members and families. Quality healthcare is
    essential to military readiness. It affects not only recruiting
    and retention but also morale. Our service members cannot focus
    on their missions if they are concerned about the quality of
    care their family members are receiving at home.
        We must improve military health care with a program that is
    responsive and reasonable. There is a limited amount of money
    to spend on health care, so we must be very prudent in our
    approach. As you know, we have moved military health care to
    the top of the legislative agenda. Recently, several
    legislative initiatives were introduced to address health care
    for the military. This hearing will assist the committee in
    finding the right combination of provisions to formulate the
    best final product. It will also help us ensure the right
    amount of funding in the fiscal year 2001 budget so that you
    will have the tools you need to conserve the fighting strength.
        Mr. de Leon, Mr. Lynn, and distinguished military leaders,
    I look forward to discussing these and other important military
    medical issues with you and your staff as the hearing process
    continues.

        Senator Stevens. Mr. Secretary, we would like to have you
    present your statement as you wish and then the other two
    gentlemen make such statements as you wish. We will not
    interrupt you until you all three have finished.
        Mr. de Leon. Thank you, Mr. Chairman. I will just make a
    few brief comments. First, as the personnel chief this is my
    first opportunity to testify before the Defense Appropriations
    Subcommittee and I would like to thank the committee for all
    the work on pay and benefits, the retirement fix, and the pay
    raise and the pay table reform that were incorporated into last
    year's bill.
        Those are extremely important. We see the retention in the
    Army being particularly strong right now, retention in the
    Marine Corps being strong. We see retention in the Navy
    improving. We are working with the Air Force to improve both
    recruiting and retention. But first I would like to thank you
    for that work last year.

                               military medicine

        Second, I would like to thank you and the other committees
    of Congress for work that they did more than a decade ago when
    they created the medical health care scholarship programs for
    our doctors and nurses. This is potentially the single most
    important piece of recruiting and attracting quality medical
    professionals to our force. When you look at the young doctors
    and nurses that we are producing, coming from the best medical
    schools in America, this is a program that has strengthened
    military medicine greatly, and we are in the debt of the
    committee for their work in the past.
        Military medicine, as Senator Leahy raised and as the
    chairman and Senator Inouye raised, in many respects reflects
    the civilian community. Health care costs are rising and
    managing health care costs in the Department is becoming an
    increasing challenge.
        One of the critical decisions I think we have made in the
    last 2 years is that we want to very much maintain the existing
    medical infrastructure that we have, not that we will not be
    making minor modifications at one location or another. The
    heart of our medical system are the military treatment
    facilities (MTF's). They have great doctors, great nurses. They
    are really the heart of our system.
        So, starting with that, that brings us into other aspects
    of the health care program. But one area where we are trying
    not to mirror the commercial sector is that the commercial
    sector and many private health care plans are cutting benefits
    and they are increasing enrollment and deductibles. We are
    working to keep faith with our military men and women,
    including one of the provisions that Secretary Cohen and
    General Shelton included in this bill to make sure that our
    active duty family members that use the TRICARE system have no
    out of pocket expenses.
        The second piece included in the Secretary's budget is to
    make sure that our service members that serve in remote
    locations, whether they are recruiters or on a remote
    assignment, have adequate medical care. We have an initiative
    that would construct and create a fee for service type benefit
    for them when they do not have an MTF that they are able to go
    to.
        Second, we have an executable and funded 2000 and 2001
    program. There are some bid price adjustments that we are
    working with the TRICARE contractors right now in terms of the
    negotiations of claims. We are expecting to maintain a very
    close dialog with the committee on this as work on resolving
    these issues continues and comes to a conclusion.
        In terms of the general state of military medicine today, I
    think we all know that our service members face frustrations
    with the business side of health care. When our military
    members actually deal with our doctors and nurses, all of our
    surveys indicate that the quality of care that they receive is
    very good. But they are frustrated in terms of dealing with the
    business side of health care delivery--scheduling appointments
    and then reimbursement from the TRICARE system if they have to
    see a personal physician outside the MTF.
        There are a number of initiatives that are ongoing in the
    Department to make sure that the business side of TRICARE is a
    seamless effort for our military men and women.
        One additional piece that we are working on is utilization.
    One morning I went with the Sergeant Major of the Army, to Fort
    Belvoir to sit in the waiting area as the morning patients were
    received. One of the elements of our initiative that the
    surgeon generals are working on (and will be discussing) is
    utilization, to make sure that our MTF's are seeing the maximum
    number of patients possible and that we have given each of our
    doctors the right set of tools so that doctors can see multiple
    patients and do not get bogged down with paperwork and
    administrative activities.

                                 pharmacy costs

        Additionally, as is the private sector, we are coming to
    grips with the increasing cost of pharmacy. Pharmacy is now the
    leading cost driver of civilian medical. We are facing the same
    set of issues in military medicine. Pharmacy is improving and
    it is improving dramatically. I use in my discussion with the
    surgeons a high school football coach that I knew died of what
    was then called hardening of the arteries in the 1960's. In the
    seventies and the eighties, that person would have had bypass
    surgery, and in the nineties that person might be prescribed
    Lipitor or Zokor as a way to preemptively treat the underlying
    problems. With these tremendous gains in pharmacy are coming
    great additional costs.
        So all of these are factors that are impacting the defense
    medical program that we present to you. We are trying to keep
    the defense budget cycle in sync with the medical marketplace
    for our civilian society.
        One additional piece that is critical was the creation of
    the DMOC, or the Defense Medical Oversight Committee. From my
    perspective, I need the support of the vice chiefs as we work
    medical budget issues and also as we oversee and deliver health
    care to our military members. We have created a mechanism, with
    the support of Dr. Hamre and Secretary Cohen, that put the vice
    chiefs at the table in terms of critical budget decisions on
    military medicine as well as a critical oversight
    responsibility to make sure that we have an efficient and
    effective program.

                               prepared statement

        So Mr. Chairman and members of the subcommittee, we look
    forward to a dialog with you. Also, I am pleased to be backed
    up by the surgeon generals and the chiefs of our military
    nursing programs, and would also note that, in terms of this
    hearing, this is probably the last time that General Blanck and
    I believe Admiral Nelson will be testifying to this
    subcommittee. They have had a tremendous impact in their roles
    as Surgeon General of the Navy and Surgeon General of the Army.
    So I just wanted to acknowledge that in my testimony.
        Thank you, Mr. Chairman.
        Senator Stevens. Thank you.
        [The statement follows:]
     Prepared Statement of Hon. Rudy de Leon and Hon. William J. Lynn, III
        Mr. Chairman, distinguished Members of the Subcommittee, it is our
    distinct honor to appear before your Committee today at the start of
    the ``Year of Health Care'' to provide for you an overview of the
    Military Health System.
        The Military Health System is a vast and extraordinary health
    system with just under 100 hospitals and over 500 clinics worldwide
    serving an eligible population of 8.2 million. There is no other health
    system like it in the world. We ensure the health of our forces and
    care for them when ill or injured anywhere around the globe. Further,
    we provide comprehensive health coverage to the families of our service
    members, our retirees and their families, and the surviving family
    members of those who have died in service to our country. Our attention
    to the health of our forces involves research, health promotion, and
    appropriate care whether deployed or at home stations. It demands
    timely, supportive, and quality care for family members; and it relies
    on fully trained and militarily prepared healthcare personnel. The
    support for deployed forces is inextricably linked to the operation of
    hospitals and clinics. We cannot provide Force Health Protection in
    wartime without a robust peacetime healthcare system.
    Fiscal Year 2001 Defense Health Program Budget
        For fiscal year 2001, we are seeking funding for the Defense Health
    Program in the amount of $11.6 billion. Under the President's budget
    request, the total proposed budget for the Military Health System is
    $17.2 billion. Our proposed funding for military personnel is $5.4
    billion, and $202 million for military construction.
        The President's fiscal year 2001 budget request:
      --Continues and increases funding for the numerous Force Health
            Protection measures designed to promote health, prevent
            injuries and disease, care for casualties, and have a viable
            automated record system for all service members detailing their
            health status, plus possible exposures to health hazards
      --Supports increased medical readiness training
      --Contributes funds to the Global Emerging Infectious Disease
            Surveillance initiative
      --Requires management efficiencies within the military treatment
            facility operations while providing increased funding for
            additional services and new benefits
      --Funds the managed care support contracts
      --Provides funding for quality initiatives and advances in medical
            practice
      --Funds demonstration programs for providing healthcare coverage to
            our beneficiaries age 65 and older. These demonstrations
            include TRICARE Senior Prime, Federal Employees Health Benefit
            Program, TRICARE supplemental benefit to Medicare, and
            expanding the national mail order pharmacy program to include
            Medicare-eligible military beneficiaries.
    Force Health Protection
        The Department is deeply committed to protecting the health of all
    service members while at home and during deployments. FHP is our
    unified strategy that protects service men and women from health and
    environmental hazards associated with military service through their
    continuum of service from accession, training and deployment(s), to
    separation or retirement, and beyond. The number and scope of current
    military operations, the variety of deployment environments and
    hazards, and our expectations of men and women in uniform all have
    increased as the Nation responds to changing global threats.
        Force Health Protection reflects a commitment to: Promote and
    sustain wellness to ensure that we can deploy a fit and healthy
    military force; implement medical countermeasures to prevent casualties
    from occurring in the deployed environment; and provide high quality
    casualty care.
        The Department has many activities underway to improve monitoring
    of individual health status and the continual medical monitoring and
    recording of hazards that might affect the health of service members.
    Medical Surveillance has been in effect for recent deployments to
    Southwest Asia, as well as for deployments to Bosnia, Croatia, and
    Hungary. Included are pre- and post-deployment medical briefings and
    individual health assessments, extensive environmental hazard
    monitoring in the theater of operations, plus increased preventive and
    mental health resources in the theater.
        We face a new era in our efforts to prevent casualties. In the
    battlefield of the future, rogue nations, extremist groups, or
    terrorists could use weapons of mass destruction against our forces. To
    counter these threats, ongoing application of the latest technology for
    Chemical and Biological Warfare (CBW) detection, prevention, and
    immunization (pre-treatment) are now employed to assure the protection
    of our forces. The Department's Anthrax Vaccine Immunization Program is
    one example. The Department has identified anthrax as a known threat, a
    weapon at least 10 enemy countries are capable of using. Anthrax
    presents a clear and present danger to our service personnel. The
    anthrax vaccine is highly effective against this dangerous threat. On
    the advice of the Chairman of the Joint Chiefs of Staff, the Secretary
    of Defense directed implementation of the total force vaccination
    program. To date, over a million vaccinations have been given to nearly
    400,000 service members.
        The U.S. Armed Forces of the 21st Century will become the highly
    mobile, technologically advanced forces envisioned by the Chairman of
    the Joint Chiefs of Staff. Medical support units can be no less mobile,
    no less agile, no less advanced if they are to discharge their Force
    Health Protection responsibilities. We have several initiatives
    underway that will afford us greater flexibility and improved patient
    care in conflict and wartime scenarios. Computerized patient records,
    deployed preventive medicine resources, and combat stress control
    measures are just a few examples of these initiatives.
        The Reserve Components are participating more frequently in our
    operational missions. Consequently, we have taken steps to facilitate
    their meeting their medical readiness requirements. Through agreements
    with the Department of Veterans Affairs (DVA), Reserve Component
    members now may obtain examinations and immunizations at DVA
    facilities. Both Reserve Component members and their families will be
    able to participate in the Department's family dental program beginning
    in February 2001. Finally, we have developed a dental health
    documentation form that will allow Reserve Component members to have
    their personal dentists conduct their annual dental health
    examinations.
        Further, FHP acknowledges that the service member cannot focus on
    the mission at hand if he or she is concerned about the healthcare that
    his or her family is receiving at home. Therefore, we must have a high
    quality, patient-focused healthcare program to care for family members
    and, in turn, give confidence to our troops about their families' care.
    TRICARE
        TRICARE is an integrated health care delivery system that has
    enabled the Department to provide better access to high quality care
    for more of our beneficiaries more cost-effectively than the previous
    health care delivery modalities available in the Military Health
    System. As a health plan, TRICARE offers a triple-option health benefit
    package providing beneficiaries a choice of: TRICARE Prime, an enrolled
    HMO-like option; TRICARE Extra, a preferred provider option; and
    TRICARE Standard, the previous standard CHAMPUS option. All active duty
    service members are enrolled in TRICARE Prime.
        TRICARE implementation began in 1995, and in three short years the
    new system has become operational throughout the United States and in
    our overseas locations. While the quality of health care in our system
    is consistently rated very high by our beneficiaries, we have
    experienced problems with the business practices of TRICARE, in such
    areas as making appointments, telephone services to our beneficiaries,
    enrollment in TRICARE, and payment of claims. Problems in these areas
    have reduced customer satisfaction with TRICARE and made the program at
    times difficult for our customers to access and use. Over the past
    year, senior Department and Service leadership have visited each
    TRICARE region to listen to our beneficiaries, health care providers,
    and MTF personnel to identify problem areas in both our direct care and
    managed care support contracts. We have developed an aggressive action
    plan to correct problems with access, enrollment, and claims
    processing. We are working closely with the Joint Chiefs of Staff, the
    members of the Defense Medical Oversight Committee, and the Services,
    to ensure these improvements will make TRICARE more accessible and
    customer-friendly, simpler, and more uniform throughout the country.
        The following access improvement initiatives are underway:
      --Optimize TRICARE Prime Enrollment--defining our beneficiary
            population and encouraging increased enrollment in TRICARE
            Prime.
      --Improve telephone access--deploying uniform standards for both
            military treatment facilities and civilian networks.
      --Improve and standardize appointing processes--accelerating
            deployment of the standardized system, and integrating demand
            management and appointing.
      --Improve primary care management--implementing a standard definition
            of Primary Care Manager by Name/Team for TRICARE Prime
            enrollees.
      --Improve case management--identifying patients who require case
            management and those who need case management services but do
            not meet the current definition.
      --Implement DEERS 3.0 on schedule--facilitating continuity of care
            and improving portability.
      --Improving TRICARE Claims Processing through such reforms as:
        --Claims Processing Cycle Time.--The TRICARE Program has adopted
                claims processing timeliness standards compatible with
                industry standards, requiring contractors to process 95
                percent of retained claims within 30 days/100 percent of
                retained claims within 60 days. Implementation of this
                process began on 1 September 1999.
        --Ease Provider Authorization.--With this change, when a contract
                is awarded, the new contractor is required to re-certify
                only TRICARE network providers and will depend on existing
                state licensing and credentialing records for all non-
                network providers. All contractors completed implementation
                of this process in 1999.
        --Better Explanation of Why Claims Returned to Providers.--If a
                problem claim is submitted, the contractor returns the
                claim to the submitting party with an explanation as to why
                the claim is being returned. All contractors completed
                implementation of this process in summer 1999.
        --Third-Party Liability.--Contractors will be permitted to process
                claims to completion and not defer them until all third-
                party liability issues are resolved. Implementation is
                expected in spring 2000.
        --Comprehensive Evaluation of Claims Processing System.--The
                Department has contracted with an expert-consulting firm to
                assess the claims processing system. Initiatives identified
                through this review include proposals to increase
                electronic claim submission; increase auto-adjudication;
                improve customer service, provider and beneficiary
                education, improve program-wide data quality; improve
                enrollment and eligibility process; and enhance fraud and
                abuse mitigation capabilities.
    The Military Health Care Benefit
        Secretary Cohen and General Shelton have identified healthcare,
    along with housing, as a key quality of life issue for our service
    members and their families that must be addressed this year. The
    President's budget adds funding for two important expansions of the
    TRICARE benefit that will lower out-of-pocket medical costs for service
    members and their families. First, the budget proposal includes $30
    million to expand TRICARE Prime Remote to cover family members. In
    October of last year, the Department launched TRICARE Prime Remote to
    reduce out-of-pocket co-payments for service members living and working
    in areas far from Military Treatment Facilities. The President's budget
    proposal would now extend this benefit to health care obtained by these
    service members' families. The budget request also includes $50 million
    to eliminate co-pays for all active duty family members enrolled in
    TRICARE Prime when they receive care from civilian health care
    providers. This proposal will stop service members from having to pay
    out of their own pocket for health care simply because there is no
    appointment available for them in a military hospital or clinic.
        Among our beneficiaries are those who have extraordinary or very
    costly medical needs. Our healthcare providers and military treatment
    facilities have developed dynamic case management programs to help
    these families identify all available resources in both the civilian
    and military communities. Our individual case management program, which
    we implemented in March 1999, now gives us an opportunity under many
    circumstances to provide for services, such as custodial care, that we
    previously were unable to provide for our former CHAMPUS-eligible
    beneficiaries. While we do not have a definitive projection of what
    this individual case management program will cost, President's budget
    includes $20 million for implementation of this new benefit.
        Secretary Cohen and the Chairman have expressed their strong
    commitment to expand health care access to our military retirees. The
    President's budget includes funding for the demonstrations we currently
    have underway, or will soon begin, to test alternative means of
    expanding health care benefits to our Medicare-eligible retirees, their
    spouses, and survivors. The Department is conducting several
    demonstration programs to test the best means to expand health care to
    Medicare-eligible retirees. Over 130,000 retirees are eligible to
    participate in these demonstrations. These demonstrations are:
      --TRICARE Senior Prime: 28,000 enrollees.--Now being tested in a
            three-year demonstration period at eight military treatment
            facilities. Under this program, Medicare-eligible retirees
            enroll with an MTF which serves as their Medicare+Choice plan,
            and Medicare reimburses DOD at a capitated rate for care
            provided to these enrollees beyond the level of effort already
            provided by DOD.
      --Federal Employee Health Plan: 70,000 eligibles.--Under this
            demonstration, Medicare-eligible retirees at eight
            demonstration sites can enroll in the FEHBP. The DOD and
            beneficiaries will pay the same premium cost shares of other
            participants in the FEHBP and receive the same benefits as all
            other federal employees and annuitants under this program.
      --Expanded Pharmacy Benefit: 6,000 eligible enrollees.--Effective
            spring 2000, DOD will offer an expanded pharmacy benefit for
            Medicare-eligible retirees at two sites. Retirees will be
            offered a pharmacy benefit equivalent to the TRICARE Extra
            pharmacy benefit with an enrollment fee plus applicable co-
            payments.
      --TRICARE Senior Supplement: 11,000 eligible enrollees.--In spring
            2000, DOD will test offering a TRICARE Senior Supplement to
            military retirees at 2 sites. Under this program, TRICARE will
            cover Medicare cost sharing as well as services not now covered
            by Medicare.
        We currently partner with seven managed care support contractors
    (MCSC) covering twelve geographic regions that include the continental
    United States and Alaska to deliver the TRICARE benefit. Each MCS
    contract covers five, one-year option periods and they range in price
    from $600 million to $3.6 billion for the anticipated contract life. As
    is normal with contracts of this magnitude there are unforeseen changes
    that create costs that result in bid price adjustments, change orders,
    and equitable adjustments. We have funded our known managed care
    contract requirements, and are committed to expeditiously resolving
    future contract changes and other claims.
        As advocates for military medicine and our beneficiary population,
    we would like to be able to care for all of our beneficiaries,
    providing them the care they need when they need it. But we are also
    public servants entrusted with the responsibility to manage the health
    requirements of the Department within the budget. Based on the current
    definition of our benefit and our level of usage, we can tell you that
    we have adequately budgeted for patient care in this fiscal year 2001
    request.
    Quality and Performance in the Military Health System
        Military medicine has always aimed to provide the very best, the
    highest quality healthcare possible. That goal continues today with our
    efforts toward ensuring patient safety, examining our quality programs,
    and gaining maximum efficiency of the Military Health System.
        Since the Institute of Medicine (IOM) issued its report, To Err Is
    Human, in December 1999, the nation has expressed increased interest in
    patient safety. In fact the Military Health System has had a number of
    programs underway prior to the IOM report that serve to improve patient
    safety. Among them are numerous computer systems, medication bar-
    coding, participation in the National Patient Safety Partnership, and
    concerted efforts to reduce errors in high hazard environments such as
    Emergency Rooms and Intensive Care Units. We have joined with other
    federal agencies in accepting the challenge of the IOM report to do
    more. We participate as a member of the Quality Interagency Task Force
    and use their recommendations to implement measures that will reduce
    errors and improve patient safety within military medicine.
        Additionally, responding to this Committee's direction, we
    established the Department of Defense Healthcare Quality Initiatives
    Review Panel (HQIRP), to look into and report on the Military Health
    System quality initiatives begun in 1998. The HQIRP, which includes 5
    medical professionals and 4 MHS beneficiaries, is well into its
    assessment of whether all reasonable measures have been taken to ensure
    that the Military Health System delivers health care services in
    accordance with consistently high professional standards. The members
    have met four times, attended our annual TRICARE conference, and plans
    to visit military medical facilities in Tidewater, Puget Sound,
    Albuquerque, and Quantico. In their final report to the Secretary of
    Defense and Congress later this spring, the HQIRP will offer their
    assessment, conclusions, and recommendations.
        In the past year we have identified needed policy and created the
    tools necessary for our military medical facilities to begin
    implementing this strategy for a High Performance Military Health
    System. These changes are brought together through the MHS Optimization
    program. The focus of MHS Optimization is to shift from providing
    periodic medical services to better serving our beneficiaries by
    preventing injuries and illness and improving health. The underlying
    tenets include:
      --Effective use of readiness-required personnel and equipment to
            support the peacetime health service delivery mission.
      --Equitably align resources to provide as much health service
            delivery as possible in the most cost-effective manner--within
            the MTF.
      --Use the best, evidence-based clinical practices and a population
            health approach to ensure consistency.
        Through full implementation of this plan, we will ensure adequate
    staffing and resourcing. A pivotal component of the MHS Optimization
    Plan is an increase in MTF utilization management. MTFs continually
    deliver quality health care services at lower costs than civilian
    counterparts. The prototype for the optimization plan began in Region
    11 (Oregon and Washington) in January 2000.
        Optimization of the Military Health System will be more successful
    with the implementation of TRICARE 3.0, the new generation of the
    TRICARE managed care support contract. TRICARE 3.0 moves away from
    highly prescriptive, government-developed requirements and processes;
    identifies government required outcomes and invites bidders to propose
    their best commercial practices to meet or achieve government outcomes;
    reduces cost for separately designed contractor systems and practices
    to meet requirements unique to the government; and gives government
    more effective, more immediate authority to enforce performance of
    MCSCs in such areas as claims processing, appointments, and access
    standards.
        Mr. Chairman, this statement has addressed the highlights of our
    fiscal year 2001 budget request, our strategy of Force Health
    Protection, progress in our TRICARE program, new benefit proposals, and
    our comprehensive reengineering initiatives. These are vitally
    important aspects of the system of military healthcare. Together they
    provide the resources and organizational improvements that cause men
    and women to want to be physicians in the military. They cause
    soldiers, sailors, airmen and Marines to want to stay in the service of
    their country; and they cause the American people to have great
    confidence in those who run the military.
        We are very proud of the Military Health System, its people, and
    the many courageous missions they undertake. We are deeply committed to
    do whatever is necessary to take care of our people, in both wartime
    and peacetime. Again, we thank you, Mr. Chairman and all the members of
    this committee for your continued strong support of the Military Health
    System.

        Senator Stevens. Gentlemen, Mr. Secretary, do you have any
    comments?
        Mr. Lynn. Just a couple of brief ones, Mr. Chairman. When
    we were here on Monday, I think you and Dr. Hamre noted this
    was a generally strong budget. I think that is true, although I
    think this area that we are discussing today is the major
    challenge that we face.
        We sought to give you a fully funded budget, but I am
    afraid we have to time-date stamp ``fully funded.'' We added
    resources for medical claims and pharmacy costs as we knew
    them, but we are in a very dynamic period and they are
    continuing to grow. I think in the near term we will face
    serious challenges with bid price adjustments for the contracts
    we have for TRICARE now and we are going to have to discuss
    with you how we are going to find a way to address those.
        Over the longer term, I think we are returning to a period
    we saw--from the mid-eighties to the early nineties, medical
    inflation was running 7, 8, 9, 10 percent a year and the
    portion of the defense budget that was devoted to health care
    doubled in that time. I think we are in a similar period of
    dynamic growth and over the long term we are going to face a
    serious choice between restricting benefits, shifting resources
    from other areas of defense into health care costs, and
    shifting resources from other areas of the Government into
    defense.
        All of those have serious problems with them. They all have
    serious challenges. This hearing is not going to end this
    story. This year is not going to end this story. Indeed, we are
    going to I think be facing this over the next years and
    probably a decade.
        Senator Stevens. Thank you, Mr. Secretary.
        Admiral.

                             military health system

        Admiral Pilling. Mr. Chairman, thank you. Members of the
    committee, thank you for the opportunity to discuss the
    military health system with you today.
        With the chairman's permission, I have a written statement
    I would like to submit for the record.
        Senator Stevens. Yes, sir.
        Admiral Pilling. I appreciate the opportunity to address
    you in my capacity as Chairman of the Defense Medical Oversight
    Committee. I want to personally assure you that the senior line
    leadership of the Department of Defense strongly believes that
    maximizing the health and wellness of our service members and
    their families is a vital component of readiness. We are
    acutely aware of the problems our medical system and our
    beneficiaries face and we are committed to working with the
    Congress to improve the military health system.
        Let me also assure you we are committed to keeping the
    promise of providing quality medical care to our retiree
    population.
        Last year the Deputy Secretary of Defense convened a
    medical summit to discuss problems faced by the military health
    care system. The summit concluded that greater service
    oversight in the operation of the health program, in
    establishment of health care benefits and budget priorities was
    required. As Chairman of the DMOC, I am committed to ensuring
    that the military health system delivers a consistent equitable
    benefit for all beneficiaries.
        In the past few months the DMOC directed a thorough budget
    review of the defense health program to determine the scope of
    current and projected funding requirements. This resulted in
    over $250 million being added to the defense health program in
    the President's budget proposal for fiscal year 2001.
        The results of this review also highlighted a shortfall of
    over $6 billion across the future years defense plan (FYDP).
    Since this $6 billion shortfall cannot be managed away, our
    first priority is to fix the bottom line without breaking the
    system.
        The DMOC also directed an analysis of the TRICARE 3.0
    request for proposal (RFP). The Center for Naval Analysis
    completed a preliminary review of the RFP, making several
    recommendations regarding financing and performance criteria
    that were incorporated into the recently released RFP for
    TRICARE Region 11.
        Another, longer-term and more rigorous evaluation will be
    conducted by an outside consulting firm to ensure that we have
    the best possible vehicle for contractor health care delivery,
    especially from the standpoint of our beneficiaries.
        The DMOC leadership is also concerned that many older
    military retirees do not have full access to the military
    health care system and we have been working with the Chairman
    of the Joint Chiefs of Staff to evaluate alternatives for
    enhancing and financing the health benefit for older retirees.
        We support the demonstration programs funded in the
    President's budget and will continue to pursue the definition
    and financing of a stable long-term benefit for retirees.

                               prepared statement

        The challenges we face are substantial, but the senior line
    leadership within the Department is committed to ensuring that
    our military health care system remains the best in the world.
    In closing, I would like to again thank you, Mr. Chairman, and
    all the members of this subcommittee for your continued strong
    support of the military health system.
        Thank you.
        [The statement follows:]
                  Prepared Statement of Adm. Donald L. Pilling
        I appreciate the opportunity to address you in my capacity as
    Chairman of the Defense Medical Oversight Committee. I want to
    personally assure you that the senior leadership of the Department of
    Defense strongly believes that maximizing the health and wellness of
    our service members--and their families--is a vital component of
    readiness. We are acutely aware of the problems our medical system and
    our beneficiaries face, and we are committed to working with the
    Congress to improve the Military Health System. Let me also assure you,
    we are committed to keeping the promise of providing quality medical
    care to our retiree population.
    DMOC
        Last year, the Deputy Secretary of Defense convened a Medical
    Summit to discuss problems faced by the military health care system.
    The summit concluded that greater Service oversight in the operation of
    the health program and in establishment of health care benefits and
    budget priorities was required. The Defense Medical Oversight Committee
    (DMOC) was formed in August, with membership consisting of the Under
    Secretary of Defense (Personnel and Readiness), the ASD(HA) the four
    service Vice Chiefs, the military department Under Secretaries, the
    Under Secretary of Defense (Comptroller), the Director for Logistics
    from the Joint Staff, and the Surgeons General.
        Since its inception, the DMOC has engaged senior military and
    civilian leadership in discussions and review of the health care
    benefit, Defense Health Program (DHP) funding requirements in the
    context of other service decisions, and management and reengineering
    initiatives. As Chairman of the DMOC, I am committed to ensuring that
    the Military Health System delivers a consistent, equitable benefit for
    all beneficiaries. The DMOC has two primary responsibilities: ensuring
    adequate funding for a high quality military health care system, and
    strengthening the benefit we offer our military families.
    Funding
        In the past few months, the DMOC directed a thorough Budget Review
    of the Defense Health Program to determine the scope of current and
    projected funding requirements. This resulted in over $250 million
    being added to the Defense Health Program in the President's Budget
    proposal for fiscal year 2001.
        The results of this review also highlighted a shortfall across the
    Future Year Defense Plan (FYDP). Since this shortfall cannot be managed
    away, our first priority is to fix the bottom line--without breaking
    the system.
        One of the options the DMOC has discussed for financing retired
    military healthcare involves conversion from a pay-as-you-go system to
    an accrual financing system. The healthcare costs for retirees would be
    funded using the same system that DOD uses to fund their retirement
    pension. The healthcare retirement cost would be included in active
    duty programming rates based on actuarial estimates and would accrue to
    a new trust fund. This trust fund would then be used to finance retiree
    health benefits.
    TRICARE Contracts
        The DMOC also directed an analysis of the TRICARE 3.0 Request For
    Proposal (RFP). The Center for Naval Analysis completed a preliminary
    review of the RFP, making several recommendations regarding financing
    and performance criteria that were incorporated into the recently
    released RFP for TRICARE Region 11. Another, longer term and more
    rigorous evaluation will be conducted by an outside consulting firm, to
    ensure that we have the best possible vehicle for Contractor health
    care delivery--especially from the standpoint of our beneficiaries.
    Readiness
        In its role of integrating Service priorities with those of the
    health program, the DMOC also recently evaluated a Theater Medical
    Readiness strategy designed to integrate successful deployment of the
    supporting Theater Medical Information Programs, to include a patient
    movement module, a defense medical logistics system, and a composite
    health care system used to track patient information within the
    military treatment facility.
    Health Benefit
        Secretary Cohen and the Chairman of the Joint Chiefs of Staff have
    expressed their strong commitment towards expanding health care access
    to all our beneficiaries--active duty, retirees, and members of their
    families. The DMOC has been working to identify ways to improve the
    health benefit, both the nature of the benefit and the manner in which
    it is delivered.
        Included in the President's Budget proposal for fiscal year 2001
    are two initiatives to improve the health care benefit for Active Duty
    Family Members. First, TRICARE Prime Remote would be extended to
    military families living in areas not serviced by TRICARE Prime, so
    these family members can enjoy the same benefit as that experienced by
    families living in Prime areas. Second, the DMOC supported elimination
    of copays for all Active Duty Family Members enrolled in TRICARE Prime,
    so that family members receiving care in the network have the same
    benefit as those receiving care in our Military Treatment Facilities.
    Retiree Health Care
        The DMOC leadership is also concerned that many older military
    retirees do not have full access to the Military Health Care System,
    and has been working with the Chairman of the Joint Chiefs of Staff to
    evaluate alternatives for enhancing and financing the health benefit
    for older retirees.
        The President's budget includes funding for the demonstration
    programs for our Medicare-eligible retirees, their spouses, and
    survivors. To date, over 130,000 medicare-eligible retirees are
    qualified to participate in demonstrations, including TRICARE Senior
    Prime, the Federal Employee Health Benefit Plan (FEHBP), TRICARE Senior
    Supplement, and an Expanded Pharmacy Benefit. The DMOC supports these
    demonstration programs, and will continue to pursue the definition and
    financing of a stable, long term benefit for these retirees.
    Best Business Practices
        The DMOC also supports adoption of business practices that will
    improve billing and claims payment, telephone access, timely
    appointing, and provider network development. Our service members say
    they are very satisfied with the healthcare they receive, but they are
    often frustrated by administrative and customer service issues. The
    DMOC is committed to fixing these problems to ensure the well being of
    our Service members and their families.
    Conclusion
        The challenges we face are substantial, but the senior line
    leadership within the Department is committed to ensuring that our
    Military Health Care System remains the best in the world. In closing,
    I would like to again thank you Mr. Chairman and all the members of
    this subcommittee for your continued strong support of the Military
    Health System.

        Senator Stevens. Thank you very much, gentlemen.
        We will go on a 5-minute rule. I would urge you to make
    your responses as short as possible. We have three panels. We
    will all submit questions to you, if others desire. I have some
    here. We would urge you to answer them as they come to you, so
    we will just print them in the record as though they are a
    dialog here.

                                Pharmaceuticals

        I do appreciate the fact that we are all here today and it
    is a chance for everyone involved in this total system to be
    part of the dialog we want to have with you.
        Let me open up on one thing. Yesterday Senator Gorton
    pointed out to Secretary Shalala that it is now possible to
    build U.S.-produced pharmaceuticals abroad, Canada or Europe,
    substantially lower than we buy them here because of the
    policies of our pharmaceutical companies in selling drugs here
    to put the costs of research and development on American
    consumers about their not exporting them because of competition
    abroad. Of course, the people abroad have not participated in
    the development costs and those who might produce drugs abroad
    using our systems would produce them at less cost.
        I do not know why we should continue to buy drugs through
    your system under this approach. We are looking at the concept
    of trying to require that Government-purchased pharmaceuticals,
    that we cannot pay less for them here--pay more for them here
    than we would pay for the same manufactured, U.S.-manufactured
    drugs abroad.
        I would like to have you look at that and see what it would
    do. Perhaps you are one of the major purchasers of
    pharmaceuticals and we ought to just put a shot right across
    the bow of those companies. If we are paying these costs, the
    people who enjoy those drugs abroad should pay part of the
    costs of development and the research. It certainly should not
    be borne by our people like our retirees and others.
        We have asked Secretary Shalala to look at it. I am asking
    you. I am not asking for a comment today.

                                  Telemedicine

        Second, my question is this. We are putting a lot of money
    now in the development of telemedicine, and it is working up in
    my State. I think it is working in Hawaii. Why should we not
    explore that for the retirement communities? Why should people
    have to drive 50, 100 miles in some of our States to go and
    have an interview with a physician? Why can we not have some
    sort of a drugstore, storefront, or a contract with some clinic
    in these small areas and put in a telemedicine concept with
    some of our physician's assistants in those places and have
    them each have a time-frame for calling in to centralized areas
    in the military system, in the nearest military hospital or
    something like that?
        That is working in Alaska with the Public Health Service
    and there is no reason why it could not work with you. I get
    more complaints in Alaska that people have to drive 200 miles
    to go have their pulse taken to see if they can continue to
    take the same pharmaceutical. Somehow we have got to adapt. And
    that would save costs if we did something like that.
        Would you gentlemen mind looking into that to see if it is
    possible? The rampup cost for such a program should not be too
    much, and certainly there is incentive for the system to
    develop many more physician's assistants. I am told that there
    are a lot of people that like that kind of occupation. It is an
    officer, it is a commissioned position, and it has great
    dignity as far as small towns are concerned. I urge you to
    think of that system. We would like to work with you.
        Last, and I will take my 5 minutes, I want to tell you if
    we do get to a supplemental--and I am not sure we will get to
    them yet because of the time-frame and everything that is going
    on around here--if we do, I want your counsel, because we want
    to take care of part of the shortfall in this year's
    supplemental. Let us go out and eliminate that as quickly as we
    can so it does not hang over our heads out into the future.
        Now, it may be we cannot do it all in one year, but we can
    certainly pick up some of it in 2000 and some in 2001, and by
    2002 if it is really as big as it looks like today it will not
    be a wall; we might run into a high hurdle instead.
        I would like your help to tell us what should we fund in
    the supplemental, what should we fund in 2001, as far as the
    shortfall is concerned, all right? You do not have to answer
    here unless you want to, Mr. Secretary. But you can give us a
    report on that, because I do not want to have us making guesses
    as to what you need. You know your needs better than we do. But
    if you do not tell us we are going to give you something, and
    it is liable to be in the wrong place.
        Mr. Lynn. We will be happy to work with your staff and
    provide the detail as we have it.
        [The information follows:]

        The Department has been developing for submission a
    reprogramming action for fiscal year 2000 to address any
    unforeseen DHP funding requirements. We are still evaluating
    the impact of fiscal year 2000 Appropriations Act language
    directing the development of a Bid Price Adjustment process for
    Managed Care Support contractor pharmacy adjustments. This
    process may affect the funding levels for fiscal year 2000 and
    fiscal year 2001. As our evaluation continues we will develop
    the appropriate resourcing strategy i.e., reprogramming or
    supplemental request.

        Senator Stevens. Thank you very much.
        Senator Inouye.

                                 TRICARE Senior

        Senator Inouye. I would like to follow up where my chairman
    left off. In 1997 we passed the Balanced Budget Act and in that
    Act we authorized the demonstration of the TRICARE Senior. The
    program will end on December 31. Can you give us some advanced
    report as to how it is coming along, so when we prepare our
    budget we will know what we are headed for?
        Mr. de Leon. Certainly. The program is currently scheduled
    to end in December 2000. It has been a very important program
    and I think we are learning much from it. We have started
    discussions with HCFA, the Health Care Finance Agency, in terms
    of how we might continue the demonstration program, because
    there are some phenomena that we are still studying and trying
    to understand.
        Generally what we are finding is where we have a larger
    medical facility we are able to bring in additional retirees.
    They are very satisfied with the health care. We think it is a
    win-win for our retirees as well as the American taxpayers.
        There are two issues with HCFA, business issues, that we
    need to resolve. One is the rate of reimbursement. HCFA has
    established a ceiling at about 80 percent. That is probably--
    that is too low for us to completely recover our costs. We have
    pledged that we can do it less expensive than a Medicare health
    maintenance organization (HMO), but 80 percent is too low, and
    we are negotiating that with HCFA.
        The second issue is level of effort. Whether there is a
    Medicare demonstration program or not, we are doing our best,
    whether it is Space A care or through the subvention program,
    we are doing our best to see as many retirees as we can. HCFA
    is looking at this as an existing level of effort: If you are
    already seeing retirees, then you should receive no
    reimbursement under Medicare for seeing those retirees.
        But we think that there is potential, that we are learning
    things, and that it is an important test that we are interested
    in continuing past December 2000.
        Senator Inouye. Thank you.

                                    Anthrax

        Admiral, as anticipated, we get a lot of letters from
    military personnel. In the past 6 months, the past year, I
    would say, one of the heaviest involved anthrax. I gather that
    DMOC has provided recommendations for DOD. Can you tell us
    about your recommendations?
        Admiral Pilling. Well, actually DMOC has not addressed the
    anthrax issue. We have been primarily focused on the military
    health system. On anthrax itself, all of the service chiefs are
    supportive of the program we have right now and it is a force
    protection issue for us. But it has not been specifically
    addressed by the DMOC.
        Senator Inouye. I was under the impression that you were
    making recommendations, but you haven't.
        Admiral Pilling. No, sir.
        Senator Inouye. Are we making any alternative programs for
    anthrax or are we still going through with the program?
        Mr. de Leon. If there is an issue, the advice is coming
    from the Joint Chiefs, and then the Surgeon Generals, of which
    the leading expert is Dr. Blanck, General Blanck of the Army.
    We are looking at research and development (R&D) dollars for
    other types of vaccines to deal with the anthrax threat, just
    as there is an Army program that potentially is looking at
    creating a stockpile for smallpox vaccine.
        Here we have a disease that is eradicated, but we know that
    it exists in certain labs around the world, and we are working
    in conjunction with the Department of Health and Human Services
    (HHS) to make sure that we have a smallpox stockpile of vaccine
    there.
        But I know that the Surgeon Generals and the Joint Chiefs
    are very much engaged on anthrax vaccine and the immunization
    program. It is one part of medical force protection. Making
    sure that our military members have the right biological
    protective gear, making sure that we improve our ability to
    detect chemical and biological attack, and the prepositioning
    of antibiotic drugs in a theater--the highest threat theaters
    were anthrax is an immediate threat--are also part of our
    program.
        We have an extensive education program that we are
    continuing on the anthrax immunization. Right now our program
    is to essentially restrict the vaccine to those troops that are
    deploying to either the Persian Gulf area or to Korea, and to
    work with the rest of our troops in terms of education, we
    know, Senator, that you are receiving a number of letters, and
    this is one that Secretary Cohen, Dr. Hamre, General Shelton,
    and all of the other Chiefs, as well as the Surgeon General,
    stay very, very much engaged in.
        Senator Inouye. I thank you very much. Mr. Chairman, I
    would like to submit my questions.
        Senator Stevens. Yes, sir. Senator Leahy.
        Senator Leahy. Thank you, Mr. Chairman. I note that the
    Department of Defense is integrating these so-called--let me
    make sure I got it right, knowledge couplers into the second
    phase of the composite health care system to improve their
    review of patient history and the providers with greater
    knowledge, move them directly to the point of service. That
    point of service might be in the hospital, or it could be in
    the field.

                                 Medical errors

        Now, last November there was an Institute of Medicine
    report that concluded that more people may die from medical
    errors than from any major diseases, and I mentioned earlier
    that I hear these things from my wife, I hear these things when
    I go back home from the medical people, and I am wondering if
    the civilian sector may have something to learn from the
    Defense Department in this.
        If you integrate the knowledge couplers into the DOD
    clinical system, would that improve the quality of care, might
    it reduce medical errors, and I am thinking obviously if the
    answer is yes to that, of having something that might help out
    in the civilian area.
        Mr. de Leon.
        Mr. de Leon. Absolutely. The state of the art system is
    being demonstrated right now at Tripler Army Hospital, and that
    is our Composite Health Care System II (CHCS-2) information
    technologies. What that allows is the physician to have
    complete access to a person's medical record. We are making
    sure that we have all of the privacy protections in place with
    such a computerized data system, but it would allow a
    physician, whether it is at the Tripler Hospital in Hawaii, or
    whether it is in a mobile medical hospital in Bosnia, to have
    access to a military member's records.
        We are also moving in the direction of making sure that
    pharmacy is bar-coded, so that we are essentially using the
    information technologies to help us reduce errors.
    Additionally, the Surgeons have a number of initiatives along
    this line that they can elaborate more fully than I. We have
    put a premium on information technologies in this decade of the
    nineties in terms of integrating our medical system both in
    terms of health care to beneficiaries, but also the medical
    readiness piece.
        Senator Leahy. And I hope you keep us posted on this,
    especially if there are problems in funding or anything else,
    because I think, Mr. Chairman, this is something that concerns
    the wide diversity of military medicine. You mentioned the
    hospital in Hawaii, a field hospital in Bosnia, and training
    facilities somewhere else.
        Mr. de Leon. Plus the telemedicine, I might add, which is
    another key element.
        Senator Leahy. Plus the telemedicine. There may well be
    some significant civilian spin-off in this with the--you talk
    about large-scale experimentation. The civilian application may
    be a great deal.
        Senator Stevens. Would the Senator yield right there?
        Senator Leahy. Sure.
        Senator Stevens. This is not new. It is 10 years ago in
    this room right here that we witnessed a mammogram conducted in
    Montana and reviewed in Minnesota and Arizona, and within 20
    minutes the woman had her diagnosis.
        Senator Leahy. Yes, but I am talking about the couplers
    that give the doctors the kind of treatment choices that they
    might have. This builds on what we have already done. You and I
    have been as strong supporters, I think, of telemedicine as
    anybody.
        Senator Stevens. Yes.
        Senator Leahy. All three of us have. Now, to add in these
    in effect a coupler, where a doctor says, okay, I can see what
    they have got, but now here are a whole lot of the choices that
    I have, that I can pull up. I find that very exciting.
        I also want to say, Mr. Chairman, I do appreciate the
    support that this subcommittee has given to the Department of
    Defense for breast cancer research. I do not think any other
    program could claim the kind of agility and effectiveness that
    it has, and I appreciate the fact that you have also in a--I
    was going to say in a bipartisan effort, but actually a
    nonpartisan effort in that.
        Senator Stevens. This committee started research, basic
    research on acquired immune deficiency syndrome (AIDS), breast
    cancer, prostate cancer research on a contract basis, as
    opposed to in-house, and I think it is a worthwhile project. We
    intend to continue it. I am not sure we are going to continue
    to increase it every year, but we are going to continue.
        Senator Leahy. I have always supported that. I appreciate
    that. Thank you. I will submit my other questions for the
    record.
        Senator Stevens. Senator Durbin.
        Senator Durbin. Thank you, Mr. Chairman. Thank you to the
    panel. Let me say at the outset I was so encouraged last week
    to receive word that the Navy has decided to go forward in a
    joint effort with the Veterans Administration at the Great
    Lakes Naval Training Station in the North Chicago Veterans
    Hospital. This to me could be a big winner not only for the
    naval personnel and the tens of thousands of veterans in the
    region, but for taxpayers ultimately. I hope that we can
    encourage this kind of cooperative effort to utilize existing
    facilities to the betterment of all that are served, and I
    thank you for your leadership in that regard.
        I have three questions, and I hope to be able to get all
    three in before Senator Stevens gives me the signal. First, on
    the anthrax question, in last year's appropriations we included
    language calling on the military to make certain that all
    military personnel who are vaccinated with this vaccine for
    anthrax understand and receive if requested what is
    characterized as the vaccine adverse events reporting system
    form, so that we can keep track of actual adverse events, and
    have reliable information.
        There was a feeling at the time that not enough was being
    done to reach out to the actual military personnel and let them
    know that if something happened that was worth reporting, there
    was a way to do it. Can you tell me what has occurred since
    that bill was passed?
        Mr. de Leon. I believe we have implemented that. I would
    ask General Blanck on the next panel to respond to you in more
    detail, but we want to make sure that any person who wants to
    report has a mechanism to do it.
        Senator Durbin. That will give us the information to
    understand the dangers that may be associated with this, and I
    certainly understand your dilemma in trying to protect all the
    military personnel, but we want to be as fully informed as
    possible.
        Let me also ask you, before I have a question on the
    TRICARE system, I read this story in The Washington Post about
    this Atsugi air facility in Japan where some 6,500 or 7,000 of
    our personnel, our service men and women and naval personnel in
    particular, are being exposed to dioxin levels from a nearby
    incinerator 65 times what is considered to be safe and
    acceptable, and it appears from what I have read that we have
    really reached in impasse where the Japanese Government cannot
    even solve this problem.
        We certainly do not want our personnel to be subjected to
    this. What is being done, or what should be done to protect
    them from this health hazard?
        Mr. de Leon. This is an issue that our Secretary of Defense
    has engaged with his Japanese counterpart on directly. It is a
    critical Navy quality-of-life issue. It has been well-
    documented from Navy reviews as well as the Dacowits panel was
    asked to go and meet with families so that we have a full
    record, but I know that the Secretary has raised this directly
    with his counterpart in Japan.
        Senator Durbin. Well, I do not know what it will take, but
    I hope during the course of this appropriations process that we
    will look into this, because to subject our personnel to that
    sort of a health danger is just absolutely unacceptable, and
    certainly the family members, innocent people who are there
    trying to help protect Japan, and in the process having their
    own lives put at risk because of the failure to deal with this
    outrageous health hazard.

                                    TRICARE

        The third area which I would like to note involves a case
    that came from Illinois where a naval commander's daughter was
    struck by a car and was in a coma for a long period of time and
    needed rehabilitative services, and it turned out under the
    TRICARE system there were limited opportunities for these
    rehabilitative services, and we appealed directly to the
    Secretary of the Navy, and they intervened and had to make a
    personal intervention so that she was able to be treated, and
    treated successfully, I might add.
        And I just wondered, as you review the TRICARE policy
    manual, can you tell me whether you are finding similar gaps in
    service for military personnel, where they frankly need certain
    medical care but, because of the paucity of providers or the
    limitation on services, cannot receive it?
        Mr. de Leon. I think there are some cases where TRICARE is
    very innovative. In doing a focus group down at Norfolk with
    military families, I found that at one end of the spectrum a
    young child that had a very complicated chromosome problem was
    getting state-of-the-art treatment at a university medical
    center. On the other hand, the limitations occur when we get
    into rehabilitative care, things like that.
        You gave us a provision last year dealing with
    reimbursements on various types of custodial care. We are
    trying to work through the implementation of that program right
    now, but we want to make sure that a dependent is covered if
    there is a medical emergency like that.
        Senator Durbin. Well, this was an outrageous case, where a
    father and mother came to me, and this man had dedicated his
    life in service to the country, in the United States Navy, and
    they came across a true health emergency in their family, and
    found TRICARE to be unresponsive.
        Mr. de Leon. I would agree that--you know, I view myself as
    Under Secretary as ultimately the chief case worker on these,
    and I would agree, Senator Durbin, that there is much too much
    case work required in terms of adjudicating the financial
    aspects of this, and that that is part of the TRICARE 3.0 and a
    number of the other improvements on the business side that we
    are in the process of trying to make.
        Senator Durbin. Well, I will close by echoing the
    chairman's comments as well as Senator Inouye about the cost of
    pharmaceuticals as well, and I hope that we can allow our
    military personnel to have the same bargaining power as many
    insurance companies have in this country today, as well as
    foreign governments have, to make sure that we get these drugs
    that are developed in the United States available at the most
    reasonable price to protect our people in uniform.
        Thank you very much. Thank you, Mr. Chairman.
        Senator Stevens. Gentlemen, I did not use all my time, and
    Mr. Lynn, I have sort of a disagreeable thing to discuss with
    you. I am not blaming you, but I want you to know, last year,
    as part of the compromise on the final bill, Congress
    specifically refused to put up the $10 million for the Justice
    Department to conduct tobacco litigation, and I am one who
    happened to vote contrary to that here in the Senate, but the
    decision of the Congress was, no money for that litigation.
        Now I understand that Justice has collected some of that
    from the Department of Defense, that you have made payments to
    the Department of Justice to conduct tobacco litigation. Now,
    how can that be justified in view of the shortfalls we are
    talking about here in the first place, but second, what is your
    authority to do that?
        Justice was specifically denied that by votes in the House
    and the Senate. I disagreed with that, as I said, but it was
    denied, and now we are going to face problems as this bill gets
    to the floor, because of that action that you have taken,
    probably some restrictive language we will have to deal with
    when we get to the floor. Why did you do that?
        Mr. Lynn. Mr. Chairman, I think you have stated the facts
    correctly. We have provided about $2\1/2\ million, as has the
    Veterans Administration (VA) and HHS.
        Senator Stevens. By what authority?
        Mr. Lynn. There was a provision I believe in the 1995
    Commerce-State-Justice appropriation which allowed Justice to
    collect funds to support litigation that was supporting the
    Government generally. In other words, other agencies who had
    beneficiaries who would be part of the----
        Senator Stevens. Yes, but that was before all of the
    decisions on the tobacco case, and before the States were
    allowed to keep their money.
        Mr. Lynn. Absolutely true.
        Senator Stevens. And they were--I really think we are going
    to run into a hailstorm when the people who disagree with--when
    we, in terms of a back issue, find out what has happened. Not
    only this bill, the head bill, they are all going to be in
    trouble. That is a back-door way to reverse a--an agreement was
    made with the administration. It is bad faith, and you cannot
    handle bills like this on bad faith, so I urge you to go back
    and tell them, give you back your money, because if you do not
    get it back, it is going to cost you a hell of a lot more than
    that when this bill comes out.
        Mr. Lynn. I certainly understand what you are saying, Mr.
    Chairman. I will take it back and discuss it. I regret I was
    not familiar with the discussions on the bill last year with
    regard to that.
        Senator Stevens. I understand you were not involved in
    that, but we were involved in some of this. I do not know how
    these guys voted, but I know how I voted, and I do not like the
    decision of Congress, but we still live by it.
        Thank you very much, gentlemen.
        We will call the next panel. We appreciate your courtesy
    and look forward to working with you.
                                Surgeons General

    STATEMENT OF LT. GEN. RONALD R. BLANCK, SURGEON
                GENERAL, U.S. ARMY
        Senator Stevens. Gentlemen, we thank you very much. We are
    pleased to have the service Surgeon Generals here with us, and
    we greatly value your views. You are the people who make the
    programs work. We just heard serious funding concerns with the
    overall defense health program, and we would like to see you
    all put that in context. What will the funding shortfalls
    predicted do to you at the operational level?
        General Carlton, this is your first appearance. We welcome
    you and look forward to a series of appointments during your
    service. Admiral Nelson, delighted to have you back again, sir,
    and General Blanck. I think this may be your last time before
    you go to Fort Worth. You are going to be president of the
    University of North Texas, we understand, and we honor you for
    what you have done, sir, and the things that you have worked
    with this committee on. All of us have very fond memories of
    our contacts with you, not only here but out at Walter Reed,
    and we wish you and your family well, and know you will enjoy
    your future. It is a great university.
        Senator Stevens. Senator Inouye do you have a statement?
        Senator Inouye. Mr. Chairman, I ask that my full statement
    be made a part of the record
        Senator Stevens. Yes, sir it will be.
        [The statement follows:]

                 Prepared Statement of Senator Daniel K. Inouye

        Good morning. I join my Chairman in welcoming General
    Blanck, General Carleton, and Admiral Nelson to discuss
    Military Medical Programs.
        I would like to take this opportunity to acknowledge
    General Blanck who is appearing before this Committee for the
    last time as the Surgeon General of the Army.
        I thank you, and commend you, for your long service to the
    Army, the nation, and your assistance to this committee. Your
    efforts over the past four years have been especially
    noteworthy and I wish you success in your future endeavors.
        I would also like to welcome General Carleton who is
    appearing for the first time before this Committee as the Air
    Force Surgeon General. I hope you find this hearing to be a
    worthwhile experience and that it will be the first of many
    productive discussions.
        This year Congress has focused on many health care issues
    including medical errors and patient safety, the expansion of
    the TRICARE program, and the redesign of the pharmacy benefit.
    While I have always believed that this nation provides a far
    superior quality of life for our service members and their
    families, we must continue to build on our successes.
        Our service members and their families deserve the best
    that we can provide and that certainly includes quality health
    care and uncomplicated access to it.
        During my visits to my home state, one of the enduring
    concerns of current and former military members is the future
    of military health care.
        Those on active duty are concerned about access to health
    care services for their family members, while our retired
    military members often perceive a decline in their medical
    benefit. We must ensure that the men and women who commit to a
    career of service to our nation have a health care benefit
    worthy of their sacrifice.
        Our current fiscal environment presents a challenge for all
    of us to make the best use of our resources while maintaining
    quality. I am particularly pleased with the continued
    advancements made in telemedicine. I commend DOD for being a
    leader on the cutting edge of medical technology.
        The Akamai project in Hawaii continues to mature and
    represents the outstanding talents and creativity of our
    military and civilian personnel. General Blanck, I thank you
    for your enduring support of the Akamai project and for our
    talented nursing leaders like Major General Adams.
        Today, as we address many of the issues facing our military
    health system, I would like to focus on beneficiary access to
    military health care services, improvements to the TRICARE
    benefit, new technology initiatives, and the President's fiscal
    year 2001 budget request. I look forward to hearing your
    testimony.

        Senator Stevens. We would like to hear your statements
    before we ask any questions, all of the statements, please. Who
    would like to go first? Admiral Nelson? Who is senior?
        You are senior.
        General Blanck. It is tough to get old. Mr. Chairman,
    Senator Inouye----
        Senator Stevens. You have got a long way to go, man.
        General Blanck (continuing). Senator Durbin, thank you
    very, very much. The statements made before I think really
    capture what I have to say, and so I will be very brief. I have
    provided a written statement for the record.
        Senator Stevens. Let me clarify that. All of these
    statements are already in the record. We will put them on the
    Internet, as a matter of fact, before the day is over, but they
    are all printed. You do not have to ask that. Thank you.
        General Blanck. Thank you, Mr. Chairman.
        I think this is a time of great excitement for military
    medicine. I personally would like to thank you, Senator Inouye,
    and all the other distinguished members of this committee with
    whom we have all worked, for your interest in and support of
    military medicine. We do have significant challenges,
    challenges of deployment, challenges of funding, as you have
    alluded to, force protection aspects that indeed are both
    frightening and challenging, and rather than take a great deal
    of time with an opening statement I will just stop there but
    add one thing, and that is, one of the exciting things, and you
    have heard from the chairman, is the DMOC, the Defense Medical
    Oversight Committee. The involvement in the services are line
    leadership, the civilian leadership, and the Department at all
    levels has never been greater, and I think that only with that
    kind of interest, involvement, and support are we going to be
    able to meet all the challenges that we face.
        Thank you, and I look forward to your questions.
        [The statement follows:]
                Prepared Statement of Lt. Gen. Ronald R. Blanck
        Mr. Chairman and members of the Committee, I am Lieutenant General
    Ronald R. Blanck and I appreciate the opportunity to address this
    committee once again. I consider it an honor to have served as the Army
    Surgeon General for the past three-and-one-half years and to lead the
    Army Medical Department into the twenty-first century. I have seen
    tremendous changes in the delivery of healthcare since my first years
    of providing care to sick and wounded soldiers some thirty years ago in
    Vietnam.
        It is a privilege to serve with the Army Medical Department team
    and I am extremely proud of our ability to keep our focus on providing
    quality healthcare to soldiers, retired and active, and their family
    members.
        The Army Medical Department has demonstrated its capability to
    support the Army on the battlefield and in garrison. I would like to
    highlight these capabilities and the challenges that Army Medicine
    faces today and in the future, in the context of five initiatives I
    actively promoted during my tenure as the Surgeon General--Readiness,
    Organization, Valuing people, Technology and TRICARE. Two additional
    areas I will also discuss in detail are the Quality of healthcare and
    Congressionally directed research.
    Readiness
        The Army Medical Department has developed a mission statement that
    stands on three legs; Protect and sustain a healthy and medically
    protected force, train, equip and deploy the medical force, and manage
    and promote the health of the soldier and the military family. These
    provide a convenient way to organize an overview of our current status
    and future plans. When not in combat, the Army Medical Department
    strives to keep soldiers ``fit to fight'' and to keep medical units and
    personnel ready for combat and demanding operations other than war,
    both humanitarian and peacekeeping. These missions mesh seamlessly with
    the Army Medical Department's day-to-day work.
        Hands-on, real-life experiences with a variety of people and with a
    variety of illnesses and injuries in real patient-care environments
    enhances our ability to provide our soldiers top-quality care in active
    operations. On a typical day in the Army Medical Department, we see:
    1,764 patient occupied beds; 40,386 clinic visits; 41,400 dental
    procedures; 476 admissions; 6,012 immunizations; 68 births; 41,693 x-
    rays exposed; 57,577 laboratory procedures; 5,577 veterinary outpatient
    visits; 66,942 pharmacy procedures; and $21 million worth of food
    inspected.
        When our field hospitals deploy, most clinical professionals and
    support personnel come from the Army Medical Department's fixed
    facilities. Typically, our deployments are not in support of
    traditional combat scenarios, but rather for humanitarian assistance,
    peacekeeping and other stability and support operations. All the while,
    we must maintain day-to-day health care for soldiers, retired soldiers
    and their families. Under our Professional Officer Filler System, we
    send up to 26 percent of our physicians and 43 percent of our nurses to
    field units during a full deployment. To replace Professional Officer
    Filler System losses, Reserve units and many Individual Mobilization
    Augmentees (non-unit Reservists) are mobilized to work in our Army
    Medical Department facilities.
        Many National Guard and Army Reserve units deploy in support of the
    Army Medical Department. The Army depends heavily on its Reserve
    Components for medical support. About 65 percent of the Army's medical
    forces are in the Army Reserve. We are truly an integrated healthcare
    system that deploys to war. Executing and sustaining these complex
    missions without loss or interruption of service to our soldiers,
    families and retirees is a challenge we address on a daily basis.
        The success of the Active Component to Reserve Component
    Professional Officer Filler System Program initiative is essential to
    support deployment of Reserve Medical Units. This initiative provides
    temporary active component Professional Officer Filler System personnel
    to fill vacant, critical Reserve Component positions. To alleviate
    critical Reserve Component personnel shortfalls, the United States Army
    Medical Command, in conjunction with United States Army Forces Command
    and United States Army Reserve Command, is in the process of developing
    and implementing this initiative, which will temporarily sustain
    Reserve Component units until critical shortages are filled. This
    initiative will improve the readiness level of more than half Reserve
    Component units.
        Recruiting and retention are my continuing areas of concern. From
    late 1995 to early 1998, the Army Reserve lost 34.2 percent of
    physicians assigned to units sent to the Balkans. Two physicians
    departed for every new one recruited. To augment the excellent work of
    the Recruiting Command, the Army Medical Department began using Reserve
    recruiters, under contract, in certain locations to recruit the health
    professionals we need.
        Surveys showed us that 81 percent of physicians could serve up to
    90 days without incurring serious harm to their medical practices back
    home. Beyond 90 days, economic consequences to their practices begin to
    show a negative impact. Because this caused an erosion of Reserve
    medical capability, the Army allowed the Army Medical Department to
    test a 90-day deployment policy for three years. The 90-day policy
    applies to physicians, dentists and nurse anesthetists who are
    involuntarily called up under a Presidential Selected Reserve Call-up.
    This policy does not apply to a partial, total or full mobilization.
    The first unit deployment under the 90-day plan will occur next
    September. In September 2002, the Army Medical Department will provide
    a final report to the Army on the policy's effect on recruiting and
    retention with recommendations.
        Medical readiness tracking was a concern of mine, therefore, I
    directed the development of a centralized, automated medical readiness
    tracking system. This hugely successful, Army-wide Medical Protection
    System, tracks immunization data. The readiness module incorporates the
    already existing dental readiness classification system and collects
    all relevant factors of medical readiness identified by commanders and
    tri-service medical panels. This web-based system, accessible to the
    Army chain of command, provides commanders and supervisors with an
    invaluable tool to assess and manage unit medical readiness. No other
    health service in the world can replicate this capability.
        Clearing the battlefield continues to be one of my highest
    priorities. Rapid transport of injured soldiers to definitive trauma
    care saves lives. The air and ground platforms designed to evacuate our
    wounded from the battlefield have not kept pace with the modernized
    force and can no longer guarantee rapid, modern day, battlefield
    evacuation. Studies conducted on combat injuries clearly indicate
    prompt treatment and evacuation significantly reduce mortality rate.
    Nuclear, biological and chemical weapons on the battlefield
    significantly delay evacuation and require altering the mix of
    battlefield evacuation resources. To meet this prospective challenge,
    we are working to modernize evacuation platforms.
        The UH-60Q is the number one near-term medical evacuation
    modernization issue for the Army Medical Department. It improves the
    medical, navigation, communication and treatment platform capabilities
    of our current UH-60A aircraft. With the UH-60Q, we significantly
    improve our capability to evacuate casualties from as far forward as
    the tactical situation permits, conduct combat search and rescue,
    transport medical material and teams on an emergency basis, and perform
    the shore-to-ship evacuation missions.
        The UH-60Q program received partial funding in the 1999 Program
    Objective Memorandum, with funding starting in 2002. Additionally, we
    have a coordinated effort with the Army aviation community to align the
    UH-60Q production with the UH-60 Service Life Extension Program. As a
    result, we will gain a better performing aircraft; have commonality
    across the utility fleet; and save Research, Development, Test and
    Evaluation dollars.
        The total objective force requirement is 387 medevac aircraft--357
    for the warfight and 30 for the operational readiness float count. Of
    the warfight 357, 192 go to the active component and 165 to the
    reserves. Current modernization funding projections for the UH-60Q
    complete the 132 aircraft requirement for Force Package One by 2010 and
    the 150 aircraft in Force Package Two by 2020.
    Organization
        We are continuing to refine our organizational structure to perform
    our mission in the most efficient and effective manner. The merger of
    the Medical Command Headquarters and the Office of The Surgeon General,
    in 1997, to create one staff under the authority and command of The
    Surgeon General, dual-hatted as the Medical Command Commander, is an
    undeniable success. It eliminates duplication, streamlines the process,
    and improves productivity and outcomes.
        Our commitment to continuous quality improvement continues as we
    examine the feasibility of mirroring our Regional Medical Command
    structure with TRICARE Lead Agents. The Lead Agents are increasingly
    important organizations for coordinating health care throughout the
    Army, Navy and Air Force.
        One way we are operating more efficiently is through closer
    cooperation with the Department of Veterans Affairs. The Army and
    Department of Veterans Affairs are benefiting from more than 130
    Resource Sharing Agreements, at least 35 Memoranda of Agreement or
    Understanding and nine Interagency Support Agreements. These various
    kinds of agreements have different administrative and funding details,
    but all involve using resources of both departments more efficiently.
        The Army must maintain a number of deployable, fully staffed,
    combat support hospitals to meet the early bed requirement to support
    two nearly simultaneous Major Theater Wars as required by the National
    Military Strategy. Other Combat Support Hospitals are given
    ``Caretaker'' status and must be able to rapidly deploy within 30 days
    to round out the required number of beds needed to support the
    warfighting force. This helps maintain clinical skills and makes the
    best use of personnel to meet the daily demand for healthcare. Each
    Caretaker Hospital, with the staff working in the fixed facility,
    provides approximately $24 million worth of healthcare per year to our
    beneficiaries. Reserve personnel will mobilize to staff the fixed
    hospital when its active personnel deploy with their Caretaker
    Hospital. Reserve personnel train with the hospital during their annual
    training period.
        In 1998, we organized an array of Special Medical Augmentation
    Response Teams (SMART) Teams in our regional medical commands and major
    subordinate commands. These functional teams provide small, rapid-
    deployment capabilities and provide global coverage to Department of
    Defense, local, state and federal agencies responding to Weapons of
    Mass Destruction, terrorist, natural disaster and other complex
    emergencies. Special Medical Augmentation Response Teams provide
    expertise in the areas of trauma, burn injuries, chemical/biological
    casualties, stress management, communications, telemedicine, preventive
    medicine, disease surveillance, veterinary care and health facility
    planning.
    Valuing people
        The Army Medical Department strives to provide an atmosphere for
    people to reach their potential, and to have opportunities for personal
    and professional satisfaction. We endeavor to give our people just
    rewards and continually promote training challenges for our soldiers
    and civilians.
        Three years ago, the Secretary of the Army approved my request to
    change restrictive Army regulations pertaining to the command of
    medical treatment facilities. Although veterinary, dental, aviation,
    garrison and logistics commands generally remained corps specific,
    virtually all other commands became Army Medical Department corps
    immaterial. The implementation of corps immaterial commands within the
    Army Medical Department presented the first opportunity for Army
    Medical Department officers to compete for commands designated as corps
    immaterial. Results of these boards yielded increased command
    opportunities for highly qualified Medical Service, Army Medical
    Specialists Corps, and Army Nurse Corps officers. In addition, the Army
    Medical Department identified and opened appropriate non-command senior
    leadership positions to the best-qualified officers of each Army
    Medical Department Corps.
        A phased implementation of new standards to train all medical
    soldiers for combat support began October 1, 1998. These new standards
    are not intended to revolutionize the substance of training, but rather
    to ensure wider understanding of requirements and greater consistency
    in implementation. The eight standards relate to survival skills,
    weapons training (for selected personnel), collective training,
    competency-based orientation, Deployable Medical Systems training, job-
    specific medical training, job-specific readiness training and Medical
    Force Doctrine.
        The Army is the executive agent for the Department of Defense
    program to immunize all United States military personnel against the
    grave and urgent threat of ``weaponized'' anthrax. The Anthrax Vaccine
    Immunization Program began in March of 1998 for all military personnel
    assigned, attached or scheduled to deploy to the 10 designated high-
    threat countries within the Arabian and Korean peninsula. Our Anthrax
    Vaccine Immunization Program Agency provided execution and management
    oversight of over 1.4 million immunizations delivered safely to over
    391,540 Service Members worldwide. Less than 500 adverse events, mostly
    local, temporary reactions, have been formally reported since March
    1998. This represents a safety profile similar to most common vaccines.
        Each adverse event is reviewed by an independent committee of
    national experts commissioned by our Anthrax Vaccine Immunization
    Program Agency and represents an unprecedented level of effort to
    ensure the health of our soldiers is protected.
        Through our direct efforts, we successfully coordinated, staffed
    and synchronized the Federal Strategic Force Health Protection
    Initiative with the Army, Veterans Affairs, and Department of Health
    and Human Services. This nationwide network of Department of Defense,
    Veterans Affairs and Federal Occupational Health clinics allows us to
    provide not only the anthrax vaccination, but also medical and dental
    support to the Reserve components within reasonable distances of
    individual members.
        The Army tracks all immunizations, to include the anthrax
    immunizations, through the Medical Protection System. Medical
    Protection System is an internet based, automated immunization tracking
    system allowing the Army to track all immunizations by name, location,
    dose, route, provider and lot number. There is literally no health
    organization in the world matching this accomplishment.
        We provided numerous tools and media to the Army to meet their
    Anthrax Vaccine Immunization Program leadership and healthcare provider
    educational goals. We are confident that every soldier receiving the
    anthrax immunization receives information materials, has opportunities
    to ask questions and is informed on the process for reporting adverse
    reactions. Our comprehensive education initiatives include an internet
    web site, www.anthrax.osd.mil, a toll-free information hot line; and an
    effective speakers bureau.
    Technology
        We are enthusiastically incorporating advanced technology into the
    way we provide world-class care to our patients. Some of our
    initiatives are:
      --The Medical Personal Information Carrier will store Service Member
            medical and personal information. It facilitates seamless,
            permanent recording and transfer of information in peacetime
            and on the battlefield. A demonstration of the Personal
            Information Carrier was conducted in a field environment in
            December 1999. The demonstration clearly showed the ability of
            the Personal Information Carrier to accept, store, and transfer
            battlefield medical care information. The next step is to
            incorporate this technology into our doctrine and practice both
            in deployed settings as well as home station. Further
            demonstrations are planned for this year.
      --A dry fibrin sealant bandage was developed by the United States
            Army Medical Research and Materiel Command in cooperation with
            the American Red Cross. The bandage is made from the last two
            proteins in the human blood coagulation cascade, and freeze-
            dried on absorbable packing. The bandage will set a clot within
            two minutes and research shows it can reduce blood loss by 50
            to 85 percent. The United States Army Medical Research and
            Materiel Command is working multiple protocols, with several
            potential manufacturers, to determine the ultimate capabilities
            of this novel product.
      --A high-tech litter with resuscitative and life-sustaining
            capabilities, which allows field surgery and care en route
            during evacuation. The Life Support for Trauma and Transport
            prototype was approved for human use by the United States Food
            and Drug Administration. This approval permits greater
            evaluation in actual hands-on treatment situations in both a
            forward deployed environment, such as Kosovo support, as well
            as civilian trauma centers under the control of patient
            informed consent guidelines. These evaluations follow
            Department of Defense acquisition demonstration methodologies
            to gather user feedback and design considerations early,
            quickly, and effectively.
      --Telemedicine is a technology to efficiently leverage healthcare
            delivery over long distances. The aims of this technology are
            to improve quality, improve access, enhance provider and
            patient satisfaction, and reduce cost. Most of Army Medical
            Department telemedicine is store-and-forward technology usually
            sent over the internet; this involves the capture of still
            images via digital camera attached to a personal computer.
            Tertiary care physicians can review the images, render a
            diagnosis and return the diagnosis back to the referring
            physician via the internet. There are more than 50 projects
            being done in the Army Medical Department. The majority of
            projects are in the areas of radiology, dermatology, and
            psychiatry and teledentistry. The projects can be reviewed at
            the following website: http://www.tatrc.org/paaes/projects/
            armypoi.html.
      --As I previously mentioned, the Medical Protection System, a Medical
            Occupational Data System application, has been a highly
            successful centralized system to record, report, and archive
            soldier and unit readiness.
      --The Ambulatory Data System captures diagnosis and procedure
            information on outpatient visits. Capturing this more detailed
            clinical information is critical for decision-making and to
            support our new costing methodology.
    TRICARE
        TRICARE, the Department of Defense's managed-care initiative, is
    now fully operational worldwide. Implementation has been a challenging
    journey since the first TRICARE contract became operational in March
    1995 at Madigan Army Medical Center, in the Northwest Region.
        This program is gaining momentum and we want TRICARE Prime to be
    the number one choice of beneficiaries. To reach that goal, we will
    continue to stress quality of care, ease of access and customer-focused
    service.
        A study of the Northwest Region, where TRICARE is most mature,
    revealed increases in the use of preventive care, obtaining care when
    needed and satisfaction in making an appointment. There was a decrease
    in use of the emergency room as a walk-in clinic, keeping it free for
    true emergencies. Most beneficiaries surveyed reported they were
    satisfied with the quality of their care.
        We are forging closer relationships between the services and the
    TRICARE Lead Agents to ensure issues requiring immediate action are
    handled without delay. And, as TRICARE continues to mature over the
    coming years, I am confident it will produce the desired benefits in
    terms of healthier military beneficiaries.
        One excellent example of increased cooperation is the many Veterans
    Administration (Veterans Affairs) facilities participating as TRICARE
    providers. Veterans Affairs is treating outpatients in community-based
    clinics at Fort Belvoir, VA., and Fort Leonard Wood, MO. Tripler Army
    Medical Center provides care for most veterans in the Pacific region. A
    Joint Venture there includes a renovated wing for administrative
    services, an ambulatory care center and a 60-bed ``Center for the
    Aging'' facility. Veterans Affairs patients receive easier access to
    care, and both agencies benefit by expanding training and research
    opportunities. This is truly a ``win-win'' partnership.
        Another highlight of 1999 was the full implementation of the
    TRICARE Senior Prime demonstration (sometimes known as ``Medicare
    subvention''), which began in selected locations throughout the
    Department of Defense. Army medical treatment facilities participating
    are at Madigan Army Medical Center, Tacoma, Washington; Brooke Army
    Medical Center, San Antonio, Texas; Fort Sill, Oklahoma; and Fort
    Carson, Colorado.
        Medical treatment facilities in the six participating TRICARE
    regional sites phased into the test as each site received Health Care
    Financing Agency approval as a Medicare+Choice plan. Healthcare
    delivery for TRICARE Senior Prime, began on September 1, 1998. The last
    site phased into the program on January 1, 1999. The demonstration is
    scheduled to end December 31, 2000. The collective target enrollment
    was 27,800 persons; currently 29,325 persons are enrolled, including
    some who have ``aged'' into the program.
        The purpose of this three-year program is to deliver accessible,
    high-quality care to people eligible for both Medicare and military
    medical benefits, without increasing the total federal cost to either
    Medicare or the Department of Defense.
        The Department of Defense continues to provide the level of care it
    has historically provided for these ``dual-eligible'' patients, as a
    precursor to retention of Medicare interim payments. The General
    Accounting Office and DOD evaluations will shed more light on the
    financial methodology and reimbursement mechanisms supporting the
    demonstration.
        The Fiscal Year 1999 National Defense Authorization Act authorized
    several demonstration projects for the Military Health System. The
    first is three-year demonstration of Federal Employee Health Benefits
    Program from 2000-2002. The Department of Defense/Federal Employees
    Health Benefits Program demonstration will include a maximum of 66,000
    Medicare-eligible military retirees and family members in the following
    geographical areas: Dover, Delaware; Fort Knox, Kentucky; Dallas,
    Texas; Greensboro-Winston Salem-High Point, North Carolina; Puerto
    Rico; Camp Pendleton, California; Humboldt County, California area; and
    New Orleans, Louisiana.
        The Fiscal Year 1999 National Defense Authorization Act specifies
    separate risk pools for Department of Defense/Federal Employees Health
    Benefits Program demonstration from other Federal Employees Health
    Benefits programs. Therefore, premiums may be higher for fee-for-
    service plans and experience-rated Health Maintenance Organizations in
    the Federal Employees Health Benefits Program demonstration than those
    in the Federal Employees Health Benefit program. The rates will
    probably equal that of community-rated Health Maintenance
    Organizations. Government contributions for demonstration premiums may
    not exceed the amount of contributions payable if the beneficiary were
    an employee enrolled in the same Federal Employees Health Benefit
    Program. Federal Employees Health Benefits Program Demonstration
    Program Premium Rates for Year 2000 rates can be found at
    www.tricare.osd.mil/fehbp. Mailings announcing the program were
    provided to beneficiaries in early October 1999.
        Open season for enrollment that opened in November was extended to
    January 2000. Additional Federal Employees Health Benefits Program
    enrollment/information fairs will be conducted in demonstration sites.
    Current enrollment as of February 2000 is approximately 2,200. The
    Federal Employees Health Benefits Program-Military demonstration began
    on January 1, 2000. A toll-free call center to answer questions and
    provide information was activated in September 7, 1999 (1-877-DOD-
    FEHB).
        The minimum period of enrollment in the Department of Defense/
    Federal Employees Health Benefits Program is three years. Participants
    need not be enrolled in part B of Medicare. Beneficiaries covered under
    the Department of Defense/Federal Employees Health Benefits Program
    demo are not eligible to receive care at a medical treatment facility
    or through the TRICARE program, including mail-order pharmacy. The
    National Defense Authorization Act for Fiscal Year 1999 also authorized
    a three-year demonstration of a TRICARE Senior Supplement Demonstration
    Program. Medicare will be the first payer for payment of care and
    services received by the eligible individuals. TRICARE will be the
    second payer. The pilot program will be located in Cherokee, Texas and
    Santa Clara, California.
        Finally, the National Defense Authorization Act for Fiscal Year
    1999 authorized a TRICARE Pilot Pharmacy Benefit. The pharmacy
    demonstration program will provide Medicare-eligible beneficiaries who
    enroll in the program access to network retail and mail order pharmacy
    benefits. The pilot program will be located in two counties:
    Okeechobee, Florida; and Fleming, Kentucky.
        In 1999 there were important improvements in the process of health
    care delivery for remotely assigned active duty service members within
    CONUS. The TRICARE Prime Remote program began in October 1999.
        TRICARE Prime Remote is the new healthcare delivery program
    designed to improve access to healthcare for active duty service
    members who reside and work more than 50 miles, or one-hour drive time,
    from a military medical treatment facility.
        The regional managed care support contractors are currently
    enrolling remote active duty service members into TRICARE Prime Remote.
    The enrollment process is not automatic. An enrollment form must be
    completed by the soldiers and submitted to the managed care support
    contractors. The regional Lead Agents and unit commanders play a
    critical role in identifying eligible members, and facilitating the
    enrollment process.
        Enrolled active duty service members are provided access to
    civilian providers for primary care where contractor primary care
    networks exist. In places where there are no networks, service members
    may get primary care services from any TRICARE authorized provider.
        Pre-authorization for primary care is not required. Primary care
    includes services for acute care (for example, colds, sinus
    infections), management of stable, chronic problems (high blood
    pressure), preventive care (for example, wellness examinations), and
    acute injury (for example, cuts, ankle sprains).
        Pre-authorization is required for specialty care (for example,
    referrals for orthopedics, surgery, mental health, obstetrics, etc.).
    When specialty care is needed, the primary care provider or the service
    member contacts the managed care support contractor's Health Care
    Finder via a 1-800 number. Before authorizing the specialty care, the
    Health Care Finder will contact the Military Medical Support Office.
    The Military Medical Support Office is a tri-service staffed central
    office that provides military oversight for all remote active duty
    service members health care. If the soldier has an illness/condition
    that has fitness for duty implications, the Military Medical Support
    Office will direct the Health Care Finder to authorize the care at a
    medical treatment facility only. If the illness/condition is not a
    fitness for duty issue, the Health Care Finder is directed to authorize
    that care be provided locally. Care is automatically authorized if the
    process takes more than 48 hours. If specialty care is clinically
    required in less than 48 hours, the active duty service member may
    proceed with the care and a retrospective review will be done to
    determine potential fitness for duty implication.
        Medical and dental care are covered along with prescription drugs
    and there are no cost shares or deductibles. In cases where up-front
    payment is required, the active duty service member submits a claim to
    the managed care support contractors (for medical claims) or the
    Military Medical Support Office (for dental claims) for full
    reimbursement.
        A program that includes the family members where network providers
    exist (the Geographically Separated Unit program) is already in place
    in Regions 1, 2, 5, and 11. Expansion of the program for family members
    in the other Regions is projected for late fiscal year 2000 pending
    enactment of necessary legislative authority. The proposal would
    provide eligibility for the program and enhanced access, even in areas
    where there are not network providers. The Administration will present
    a legislative proposal to this effect this spring.
        Better financial decisions will be made with an accurate count of
    beneficiaries enrolled in TRICARE Prime through each facility, and with
    the ability of the Corporate Executive Information System to keep
    ``score'' of resources expended. However, there is a bottom below which
    we cannot responsibly go. Our priorities must be to provide quality
    medical care, to keep faith with our service members and to invest in
    the future so the quality of our medical program will keep pace with
    advances in medical science.
        In 1999, I whole-heartedly participated in a senior level
    cooperative effort with my fellow Surgeons General and the Department
    of Defense to develop a more integrated health services delivery system
    that emphasizes effective use of medical treatment facilities, focusing
    on beneficiary expectations and satisfaction. The result was the
    Military Health System Optimization Plan. We all agreed to implement
    the critical components of the plan as quickly as possible.
        With the first generation of managed care contracts in place and
    current versions of the managed care support contracts beginning to
    elapse, the Military Health System Optimization Plan supports the next
    generation of TRICARE 3.0 support contracts that put in place needed
    TRICARE improvements. TRICARE 3.0 is a three and one half-year
    evolution to move away from highly prescriptive government requirements
    and processes. The beneficiary's satisfaction is at the forefront with
    mandatory performance outcomes. The contracts will include a more
    effective mechanism for holding contractors to contract terms. The
    elaborate and complex funding mechanisms of current Military Health
    System contracts are simplified under TRICARE 3.0.
        The goal of TRICARE 3.0 is to migrate to a contract vehicle that
    has appropriate financial incentives to support the military direct
    care system in the recapture of purchased care. Specifically, TRICARE
    3.0 strives to streamline the funding mechanism to better focus risks
    and financial incentives between the direct care system and contractor
    so that overall cost is reduced. TRICARE 3.0 provides the contractor
    bonus incentives for superior performance linked to beneficiary
    satisfaction. The new contract vehicle moves away from prescriptive
    government requirements and allows the use of best business practices.
        Although much thought and energy has been invested in TRICARE 3.0
    development, there are some key concerns. The objectives-based contract
    methodology chosen for TRICARE 3.0 works well for building aircraft,
    but has never been tried in a large medical service contract such as
    this one. Managed care commercial best practices are not standardized
    and may produce confusion for beneficiaries as they move from region to
    region. TRICARE 3.0 is anticipated to live up to the expectation that
    it will really fix the problems encountered in the execution of past
    contracts and produce a more cost effective and patient friendly
    healthcare system.
    Quality of health care
        I would like to discuss the issue of quality of health care. Two
    years ago, we collectively agreed to improve healthcare by implementing
    thirteen quality points. I would like to report that the Army Medical
    Department continues to make improvements in the delivery of quality
    health care in the following areas:
        Phase out accessions and deployment of general medical officers.--
    To ensure clarity, a general medical officer was defined as a physician
    who has completed one year of graduate medical education and is serving
    in a non-training status. In 1998 there were 476 general medical
    officers in the Army. In 1999 there are 291. They serve as brigade
    surgeons, flight surgeons, and in clinics and hospital. At this time
    about 60 percent of these billets have been converted. A detailed study
    of all current general medical officer billets will be done, by the
    Medical Corps Branch at United States Army Personnel Command, to
    determine by site which positions still require conversion. Changes
    have also been made in graduate medical education to decrease the
    number of individuals in nonspecific internships. This decreases the
    numbers available to serve as general medical officers. A complete
    elimination of general medical officers is not necessary as long as
    adequate oversight and opportunity for consultation and continuing
    education is available.
        Establish centers of excellence to provide improved patient
    outcomes for complicated surgical procedures.--The Assistant Secretary
    of Defense for Health Affairs established policy in 1995 for the
    implementation of the Specialized Treatment Program. The goal is to
    promote the highest standard of care throughout the Military Health
    System. A medical treatment facility could be designated as a national
    or regional Specialized Treatment Services facility. Assistant
    Secretary of Defense for Health Affairs established policy in 1997 that
    only medical treatment facilities designated as Specialized Treatment
    Services facility could continue providing health care in one or more
    20 designated Diagnostic Related Groups. In 1998, Assistant Secretary
    of Defense for Health Affairs expanded the Specialized Treatment
    Services policy to include Center of Excellence designation. This
    enabled non-Specialized Treatment Services facilities to continue
    providing clinical care in one or more of the designated Diagnostic
    Related Groups.
        Immediately resolve all malpractice and adverse action cases
    pending and file complete reports to the National Practitioner Data
    Bank where required.--The Headquarters, United States Army Medical
    Command is responsible for the administrative processing of the medical
    malpractice claims backlog. The Command conducted an analysis of the
    claims management process. Process design changes specifically
    identified to eliminate and prevent the case backlog were implemented
    over the past year. The United States Army Medical Command allows
    ninety days for processing the case upon receipt of legal settlement/
    judgment and a standard of care determination by the Consultation Case
    Review Branch. All cases not processed within that time limit
    constitute the backlog and are prioritized for completion. There is
    currently no adverse action backlog. Reports were submitted to the
    National Practitioner Data Bank in cases where moneys were paid, the
    standard of care was deemed not met and a provider was identified.
    Seventy-three were filed during fiscal year 1999. There are currently
    ninety medical malpractice cases undergoing administrative processing
    at Quality Management-United States Army Medical Command.
        All military providers must have a valid, unrestricted and current
    license.--The Assistant Secretary of Defense for Health Affairs issued
    a memorandum dated January 29, 1999 that required all physicians to
    hold a full-scope license by October 1, 1999. All providers engaged in
    the independent practice of medicine are now required to possess a
    current valid and unrestricted license. There are no physicians with an
    Oklahoma Special license engaged in the independent practice of
    medicine in the Army. The United States Army Medical Command Quality
    Management Directorate began site visits to medical treatment
    facilities in January to assess organizational management of compliance
    with licensure, and the process for dealing with the impaired
    practitioner.
        Provide Service input for the Annual Quality Management Report.--
    The Department of Defense Quality Management Report is an annual
    requirement in which Department of Defense specified service data from
    each Army medical treatment facility (military treatment facility) is
    consolidated and provided to the Assistant Secretary of Defense for
    Health Affairs. This data is integrated with input from the other
    Services to complete the report. The anticipated date for the most
    recent draft to be ready for review by the Services is April 2000. When
    the draft has been approved by the Services the final report will be
    published.
        Fully implement TRICARE by assigning all enrollees a primary care
    manager or team.--All TRICARE Prime enrollees must be assigned to a
    specific individual care manager.
        Generate a public report card at each facility sharing information
    concerning our Military Health System.--The minimum elements that are
    required to be included are waiting times for major services, patient
    satisfaction at the medical treatment facility (overall satisfaction
    with clinics and overall satisfaction with medical care), Joint
    Commission on Accreditation of Healthcare Organizations Summary Grid
    Score and the selected Joint Commission on Accreditation of Healthcare
    Organizations Grid Elements in the areas of credentialing, assessing
    competence, infection control, and nursing. All Army medical treatment
    facilities have reported that they are in 100 percent compliance with
    the requirement for the development of and displaying of the report
    card in their facilities.
        Establish a healthcare council at each facility.--The requirements
    for the healthcare council are that it be chaired by the medical
    treatment facility commander, include consumers from the military
    community, solicit and address concerns of the enlisted service member
    and their families and meet quarterly. The most recent update for the
    Department of Defense Healthcare Quality Initiatives Report indicated
    that 100 percent of the Army medical treatment facilities had fully
    implemented the requirements for the council.
        Implement a directory of providers in a medical treatment facility
    specific patient information handbook that will be updated annually.--
    The requirements for the directory are that the contents include
    medical treatment facility providers who are primary care managers as
    well as providers in specialty referral clinics who are most likely to
    receive consults from primary care managers. The design must conform to
    the template created by the TRICARE Marketing Office and be available
    to all prime enrollees. The most recent report on implementation of
    Department of Defense Healthcare Quality Initiatives indicated that 100
    percent of the Army medical treatment facilities were in total
    compliance.
        Place greater emphasis on the best clinical practices identified
    through our National Quality Management Program.--National Quality
    Management Program initiatives to identify best clinical practices
    continue. The National Quality Management Program completed baseline
    studies in fiscal year 1999, determining the extent of compliance with
    Department of Defense/Veterans Affairs and/or other national clinical
    practice guidelines so that the impact of implementing evidence-based
    disease management practice guidelines system-wide can be determined.
    The program will facilitate the benchmarking of Department of Defense
    facilities against their federal and civilian peer facilities on
    Department of Defense/Veterans Affairs Practice Guidelines and
    Department of Defense Putting Prevention into Practice evidence-based
    process and outcome quality indicators. The Joint Commission on
    Accreditation of Healthcare Organizations ORYX measurement program,
    Special Studies and the annual Quality Management Reviews continue to
    be utilized to benchmark Department of Defense facilities and identify
    best practices.
        Place greater emphasis on direct use of clinical guidelines
    wherever appropriate.--The Department of Defense's partnership with
    Veterans Affairs, to adapt and monitor the implementation of practice
    guidelines, continues to flourish. The Army Medical Department leads in
    the development of guideline ``tool-kits'' which facilitate provider
    implementation of adapted guidelines by ``making the best way the
    easiest way.'' Tool kits incorporate provider point of care, patient
    self-management and process/system tools to support guideline
    utilization. Three tool kits have been developed through the
    coordinated efforts of Department of Defense/Veterans Affairs
    providers, with another under development. The tool-kit supported
    Department of Defense/Veterans Affairs Acute Low Back Pain Clinical
    Practice Guidelines have been piloted in two Army Regional Medical
    Commands. The Army Medical Department implementing a system-wide
    deployment of the Department of Defense/Veterans Affairs Acute Low Back
    Pain Guidelines based on preliminary results from a pilot study
    conducted by the Army Medical Department and the RAND Corporation
    demonstrating improvements in access and quality. Early results include
    increased access to care due to efficiencies in Primary Care and Troop
    Medical Clinics and a decrease in inappropriate referrals to specialty
    care. From the quality perspective, there has been an increase in the
    quality of documentation of the care of patients with low back pain and
    identification of clusters of injuries so that primary preventive
    efforts can be targeted at identified work sites.
        Honestly evaluate our weaknesses and immediately improve them.--
    There is an ongoing quality improvement/reengineering effort to
    analyze, review and make recommendations on 29 initiatives that have
    been identified by Department of Defense for improving the Military
    Health System. The Reengineering Coordination Team published the
    Military Health System Optimization Plan to address these initiatives
    in February 1999. This Plan has been sanctioned by the Surgeons General
    in a memorandum for the Assistant Secretary of Defense for Health
    Affairs dated November 1999. The Optimization Plan provides the
    strategy for improving the efficiencies of the Military Health System
    and improving the responsiveness to the line and the health of all the
    beneficiary population. Policy guidelines are being developed to
    support many of the critical reengineering components, including
    assignment of primary care manager by name; standardized enrollment,
    Health Enrollment Assessment Review survey implementation, and
    appointment processes; and improved data quality and clinic management.
    Clinical optimization has been addressed specifically in the
    Reengineering Coordination Team-chartered Population Health Improvement
    Plan, which is currently under review. The Reengineering Coordination
    Team has approved the Population Health Improvement Plan. This plan
    includes process elements covering the reengineering components noted
    above throughout the spectrum of care. Processes necessary to assure
    optimal population health and quality of life are addressed beginning
    with population needs assessment at enrollment, continuing through
    prevention and education, to efficient and timely intervention
    strategies. Implementation of the Population Health Improvement Plan in
    a demonstration project is forthcoming early in 2000. Lessons learned
    from this demonstration will serve to define a tri-service Military
    Health System Support Center to sustain optimal strategies, and develop
    and update relevant strategies and policies over time.
        Work to improve our patient satisfaction through communication and
    education.--This area is a part of TRICARE Operational Performance
    Statement and is tracked by region, facility and clinic at the
    Department of Defense level via the annual and monthly Customer
    Satisfaction Surveys. Initiatives to improve customer satisfaction with
    quality include increased customer informational efforts and employee
    hospitality training initiatives. Customer informational handbooks,
    briefings, computerized presentations and a variety of other media
    mechanisms are used to inform beneficiaries of available services. Data
    is also solicited from each beneficiary regarding their satisfaction
    with services offered and access to care. One product that has been
    developed as a result of the focus groups is the TRICARE Personal
    Profile Program, an interactive CD-ROM that simplifies and personalizes
    the TRICARE message. The prime focus of customer service and thus of
    patient satisfaction must remain the provision of timely, efficient,
    high-quality care. These communication processes are also vital because
    they reassure beneficiaries who are not currently under care and
    provide specific, detailed, up-to-date guidance on how to use the
    system when care is needed.
        The rate of medical errors has recently gained national attention.
    The Army Medical Department has implemented a wide variety of
    initiatives to prevent medical errors:
      --The Unit Dose Drug Distribution System automated drug dispensing
            technologies, and the use of specially trained and certified
            Registered Pharmacists certified for preparation of IV
            admixtures and specialty drugs (such as chemotherapy) are
            safeguards against medication errors. These have long been the
            standard of care in Army medical treatment facilities.
      --All Adverse Drug Events are reviewed locally by the medical
            treatment facility Pharmacy and Therapeutics Committee with
            significant drug events reported to the Food and Drug
            Administration. The Department of Defense is currently working
            to implement the Pharmacy Data Transaction System, which will
            integrate all Department of Defense pharmacies, civilian retail
            pharmacies, and the National Mail Order Pharmacy in an all-out
            effort to prevent adverse drug events.
      --Several ``models of excellence'' have been studied by the
            Department of Defense Pharmacy Board of Directors and adapted
            by the Army Medical Department to safeguard patients against
            medication errors. The Composite Health Care System provider
            order entry gets the right drug to the right patient by
            eliminating the errors inherent in hand-written prescriptions.
            Barcoding, and robotic technology for drug selection and
            labeling also decrease human error.
      --Many of the safeguards generated by Composite Health Care System
            order entry system are also applicable in the clinical
            laboratory. In addition, the bi-directional interface of
            clinical analyzers (downloads orders from Composite Health Care
            System to the analyzer and uploads results back to Composite
            Health Care System) also significantly reduces transcription
            errors. Presently, the Department of Defense Laboratory Joint
            Working Group has an initiative to standardize laboratory data
            and gain interoperability between Composite Health Care System
            host computers.
      --In the Blood Bank arena, the use of barcodes has been one method of
            improving specimen identification processes. This has been
            emphasized throughout the entire laboratory. The sites with
            donor and/or transfusion functions have installed the Defense
            Blood Standard System supported computers to assist in the
            issue of blood products.
      --Risk management assessment by the Quality Management Division
            focuses special attention on high volume, high risk, or problem
            prone procedures. Trends are analyzed for lessons learned and
            performance improvement. All medical treatment facilities use a
            systematic process (root cause analysis) to assess and evaluate
            significant events.
      --Peer review process is a mechanism used in all medical treatment
            facilities to determine if standards of care were met when
            there is a question about appropriateness of practice. Findings
            from the process are used to educate staff, improve practice
            and implement changes to prevent further occurrences.
      --A Congressionally funded pilot project to evaluate the MedTeam
            concept is underway at three medical treatment facilities. The
            MedTeam concept was modeled after the successful error
            prevention initiative in the aviator community and uses a team
            based approach to reduce errors in the Emergency Department.
            Early results indicate as much as an 84 percent reduction in
            errors in those Emergency Rooms studied.
    Congressionally directed research
        The Fiscal Year 2000 Defense Appropriations Act applauded the
    medical research and development efforts and accomplishments of the
    Department of Defense. I would like to discuss the highlights of
    several of these programs.
        As you know, the United States Army Medical Research and Materiel
    Command (USAMRMC) has been entrusted by Congress with the management of
    congressional special interest research programs. The appropriations
    have totaled almost $2.5 billion since fiscal year 1990. The Command's
    vision is to ensure the sponsorship of good science that can also
    benefit the DOD and fulfill the mission of the USAMRMC. When
    appropriate, the research results have been mined for application
    within the DOD as well as the civilian sector. Examples of these
    programs are the Breast Cancer Research Program, the Prostate Cancer
    Research Program, and the Volume AngioCAT project.
        Since the inception of the Breast Cancer Research Program (BCRP),
    1,806 proposals have been awarded with fiscal year 1992-98 funds
    totaling approximately $629.1 million. The following products have been
    reported by investigators and represent a measure of the program's
    success: over 2,300 publications in scientific journals, 1,800
    presentations at professional meetings, and 30 patent/license
    applications. Tangible program accomplishments and outcomes directly
    resulting from this funding have been in the areas of infrastructure
    enhancement, training, HER-2/neu oncogene research, angiogenesis,
    mammographic imaging, environmental carcinogenesis and quality of life.
    Since the inception of the Prostate Cancer Research Program, the
    program has received over 1,200 proposals and approximately 300
    proposals will be awarded with fiscal year 1997-99 funds. Research
    funds awarded to date total approximately $105 million. The PCRP is a
    young program, with the first research proposals beginning research in
    May, 1998. This funded research is novel and innovative, and is
    expected to provide exciting outcomes and to provide a solid framework/
    foundation for contemporary and future scientific discoveries.
        The Volume AngioCAT project is envisioned as a newly conceived
    medical device that could employ, simultaneously and in real time,
    several imaging technologies that might provide physicians with a new
    level of anatomic and physiologic data about their patients. Advanced
    detection, before the onset of symptoms, might be provided for such
    important disorders as atherosclerotic cardiovascular disease (which
    leads to heart attack and stroke), orthopedic disorders (arthritis,
    osteoporosis affecting a variety of structures), or even infection and
    cancer. Such information might allow for aggressive new preventive
    interventions in patients that were ``missed'' on routine physical
    examinations, thus maintaining a healthier active duty and retired
    population. The first prototypes of a Volume AngioCAT will function in
    fixed facilities, however, the research may be central to the
    development of units that could function in deployed environments for
    rapid diagnosis of the injured warfighter.
        I would like to close this discussion by expressing my concern that
    past and future funding challenges facing medical facilities have the
    potential to contribute to reduced quality of care. The full support of
    maintenance, repair, renovation and replacement of aging inventory is
    the only way to avoid systems failures that disrupt the normal delivery
    of healthcare services and significantly increase future repair
    requirements and costs. Historical MILCON funding trends have shifted
    the burden to an already stretched Repair and Maintenance program to
    maintain facilities.
        In conclusion, I believe today's Army Medical Department is more
    flexible and better prepared to meet diverse missions than ever before.
    I thank you again for the opportunity to testify today and for your
    continued support of our efforts to provide the finest quality of
    medical support to America's Army.

        Senator Stevens. Yes, sir. Admiral.
    STATEMENT OF VICE ADM. RICHARD A. NELSON, MEDICAL
                CORPS, SURGEON GENERAL, U.S. NAVY
        Admiral Nelson. Mr. Chairman, thanks for the opportunity to
    come before you, and I also have a written statement that
    really talks about the positive issues going on in Navy
    medicine, and a couple of the issues, problem areas that we
    have, and I will not dwell on that here.
        Senator Stevens. I like them, Admiral.

                                  health care

        Admiral Nelson. Well, these have been an interesting couple
    of years for me as the Navy's Surgeon General as we wrestle the
    issues of delivering health care and keeping the promises we
    have made to our beneficiaries. Health care is very important
    to our active duty and our retirees. In fact, it is one of the
    key quality-of-life factors that affects the morale and the
    retention of our active duty.
        But the benefits that we afford the retirees are viewed as
    an indicator of the extent to which we honor our commitments,
    and just a couple of days ago I had a letter from a retiree who
    wrote and talked to me about the health care he had been
    receiving. I will read to you just the last sentence of what he
    had to say.
        He says, ``the health care that I have received in military
    hospitals during active duty and retirement has been the most
    outstanding benefit I have received in my military career.''
    This is an individual who is reaching 65. He is having medical
    problems, and he has the good fortune to have access to our
    facilities and has appreciated that. Too many do not have that
    access. That is the crowd that I worry about.
        We in the military and in the Navy medical system are
    working hard to optimize access to our system. We are working
    to do the things that will make us more capable and allow us to
    increase the capacity in our own direct care facilities, but we
    need assets to be able to do that.
        Our beneficiary population had some disappointments in the
    inconsistencies and the cumbersome administrative processes
    that TRICARE has projected at times. The access problems to our
    own direct care systems are the things that we are working to
    try to overcome.
        Several of the health care proposals that are before the
    Congress this year are a step in the right direction towards
    correction of some of these issues. Health care is very
    expensive, and reform is necessary for our active duty members
    and our retirees. However, one thing that I would like to
    stress, and that is, as you look at benefits and possible
    changes and the like, the first thing that I think you must do
    is fully fund the services' medical treatment facilities. We
    must be able to do as much in-house and be able to make these
    facilities as productive as they can be, and we have not been
    able to do that in recent times.
        I thank you for the opportunity to come before you. I look
    forward to your questions. Thank you, sir.
        [The statement follows:]
               Prepared Statement of Vice Adm. Richard A. Nelson
        Good morning! I am Vice Admiral Richard A. Nelson, the U.S. Navy
    Surgeon General. I want to thank you, Mr. Chairman, Senator Stevens,
    and members of this Subcommittee for the opportunity to appear before
    you to testify on the status of Navy Medicine. In April 1999, I
    submitted testimony to this committee on Navy Medicine's strategic plan
    and goals. I would like to share with you our accomplishments over the
    last year. As we move into a new century, the Navy Medical Department
    is well prepared to meet the challenges ahead. We are in an era of
    unprecedented change for medicine, and the military health system must
    be flexible enough to embrace new technologies, new clinical practices
    and new business practices as they evolve. Navy Medicine has been
    working hard to ensure continued excellence in health services to keep
    our uniformed services ready.
        The past year has been a busy and rewarding one for the Navy
    Medical Department. One significant milestone is the opening of a new
    facility at Naval Medical Center Portsmouth, Virginia. The Charette
    Medical Center, named in honor of a Korean War Hospital Corps Medal of
    Honor recipient, is a state-of-the-art facility that has significantly
    improved our ability to serve our beneficiaries in the Tidewater area.
    The medical center also recently opened two new TRICARE outpatient
    clinics at Virginia Beach and Chesapeake, which will greatly improve
    access to military care for beneficiaries.
        We've also been providing care in response to natural disasters,
    such as Hurricanes Dennis and Floyd, Typhoon Bart, earthquakes in
    Turkey and closer to home at 29 Palms, California. At 29 Palms, Navy
    Medicine responded superbly in assessing damages in the affected areas,
    prioritizing concerns and coordinating emergency repairs while ensuring
    patient care was not compromised.
        For the devastating earthquake in Turkey, a Surgical Response Team
    from U.S. Naval Hospital Naples deployed to support the victims. 22
    medical and dental specialists were on the ground setting up camp
    within 48 hours of the earthquake. Despite extremely hot temperatures
    and challenges of working in the field, the team performed superbly.
    The experience provided a valuable opportunity for them to hone their
    skills and test their readiness while providing relief to people in
    need.
        We are making strides in improving TRICARE and doing so with the
    full support of the Joint Chiefs of Staff. Our Chief and Vice Chief of
    Naval Operations (CNO, VCNO) have a great appreciation for Navy
    Medicine and the need for leadership to be involved in making TRICARE
    work. The VCNO, Admiral Donald L. Pilling, volunteered to chair the
    newly created Defense Medical Oversight Committee (DMOC). The DMOC
    engages senior military and civilian leadership in discussions and
    review of the health care benefit, Defense Health Program (DHP) funding
    requirements in the context of other service decisions, and management
    and reengineering initiatives.
    Focus areas
        Much of our preparation for the future has required an
    introspective look at our organization, our people and the way we do
    business. During my first year as Surgeon General I identified five key
    focus points for Navy Medicine: Service to the Fleet; Manage Health Not
    Illness; TRICARE and Readiness are Inseparable; Make TRICARE Work; and
    Embrace Best Business Practices.
    Strategic plan
        These focus points complement our corporate strategic plan. The
    Navy Medical Department's strategic planning process has been evolving
    continually in an effort to align and increase accountability
    throughout our worldwide health delivery system. Our aim has been to
    accomplish two major objectives--reassess the Mission, Vision and
    Guiding Principles for Navy Medicine and develop true strategic goals
    that will move us toward sustained, higher levels of performance. These
    goals must be translated into objectives that are applicable to our
    commands, activities, and customers on a daily basis. In addition, they
    must lend themselves to measurement so that we can assess the
    improvement in Navy Medicine's performance at the local and corporate
    levels. We are confident that our current plan reflects our
    organizational growth as well as the changing health care environment.
        Our mission--to support the combat readiness of the uniformed
    services and to promote, protect and maintain the health of all those
    entrusted to our care, anytime, anywhere--was reworked to resolve the
    perennial question about our ``dual'' readiness and peacetime roles. We
    are trained for our readiness mission through our peacetime health care
    delivery. Thus, we streamlined our vision statement to ``Superior
    Readiness Through Excellence in Health Services.''
        Our current strategic plan has four major themes--Force Health
    Protection, Health Benefit, People, and Best Business Practices. The
    overarching message of this plan is very simple--our ability to support
    combat readiness is directly linked to our ability to provide superior
    health services to our 2.5 million beneficiaries worldwide, every hour
    of every day.
        The challenge for current and future leaders of Navy Medicine is to
    maintain focus on the accomplishment of these goals and their
    supporting objectives while simultaneously solving the myriad day-to-
    day issues they face. Our leadership can and will meet this challenge.
    Force Health Protection
        As outlined in the DOD Medical Readiness Strategic Plan (MRSP), the
    military medical departments exist to support the combat forces in war;
    and in peacetime, to maintain and sustain the well being of the
    fighting forces. The medical departments must be prepared to respond
    effectively and rapidly to the entire spectrum of potential military
    operations--from Major Theater Wars (MTWs) to Military Operations Other
    Than War (MOOTW).
        Readiness to support wartime/contingency operations will require us
    to successfully accomplish several missions. We must be able to
    identify the medical threat; develop medical organizations and systems
    to support potential combat scenarios; and train medical units and
    personnel for their wartime roles. We must train and educate non-
    medical personnel; conduct research to discover new techniques and
    materiel to conserve fighting strength; and provide both preventive and
    restorative health care to the military force.
        Force Health Protection is a strategy that maintains readiness by
    promoting a system of comprehensive quality health services that
    ensures our people are fit and healthy; that they are protected from
    hazards during deployment; and that when illness or injury intervenes,
    they are afforded state of the art care.
        We can protect our people better by emphasizing prevention and
    health promotion to keep them fit and healthy as opposed to giving them
    treatment once injuries or illness occurs. Stronger, fitter and
    healthier military members are less likely to be accidentally injured,
    heal better and faster, and are more readily able to handle diseases
    and stress.
        In keeping with this culture shift, we have strengthened programs
    to promote healthy diets, exercise and tobacco cessation as well as
    prevent and minimize injuries. Our efforts are proving successful and
    are reducing injuries, curbing attrition and saving money for the Navy
    and Marine Corps.
        The Navy Environmental Health Center runs a training program for
    health promotion coordinators in conjunction with the Cooper Institute,
    training both medical and line personnel in methods of changing health
    behaviors. These coordinators are then qualified to establish programs
    at their home units. Our surface forces have actively embraced this
    concept, granting the ``Green H'' award to ships and other units
    meeting specified criteria. Areas included in this program are fitness,
    nutrition, stress management, occupational health issues, hypertension
    screening, tobacco cessation programs, and STD prevention.
        Disease and illness among any population is an unavoidable fact of
    life despite our emphasis on prevention. To provide further
    intervention, Navy Medicine initiated a Disease Management program in
    partnership with Lovelace Health Innovations at our medical centers in
    Bethesda, San Diego and Portsmouth with a focus on diabetes at the
    first two facilities and asthma at the latter. All three sites have
    made significant inroads in identifying their diabetic or asthmatic
    population, giving their providers tools to better manage their
    patients' disease, integrating health care for diabetic and asthmatic
    patients and developing health promotion programs specifically
    targeting these diseases.
        Musculoskeletal injuries also pose a significant challenge to the
    readiness and retention of Sailors and Marines and are the number one
    medical reason for first term separations. The Naval Health Research
    Center in San Diego has been involved with the Marines and the Naval
    Training Centers to decrease stress fractures in personnel by adjusting
    the frequency, intensity and speed of progression of physical training.
    As a result, fewer Sailors and Marines are seeking costly medical
    intervention for sprains, stress fractures, shin splints, dislocations
    and other injuries sustained during training. Lost training days are
    down and personnel are back on the job sooner, helping to support the
    Navy's mission-readiness.
        Our mission in military medicine is to support warfighters and all
    our TRICARE beneficiaries. The war fighters support mission is the
    reason for our existence and drives our requirements, endstrength and
    mission. Training and sustaining a ready force which has significant
    operational and peacetime responsibilities and commitments is a major
    challenge.
        During the past several months, we have been working diligently to
    ensure the readiness of our medical department personnel charged with
    manning our Fleet Hospitals, Hospital Ships, Casualty Receiving and
    Treatment Ships, and Marine Force augment. Just as ships of the line
    returning from deployment enter a lesser readiness phase while
    receiving needed upkeep and crew training, so do our medical platforms.
    As units are reconstituted and become more likely to deploy, their
    readiness status is increased. We are testing this concept with the 84-
    man augmentation elements assigned to each of our Fleet Surgical Teams
    on the large deck amphibious ships. So far, we have every indication
    this model is meeting our readiness requirements while reducing the
    training demands on our hospital-based medical personnel. We can thus
    provide the maximum peacetime care possible to our Sailors, Marines,
    and their family members, and still keep our units in a high readiness
    status.
        By performing priority tiering of medical platforms in line with
    the Fleet's Inter-Deployment Training Cycle (IDTC), Navy Medicine will
    have achieved an alignment of our deployable assets with our line
    constituents. This approach allows some predictability on the
    operational schedules of deploying platforms, promotes unit integrity
    by training, deploying and preparing as a cohesive force, and makes the
    most productive use of our medical manpower in support of both our
    readiness and peacetime roles.
        As you can imagine we are concerned about chemical/biological
    incidents and have formulated various initiatives to address the
    threat. Navy Medicine has developed a three-day Chemical, Biological,
    Radiological and Environmental (CBRE) Casualty Care Management Course.
    So far over 250 providers have received training in 1999. In addition
    to providing the necessary CBRE training to medical personnel, our
    Naval Environmental and Preventive Medicine Units (NEPMUs) have
    designated specific staff members as primary responders to requirements
    for CBRE medical surveillance. Deployable biological laboratory
    equipment is also available in each of our NEPMUs and staff members are
    developing expertise and protocols for use.
        The Anthrax Vaccine Immunization Program (AVIP) is one of our
    highest priorities for Force Health Protection. Navy Medicine began
    vaccinating service members in March 1998 and as of 6 December 1999 has
    completed the immunization series on approximately 78.2 thousand Navy
    and 67 thousand Marine Corps personnel. The Naval Medical Information
    Management Center (NMIMC) consolidates DON data for entry into DEERS.
        The DON has an ongoing education/training program within the fleet,
    Marine Forces and MTFs. The Navy Lifelines and the Navy Environmental
    Health Center Web sites provide links, briefings and forums for both
    medical and non-medical personnel and a toll-free number staffed by
    AVIP agency staff is also available. Several messages have been
    released by Navy Fleet CINCs, and myself reiterating AVIP guidance.
    Refusals to take the vaccine within DoN have not had an impact on unit
    effectiveness from the readiness standpoint. Navy and Marine Corps have
    issued guidance to commanding officers regarding courses of action
    available to manage refusals.
        In order to help us enhance our understanding of the types and
    magnitude of reactions experienced by our personnel, Navy health care
    providers are encouraged to submit Vaccine Adverse Event Reporting
    System (VAERS-1) forms and to assist members desiring to submit VAERS-1
    forms for reactions experienced. Submission of a VAERS-1 form does not
    establish a causal relationship between the reaction and vaccination.
    The Anthrax Expert Committee, under the auspices of the FDA reviews
    each VAERS-1 for determination of causal relationship. As of 21 January
    2000, a total of 52 VAERS-1 forms have been submitted on Navy/USMC
    personnel. All members have returned to duty.
        One other important point to mention under the Force Health
    Protection strategy is that we recently revised our corneal refractive
    surgery physical standards and waiver policies for the Navy and Marine
    Corps. Our new policy directly addresses general accessions, as well as
    active duty personnel currently serving in undersea/diving/special
    warfare, surface warfare and air warfare communities. The most
    significant contribution the surgery offers our active duty forces is
    its ability to enhance human performance in operational environments
    where glasses or contact lenses may compromise the ability to safely
    perform required duties. Laser vision correction will be an important
    contribution to improving operational readiness.
    Health Benefit (TRICARE)
        The complementary partner to Navy Medicine's readiness mission is
    the health benefit mission. Fundamental changes are ongoing in the way
    health services are organized, delivered, and paid for, in both
    civilian and military sectors. Today, all health plans are competing on
    the traditional bases of access, quality and cost. An intrinsic element
    that distinguishes the truly outstanding programs from the rest is the
    health outcomes the system achieves for its beneficiaries. Thus, just
    as health and fitness are critical barometers of the readiness of our
    Navy and Marine Corps forces, so too is the health and fitness of our
    extended military family. This family includes the spouses and children
    of our active members, and our retirees, their family members or
    survivors.
        I want to take this opportunity to share with you an update on the
    state of TRICARE as I see it today. TRICARE is the tangible tool that
    supports readiness by offering a uniform benefit, with guaranteed
    access and specialty care when needed whether forward deployed, near an
    MTF, remotely stationed in CONUS or overseas. Managed health care keeps
    Sailors and Marines fit for duty and directly contributes to optimal
    readiness. TRICARE provides that managed health. It's a good program
    that was fully implemented last year and has already made a very
    positive impact. However, nationwide implementation also revealed areas
    for improvement that we will need to address as quickly and
    aggressively as possible. The initial TRICARE contracts are only
    partially successful. Difficulties have been experienced in areas of
    billing and claims payment, telephone access, timely appointing, and
    provider network development. Stricter requirements have been
    implemented, and as the contracts begin to expire over the next two
    years further improvements will need to be made.
        We also need to address leadership education and beneficiary
    education. The TRICARE options while offering a choice, can lead to
    confusion and indecision on part of some of our beneficiaries. While
    TRICARE Prime is clearly the most beneficial program for the majority
    of our population, our efforts to communicate this message have been
    complicated by numerous program changes as TRICARE has grown and
    matured.
        Along this marketing and education journey, we need to improve on
    administrative and customer service concerns. Extensive patient
    satisfaction surveys have shown that patients are very satisfied with
    the healthcare they receive, but are often frustrated by administrative
    and customer service issues. In time, the sum total of our education
    and customer service initiatives will directly contribute to our
    steadily improving enrollment rates.
        Customer satisfaction will be greatly enhanced by the new MHS
    optimization initiative of ``PCM by Name.'' Linking beneficiaries to a
    specific Primary Care Manager will not only give them the personal
    touch they seek in health care, but also improve accountability for the
    proper management of their health. I'm confident Navy medical treatment
    facilities will work hard to implement this policy promptly and
    smoothly.
        We may not have reached our goal, but are well on our way to a more
    solid, dependable system for providing quality health services to our
    beneficiaries. We must maintain high quality health care, improve
    customer service and access, while monitoring costs.
        TRICARE 3.0 and other TRICARE improvements are designed to address
    many of current problems, including improved business practices, making
    regional boundaries transparent and focusing on the MTF as the
    centerpiece of healthcare delivery. Region 11 has been selected to
    serve as a demonstration site for TRICARE 3.0 and will provide valuable
    insight for program improvements.
        Senior leadership and I remain concerned that many older military
    retirees do not have full access to the Military Health Care System. In
    an effort to better serve the medical needs of military beneficiaries
    who are 65 and over, DOD is testing several programs, including TRICARE
    Senior Prime, a managed care demonstration program, at selected sites
    across the country. It provides enrollees with all of the benefits
    available under Medicare, plus additional benefits under TRICARE Prime.
    I fully support the demonstration programs designed to evaluate the
    incorporation of these beneficiaries into our system. I am pleased to
    report that Naval Medical Center San Diego, the single Navy site, has
    enrolled 95 percent of its capacity of 4,000. Indications are that
    enrollees have greater access and improved satisfaction with the
    delivery of their health care.
        The implementation of TRICARE Prime Remote for active duty members
    will significantly enhance healthcare quality and access to our
    beneficiaries attached to geographically separated units within the
    regions. This initiative is a great benefit to our active-duty service
    members--by delivering the uniform benefit through the civilian
    provider network, and needs to be extended to their family members. An
    extension of this program to active duty family members is included in
    the President's Budget proposal for fiscal year 2001. A key component
    of the MHS Optimization Plan is to initiate a beneficiary shift back to
    the direct care system to ensure optimal use of our military treatment
    facilities (MTFs). The optimization plan is designed to change the
    focus of care from the contract provider network to the direct care
    system, resulting in additional cost savings. The main aspects of this
    plan are population health improvements, with additional emphasis on
    optimal use of the MTF. This plan will shift the emphasis of providing
    primarily episodic and costly intervention services to better serving
    our beneficiaries by preventing injuries and illness. Instead of
    waiting for our beneficiaries to become ill or injured, we will deliver
    preventive services and anticipate their health care needs. Our
    beneficiaries will be healthier and operational readiness will improve.
    People
        Our people are the critical resource in accomplishing Navy
    Medicine's mission. Their professional needs must be satisfied for Navy
    Medicine to compete. Their work environment must be challenging and
    supportive, providing clear objectives and valuing the contributions of
    all. Their commitment must be reinforced by effective communication,
    teamwork, respect, and outstanding leadership. Job satisfaction is an
    essential element in recruiting, retention and development of a
    professional, career-oriented Medical Department. In addition, Navy
    Medicine must align and train its military, civilian and contract
    partners to support the mission.
        Over the past year, we have been focusing attention on our General
    Medical Officer (GMO) Program to see how best to conform to a
    congressionally supported GMO-conversion plan. GMOs are highly suited
    to the Navy's operational environment and the benefits are mutual for
    the line and Navy Medicine. GMO tours help broaden our physicians'
    perspectives on life in the Navy and Marine Corps. GMOs constitute a
    significant source of high quality primary, urgent and emergency care
    in operational and clinical settings around the world. Customer
    satisfaction surveys rate GMOs equal to specialists. In addition,
    quality reviews demonstrate that GMOs practice excellent medicine with
    a very low rate of adverse events.
        A Task Force recently convened to conduct a review of our GMO
    billets and to address which should remain GMOs and which are suited
    for fully trained specialists, nurse practitioners, physician's
    assistants or independent duty hospital corpsmen. We need to preserve
    the GMO where their skills are well matched to patient needs.
        We have also placed a renewed emphasis on the health of the
    Hospital Corpsman (HM) and Dental Technician (DT) enlisted communities.
    We are looking at new methods and innovations in education, reviewing
    curricula, and focusing on training to real needs. We have increased
    the specialty school (C school) quotas in many of our HM schools to
    improve our community manning. In order to keep our pipeline for career
    development and the corpsman ``C'' school seats filled, we have
    promoted career fairs at many of our medical and dental treatment
    facilities. Utilizing the Enlisted Technical Leaders and the Detailers,
    we are able to recruit hospital corpsmen and dental technicians into
    ``C'' schools and write orders on the spot.
        As the Fleet Marine Force (FMF) corpsman is such an integral part
    of our enlisted community, a special advocate for the FMF hospital
    corpsman has been placed on our BUMED staff to better align us to the
    issues and concerns of those corpsmen and dental technicians serving
    with the Marine Corps. And in further support of fleet marine force
    corpsmen, an FMF warfare device is being proposed as an outward
    recognition of this important and unique duty.
        Of course our Reservists also play an integral role in supporting
    our mission. Our Reserve Utilization Plan will optimize our use of
    reservists during peacetime and contingencies. At the recent AMSUS
    meeting Reserve Component (RC) and Active Component (AC) leaders sat
    down and negotiated the fiscal year 2001 personnel needs of Navy
    Medicine to support both operational forces and military treatment
    facilities. Additionally, they laid out a plan to integrate RC and AC
    to attain those needs. This will allow long-term budgeting and
    personnel management. It is another way of saying ``The right
    reservist, at the right place, at the right time'' but adding ``planned
    for and funded'' to the equation.
    Best Business Practices
        Navy Medicine must carry out our mission as a business, recognizing
    the readiness, social, personal, professional and economic impacts of
    our decisions. The resources required to improve health vary greatly
    depending upon the environment, beneficiary mix, duration of support,
    echelon of care and alternatives available.
        A key to our long-term success is the employment of sound business
    practices throughout Navy Medicine. They will cross the entire spectrum
    of our activities--clinical care, forward-deployed medical care,
    education and training, research and development. The successful use of
    business case analyses will provide documentary support in our
    decision-making. We've published a BUMED Guide to Business Case
    Analysis (BCA) for use as a reference.
        The fundamental base of a BCA is the use of quality data. The guide
    will help local commands transform the raw data into useful
    information. It will standardize the analysis process and help identify
    opportunities that will best benefit the organization.
        The integrity of our data and our analytical process has never been
    more important than right now. Our ability to finance additional
    programs will continue to be constrained by resources. We must do a
    better job in Navy Medicine of fostering innovative solutions, managing
    risk, and anticipating resource requirements.
        To this end, BUMED participated in drafting a Memorandum of
    Agreement (MOA) between the Department of Defense (DOD) and the
    Department of Veterans Affairs (DVA) combining the strengths and buying
    power of the DVA with those of the DOD. The objective of the MOA is to
    combine the contracting requirements from both agencies and leverage
    that volume to negotiate better pricing. This business initiative will
    allow the customers of both agencies to select the product and pricing
    that best meets their needs, thus lower pharmaceutical and medical
    materiel costs.
        Research and Development (R&D) initiatives are another aspect of
    improving our business practices. In order to prioritize the Science
    and Technology Account applications, the Department of the Navy has
    developed an Integrated Product Team (IPT) process for 12 discrete
    Future Naval Capability (FNC) areas. Navy Medicine's focus is on the
    FNC ``Warfighter Protection''. To achieve this FNC, the following
    enabling capabilities have been developed:
        1. Combat Casualty Care and Management: Maximize as far forward as
    possible with reduced infrastructure and logistics,
        2. Enhance Warfighter situation awareness and counter threats from
    disease, battle and non-battle injuries, and
        3. Preserve health and enhance fitness of ready forces.
        I feel we have already made significant strides towards achieving
    some of these capabilities:
        Recent tuberculosis (TB) outbreaks among the crew of a Navy ship
    have underscored the importance of testing operational units for
    exposure to TB. The skin test for TB may no longer be necessary thanks
    to the ground breaking work of scientists at the Naval Dental Research
    Institute (NDRI). NDRI researchers have developed a technology for
    testing oral fluids for immunogenic proteins, and believe they will be
    able to develop a rapid, inexpensive, screening test for exposure to
    tuberculosis. Salivary diagnostics present tremendous readiness
    possibilities for the military. This technology holds potential for
    rapid detection of antibodies signaling exposure to diseases and
    environmental toxins.
        Last October, Captain Stephen Hoffman, Medical Corps received the
    Robert Dexter Conrad Award, the Navy's highest honor for scientific
    achievement, for his contributions to malaria vaccine research. As
    Director of the Malaria Program at the Naval Medical Research Center,
    Hoffman led the effort to sequence the first malaria chromosome
    (Plasmodium falciparum), thereby elucidating numerous new targets for
    vaccine and drug development. His work has paved the way for a future
    multi-gene DNA vaccine against malaria and other infectious diseases as
    well as biological threats. Hoffman's other accomplishments involve
    creating the world's leading malaria vaccine program, internationally
    acclaimed in the pursuit of one of nature's most challenging biological
    problems.
        One last aspect of best business practices that I would like to
    touch on is exploiting Information Technology and Information
    Management. I have already mentioned that information management and
    data integrity are vital to improving our business practices. Navy
    Medicine is also involved in some very innovative ways of utilizing
    Information Technology to assist us in meeting our mission
    requirements:
        As you are aware, telemedicine has been instrumental in improving
    medical care fleet wide by increasing patient/provider access to
    specialized medical facilities and services across time and distance.
    Shipboard use of this technology has seen a significant decrease in
    medevacs which is not only keeping our sailors on the job, but
    according to the Center for Naval Analyses, realizes a cost savings of
    $4,400 per avoided medevac. Telemedicine is also being utilized by U.S.
    Forces in locations such as Bosnia, Macedonia, Haiti, and Southwest
    Asia and has proven useful during exercises involving both land and
    naval forces. Current telemedicine projects include teledermatology,
    rapid transmission and receipt of medical data, as well as expanded
    efforts in teledentistry, teleradiology, and home health care. The
    technologies and lessons learned from these projects are the foundation
    for formulating convergent strategies for research, education, and
    clinical practice. These strategies will ultimately change the way DOD
    uses information and technology to provide health care.
        The use of Smart Card technology is also improving on the way Navy
    Medicine does business. About the size of a credit card, the Smart Card
    contains an embedded integrated circuit which contains both memory
    storage capability and a central processing unit. The cards enable
    quick expedient tracking and recording of immunizations and episodes of
    care, which saves time, improves access to health care information by
    authorized providers, and reduces redundant data entry and
    transcription errors. Although not fully implemented, the program is a
    glimpse into the future and has seen success with the recruit
    population at Great Lakes, Illinois. In the future the card will
    contain not only medical information, but a Sailor's service record as
    well.
    Conclusion
        With a strong viable strategic plan in place, Navy Medicine looks
    to the future with excitement. As we work together to reach our
    corporate objectives in our goal areas of force health protection, the
    health benefit, people, and best business practices, we are confident
    that the entire Navy and Marine Corps team will reap the benefits.
    However, a major distraction to our initiatives are budget challenges
    and unexpected reprogramming events. A stable fiscal environment is
    essential for planning to be successful. Operating on a mere
    sustainable budget also limits the amount of reengineering we can
    undertake and reduces investments in efforts that have long term cost
    savings and benefits. Our ideas are promising, our people are bright,
    talented and motivated. I am privileged to be a part of such a vibrant
    and evolving organization during this historical time.

        Senator Stevens. Yes, sir. Thank you.
        General, nice to have you on board.
    STATEMENT OF LT. GEN. PAUL K. CARLTON, JR., AIR FORCE
                SURGEON GENERAL
        General Carlton. Mr. Chairman, Senator Inouye, members of
    the committee, thank you for this opportunity to address the
    important issues that are facing the Air Force Medical Service.
        The times have never been more exciting for the Air Force
    Medical Service. We divide our thoughts into our privilege and
    our pleasure. Our privilege is to serve this great country in
    the arena that we call readiness. Our pleasure is to take care
    of the great American patriots who have earned the right to our
    health care.
        Initiatives under our privilege are readiness in support of
    the Expeditionary Aerospace Force. We have made great strides
    in ensuring that our medics have state-of-the-art training and
    readiness capabilities. This is vital as we prepare for our
    tripartite missions of war-winning, disaster relief, and
    support for humanitarian operations. We have an international
    training program for disaster response that allows us to help
    other countries around the world deal with the challenges of
    disasters. It premiered in United States Southern Command
    (SOUTHCOM), and is now headed for other theaters.
        We are fielding new expeditionary medical support
    platforms. They will replace the air transportable hospital
    with an even more flexible and modular arrangement. We have
    reduced the lift profile as much as 94 percent, and we can now
    provide theater commanders medical arrangements within hours
    instead of weeks. We are working on weapons of mass destruction
    issues. Project Yorktown, complete with knowledge couplers, is
    an integrated suite of early warning and identification
    capabilities for biological and chemical attack, and it has
    been fielded and is operational. Our National Guard partners
    are building civilian exercise scenarios in Texas and in
    Missouri that are templates for the future, and exciting for us
    to participate in.
        In our pleasure, peacetime health care, we remain committed
    to optimizing our peacetime health care system. Our product is
    now health instead of medicine or surgery or dentistry. We have
    established metrics to assure that our game plan is working. We
    have just finished a comprehensive program called primary care
    optimization, which teaches our primary care providers around
    the world leading edge techniques in primary care and
    population-based health care.
        These methods have been successfully utilized in the United
    States Air Forces in Europe for the last 2 years. We are
    optimizing Veterans Affairs (VA) relationships with three fully
    integrated hospitals in Alaska, Nevada, New Mexico, and one in
    transition in California, win-win in every case.
        Our demonstration programs to keep the promise to our over-
    65's are popular with our enrollees, but we need to carefully
    examine the lessons learned. The anticipated revenue streams
    have simply been dry.
        The bedrock of our quality care for all beneficiaries is
    population-based health care. Our most notable achievement
    among the many population-based health care efforts has been
    the suicide prevention program. This has dramatically reduced
    the number of suicides in the Air Force, because it involves
    the entire community in the process. It is the national
    benchmark recognized by the White House and the national media.
    It is being used as a model by the Department of Health and
    Human Services.
        In conclusion, the Air Force is committed to optimizing our
    entire system with an unrelenting focus on our many different
    customers in both our privilege and our pleasure. Thank you for
    your tremendous support in helping us achieve that commitment.
        Thank you, sir.
        [The statement follows:]
              Prepared Statement of Lt. Gen. Paul K. Carlton, Jr.
        Mr. Chairman and members of the committee, thank you for this
    opportunity to address the goals and accomplishments of the Air Force
    Medical Service (AFMS). I consider it a privilege to appear before this
    committee who has worked so hard on our behalf.
        As I begin my tenure as the Air Force Surgeon General, I am honored
    to lead the finest young health care professionals in the world into
    the 21st Century. The Air Force Medical Service (AFMS) will continue to
    execute our successful ``Parthenon'' strategy, centered on medical
    readiness, employing TRICARE, tailoring the force, building healthy
    communities, and customer satisfaction. However, we will expand the
    horizons of the strategy to focus on population-based health care and
    global support of the Expeditionary Aerospace Force.
    Reengineering Medical Readiness
        The AFMS is well positioned to support our new Expeditionary
    Aerospace Force doctrine. We must be able to respond to major theater
    wars with a power projection force, while also being able to support
    small-scale contingency operations. Our nation's commitment to global
    engagement has meant unprecedented peacekeeping, humanitarian and civic
    action deployments since the Persian Gulf War. The AFMS has made
    significant strides in ensuring the 21st Century aerospace warrior will
    have new, modular, and flexible medical readiness capabilities to
    support these operations.
        The AFMS operational support capability must address three major
    functional areas: war-winning, disaster relief, and support for
    humanitarian operations. Each of these functional areas is critical to
    supporting our National Security Strategy. I have directed my staff to
    optimize operational health support to provide this full spectrum
    support. We are working with the Air National Guard to optimize and
    enable their forces to provide military support to civil authorities. I
    have also directed my staff, in conjunction with regional CINCs, DOD,
    and the Department of State, to develop a comprehensive AFMS medical
    theater engagement support plan. Our reengineering efforts will be
    vital to achieving these operational goals.
        By the end of this fiscal year, we will have replaced our
    contingency hospitals with Air Force Theater Hospitals (AFTHs), which
    provide a modular, incrementally deployable capability to provide
    essential care. They use existing Air Transportable Hospital (ATH) and
    specialty teams, along with pre-positioned (buildings) and deployable
    (tents) AFTHs. Future force commanders will dial up or dial down Air
    Force clinical and technical capability, easily permitting the
    deployment of hospitals from 10- to 114-bed capability. The Form, Fit,
    and Function Follow-on Test conducted last February at Nellis AFB
    proved that our concepts of operations, manpower force listings and
    allowance standards will meet operational requirements.
        Also in fiscal year 2000, we will begin fielding our new
    Expeditionary Medical Support/Air Force Theater Hospital (EMEDS/AFTH),
    which will replace the ATH. We will have a very clinically capable,
    light, flexible, modular package that leverages man-portable assets
    such as the Mobile Field Surgical Team, Critical Care Air Transport
    Team, Squadron Medical Element and our specialty sets. The increments
    are EMEDS Basic, EMEDS + 10-bed AFTH, and EMEDS + 25-bed AFTH. The
    beauty of this new capability is that we can append specialty sets and
    wards at the 25-bed level, thereby sustaining up to the 114-bed AFTH,
    should we require this capability. More importantly, we have reduced
    the lift profile three-fold (from 55 to an estimated 18 pallets for 25-
    bed AFTHs). This new field hospital package can provide the theater
    commander exactly the level and mix of medical services he or she
    requires in as little as 12 hours post-arrival for the basic increment.
        To support EMEDS/AFTH, we are planning field training using
    clinical, technical and readiness field experts to develop bold and
    decisive medical leadership to respond to the rigors of Air
    Expeditionary Forces (AEF) deployments. Beginning in February, and
    ramping up over two years, training will include all team members and
    will be prioritized based on the AEF rotation schedule.
        The AFMS has answered the call of the CINCs in one other vital
    area. The Air Force now has a well proven capability to care and manage
    the critical care patient in the Aeromedical Evacuation (AE) System.
    Through the use of Critical Care Air Transport Teams--or CCATTs--we
    augment AE crews to evacuate newly stabilized patients to CONUS for
    definitive care. We have trained more than 151 CCATTs and have 51
    equipment sets on hand, with plans to field 25 sets in fiscal year
    2000.
        As part of Mirror Force, the AFMS initiative to bring together
    active duty, Guard and Reserve components into a seamless force, Air
    Education and Training Command developed the Aeromedical Evacuation
    Contingency Operations Course to provide critical training for Total
    Force ground-based AE units. This course became operational in May
    1999. In addition, we developed the Top Sustainment Training to Advance
    Readiness (TopSTAR) course to regionalize refresher training for all
    components. The first TopSTAR site became operational at the 59th
    Medical Wing, Lackland AFB, Texas, in February 1998.
        Force health protection continues to be on the forefront of our
    efforts. Though far from completion, we are accomplishing a great deal
    in response to Weapons of Mass Destruction (WMD) requirements. The Air
    Force Medical NBC Defense program achievements over the past year have
    been in identifying requirements, codifying doctrine, approving
    equipment, and executing training. To support requirements, we added
    medical-related items as high leverage in the Air Force
    Counterproliferation Roadmap. To support doctrine, we participated on
    the team that produced the first-ever joint publication on the care and
    treatment of biological warfare casualties, and this team is now
    working on a similar publication on medical operations in an NBC
    environment, to be completed this year. We also helped to develop a
    ``Response Guide for Commanders and First Responders,'' which addresses
    biological, incendiary, chemical, and explosives threats on Air Force
    installations.
        The rapidly expanding potential for NBC warfare makes necessary the
    capability to continue medical operations even in toxic environments.
    The objective of the Chemically Hardened Air Transportable Hospital
    (CHATH) program is to provide the equipment necessary for such a
    capability. Our medics at Air Combat Command worked in the true spirit
    of ``jointness'' with the Army on this system, and both Army and Air
    Force requirements are incorporated in the Joint Operational
    Requirements Document for a CHATH/Chemically Protected Deployable
    Medical System. The CHATH completed Initial Operational Test and
    Evaluation in December 1997. The Milestone III production decision was
    achieved in March 1998, and initial operational capability was declared
    in October 1998. Fielding should be completed in September. The CHATH
    represents the culmination of an approximate 10-year joint effort to
    provide collective protection capability for patients treated in the
    field in a chemical warfare environment.
        To support the warfighters, we recently finalized the Biological
    Augmentation Team contingency operations (CONOPs), which provides
    diagnostic identification capability for naturally occurring or induced
    biologic agents at a deployed location. With this new team, we can now
    analyze samples and interpret results using complementary
    microbiological techniques, primarily a nucleic acid-based testing
    platform. The team deploys based on threat assessments and will usually
    deploy with the EMEDS/AFTH. We will field several teams in this year.
        Further, Air Combat Command's development of ``Project Yorktown''
    will change the way we respond to terrorism forever. Project Yorktown
    was developed as an integrated suite of early warning and
    identification capabilities for biological and chemical attack. It is
    composed of a clinical encounter system that collects standardized
    medical signs, symptoms, diagnoses and procedures. These are
    encapsulated and sent immediately to a location in the United States
    where they are electronically analyzed for abnormalities. If something
    suspicious is indicated, laboratory identification systems pre-
    positioned at high threat areas are utilized to determine if a
    biological or chemical agent was present that may have been covertly
    introduced to members at the location through food or environmental
    vectors. Should an incident be confirmed, Yorktown is linked with a
    sophisticated network of command and control agencies to help mitigate
    the effects.
        Our medics in Europe have also aggressively prepared for WMD. To
    meet in-place force health protection requirements, United States Air
    Forces, Europe (USAFE), medical personnel developed a new in-place
    patient decontamination team for each of their five bases. This team is
    a non-deployable organic medical asset for patient decon at USAFE
    medical treatment facilities (MTFs). The approved CONOPs includes
    capability to decontaminate patients outside the MTF. Fielding will be
    completed this fiscal year.
        Finally, our WMD training focus has been through distance learning.
    During this past year, 8,000 Air Force medics, including active duty,
    Guard and Reserve, participated in the NBC Satellite Broadcast
    Training.
        Despite these serious efforts to protect the force, we are not yet
    fully prepared to counter WMD, specifically chemical and biological
    weapons, on the battlefield. In all likelihood, our foes will not meet
    us force on force--asymmetrical attacks, including those on the
    homeland, represent huge challenges in which the AFMS can be expected
    to play a crucial role. With the support of our sister services, DOD
    and our leadership at all levels, the AFMS is committed to helping our
    nation prepare for this very real and lethal threat.
    Employing TRICARE
        Another way we protect the troops is by reassuring them that their
    families are well cared for while they are deployed. TRICARE has been
    fully operational for more than a year now, and we have come a long way
    toward resolving problematic issues, such as improving access to care
    and payment of claims. We recognize that access continues to be a
    problem, and that, once in the door, our patients are, for the most
    part, highly satisfied customers.
        We are committed to achieving five metrics across the AFMS that
    will ensure improved patient access to primary care: (1) measured
    progress toward maximum allowable enrollment; (2) 1,500 patients
    enrolled per primary care manager (PCM); (3) 25 patients per day per
    provider (4) 3.5/1 support staff/provider ratio; and (5) two exam rooms
    per provider. We are closely monitoring how our facilities are meeting
    these metrics and holding them accountable. Our ultimate goals are that
    every patient will know his PCM by name and enjoy guaranteed access
    standards for primary care.
        Certainly, a key factor in the success of these five metrics is
    educating our PCMs to understand, accept, and deliver the expectations
    of leading edge primary care and population-based health care. We are
    developing an aggressive, exciting education program to optimize AFMS
    primary care. The program's objectives are to prepare our primary care
    teams to deliver the health care benefit effectively and efficiently;
    develop programs that execute the population health improvement policy;
    and develop criteria that will assist in the effective distribution of
    resources. We are implementing the ``Quickstart'' phase of the program
    in early 2000, with follow-on sustainment activities through the next
    year. In the long term, we are seeking a culture change through a
    primary care course and other formal education programs.
        One of our greatest remaining TRICARE challenges across the AFMS is
    to provide care to those who are not being fully served. For example,
    we are on the threshold of programs that will provide TRICARE to our
    geographically separated units, and we're working on solutions for
    their family members as well.
        We are also trying very hard to fulfill the promise made to our
    older retirees that they would have health care for life. I am happy to
    say that our participation in the TRICARE Senior Prime demonstrations
    for the over-65 retiree has been well received. However, the unique
    needs of this population place some very stringent demands on the
    Military Health System, such as benefits mandated by Medicare that
    differ from those provided by DOD. And to put it simply, our older
    beneficiaries require more health care. We will continue to address
    those issues.
        The good news is that utilization rates and customer satisfaction
    are high. And with access to the National Mail Order Pharmacy, TRICARE
    Senior Prime enrollees have better prescription coverage than ever
    before. This year, we will embark on the Federal Employees Health
    Benefits Program (FEHBP)-65 demonstrations, giving us insight into
    another possible means of meeting our beneficiaries' health care needs.
        Another way we are working to create viable alternatives for our
    beneficiaries is through sharing arrangements with the Department of
    Veterans Affairs (DVA). Today we have more than 100 agreements with the
    DVA, sharing more than 270 services. Our new $164 million joint venture
    facility in Alaska at Elmendorf AFB opened in May 1999. The DVA staffs
    and operates the intensive care unit, saving the Air Force $1.4 million
    annually in referrals to downtown facilities. The Air Force staffs and
    operates the multi-service medical/surgical unit. Both organizations
    staff the emergency room, internal medicine, and surgery sections. Our
    other two joint ventures continue successfully at Albuquerque, New
    Mexico, and Las Vegas, Nevada.
        We're also pursuing numerous joint initiatives with the DVA to
    improve mutual efficiencies. For example,
      --Clinical guidelines improving the standards of care are being
            shared across the Services and DVA, enhancing continuity and
            outcomes
      --Discharge physicals are now ``one-stop shopping'' through one
            organization
      --One computerized patient record for both organizations will be beta
            tested at the new joint venture facility in Alaska this spring,
            allowing one computerized record that could be used during and
            after active duty service
      --DVA representatives are participating on the DOD pharmacy redesign
            working group to establish standardization between agencies
            where feasible
      --Combined purchasing of pharmaceuticals is saving $57 million for
            both DOD and DVA.
        The AFMS is also seeking to improve health care for our
    beneficiaries by better educating our own. As a large employer
    providing health care services for their employees, the Air Force has
    stressed the involvement of line leadership. At our Chief of Staff's
    urging, we have developed a program we call ``Command Champion'' that
    takes TRICARE to the unit commanders, providing tools to help them
    ensure their people are receiving the best possible care. Personal
    involvement by senior staff at our MTFs and Major Commands offers clear
    guidance on how TRICARE works at the local level and where assistance
    is available. I am delighted with the returns on this effort! Senior
    MTF representatives met initially with 2,400 commanders; made 1,258
    follow-up visits; and hosted more than 1,600 commanders at a
    culminating Hot Wash. Program success is perhaps best summarized by the
    60th Medical Group, who said, ``Virtually 100 percent of the commanders
    expressed appreciation for the caring way in which the medical group
    presented Operation Command Champion and the outreach provided to
    them.'' One commander stated, ``The growing pains are over; we're going
    the right way and getting a good news story.'' Further, we are pleased
    that the Army and Navy have adopted our program in educating their own
    leadership. Our proposed sustainment program is anticipated to begin in
    May.
        We are also encouraged by the efforts of the Defense Medical
    Oversight Committee (DMOC), which has been formed to ensure optimum
    Service participation in the military health care agenda. This board
    consists of the Under Secretary of Defense (Personnel & Readiness),
    Service undersecretaries, Service vice chiefs, and the Assistant
    Secretary of Defense (Health Affairs) as voting members. The Service
    surgeons general participate, but are non-voting members. The main
    purpose of this board is to define the medical benefits and establish
    budget priorities.
    Tailoring the Force
        The focal point of our system remains the military MTF. We're
    stressing that the care provided in our MTFs be the best available and
    the most efficiently provided. Toward that end, we are emphasizing
    performance and optimization of our system. We are sizing our MTF
    staffs to specifically meet the needs of the local population,
    including our over-65 beneficiaries. I have asked the MAJCOM surgeons
    to meet specific staffing levels and arrangements to optimize the
    health care delivery process.
        Our vision of population-based health care management is driving
    the methods used to plan for and allocate resources to our MTFs, and is
    therefore vital to our Tailoring the Force pillar. The primary
    objective of Tailoring the Force is to develop a long-term resourcing
    process that will optimize overall force size, increase MTF
    productivity and effectively manage patient care through a focus on
    health awareness and prevention. We are developing and implementing
    various tools to properly size and resource our MTFs to meet mission
    requirements and population health care needs.
        One of these tools, Stratified Enrollment-Based Capitation (EBC),
    allocates funds to each MTF based on the direct health care cost of an
    enrolled population. We are using EBC as a metric for MTF commanders to
    build an awareness of all resources used in providing service to
    TRICARE Prime enrollees. Ultimately, this data will ensure future MTF
    commanders have the data to know who their TRICARE Prime patients are
    and the cost of caring for these patients.
        Another tool is the Enrollment-Based Reengineering Model (EBRM).
    The traditional method of using historical workload of an unenrolled
    population to determine staffing requirements is outmoded. The EBRM
    determines manpower requirements for a managed care delivery system
    with an enrolled population. Consistent with changes in the civilian
    sector's delivery of health care, the model shows more primary care
    physicians are required than specialists. It also suggests the
    ``ideal'' provider/support staff ratios. EBRM is akin to what our line
    counterparts call ``Primary Aircraft Authorized''--PAA--meaning there
    is consistency in the numbers and specialties of personnel manning
    comparable units. Unless there is an extenuating requirement, Air Force
    MTFs with similar patient populations should have the same manning
    profile.
        The ultimate outcome of a system reengineered in these ways is a
    system in which the MTF's enrolled population drives money and
    manpower. As noted previously, we have put metrics into place that
    measure our progress toward this goal, and we're reviewing our progress
    monthly, base by base. The majority of health services will be
    delivered through prevention programs and well supported primary care
    managers. SEBC and EBRM encourage MTF commanders to enroll their
    beneficiaries and retain them as satisfied customers while emphasizing
    preventive and primary care as the preferred delivery setting.
    Building Healthy Communities
        The prevention paradigm of our fourth pillar, Building Healthy
    Communities, is the cornerstone of the population-based health care
    management system. Previously we concentrated on individual prevention
    initiatives through clinical intervention, but now we are using the
    community-approach, population-based initiatives. The community
    approach has already been tested and proven by the Air Force. For
    example, in response to a community problem, suicide, we established an
    Integrated Product Team (IPT), comprised of members from various
    functional specialties--such as chaplains, security police, family
    advocacy, legal services, and mental health--and chaired by the AFMS.
    As a result of the efforts of the IPT, suicide rates have declined from
    16 per 100,000 to 5.6 per 100,000 within the Air Force during the past
    five years. The suicide prevention program has been applauded as a
    benchmark for both the public and private sector.
        Following this success, the IPT concept was expanded to our
    Integrated Delivery System (IDS), which links the synergy among base
    agencies to promote help-seeking behavior and integrate prevention
    programs. The IDS addresses risk factors through a collaborative,
    integrated, customer-focused prevention effort designed to offer
    programs such as stress and anger management, personal financial
    management, and effective parenting. These programs support readiness
    by reducing risk factors and building the performance-enhancing life
    skills of our Air Force community members.
        The concepts of a healthy community involve more than just medical
    interventions. They include local environmental quality and hazards;
    quality of housing, education and transportation; spiritual, cultural
    and recreational opportunities; social support services; diversity and
    stability of employment opportunities; and effective local government.
    Impacting these elements requires long-term, dedicated planning and
    cooperation between local Air Force commanders and civilian community
    leaders.
        Three major areas we have initially targeted at the community level
    are decreases in tobacco use, alcohol abuse, and injuries. The Under
    Secretary of Defense for Personnel and Readiness chartered the
    Prevention, Safety and Health Promotion Council (PSHPC), with the Air
    Force as executive agent, to address these and other areas. We have now
    developed additional committees to focus on Putting Prevention Into
    Practice, which provides tools and training to providers to ensure they
    use each encounter with a patient as an opportunity for preventive
    interventions; Joint Preventive Medicine Policy Group; self-reporting
    tools, such as the Health Enrollment Assessment Review; and Sexually
    Transmitted Disease Prevention. These efforts are critical, when we
    consider that more than 70 percent of preventable deaths are due to
    life-style factors.
        We are also stressing prevention at the individual level--readiness
    begins with each individual, each human weapons system. Our tool to
    assure individual readiness for any contingency is the Preventive
    Health Assessment (PHA). The PHA changes the way the Air Force performs
    periodic physical examinations from a system based on intervention to a
    system that stresses prevention. The goal is to identify risk factors
    from a person's life-style--such as whether a person smokes, how
    frequently he exercises, and his diet--as well as his genetic
    background, individual health history and occupational exposure. Then,
    through proper prevention practices, we assist the member to moderate
    those risks.
        PHA data, along with data on medically related lost duty days,
    immunizations status, dental readiness and fitness status, are
    available to the unit commander to provide vital information about the
    readiness of his or her unit. Our line commanders have reported high
    satisfaction with the PHA, and were especially pleased when their units
    were prepared to go to the field for deployment exercises without any
    medical discrepancies.
        To support our goals in population health, the Air Force Medical
    Operations Agency stood up our Population Health Support Office (PHSO)
    in May 1999. The PHSO will focus on three primary activities. First,
    they will provide a centralized help desk and resource center,
    accessible through a toll-free number (1-800-298-0230), e-mail (phso-
    helpdesk@brooks.af.mil), and a web site (www.phso.brooks.af.mil).
    Second, they will offer program management assistance for our various
    prevention programs, such as the HEAR, the PHA, and Put Prevention Into
    Practice. They will also be available to assist in areas such as
    condition management, clinical reengineering, patient education, and
    metrics. Third, the PHSO will be responsible for health data
    identification, analysis and reporting. We are excited about the PHSO
    and all our efforts to make population-based health care a reality in
    the Air Force.
    Customer Satisfaction
        These are all examples of how we are striving to meet our customers
    needs, and thus achieve Customer Satisfaction, the capstone of our
    Parthenon strategy. It all comes down to satisfying our customers.
    Whether our customers are active duty, family members or retirees, our
    AFMS stands ready to provide world-class deployed and home-station
    medical support.
        We recognize that, as the AFMS evolves into a worldwide competitive
    health plan, it is essential that all AFMS personnel adopt a total
    customer service philosophy that transcends our current business
    practices. To do this, we have implemented a strategy to create a
    climate and culture where customer focus and service permeates the
    AFMS, leading to customer satisfaction and loyalty. Our competitors
    know that customer satisfaction is the key to retaining and recapturing
    patients--we know it too. Our customer satisfaction task force, known
    as the ``Skunkworks,'' has completed its first two phases of
    development and deployment, and is now well on its way to executing the
    third phase, sustainment and partnering.
        In 1999, we completed five customer satisfaction model site visits,
    conducted eight deployment roll-outs for all AFMS organizations and
    higher headquarters, and began the sustainment/partnering phase for
    AFMS organizations in collaboration with the MAJCOMs through five
    sustainment summit meetings. We are also working to actively involve
    our reserve components in the customer satisfaction strategy as a part
    of our Mirror Force endeavors to achieve a seamless, ready Air Force
    health service.
        This year, we will continue ongoing sustainment and partnering
    endeavors with the Major Commands, our AFMS organizations and the
    reserve components. In addition, we will be inserting customer
    satisfaction priorities in the TRICARE 3.0 contracts to help ensure
    contractors are held to the same standard as our AFMS personnel. To
    monitor and measure our sustainment success, we will use ``report
    card'' data and the AFMS customer satisfaction metrics that are part of
    the AFMS Performance Measurement Tool (PMT).
        Quality care continues to be our hallmark. With all of our
    facilities surveyed by the Joint Commission on Accreditation of
    Healthcare Organizations (JCAHO), the Air Force continues to meet or
    exceed civilian scores. The average Air Force clinic accreditation
    score has risen from 97.0 percent in 1998 to 97.4 in 1999, with an
    impressive 73 percent accredited with Commendation.
        Many of our facilities continue to participate in the Maryland
    Hospital Association (MHA) Quality Indicator Project. Air Force
    performance has been commendable and is consistently better than the
    overall MHA national average for several indicators. Our total cesarean
    section rate has been approximately 20 percent less than the national
    rate. Air Force rates for returns to the Operating Room and Intensive
    Care Unit are continually less than the national rate. Also, our
    mortality rates for overall inpatient, as well as neonates and
    perioperative patients, are far below the national norm. These rates
    indicate a sustained quality of care for these areas in AF inpatient
    facilities.
        Air Force personnel are also participating in the Quality
    Interagency Coordination Task Force's Patient Safety Working Group to
    improve health care through the prevention of medical errors and
    enhancement of patient safety. The Air Force is promoting its Medical
    Incident Investigation review process where an external professional
    investigation team reviews medical incidents for causes and identified
    lessons learned for prevention of future similar incidents. The lessons
    learned are then widely disseminated throughout the medical community
    as NOTAMs (notes to airmen). The Air Force is also using the Composite
    Health Care System (CHCS) electronic order entry of prescriptions to
    eliminate illegibility' as a cause of medication errors. In addition,
    we are piloting pharmacy robotic technology with excellent initial
    reports on decreasing dispensing errors. These are all ways we are
    striving to put our patients first.
    Conclusion
        The ``Parthenon'' has been and continues to be an effective
    strategy for moving the AFMS to a population-based health care system.
    Our outstanding PMT metrics will continue to monitor successful
    implementation of necessary changes and ensure we satisfy our customers
    to the best of our ability. The ultimate goal of our strategy is a
    healthy, fit fighting force that can effectively support the greatest
    Expeditionary Aerospace Force in the world.

        Senator Stevens. General, thank you very much.
        General, I hope you will be around long enough to go up and
    participate in the dedication of the new Bassett Memorial
    Hospital at Fort Wainwright. I am really indebted to you for
    your consideration of that proposal. It will be a massive new
    facility for interior Alaska, where it has an enormous retired
    military presence as well as active duty presence. Now that the
    national missile defense system appears to be headed for
    Alaska, it was far-sighted to put it there, so I hope you can
    join us.
        General Blanck. Thank you.
        Senator Stevens. I have just one general question for all
    of you for my time. I will submit the rest of them, but I
    understand that our staffs have met with you and your staffs
    concerning the exceedingly tight budget. We have unexpected
    bills, and we have reduced budget for real property
    maintenance. That is not good in hospitals, and you have
    reduced travel, and it looks to me like you have reduced the
    budget for the information technologies vital to reducing
    future costs.
        So I should tell you, right after I became a Senator, as a
    new Senator I took eight Senators to Alaska to show them the
    hospitals in Alaska. When we went into Bethel we found an
    operating room with mold on the walls. We found that because of
    the fire codes they had in each patient's rooms back doors to
    get out of the old buildings, and a series of women had been
    raped in their hospital beds. You know, that sort of thing gets
    into your brain and into your soul, and I think it is essential
    that you really look at the facilities and make sure they are
    modernized to meet tomorrow's needs, not just today's, so you
    have done it in Bassett, and I thank you for that.
        My questions are these. For each of you, just to go across
    the table, if you will, what is your budget shortfall for this
    year, 2000? Does your direct care system need supplemental
    funds now, and what is the 2001 budget submitted here, as far
    as your requirements are concerned?
        If you want to do some of these things for the record, be
    my guest, but I think people here ought to know from you, what
    is the situation as far as these budgets are concerned, 2000
    and 2001, and what is that wall that is out there in 2002,
    okay? General Blanck.
        General Blanck. We have additional moneys that have been
    provided us based on the analysis you heard Admiral Pilling
    describe for 2000 and 2001. That gave us the money necessary to
    do the day-to-day health care with the provision that we are
    suppressed as far as repair and maintenance, and I worry about
    that a great deal, because we have been suppressed on and off
    for the past several years, and even at the 2.4 percent funding
    that we hope to get to next year, it is inadequate, in my view,
    to deal with the kinds of issues that you described.
        We are suppressing travel and information management/
    information technology (IMIT) locally this year, which is a
    problem. It is one of the reasons that we have not been able to
    do all of the telemedicine that we have talked about nearly as
    much as we want to, teleradiology, telepathology.
        Senator Stevens. What has that got to do with travel?
        General Blanck. That is the IMIT suppression as opposed to
    the travel suppression. I beg your pardon.
        We also, of course, are waiting for the reprogramming
    action to give us some of the funds. We do not have them in
    hand yet, though I believe that we will get them, so that is
    yet another qualifier.
        Finally, we have a serious problem in my estimation with
    TRICARE Senior Prime, in that--and I believe General Carlton
    mentioned it--the anticipated funding stream has not
    materialized as we deal with what our level of effort is in
    what the reimbursement rate is and try to get the data to
    Health and Human Services in such a way that we can agree on
    what that reimbursement should be, so I am short, I believe my
    colleagues are short in that arena.
        Again, we have been plussed-up for pharmaceuticals. We have
    been plussed-up in other areas. We have the money to do the day
    to day. We are short in the areas that I described.
        Senator Stevens. Okay. I am going to yield to the others,
    and then I will come back to you.
        On the supplemental, we will take care of that amount that
    you are talking about, I think, on reprogramming. I would urge
    you not to pursue that supplement, that reprogram right now,
    and give us a chance to put the money up. Otherwise, if you
    reprogram it now, then we will have to figure out where we put
    the money. We know where that goes, and that is $257 million I
    think is it not? Yes.
        General Blanck. Excellent. Thank you.
        Senator Stevens. Thank you. Senator Inouye, go ahead, and I
    will come back.
        Senator Inouye. I would like to join you, Mr. Chairman, in
    thanking General Blanck for all the years of service to our
    Nation, and welcome to General Carlton.
        General Carlton. Thank you, sir.
        Senator Inouye. And Admiral Nelson, you will be the senior
    one next time.
        For the past 55 years, Mr. Chairman, I have been a
    beneficiary of the military medical system and, if I may,
    through these gentlemen I would like to thank all those who
    have been helpful and generous to me. I thank you very much.
        Mr. Chairman, I have many questions that I would like to
    submit, and they all relate to quality of life. They relate to
    the impact the system will have on readiness, retention, and
    also some of the other concerns on the programs.
        I am glad that General Carlton brought up the Air Force's
    involvement in terrorism. Whenever we pick up the newspaper or
    listen to radio or television, there is always some report on
    terrorism today. Manholes explode, and we call them in to check
    to see if this is a terrorist act. We have called upon the
    National Guard to be the point agency to set up a system to
    counter terrorism and to help the populace of the United
    States.
        I am certain that the medical community will be called. I
    would like to know what, if anything they are doing, because I
    have the sense that if something should happen tomorrow, we are
    just not ready.
        General.
        General Blanck. We have all participated in a seminar at
    the American Medical Association, and we will participate in a
    weapons of mass destruction medical response conference
    cosponsored by the Department of Defense and the American
    Medical Association with other health care organizations next
    month here in Washington. We are all heavily involved in
    working through our systems with not only other parts of the
    Government but with our local communities.
        And I would make a distinction between the first responders
    for chemical, which would be police and fire, with whom we work
    on recognition and decontamination, and bioterrorism, which
    generally there would be no warning for early, because we have
    no real time detectors, and so we have to prepare the emergency
    rooms, the medical communities, the nursing personnel, the
    doctors, the technicians about this threat, and thus the
    conference, the working through these other organizations.
        Admiral Nelson. I would concur with that. We are working,
    along with our research folks, on much faster detection, and
    actually have ability to detect within 15 minutes or less about
    15 different agents now, so we are working these, but I think
    the conference in April will really bring more clarity to our
    relationship with the communities in the continental United
    States, within the United States, not just the continental, but
    I think we are very much tuned to our responsibilities in
    supporting the private sector in this.
        Senator Inouye. General.
        General Carlton. Yes, sir. I spent the weekend with the
    National Guard in Missouri, specifically addressing the
    question, what have we done, show it to me, and I am happy to
    tell you that the National Guard in Missouri has done a superb
    job. They combine Army and Air Force National Guard. They have
    teams on the ground. They are going actively to the first
    responders. They are actively selling that capability. Senator
    Inouye, I would suggest that that was a superb choice, and a
    superb investment.
        From the other parts of the military we are pressing
    aggressively to form partnerships with the American Medical
    Association (AMA) and the Association of Military Surgeons of
    the United States (AMSUS) to sponsor education programs,
    seminars. As General Blanck discussed with you, we have the
    equivalency that we did for heart called advanced cardiac life
    support. We now have that course for weapons of mass
    destruction. Our goal is to give that opportunity to every
    medical school curriculum in the country.
        We are training with the Centers for Disease Control (CDC)
    all of our Project Yorktown activities where we have a
    sophisticated net out in Southwest Asia, making sure that our
    people are protected. We put the knowledge couplers in. We can,
    as we recently did, stop an outbreak of a dire, real illness,
    and made it work very, very well, aborted that in a matter of
    an hour instead of a traditional number of days. We are getting
    back to the Centers for Disease Control as quickly as we can.
    We are literally training together, because this is a clear and
    present danger, and getting that word out is extremely
    important.
        I am happy to tell you that, after looking at that, I am
    sleeping better at night knowing that our Guard colleagues are
    doing a superb job.
        Senator Inouye. So you believe that we are moving in the
    right path?
        General Carlton. Yes, sir. We are moving in the right
    direction, and we are focused on the first responders. We are
    doing this with our fire protection agencies, with our
    emergency medical response, with our police academies. We have
    wonderful Army training, the programs that are focusing on
    these first responders, so we are making leaps that are not
    baby steps. They are leaps into the future.
        General Blanck. If I may even add to that, Senator, we now
    do twice-yearly distance learning courses for medical response
    to chemical and biological weapons that has 60,000, 70,000
    registrants, goes worldwide, and the estimation is that we may
    have as many as 2 million viewers throughout many nations.
        In addition to the United States we also, by the way, have
    a group from Japan here as we speak at the Armed Forces
    Radiobiologic Research Institute training on radiation, the
    effects of radiation terrorism, how to respond, and of course
    to accidents such as they recently suffered. We are doing
    exchanges with them at Fort Dietrich as well.
        Admiral Nelson. One of the things we have done across DOD
    is take a look, facility by facility, at our capability, and
    also at our interagency agreements. One of the things that we,
    the Navy, has, is forward-deployed preventive medicine units
    that are being equipped to look particularly at biological
    agents. In fact, one of our units in Hawaii assisted the
    Federal Bureau of Investigation (FBI) with a particular issue
    that they had just a few months ago.
        Senator Inouye. Gentlemen, I thank you very much. Mr.
    Chairman.
        Senator Stevens. Thank you. Senator.
        Senator Durbin. Thank you, Mr. Chairman. General Blanck,
    you raised a point here in your testimony that I would like
    each of the members of this panel to respond to. It relates to
    the recruiting and retention of doctors. You noted that from
    late 1995 to early 1998 the Army Reserve lost 34.2 percent of
    physicians assigned to units sent to the Balkans. Two
    physicians departed for every new one recruited. In the next
    panel the ladies who represent the nursing profession are going
    to tell us a similar story about the difficulty in filling
    their needs for professional medical personnel.
        This is not unique to the military. When I spoke to the
    Administrator of the largest hospital in Springfield, Illinois
    over the weekend, he tells me, I am facing the same thing when
    it comes to nurses and therapists and pharmacists and the like.
        Is this something that we need to address with new and
    innovative approaches by legislation or program to attract the
    men and women, the medical professionals, so that those who are
    in service to our country have the very best care?
        General Blanck. I will speak only for the Army and respond
    to that, because I may well ask for your help, and I will tell
    you how. First, we have put three programs into place that have
    made a great difference in the issue that you have just raised,
    that is, the loss of reserve personnel, not active. This has to
    do with the reserve medical personnel.
        The three programs are, first, we have increased the loan
    repayment program so we have been able to recruit physicians,
    nurse anesthetists, dentists and others, far more successfully
    than we have in the past.
        Second, we actually have been able to start a scholarship
    program similar to that that we have for active duty physicians
    and dentists that allow us to pay medical school costs and then
    obligate graduate physicians for service in the reserves.
        Third, and I think the biggest win, is we have reduced
    rotation times from the 180 to 270 days down to 90 days for
    nurse anesthetists, dentists, and physicians. That has made an
    enormous difference, and I can tell you both anecdotally and
    looking at the numbers. People come up and tell me, I was going
    to leave, but now I will stay, because I can take a 90-day
    rotation. Anything more than that, unless there is a general
    call-up, I cannot.
        Now, where I may ask your help is one that we are actually
    going through a staffing process right now, and that has to do
    with a practice plan coverage program. If someone is
    involuntarily extended past that 90-day point, we would pay a
    bonus that would allow them to cover their practice expenses in
    the case of a physician or a dentist, so that we would not
    bankrupt them, as we did to many during the gulf war. If it
    goes through the staffing, and is approved as I anticipate, it
    will be submitted legislatively next year, and I will certainly
    be in touch with you or your office.
        Senator Durbin. Thank you, and because I have limited time,
    I am going to invite the other members of the panel if they
    will please respond to that general question about the
    availability of medical professionals and any innovative ways
    that we might approach this in terms of increasing the supply.
    I hope we can find ways to help you in doing that.
        If I might, if I could ask Admiral Nelson another question,
    each of you has pointed out some of the amazing breakthroughs
    that you have found in medical research through each of your
    services. General Blanck points to a new bandage that can
    dramatically reduce bleeding from wounds. I believe, Admiral
    Nelson, that you point to a tuberculosis test that may be a
    breakthrough that the Navy has come up with.
        My basic question to you--I am glad to hear all of these--
    how is this translated into a commercial undertaking? Once we
    have discovered this technology, do we retain any rights of
    licensing or the like, so that the taxpayers receive some
    benefit from these medical breakthroughs? Admiral Nelson.
        Admiral Nelson. Most all these we transition to the private
    sector, and we also work in collaboration with the private
    sector to bring them to market, but I think there are a lot of
    important things that we get involved in that probably have
    more application to the military, or to communities other than
    within the United States. One of the ones we are working on is
    a malaria vaccine, extremely important for the world, but as
    far as its application within the United States at the current
    time, there is not the breadth of interest there, but yet we
    clearly have collaborators to work with.
        I think you may want to comment more on that.
        Senator Durbin. But I might say to you that, despite the
    AIDS epidemic in Africa, which is an overwhelming moral
    challenge to the world, the number one killer of children under
    5 in Africa is malaria, and if we can find something along
    these lines, believe me, it will leave a legacy which we will
    be proud of for generations to come.

                                Tobacco problem

        Admiral Nelson. I think we are well underway.
        Senator Durbin. General Carlton, you made a point about
    quality of life and preventive health care, and you made a
    special note in here of problems with tobacco and alcohol among
    the military. Can you tell me, I assume that each branch is
    facing the same sorts of challenge with the uniformed
    personnel, but have you identified tobacco in particular as a
    problem cause, a cause of problems, I should say, in terms of
    the health care of active personnel?
        General Carlton. Yes, sir. We have just completed a study
    about what does tobacco smoking cost us on the active duty
    population, not in the future years, not in retired years. The
    answer is, in lost duty time and lost work, it costs us more
    than $100 million a year.
        Senator Durbin. I want to make sure that that is a matter
    of record here. We lose $100 million a year in lost time of
    active military personnel because of tobacco----
        General Carlton. Yes, sir.
        Senator Durbin (continuing). And smoking.
        General Carlton. Yes, sir.
        Senator Durbin. $100 million a year.
        General Carlton. Yes, sir. It is $101 million to be exact,
    but it is $100 million in round numbers, and we are targeting
    that with a tremendous effort on the smoking cessation and
    preventing people from getting into the habit of smoking, and I
    believe you can see in the future where we will not support bad
    habits with our health care, that when we do screens we will
    say, if you have bad habits, we cannot afford to have you in
    our service.

                                Alcohol problems

        Senator Durbin. And I would like to ask each of you on the
    panel as a matter of record to report what your service is
    doing in response to--and I do not want to diminish the
    concerns over alcohol, which I am sure are equal if not greater
    in terms of their impact, but if you could share that with me,
    and I thank you, Mr. Chairman.
        [The information follows:]

                                Medical Service

        The information provided by the Air Force Surgeon General
    regarding the short-term costs of smoking cessation for Air
    Force personnel was based on a study conducted by: Robbins AS,
    Chao SY, Goil GA, Fonseca VP. Cost of smoking among active duty
    U.S. Air Force personnel, 1997. Morbidity and Mortality Weekly
    Report, In press.
        This investigation found that among a sample of young Air
    Force personnel who smoked, there were annual medical costs
    (directly attributable to smoking) of $20,098,339 and annual
    productivity costs (directly attributable to smoking) of
    $87,142,716. This is a total annual cost for smoking alone of
    $100,724,105. The authors go on to calculate the impact of this
    additional health care and productivity loss in terms of full
    time equivalents (FTEs). They determined that every year we
    lose 3,573 FTEs due to smoking.
        DOD is actively engaged in addressing the problems of
    tobacco use. Mr. Rudy de Leon, Under Secretary of Defense for
    Personnel and Readiness (USD (P&R)), requested the development
    of a Department of Defense (DOD) Prevention Plan. We are
    actively addressing the problems of tobacco use in the DOD.
        As part of this prevention initiative a senior level
    Prevention, Safety and Health Promotion Council was formed to
    address alcohol abuse, injury prevention, and tobacco use
    reduction. This council is chartered by the Secretary of
    Defense and provides an integrated forum for a diverse, multi-
    functional group of DOD, Service Secretariat and Service
    leaders. The council approved action plans to reduce the health
    care and productivity burden of tobacco. These plans target
    system-wide changes aimed at cultural aspects of tobacco use,
    availability of tobacco products on military installations,
    medical issues and effective smoking cessation programs.

        Senator Stevens. Thank you very much. Senator Hutchison. We
    are on a 5-minute rule, unfortunately.

                              TRICARE improvements

        Senator Hutchison. Thank you, Mr. Chairman. I want to first
    say I am very pleased that General Blanck is going to be my
    constituent very soon, and that is a great university that you
    are going to be associated with, and we look forward to having
    you there.
        I want to ask a general question to any and all of you.
    Last year, in the bill in which we increased salaries for our
    military personnel, I included an amendment that would have
    allowed the Pentagon to go forward with some improvements in
    TRICARE and medical service that could be done without
    legislation.
        It permitted the increased reimbursement levels for
    TRICARE, particularly in areas where our military personnel
    could not get a provider to see them. It would expedite and
    reduce the cost of the TRICARE claims process, required
    portability among TRICARE regions, brought the TRICARE fee
    structure in line with comparable civilian HMO's, and an idea
    that I got when I visited Brooke Army Medical Center in San
    Antonio from General Timbo, who was saying that the military
    hospitals provide services to outsiders and have a hard time
    getting the payments for that, which they are certainly
    entitled to, so I added an amendment in my amendment that would
    provide for standardized reimbursement rates to make it easier
    to recover third party payments to military hospitals.
        My question to you is, have any of those measures been
    taken by the Pentagon to give the better TRICARE service?
        General Blanck. Every one of them. Every one of them has,
    and I will take it upon myself to speak for all of us, and
    everyone in our Departments but all of our patients, to say
    thank you for wonderful legislation that has allowed us to--
    now, in many cases we are in the process of implementing it, so
    we have not begun to fully realize the benefits, but from third
    party payment to portability to increasing, having the ability
    to increase payments in Alaska, where health care costs are
    such that we just were not competitive, nobody would see our
    patients, and we are able to increase those costs, and in
    remote areas where there may be few physicians.
        Senator Hutchison. Even places like Abilene.
        General Blanck. Absolutely.
        Senator Hutchison. We were having trouble getting our
    providers to see our military patients, where there would be
    one heart specialist in town.
        General Blanck. So we have begun doing all of these kinds
    of innovative ways to improve the ability that we have to
    provide those services.
        Admiral Nelson. I think that you will see a dramatic change
    in processing claims. The three of us were reviewing that
    yesterday, along with Dr. Bailey, and it looks like we have
    made a major turnaround in the rapidity with which claims are
    dealt with outside the direct care system.
        Senator Hutchison. Good. General Carlton.
        General Carlton. Yes, ma'am. When we say we have done that,
    it is exactly true. When you ask a beneficiary, have they seen
    it, there is a contractual lag that may be several months in
    length, and so all of the things that you enabled us to do, we
    have done through the contract or through our direct care
    system.
        Have the customers seen it yet? It may be in some stage of
    implementation, but we certainly appreciate that support, and
    we now are in the 95 percent goal for payment within 30 days.
    We pay first, and if there is some question we chase it down,
    instead of the converse. Your legislation helped us a great
    deal.
        Senator Hutchison. Well, I just want to thank you. I am
    very pleased to hear that, because, as you know, TRICARE has
    mixed results. In Corpus Christi they love it. In Abilene and
    San Antonio there are complaints, and certainly when I learned
    that we were having a hard time getting the reimbursements to
    the military hospitals, which do so much in San Antonio for the
    civilian population, I wanted to get the income in, because
    that supports the system for everyone.
        That is exactly the answer that I wanted to hear, and I, of
    course, will be visiting and hearing from my constituents in
    the military, and I hope that I can get those same reports, and
    I do thank you for making the emphasis be put where it needs to
    be.
        Thank you, Mr. Chairman.

                                Budget shortfall

        Senator Stevens. Thank you. Gentlemen, in just 5 minutes,
    if you can, Admiral Nelson, General Carlton, could you tell me
    the answers to my question, what is the budget shortfall this
    year? What supplemental funds do you think you need to take
    care of this year, and what about 2001? And I know that you are
    supposed to defend the budget. I am asking you beyond the
    budget.
        Admiral Nelson. Yes, sir. Last year I thought I had a tight
    budget. This year I am between $70 and $75 million shy of where
    I was last year with my budget.
        Senator Stevens. What was your request?
        Admiral Nelson. I would have to take the exact request for
    the record.
        [The information follows:]

        The fiscal year 2000 President's Budget submission for Navy
    consisted of the following:

    Direct Care.............................................  $1,573,938,000
    Private Sector Care.....................................   1,416,491,000
    USUHS...................................................      65,461,000

        The level of funding for direct care was approximately $72 million
    below the previous fiscal year funding level of $1.64 billion.

        Admiral Nelson. But I can tell you--well, I can tell you
    what it was.
        Senator Stevens. Put it in the record. It was higher than
    what you got?
        Admiral Nelson. Yes, sir.
        Senator Stevens. I want each of the three of you to tell us
    what you asked for. Maybe we can go a little bit further to
    meeting it using the 2000 funds, all right, and what is the
    shortfall?
        Admiral Nelson. I can tell you that as I stand this week I
    am about $135 million short of being able to do everything you
    have tasked me to do for 2000.
        Senator Stevens. All right.
        Admiral Nelson. Now, how does 2001 look? We at this point
    feel fairly comfortable about 2001, but 1 year ago I would have
    told you I felt fairly comfortable with where we were going in
    agreements on 2000, so I am a little hesitant to tell you,
    other than at this point 2000--that 2001 looks doable.
        Senator Stevens. Airlines people told us the other day that
    we should expect to pay $70 more a ticket for a round-trip
    ticket to the coast by September. You are going to run into a
    lot more things coming out of this fuel cost as far as I can
    see.
        Admiral Nelson. Yes, sir.
        Senator Stevens. But give us that for the record. General,
    have you got any?
        General Carlton. Yes, sir. We are executable for 2000 and
    2001, but you must define your terms. Executable in terms of
    the law, we are certainly executable, but in terms of saving
    the taxpayer money, because we are not getting money for the
    65's and over, we are having to buy that at full rate downtown.
        And so I think we could save a tremendous amount of money
    as taxpayers if we forged a better partnership with our
    Medicare partners, because for lack of the operations and
    maintenance costs, which is traditionally regarded as 20 to 25
    percent of a total health care cost, we are turning that great
    group of American patriots away that we call the over-65 group,
    and instead Medicare is having to pay full price, both part A
    and part B.
        When we talk about a participated rate at 82 percent, that
    is of part A. In a traditional medical experience, in a
    hospital, half the cost will be part B, and so it is 82 percent
    of half the cost. It is a great deal for Medicare, and that
    partnership is critical for us.
        Senator Stevens. Thank you very much. Senator Inouye has
    got a question that, you know, I was visiting with people about
    rural health care the other day, and the lack of doctors. We
    used to have a pretty good supply of doctors when we had an
    incentive because of the draft, and then we had another one
    that was an incentive because of the assistance we were giving
    to some people to go to medical school.
        We need something else now. We need something that gets a
    commitment from young doctors to go spend a year or two in
    rural America. I wish the three of you would think about that.
    What kind of incentive would it be? I do not know. Maybe we
    would expand the Montgomery program, or replace it with an
    Inouye program of some kind, but he is Mr. Defense Medical Man.
    I am just his--I am Charlie McCarthy, you know.
        But I do hope that you will give us some help on that.
        My last comment to you, General Blanck, would be, we know
    where you are. We hope we will hear from you. You helped us get
    started on that AIDS research. Some day we ought to have an
    update of what is going on. I still think it holds the best
    promise of all the research in the country, if not the world.
    Your research in AIDS has got the best promise. We ought to
    have a hearing on that alone.
        Senator Inouye.

                               Nursing standards

        Senator Inouye. In preparation for the next panel, I would
    just like to express some concern to this panel here. I have
    been hearing rumbles that a recommendation may be made to lower
    the standards for our military nurses. If the nurses are going
    to be considered to be professional, as they are, then I do not
    think you should lower the standard below baccalaureate, and I
    gather that some of you are suggesting maybe we should lower it
    below the baccalaureate, the grade.
        Second, I have been told that there are some who are
    suggesting that certified registered nurse-anesthetists should
    always have physician supervision. Over the years, over 85
    percent of all anesthesia administered is done so by nurse-
    anesthetists. In fact, you know, I have been on the table
    countless times now. I know that on some occasions the
    anesthesia was administered by a nurse-anesthetist, and I have
    got no squawks. They have done a good job. They are
    professional.
        I hope that we will not lower the standards. Are you
    thinking of lowering the standards, gentlemen?
        General Carlton. Sir, we are specifically looking at how to
    optimize so we can get more of our retirees in our system. It
    is not a lowering of standards. It is doing things in different
    ways. Our sister service, the Army, for example, civilianized
    half of their nursing force almost 10 years ago, at a
    considerable cost savings. Likewise, they have a licensed
    vocational nurse that provides superb health care on the ward
    as a separate enlisted military operating specialty.
        And so what we are trying to do is say, how can we do the
    best for our people, given our dollar limitations, and pull
    more of our retirees back in by looking at ourselves in the
    mirror and saying, have we optimized our system? It has nothing
    to do with lowering our standards. You are correct, that would
    be an error to do.
        Admiral Nelson. We are not contemplating any changes in our
    nurse educational level at this point. We did that several
    years ago and had difficulties with it and we reversed our
    position at that time, but I would address the CRNA issue. You,
    Senator, sent us a letter 1\1/2\ years ago. It was one of the
    first that I received as Surgeon General, that asked the
    question about how we dealt with the CRNA, not issue, but
    rather their privileges, and I assure you at that time that we
    had a requirement, that we had a set of expectations,
    directives that clearly defined their role and did not require
    specific oversight by a physician.
        I found that one activity I had still practiced that way.
    We have since changed that. We are in line with what I told you
    1\1/2\ years ago, and I think it works quite well.
        The only surgery that I have ever had, the anesthesia was
    given by a nurse. My wife is in surgery this morning, as we
    speak, and for all I know she has a nurse giving that.
        So we are in line, I think, with what you expect, and it is
    not a quality issue at all. The quality is excellent.
        General Blanck. We are contemplating no changes in the
    standards as you describe. We are looking to remove the
    requirement for the direct or immediate supervision of
    certified registered nurse anesthetist (CRNA's). It seems to be
    unnecessary. Clearly, complicated cases require
    anesthesiologists. Those that are not, do not.
        Senator Inouye. One last question. Are you all in favor of
    continuing USUHS (Uniformed Services University of Health
    Services)?
        General Blanck. Yes, sir.
        Admiral Nelson. Yes, sir.
        General Carlton. Yes, sir.
        Senator Inouye. Thank you very much.
        Senator Stevens. Thank you very much. We will now
    transition to the nurses' panel. Thank you very much, and we
    look forward to hearing from you.
        General, we would like to continue to ride herd on that.
    Maybe before you leave we can talk about that.
        General Blanck. Certainly. Perhaps on the trip to Alaska
    maybe we can get together.
        Senator Stevens. Good. Good. Thank you.
                                  Nurse Corps

    STATEMENT OF REAR ADM. KAREN A. HARMEYER, DEPUTY
                DIRECTOR, NAVY NURSE CORPS, RESERVE
                COMPONENT, AND DIRECTOR, NAVAL RESERVE
                MEDICAL PROGRAM 32, BUREAU OF MEDICINE AND
                SURGERY
        Senator Stevens. We are going to hear from the chiefs of
    the Nursing Corps. We all know that you are very vital to the
    success of the military medical system. General Brannon,
    Admiral Harmeyer, Colonel Gustke, this is your first appearance
    before the committee, I understand, each of you. Perhaps you
    have been in the audience before, but I want to turn to my
    friend, and I also want to apologize. I am scheduled to speak
    to a meeting conducted under the auspices of the Office of
    Naval Research in another building in just 7 minutes, so I will
    leave before you probably have completed your statements, but I
    know that Senator Inouye will be your godfather, as always.
    Senator Inouye.
        Senator Inouye. Let's hear those statements while you are
    here.
        Senator Stevens. All right, fine. Go ahead and give your
    opening statements, and I will remain, and Senator Inouye will
    take over from there.
        Senator Inouye. I want to hear, I want the chairman to hear
    your statements.
        Senator Stevens. Admiral.
        Admiral Harmeyer. I will start. Good morning, Mr. Chairman,
    Senator Inouye, distinguished members of the committee. I am
    Rear Admiral Karen Harmeyer, Deputy Director of Navy Nurse
    Corps Reserve Component. On behalf of Rear Admiral Kathleen
    Martin, I am honored to attend, and appreciate this
    opportunity. I will focus my remarks on four key areas that
    serve as a framework for accomplishing our mission: leadership,
    TRICARE, reserve support, and nursing research.

                                  Nurse Corps

        The number of nurses in commanding officer and executive
    officer billets has tripled in recent years. Nurse Corps
    officers are in command at two of the Navy's residency
    treatment facilities, two active duty fleet hospitals, and
    three of the eight large Naval Reserve hospital augment units.
        Nurses hold critical positions at health affairs, OPNAV,
    and lead agent offices. Navy nurses play key roles in the
    implementation of TRICARE, to include direct health care
    delivery, triage, utilization and quality management,
    marketing, education, case management, and policy development.
        Nurse practitioners, midwives, and nurse anesthetists
    provide services to the fullest extent of their scope of
    practice and competency. By increasing the enrollment
    capabilities at all MTF's, we maximize our provider assets
    while maintaining critical competencies needed for wartime
    roles.
        Through nurse-managed clinics, numerous commands have
    improved patient compliance, decreased outpatient and emergency
    department visits, and reduced hospitalization rates. Nurses
    assess patients for health promotion and maintenance needs,
    thus allowing the MTF to tailor health care delivery to the
    user population.
        Total force integration allows us to meet our mission, and
    make the strides that I have mentioned. We are one force,
    active, reserve, civilian, contractor, all pulling together to
    accomplish the work of Navy medicine.
        Nursing research is central to our practice. Research is
    key to establishing and keeping a scientific basis for
    professional nursing. We must continually evaluate our actions
    to ensure that advances in the health sciences are translated
    into cost-effective, high-quality health care. The tri-service
    nursing research program assists these efforts through funding
    of both short and long-term studies. We greatly appreciate your
    support in our research efforts.
        Having focused on our accomplishments, I will mention two
    of our challenges, the predicted nursing shortage, and our
    commitment to a bachelor's degree education. Indicators point
    to a developing nursing shortage. We are working with our
    recruiting commands to attract both new graduate and
    experienced nurses. The competition is keen, with signing
    bonuses and higher salaries in the civilian sector. For these
    reasons, Nurse Corps accession bonuses and stipend programs are
    crucial to our recruiting efforts.
        Second, as with other officers, all commissioned officers
    in the military service, nurses need to have a baccalaureate
    degree. Despite the growing nursing shortage, the answer is not
    to lower our accession requirements, but to remain steadfast to
    our entry standards.
        In conclusion, as we collaborate with our military and
    civilian colleagues to achieve high-quality, cost-effective
    care, the health and safety of all our beneficiaries are our
    highest priorities.
        On behalf of Admiral Martin, I sincerely appreciate your
    support and the opportunity to address you today. Thank you.
        [The statement follows:]
                 Prepared Statement of Rear Adm. Karen Harmeyer
        Good morning Mr. Chairman and distinguished members of the
    Committee, I am Rear Admiral Karen Harmeyer, Deputy Director, Navy
    Nurse Corps, Reserve Component and Director, Naval Reserve Medical
    Program 32. On behalf of Rear Admiral Kathleen Martin, who regretfully
    could not be here today, I am honored to attend and excited about this
    opportunity. I am immensely proud of the Navy health care team and the
    Navy Nurse Corps. It is a pleasure to be with you this morning
    representing the Director of a group of incredibly talented Nurse Corps
    officers. The opportunities that face us in Navy Medicine are
    challenging ones, but the Navy Nurse Corps, with our focus on creating
    teams and developing partnerships for optimal health promotion and
    organizational performance is ready for the challenge.
        I would like to center my remarks on several key areas that shall
    serve as a framework on which to describe our mission accomplishment
    and future challenges. These focus areas are leadership roles and
    responsibilities, Navy nurses' role in support of TRICARE initiatives,
    population health and health promotion, and nursing research.
                     leadership roles and responsibilities
        Leadership is one of the strongest attributes of the Navy Nurse
    Corps. There is both an implicit and explicit expectation that Navy
    nurses apply their experience, education and training to be both
    military and healthcare leaders. When commissioned, they assume an
    additional role as Naval officers, which mandates the successful
    integration of compassion with discipline, individuality with
    conformity, and wellness with wartime readiness. Our charge is to
    develop recognized leaders in the health care arena who create best
    business and clinical practices through partnership, collaboration, and
    teamwork.
        This vital importance of leadership is truly exemplified in the
    Surgeon General's support of the concept that leadership positions in
    Navy Medicine should go to the ``best qualified'' officer regardless of
    corps specialty. Doors are open to nurses that have never been open
    before. In recent years, the number of nurses in commanding officer and
    executive officer positions has tripled and we placed nurses in
    critical positions at Health Affairs, OPNAV, and Lead Agent staffs. For
    the first time, we have Nurse Corps officers serving as commanding
    officers of two of the Navy's residency training facilities: National
    Naval Medical Center (NNMC), Bethesda and Naval Hospital (NH)
    Jacksonville. Their expertise as superior senior healthcare executives
    transcends traditional Nurse Corps roles. Additionally there are 24
    active and reserve component nurses serving in command, executive
    officer roles, or as deputies or chiefs of staff at military medical
    treatment facilities, lead agent staffs, or education commands. Nurse
    Corps officers command two of our active duty Fleet Hospitals; Reserve
    Nurse Corps officers command three of the eight casualty receiving
    hospital units. Reserve and active duty officers also serve throughout
    the entire breadth of headquarters commands.
        Some of the most exciting leadership initiatives are occurring as
    we continue major organizational changes within our hospitals and at
    commands around the world. In numerous hospitals, nurses are assuming
    roles as department heads or directors of clinical services and product
    lines. Nurse anesthetists and nurse practitioners at USNH Yokosuka, NH
    Cherry Point, NH Corpus Christi, Naval Medical Clinic (NMCL) Pearl
    Harbor, USNH Naples, Branch Medical Clinic Sasebo, USNS Mercy, and NH
    Beaufort are serving in dual roles as health care administrators, while
    maintaining an active clinical practice.
        In addition to leadership roles in traditional fixed treatment
    facilities, we have over 70 active duty and many reserve nurses serving
    in a broad range of operational assignments that include:
      --shipboard assignments on aircraft carriers, hospital ships, and
            with the fleet surgical teams;
      --assignments with the Marine Corps Medical Battalions;
      --flight nurse assignments at Diego Garcia and Scott Air Force Base;
      --operational staff assignments with Commander, Amphibious Group 2 &
            3 and Marine Forces Pacific; and
      --training assignments at Fleet Hospital Operations/Training Command,
            Field Medical Service Schools, Marine Corps Combat Development
            Command, Naval Operational Medicine Institute, Surface Warfare
            Medicine Institute, C-4 Staff, Academy of Health Sciences Fort
            Sam Houston, Camp Lejeune Chem-Bio Response Force, and the
            Joint Trauma Training Center.
        I see multiple examples of strong nursing leadership at every
    command I visit. I see our vision of being the leaders in creating
    teams and developing partnerships for optimal health promotion and
    organizational performance becoming reality.
               navy nurses role in support of tricare initiatives
        As highlighted by our senior leadership, TRICARE and Readiness are
    inseparable. As we work to improve TRICARE, so we are maintaining our
    readiness skills. Navy Nurse Corps officers are valued and active
    members of the TRICARE team. They serve in a variety of roles; direct
    health care provider and triage nurse, utilization/quality management,
    marketing & education roles, and policy development roles at every
    level of the organization. We are proud to serve in many TRICARE
    leadership positions including Lead Agent Director, Heads of Managed
    Care Departments and business case analysts. There are four nurses
    serving at the TRICARE Management Activity, two of them in director
    roles.
        At the Military Treatment Facility level (MTF), active and reserve
    Navy nurses are uniquely positioned to ensure TRICARE is meeting the
    needs of our beneficiaries by focusing on prevention, health promotion,
    case management, education and serving as leaders of special
    demonstration projects. Our Navy Nurse Corps strategic plan focuses on
    the professional development of all Nurse Corps officers, with specific
    strategies for educating nurses on the TRICARE program and managed care
    practices. I would like to highlight just a few of the specific TRICARE
    initiatives in which Navy nurses play a pivotal role.
        Navy nursing has been instrumental in the successful implementation
    of the TRICARE Senior Prime (TSP) demonstration project at NMC San
    Diego. As project manager, a Navy nurse led the planning,
    implementation, and administration of the program. He and his staff
    partnered with the managed care support contractor, Foundation Health
    Federal Services (FHFS), and developed a comprehensive plan to
    effectively include San Diego as a TRICARE Senior Prime Demonstration
    site. Based on historical MTF utilization data (number of admissions,
    average lengths of stay, occupied bed days, etc), it was determined
    that 4,000 beneficiaries could be enrolled without unduly affecting the
    quality of care and TRICARE Prime beneficiary access to NMC San Diego.
    Health care delivery for TSP began 1 November 1999 and the external
    reviews of the program to date by the RAND Corporation and the
    Government Accounting Office found a high degree of satisfaction in the
    quality of, and access to, care provided by both beneficiary and
    provider focus groups. Monitoring of utilization data has resulted in
    practice patterns that are beginning to mirror the ``best practices''
    of health plans in the civilian community.
        Another San Diego nurse performs the pivotal role of Compliance
    Officer and MTF Liaison for the TRICARE Senior program. In this role,
    she ensures compliance with HCFA regulations, performs audits, and
    develops provider and beneficiary training programs. She developed
    relationships with other MTF TSP/Compliance Officers across all
    demonstration sites to help ensure uniformity in how business is
    conducted. Furthermore, Navy Nurse Corps case managers interact with
    FHFS case managers to track and monitor TSP beneficiaries that are
    referred to skilled nursing or rehabilitation facilities.
        Case management of administratively, medically, or socially complex
    patients has been identified as a major asset in controlling costs and
    improving the quality of care these patients receive. Nurse Corps
    officers with in-depth clinical and military system knowledge guide
    providers and patients through the complex processes and connect them
    to vital community resources. Coordinating the multiple care needs of
    these patients is a major contributor to the satisfaction of patients
    and providers with TRICARE. Nurses at numerous Navy treatment
    facilities perform utilization and quality management oversight of both
    ambulatory visits and inpatient admissions.
        Our advanced practice nurses--nurse practitioners, certified nurse
    midwives and certified nurse anesthetists--all practice to the fullest
    extent of their competency and practice scope to ensure the right care
    provider delivers care to the right patient based on their health
    requirements. In this manner, we maximize our provider assets while
    allowing them to maintain those critical practice competencies needed
    for wartime roles. As integral members of provider teams, nurse
    practitioners and certified nurse midwives greatly increase the
    enrollment capabilities at all MTFs.
        Nurse-managed clinics are operating at numerous commands around the
    country. The primary aim of these clinics is to encourage patients'
    involvement in their care and provide individualized education to
    patients regarding their diseases or complications. The goals are to
    improve patient compliance with medical regimens, decrease the number
    of outpatient visits to emergency departments and primary care
    managers, and decrease inpatient hospitalization rates.
        An example of this is Naval Ambulatory Care Clinic, Groton, where
    the nurses can manage beneficiaries requiring education or initial
    screening for conditions such as sore throats, chicken pox, or
    pregnancy. Additionally, nurses begin preliminary screening for school
    physicals. Nurses see approximately 20 to 25 patients per day,
    enhancing access to care and increasing the number of patients enrolled
    to providers.
        In the mental health arena, NH Great Lakes provides critical
    programs to screen all incoming recruits, and triage recruits with
    psychopathology and alcohol related disorders. Acute care and
    stabilization is provided and case management is rendered for high-risk
    recruits pending separation. The NH Great Lakes staff members also
    provide an outreach program focusing on life skills support to sailors
    in the service schools. Similarly, at NMC Portsmouth, the nurse-run
    outpatient case management program provides stabilization and
    transition support for service members with severe mental illness who
    are pending separation and are too symptomatic to maintain self care in
    a transition barracks. NMC Portsmouth also has a nurse managed
    outpatient crisis intervention program that replaced services that were
    previously provided by a five to ten day inpatient stay.
        NNMC Bethesda has started a ``Parents Expecting Multiples'' birth
    support program that addresses concerns unique to those who will soon
    be parents of twins, triplets or more. A Nurse Corps reservist who is
    the mother of triplets started the program to help new parents with
    issues such as preterm labor, breastfeeding, proper nutrition and
    delivery. As an added support gesture, the soon-to-be mothers of
    multiple births gladly exchanged names and phone numbers creating an
    informal parent support group.
                     population health and health promotion
        As we educate our patients regarding healthcare services, access
    and referral we must also assess the healthcare needs of our various
    populations and provide specific health prevention and promotion
    initiatives. Patients with diseases that generate high utilization and/
    or costly services can be best managed if needs are identified and
    coordinated over the entire continuum of care. At NMC San Diego, Nurse
    Corps officers have taken the lead in managing this process in the
    Diabetes and Asthma Disease Management projects begun with Lovelace
    Health Innovations, Inc. By systematic patient population
    identification and numerous process improvement initiatives, patients
    are showing greater compliance with established medical practice.
    Future return-on-investment strategies, such as health promotion
    programs targeted specifically to these diseases are being developed
    with systematic data retrieval to ensure the long-term success of these
    programs.
        Health promotion activities provide a medical benefit to the non-
    ill population, as well as to those already diagnosed with a medical
    condition. Nurse Corps officers have provided the leadership and
    coordination in these departments that focus on programs to reinforce
    beneficiary healthy life-style behaviors, which should lead to
    reduction of demand for more invasive procedures. Additionally, through
    patient education programs and nurse triage services, patients are
    taught appropriate self-care measures and better uses of the health
    care available.
        One example of this is the new Putting Prevention into Practice
    (PPIP) Center, which opened last September in Yokosuka, Japan. The
    center is a first in that it is a joint comprehensive hospital and
    dental partnership which focuses on pre and post-deployment medical
    examinations for active duty members as well as a joint, integrated
    medical surveillance system to collect, analyze and disseminate data
    related to military preventive medicine support. At a myriad of other
    sites, including NMCL Pearl Harbor and USNH Rota, the nurses have been
    very successful in implementing PPIP initiatives by interviewing each
    family as they report aboard; conducting these health-screening
    interviews allows the nurse to assess the family's specific health care
    needs such as immunizations, screening mammograms, well-baby physicals,
    stress management and tobacco cessation interventions. This further
    assists the MTF in planning for their resource requirements and
    tailoring their healthcare delivery to the needs of their user
    population.
        In an effort to address one of the fastest growing drug problems in
    the United States, USNH Okinawa and the Armed Forces Network Okinawa
    produced a video titled ``Last Breath.'' The documentary provides an
    unsettling look at the allure and popularity of inhalant abuse as well
    as its potentially lethal effects. A nurse and physician led the
    project that promotes awareness of ``huffing,'' the deadly practice of
    inhaling fumes from household chemicals such as edge dressing, solvents
    and aerosol room deodorizers. The documentary was researched, written
    and produced by a multidisciplinary team of nurses, physicians,
    corpsmen and military public affairs specialists, and will be
    distributed throughout Okinawa to the Department of Defense Dependent
    Schools and Navy and Marine Corps commands.
                                nursing research
        Central to our practice is our commitment to nursing research. As
    stated in our strategic plan, Nurse Corps officers will use research
    strategies to promote and develop evidenced-based practice, and conduct
    and disseminate research. This dedication to research is key to
    establishing a scientific basis for professional nursing practice. Much
    of our current nursing practice is based on historical and anecdotal
    information that has not been scientifically validated. Our profession
    has the obligation to continually evaluate our practice to ensure that
    advances in the health sciences are translated into cost-effective,
    high-quality health care. This focus on research is manifested in
    multiple ways. Clinical staff nurses at a MTF, seeking ways to improve
    patient outcomes, conduct studies that seek to answer the ``why'' of a
    particular care modality. In more extensive studies, active and reserve
    component Nurse Corps officers do qualitative and quantitative studies
    as part of their doctoral dissertations. The TriService Nursing
    Research Program (TSNRP) provides funding for both short and long term
    studies, all seeking to base nursing practice on solid research. Let me
    describe a few of the many studies in which nurses are involved:
        Nurses in San Diego initiated several research studies on methods
    to decrease patient anxiety. They validated the effectiveness of non-
    invasive techniques such as distraction and music therapy as proven
    methods to reduce pain and decrease anxiety. With such validation of
    the success of these interventions, they can be incorporated as
    discrete steps in a protocol, thus changing practice based on research.
    Such seemingly simple interventions directly affect patients' quality
    of life and reduce costs by reducing medication needs.
        At NNMC Bethesda, nurses initiated a research project that
    evaluated the effects of patient positioning on discharge readiness
    following diagnostic laparoscopies. This procedure is the most common
    gynecological procedure performed in an ambulatory setting. The
    research revealed that women who recovered in recliner-chairs following
    this type of laparoscopic surgery were ready for discharge faster and
    experienced greater comfort levels than women who recovered in
    traditional hospital beds. This led to an increase in patient
    satisfaction, improved outcomes and shorter length of stays. In
    addition, there is a measurable cost savings attributed to the faster
    recovery period and more timely discharge associated with women who
    recovered in the recliner-chairs.
        Nurses at NH Camp Pendleton, evaluated the functions of the Patient
    and Family Education Program in relation to other program offerings and
    the Joint Commission on Accreditation of Healthcare Organizations'
    patient and family education program standards. This study resulted in
    the formation of a Department of Population Health, which will start
    operations this month. The department will be multidisciplinary in
    structure and will take a proactive, evidence-based, collaborative
    approach to continuously assessing, improving and documenting the
    general health and well being of NH Camp Pendleton's population. This
    will be done in conjunction with the hospital's healthcare team, by
    utilizing population-based and prevention-oriented strategies, measures
    and outcomes.
        Utilizing TSNRP funding, another Nurse Corps researcher
    scientifically validated the safe use of resistance exercise training
    in patients with advanced heart failure. As a result, the use of hand-
    held weights may be incorporated into the cardiac rehabilitation
    program for these patients.
        Without a doubt as a group, the nurse anesthesia community is in
    the forefront in terms of the numbers and types of research conducted
    and application of results to direct anesthesia practice. Research
    conducted by nurses in the Navy Nurse Corps Anesthesia Program (NCAP)
    is the backbone of the ``Research in Action'' presentations presented
    annually at the national meeting of the American Association of Nurse
    Anesthetists (AANA). Over one-half of all the 1999 presentations were
    from Navy NCAP students. Together with their clinical instructors and
    research directors at the school headquarters in Bethesda and at the
    three clinical sites at NMC Portsmouth, NMC San Diego and NH
    Jacksonville, the students look at all facets of nurse anesthesia
    practice. Studies include topics such as validating the need for
    certain types of anesthetic agents, determining the best doses for a
    desired patient outcome, testing equipment to be used in a new way,
    nurse anesthetist productivity, how a given type of anesthesia
    contributes to a patient's quality of life and ability to return to
    their normal state of health after release from the hospital. NCAP
    students also received FDA approval and funding for a study in which a
    specific drug was evaluated for a new use. In recognition of their
    superlative program, the NCAP program became one of the first nurse
    anesthesia programs in the country to attain 10-year accreditation
    status.
                                reserve support
        Our current accomplishments would not be possible without the
    dedicated, educated, and motivated Nurse Corps officers who demonstrate
    excellence in nursing practice on a daily basis and the Reserve Nurse
    Corps officers who bring their civilian experiences to military medical
    facilities during drills and annual training. At the Naval Reserve 84th
    Birthday Ball, Secretary Danzig said that reservists ``bring something
    precious that frequently (active duty members) do not have, that you
    cannot get simply by being a Sailor; but you can get by being a citizen
    and a Sailor and engaged in civilian occupations.'' We could not meet
    our mission nor make the strides that I have mentioned were it not for
    the concept of Total Force Integration. This concept, endorsed at all
    levels of our organization, envisions us as one force--active
    component, reserve component, civilians, contractors, and others--
    pulling together to accomplish the work of Navy Medicine. Reserve
    nurses have become fully integrated into the daily activities in many
    of our commands and likewise have key roles on operational platforms.
        Reserve medical support plays a vital role each year at NH Great
    Lakes during ``summer surge'' when thousands of new recruits process
    through boot camp. The flawless integration of active and reserve
    components during these peak times allows this training command to
    process and provide healthcare to three times the usual recruit
    throughput. Total Force Integration is achieved through collaborative
    relationships between active and reserve components to effectively
    utilize all resources and maximize readiness. This synergistic approach
    allows reservists to keep their medical and military skills sharp and
    fulfill their drill requirements, while the hospital benefits from much
    needed medical support from July to October.
        NMC Portsmouth recently opened a ``state of the art'' Pediatric
    Intensive Care Unit (PICU). This would have not been accomplished
    without the support of several PICU qualified reserve nurses from San
    Diego as well as the local Portsmouth area. Their presence was critical
    and due to their educational and professional support the NMC
    Portsmouth PICU opened on schedule.
        Furthermore, while serving on the National Naval Reserve Policy
    Board, my efforts focused on ferreting out the impediments and barriers
    to full integration of our reserve and active components. The
    personification of these efforts is the collaboration our reserve
    nurses share with active component Nurse Corps officers at every level
    of Navy Medicine. I am seeing this at medical treatment facilities,
    BUMED headquarters, and all other activities where Navy nurses perform
    their duties. Our Nurse Corps strategic plan, with leadership,
    operational readiness and professional practice goals, is a road map
    for all Navy nurses. I see total force integration daily. We have come
    a long way and must continue to work together as one successful team.
                                   challenges
        Having focused on our accomplishments in leadership, TRICARE,
    population health and research, I would also like to briefly mention
    two of our challenges. The nation-wide developing nursing shortage has
    been well publicized in numerous professional journals, the press and
    at national conferences. Two of the major factors continue to be an
    aging RN workforce and a drop in enrollment numbers at nursing schools
    around the country. According to a new survey by the American
    Association of Colleges of Nursing, the overall enrollment in entry-
    level bachelor's degree programs dropped 4.6 percent last year--the
    fifth consecutive decrease in as many years. The overall enrollment in
    master's and doctoral programs also fell. Of note in this survey is the
    strong emphasis on current trends such as increasing technology, an
    aging population, and an increasing breadth and scope of nursing
    practice that is demanding a need for well-educated nurses.
    Specifically, demand is high for baccalaureate prepared nurses, from
    programs that give them leadership, case management training and
    experience in a variety of care settings. This is exactly the same
    preparation we require as an entry level for our Navy nurses. We are
    working with our recruiting command to attract both new graduate and
    experienced nurses. The Navy Recruiting Command must compete with large
    ``signing bonuses'' from civilian healthcare organizations and pay that
    exceeds beginning Navy salaries. For these reasons, our Nurse Corps
    accession bonuses and our pipeline stipend programs continue to be
    critically important to us; we are extremely appreciative of your
    support for them.
        Secondly, the broad scope of professional practice expected of a
    Navy nurse in a variety of practice settings, hopefully borne out in my
    testimony today, requires that our Nurse Corps officers be educated to
    meet patient care needs in our increasingly complex healthcare delivery
    system. Nurses must have critical thinking skills, effective
    communication skills, and proficient clinical talents. As with all
    other officers commissioned for military service, nurses need to have a
    baccalaureate degree. As nurses work with various healthcare providers
    and line officers to meet the numerous and unique needs of active duty
    members and their families, they must have the educational preparation
    to meet these challenges. Despite the growing nursing shortage, the
    answer is not to lower our baseline entry requirements, but to remain
    steadfast in our entry standards. We truly are most appreciative of
    your support in this area.
        I would like to close on a positive note: the following excerpt is
    taken form the web-site of the Gallup Poll, in December 1999.

              A century and a half after Florence Nightingale's heroic
            efforts in the Crimean War first brought attention, and
            adulation, to the nursing profession, public esteem for this
            profession is extremely high. In Gallup's annual Honesty and
            Ethics poll, expanded this year to include nurses and 19
            additional occupations not previously rated, nearly three-
            quarters of Americans, 73 percent, deem nurses' honesty and
            ethics as either very high or high, putting them at the top of
            the list.

        In an article given to me on the same subject, much was written
    about how much the public trusts nurses. In many cases, the person they
    prefer to get their healthcare advice from is the nurse. This trust of
    the American public is something we should cherish and carefully
    nurture. In a time when there is so much mistrust of the healthcare
    system, we should continue to capitalize on this trust and continue to
    provide caring, honest and trustworthy care to all that come to us for
    help. The Navy Nurse Corps is committed to the success of the military
    health care system, and we are extremely proud to be part of the Navy
    Medicine team.
        As we collaborate with our colleagues in all the services to
    achieve high quality, cost effective care, we will continue to keep the
    health and safety of our beneficiaries as our highest priority. On
    behalf of Admiral Martin, I sincerely thank you for your support and
    for the opportunity to address you today; I know she looks forward to
    your continued association during her tenure as Director.

        Senator Stevens. General.
    STATEMENT OF BRIG. GEN. BARBARA C. BRANNON, DIRECTOR OF
                MEDICAL READINESS AND NURSING SERVICES,
                OFFICE OF THE SURGEON GENERAL, DEPARTMENT
                OF THE AIR FORCE
        General Brannon. Mr. Chairman, Senator Inouye, it is an
    honor to present my first testimony on the achievements of Air
    Force Nursing Services. Let me begin by saying thank you for
    your continued advocacy and support, and for the opportunity to
    highlight some of our challenges and our successes.

                             Command opportunities

        Command opportunities for nurses have grown tremendously
    over the past several years. Each year, nurses have been
    selected for group command in ever-increasing numbers, peaking
    at 14 in 1998. On the 1999 Medical Group Commanders Screening
    Board, for the first time, we saw a decrease in the number of
    nurses selected, 28 percent fewer than the previous year. This
    is the first decrease, and I have no reason to expect that this
    represents a trend.

                                   Recruiting

        I am very concerned about Air Force nurse recruiting. Last
    year, for the first time in many years, we had a recruiting
    shortfall of 85 nurses, which was nearly 30 percent of our
    requirement. One of the biggest recruiting challenges is our
    need for fully qualified nurses, those who have 1 year of basic
    medical-surgical experience. I believe experienced nurses are
    necessary because Air Force right-sizing efforts have decreased
    our clinical training opportunities. Our remaining in-patient
    facilities cannot absorb larger numbers of new, inexperienced
    accessions.
        We are using many incentives to attract experienced nurses,
    such as bonuses, and additional constructive service credit. We
    have also proposed loan repayment programs and shorter initial
    active duty service commitments, and we will continue to
    explore other options to ensure Recruiting Services has the
    tools they need to achieve our accession goals.
        As we sculpt our nursing force, it is also imperative that
    we optimize the contributions of our enlisted nursing
    personnel. An initiative is underway to train and license
    enlisted medics at the licensed practical nurse level. We are
    also examining the feasibility of expanding our nursing skill
    mix to include civilian or enlisted associate degree nurses.

                                   Readiness

        The primary mission of Air Force Nursing Service is
    readiness. Our active duty, Reserve, and Guard nursing
    personnel continue to be heavily engaged in global contingency
    operations, humanitarian support, and also in disaster relief.
    As examples, this past year we deployed to the Balkans, we
    continued our Hurricane Mitch disaster relief, and we provided
    medical support to Native Americans in Alaska.
        Advances in telemedicine continue, and have specific
    applications for Air Force nursing. The use of in-flight e-mail
    to transfer patient information has brought a new dimension to
    nursing care in the air. Army and Air Force nursing personnel
    in Hawaii are also testing and evaluating a telemedicine
    program that is aimed at improving DOD patient access and the
    quality of care. An Air Force nurse will be the next Deputy
    Director of this $40 million project.
        Air Force nursing continues to partner with our sister
    services to achieve professional goals. The Federal nursing
    chiefs were successful this year in establishing a Federal
    Nurses Association as a constituency of the American Nurses
    Association. This landmark means that Federal nurses now have a
    place at the table where national standards of care and
    practice are made for nursing.
        Congressional funding has provided vital support to Air
    Force nursing research, and we are exploring measures to fund
    our triservice nursing research program through the DOD. Active
    duty, Reserve, and Guard nursing personnel currently have 60
    research projects underway. Our topics range from post
    deployment nursing care needs to air medical evacuation nursing
    procedures, and to other issues that are specific to military
    nursing.
        Air Force nursing plays a major role as we transition to
    population health. Nurse triage and nurse-managed clinics
    address two areas where nurses are providing critical
    professional support and improving the health care to our
    people. Facilities that have implemented these programs have
    seen a significant increase in both access and patient
    satisfaction, with a decrease in cost, and the focus squarely
    on prevention, as it should be.
        In closing, I thank you for the opportunity to share the
    challenges and the tremendous accomplishments of Air Force
    Nursing Services. Mr. Chairman, Senator Inouye, and other
    members present, on behalf of the patients we serve, the Air
    Force Medical Service, and the Department of Defense, we
    appreciate your strong continuing support of military nursing.
        [The statement follows:]
              Prepared Statement of Brig. Gen. Barbara C. Brannon
        Mister Chairman and members of the committee, it is an honor to
    present my first testimony on the achievements and challenges of Air
    Force Nursing Services. Let me begin by thanking you for your continued
    advocacy and support of our many endeavors.
                             command opportunities
        Leadership and command opportunities for Air Force Nurse Corps
    (AFNC) officers have increased steadily over the past 13 years. Our
    nurses, because of their superb blend of educational preparation,
    clinical expertise, and management experience, have been very
    successful in leadership positions within the Air Force Medical Service
    (AFMS).
        I proudly report that nurses have made steady progress in selection
    for command; active duty nurses currently command 32 percent of our
    medical groups and 18 percent of our squadrons. The first nurse to
    serve as a Command Surgeon, a Reserve nurse at the Air Force Reserve
    Personnel Center, was appointed last year. Nurses also command 29
    percent of the Air Reserve medical squadrons and 15 percent of Air
    National Guard medical squadrons.
        However, the number of nurses commanding medical groups will
    decline in the future. The selection rate for the CY 1999 Medical
    Commander Selection Board was only 30 percent for nurses, and of those
    candidates, only 54 percent were assigned to group commander positions.
    In comparison, 50 percent of nurses eligible for command were selected
    as candidates in CY 1998 with 82 percent of the selects assigned to
    medical group command positions. The CY 1999 nurse selection and
    subsequent placement rates were lower than the percentages for the
    Medical, Dental, and Medical Service Corps.
                           readiness accomplishments
        The primary mission of the Air Force Medical Service, and hence
    Nursing Services, is readiness. To meet readiness requirements, we must
    ensure that we are appropriately staffed, trained, and equipped to
    respond to wartime contingencies, humanitarian and civic assistance
    missions, and disaster relief operations.
        The Expeditionary Medical Support (EMEDS) concept was fully
    developed this past year to support the Air Expeditionary Force. EMEDS
    units are mobile and modular and can be tailored to support any type or
    size of military operation. The most basic unit consists of small,
    surgical and intensive care teams of physicians, nurses, and enlisted
    specialists who can respond quickly to contingencies around the world.
    Nursing resources assigned to each team were revised to provide the
    right combination of general and specialty nursing staff and equipment.
        As the AFMS continues to rightsize, the number of clinical training
    platforms is steadily decreasing, making maintenance of clinical skills
    and meeting readiness training requirements a significant challenge.
    Air Force Nursing Services is committed to creating efficient and
    effective programs for nursing personnel to gain and maintain critical
    readiness skills. Air Force nursing consultants recently revised
    Readiness Competency Skills lists to reflect tasks nurses perform in
    contingency environments. Active duty, reserve, and guard nursing
    personnel will use these lists to assess their clinical capabilities
    and training requirements. Programs are already being developed to meet
    identified needs.
        TopSTAR, Sustainment Training to Advance Readiness, expanded to a
    second location last year. Travis Air Force Base opened a TopSTAR unit
    in addition to the original site at Wilford Hall Medical Center.
    TopSTAR is currently used to validate clinical skills and it is also
    being evaluated as a training platform for nursing personnel to update
    their skills prior to assignment overseas.
        Exceptional training opportunities also occur during medical
    exercises and real-world contingencies. Medical exercises in Asia and
    within the Continental United States, and contingency operations in
    Central America, Asia, and Europe, allowed active duty, reserve, and
    guard personnel to test their skills. These deployments were also
    particularly helpful in identifying tasks that required follow-on
    training.
        Two other training success stories were the Joint Military Trauma
    Training program at Ben Taub General Hospital in Houston, Texas, and
    the Jefferson Barracks Trauma Training pilot program in St. Louis,
    Missouri. The Ben Taub clinical rotation for military teams provided
    four times the patient admissions, blunt trauma cases, and penetrating
    trauma cases than experienced by teams at Wilford Hall Medical Center
    during the same time frame. At the Jefferson Barracks pilot program,
    similar training opportunities are potentially available to provide our
    medics excellent experience in trauma management.
        All readiness training is focused on ensuring our nursing personnel
    can provide care under highly stressful conditions in deployed
    locations. Nursing personnel have had many opportunities to support
    contingency operations this past year and demonstrate their capability.
        Operation Southern Watch/Joint Guard.--The ongoing support to
    Southwest Asia (SWA) is a total force commitment. There are currently
    47 nursing personnel serving at Prince Sultan Air Base and Riyadh,
    Kingdom of Saudi Arabia; Kuwait; United Arab Emirates; and Oman.
    Nursing personnel on 120-day rotational deployments work in clinics,
    small hospitals, and aeromedical evacuation (AE) settings in support of
    the continued SWA mission.
        Operation Joint Forge/Noble Anvil.--Nine nursing personnel are
    assigned in Bosnia, Kosovo, Macedonia, Italy, Hungary, and Germany
    where AE liaison teams, mobile aeromedical staging flights, aeromedical
    evacuation control centers, and aeromedical evacuation support cells
    provide medical support to the theater of operation.
        Operation Northern Watch.--Currently six nursing personnel are
    deployed to Incirlik, Turkey, to augment nursing care available for
    deployed forces.
        In addition to the sustainment operations already listed, nursing
    personnel were also primary responders to several humanitarian
    operations and disaster relief actions. For example, active, reserve,
    and guard nurses and technicians provided humanitarian assistance in
    South America and continued recovery efforts following Hurricane Mitch
    which devastated Central America in 1998. We also provided nursing care
    in Alaska to Native Americans, where medical teams were able to test
    their ability to care for cold-weather injuries.
        In addition to nursing's total force engagement in readiness
    training and actual deployments, senior nursing personnel also have a
    strong presence in leading readiness programs at command level. Nurses
    currently hold the senior readiness position at the Air National Guard,
    Air Mobility Command, and Pacific Air Forces Command. Several nurses
    are also assigned to the readiness staffs at the major command, Air
    Staff, and Joint Staff levels. Nursing Services personnel are clearly
    at the tip of the spear in medical readiness.
        To meet our medical readiness support requirements, the Air Force
    Medical Service continues to pursue the insertion of telemedicine into
    the aeromedical environment--a concept critical to providing nursing
    ``care in the air.'' The success of transmitting patient and
    operational data via e-mail on ``live'' AE missions within Europe has
    already been validated. A similar advanced telemedicine demonstration
    is currently underway in the Pacific.
        Another great accomplishment in telemedicine is a joint venture at
    Tripler Army Medical Center in Hawaii. Nursing personnel assigned to
    this program test, validate, and evaluate new technology to improve DOD
    patient access and quality of care. An Air Force nurse will be the next
    deputy director of this $40 million project.
                           peacetime accomplishments
        While readiness remains our priority, Nursing Services has had
    numerous successes in the peacetime healthcare arena as well. As
    mentioned earlier, the Air Force Medical Service is transitioning to a
    population health model of care delivery. Population health
    standardizes beneficiary healthcare management, promotes effective
    prevention and clinical intervention, and, in the long run, drives down
    costs. It also facilitates using clinical nurses in expanded roles such
    as nurse triage, nurse-managed clinics, condition management, demand
    management, case management, and informatics. Our nurses have the broad
    knowledge base and right qualifications to fulfill these crucial
    functions.
        Air Force Nursing Services has been instrumental in the transition
    to population health. Nurses and medical technicians assisted in
    planning the ``Primary Care Optimization'' course attended by 861 AFMS
    members over a four-week period. As key faculty for the training
    sessions, nursing personnel taught primary care management teams
    composed of physicians, nurses, and technicians the principles and
    practice of demand management, case management, nurse triage, and new
    roles and responsibilities.
        Nursing also supports population health by ensuring services are
    provided at the right time, in the right place, and by the right member
    of the healthcare team. Aviano Air Base provides a wonderful example of
    a nurse triage program that enhanced patient access and dramatically
    decreased the need for primary care appointments. Triage nurses at
    Aviano successfully determine the appropriate level of care based on
    the patients' symptoms and then, using triage principles and protocols,
    refer them for routine, acute, or emergency appointments, or provide
    self-care options. The patients report a high degree of satisfaction,
    and it was found that eighty percent of the patients triaged by nurses
    did not require a medical appointment. Scott and Keesler Air Force
    Bases have similar success stories using nurse triage to greatly
    streamline patient access to care.
        Nurse-managed clinics have also proven highly effective in
    achieving the goals of population health. Using clinical guidelines or
    approved nursing protocols, nurses manage patients with chronic
    conditions, conduct follow-up visits, provide patient education, and
    coordinate care among the primary care managers, referral services, and
    specialists. Nurses provide patients and family members the long-term
    support needed to promote life-style changes that enhance their ability
    to manage their health and healthcare.
        Little Rock, Hill, and Keesler Air Force Base hospitals have very
    successful nurse-managed clinics. Nurses educate the patient and
    family, assist the patients in setting their own realistic goals,
    encourage optimal use of local resources such as the base health and
    wellness center, and monitor long-term progress. Implementation of
    nurse-managed clinics has decreased readmissions and length of hospital
    stays. As a result of these nursing initiatives, we have also seen a
    significant increase in customer satisfaction, a decrease in cost, and
    a focus squarely on prevention, as it should be.
        A new role for military nurses under population health is the
    health care integrator (HCI), a liaison between primary care team
    members, our beneficiaries, and the local community. The HCI collects
    and analyzes data to assess individual and group characteristics and
    health practices. With definitive information about the population
    served, the HCI is better able to match and coordinate the needs of the
    patients with the capabilities of the military and civilian healthcare
    system.
        The increased emphasis on clinical nursing in the transition to
    population health prompted a review of our AF nursing career path. In
    the past, promotion to lieutenant colonel and colonel was more easily
    achieved by nurses in administrative roles. Senior nursing leadership
    recently began emphasizing the the importance of the clinical nursing
    career path to ensure we have the clinical focus needed in our company
    grade and junior field grade nurses. The recently revised NC career
    path clearly delineates both a clinical and administrative career track
    through the rank of lieutenant colonel for most Air Force specialty
    codes (AFSC) and to colonel for a few specialty AFSCs. We will continue
    to stress the importance of the clinical nursing career path to our
    nurses and our non-nursing colleagues. In addition, the Secretary of
    the Air Force's instructions to promotion boards charge board members
    to ``consider clinical proficiency and skill as a health
    professional.'' This helps to emphasize the importance of a strong
    clinical presence in our field grade ranks.
        The sustainment of Air Force Nursing Services is dependent on
    successful accession programs. The Nurse Corps has three sources of
    accessions: direct commissioning, Reserve Officer Training Corps
    (ROTC), and the Enlisted Commissioning Program. We had a recruiting
    shortfall of almost 30 percent, or 83 ``fully qualified'' nurses, last
    year. This problem stems from the decreasing pool of fully qualified
    nurses in the civilian sector and the decline in nursing school
    enrollments on a national level. Recruiting Service is finding it
    increasingly difficult to attract the ``fully qualified'' nurses we
    need to sustain our nursing force.
        A ``fully qualified'' nurse is one who has one year of experience
    in medical-surgical nursing. Basic inpatient medical-surgical nursing
    is the foundation for our readiness skill competencies. Since the
    majority of Air Force medical facilities now provide only ambulatory
    care services, training opportunities for novice nurses in basic
    inpatient care have decreased. Our remaining inpatient facilities
    cannot absorb a large volume of new, inexperienced nurses. Because of
    our concern over the degree of preparation of our new nurses, the AFNC
    is exploring new training programs at our larger facilities, which, in
    turn, would potentially allow an increase in recruitment of new nurse
    graduates.
        To attract the right nurses with the right skills, recruiting
    incentives are essential. Up to 12 months additional constructive
    credit has been authorized for nurses in critical specialties,
    providing them earlier promotion opportunities. The bonus for nurses
    with one-year experience is now $5,000 for a four-year commitment.
    Prior to 1999, only nurses with three years of experience qualified for
    the bonus.
        Another potential incentive is a specialty bonus, in addition to
    the accession bonus, for nurses with critically needed skills. We are
    also investigating a two-year active duty service commitment option in
    addition to the current three-year and four-year options. Furthermore,
    we are studying the feasibility of a delayed entry program in which
    nurses would be commissioned after completing their baccalaureate
    degree. As a commissioned officer without pay, the novice nurse would
    be required to gain one year of civilian experience and then would
    enter the Air Force with one year time in grade for pay purposes.
        Air Force nurses are also accessed through ROTC and enlisted
    commissioning programs. The ROTC goal for fiscal year 2003-04 was
    doubled from 25 to 50. To facilitate the commissioning of enlisted
    members, the accession cap on those programs has been lifted. For prior
    active duty enlisted personnel currently enrolled in baccalaureate
    nursing programs, the one-year experience requirement was recently
    waived.
        As we take action to address the recruiting shortfalls, the Nurse
    Corps must continue to sculpt our force in support of the fiscal year
    2001 drawdown requirements. The AFNC, currently 4,335 nurses strong,
    initiated several measures in an effort to reach our fiscal year 2001
    targeted end strength of 3,978 nurses. Almost three hundred nurses
    voluntarily separated from the Air Force during the last 18 months
    through temporary early retirement authority, voluntary separation
    incentives, special separation benefits, and waiver programs. However,
    continued authorization for and funding of these drawdown incentives
    are required to achieve our targeted end strength.
        As mentioned earlier, Air Force Nursing Services must have the
    ``right size'' and ``right mix'' of nursing personnel as the AFMS
    transitions from inpatient to ambulatory care. We are reviewing the
    efficacy of several models of nursing care delivery. Most healthcare
    organizations employ a blend of skill levels in their nursing workforce
    that includes unlicensed nursing assistants, licensed practical/
    vocational nurses (LPN/LVN), and registered nurses (RN) prepared at the
    associate degree, diploma, or bachelors degree level. Using an
    appropriate mix of skilled healthcare workers provides a more cost-
    effective system without adversely impacting the quality of services.
    The Army has adopted a nursing force model that includes a robust
    number of LPN/LVNs. The majority of these are active duty personnel who
    are trained in an Army program. Our goal is to balance the size, mix,
    and skills of nursing personnel to meet our peacetime and readiness
    requirements while ensuring high quality care to our beneficiaries.
        An important strategy to obtain this goal is to optimize the skills
    and practice of our enlisted force. The scope of practice for our
    enlisted members is defined in the career field education and training
    plan (CFETP). The CFETP permits our medical technicians to practice at
    a level equivalent to the civilian LPN model, with minor exceptions.
    Despite their educational preparation, our enlisted medics presently
    function, for the most part, at the unlicensed assistive personnel, or
    nurses' aide, level. Our goal is to implement a program that will
    provide selected enlisted members licensure as practical nurses.
        Another skill mix initiative revolves around the associate degree
    nurse (ADN). The AFNC is currently examining options to add the ADN
    nurse to our inventory. One alternative is to contract or hire civilian
    ADN nurses. Another is to educate our enlisted LPNs to the ADN level.
    Currently, our research indicates that it might be more fiscally
    advantageous to hire civilian ADNs rather than to ``grow our own.''
    However, we will proceed in contacting educational institutions for ADN
    program criteria and costs to use in our planning.
        The Tri-Service Nursing Research Program continues to provide
    important benefits to the practice of Air Force nursing. Congressional
    funding has been pivotal to the implementation of many vital nursing
    research projects. We are currently exploring funding for this program
    within the DOD budget.
        There are 34 Air Force nursing research projects in progress
    sponsored by the Tri-Service Program. Air Force nursing personnel are
    investigating topics targeted at clinical practice and readiness.
    Subjects range from post-deployment nursing care and aeromedical
    evacuation nursing procedures to other issues specific to military
    nursing. Many completed studies were published in professional journals
    and presented at federal, national, and specialty meetings this past
    year. I firmly believe that nursing research will continue to improve
    health care in the inpatient, outpatient, and contingency environment.
    Again, the AFNC thanks you for your continued support.
        As in tri-service research, we frequently partner with our sister
    services to achieve our professional goals. For the past four years,
    the federal nursing chiefs collaborated with the American Nurses
    Association (ANA) to establish a federal constituency within that
    organization. In June 1999, the Federal Nursing Association, or FedNA,
    became a reality. This landmark achievement means federal nurses now
    have a place at the table where decisions on national nursing standards
    of care and practice are made.
                                   conclusion
        In closing, I thank you for the opportunity to share the many
    challenges and tremendous accomplishments of Air Force Nursing
    Services. Mr. Chairman and committee members, on behalf of the
    Department of Defense, the Air Force Medical Service, and the patients
    we serve, we appreciate your strong and continuing support of military
    nursing.

        Senator Inouye (presiding). Thank you very much, General
    Brannon. Now may I call upon Colonel Gustke.
    STATEMENT OF COL. DEBORAH GUSTKE, ASSISTANT CHIEF, ARMY
                NURSE CORPS, U.S. ARMY
        Colonel Gustke. Yes, sir. Senator Inouye, distinguished
    members of the committee, I am Colonel Deborah Gustke,
    Assistant Chief of the Army Nurse Corps. It is indeed an honor
    and a privilege to speak to you today, this being my first time
    before the committee. I would like to tell you a few stories
    about how Army nurses are making a difference for America's
    soldiers and their families. I would like to highlight three
    primary areas, deployments, TRICARE, nursing research, and then
    I will conclude with some of the challenges we are facing
    today.
        With regard to deployments, when the First Med Group
    started the Bosnia support mission in September of 1998, at
    Eagle Base in Tuzla, Bosnia, Army nurses have been critical to
    the success of these deployments and the multiple deployments
    thereafter. Not only have they done their health care mission
    well, but they have expended significant energy in being
    ambassadors in the region and providing valuable training
    opportunities to multinational personnel.
        Some examples are when the 212th Mobile Surgical Army
    Hospital designed a contingency medical force package that was
    both air-deployable, compact, and could provide surgical
    resuscitative care to patients for 72 hours without requiring
    resupply. When nursing was given the word to go, they were able
    to pack, palletize, and be ready to go in less than 14 hours,
    but most importantly, when they hit the ground running they
    were able to set up the facility in less than 6 hours.
        Again, when the 212th had to move to Macedonia to support
    operations there, they were able to be fully operational and
    accepting casualties again under 6 hours.
        Nurses at Task Force Med Falcon at Kosovo packed mil vans,
    trained medics, and cared for patients ranging in ages from 2
    to 75 years of age.
        Still another initiative was the development of a program
    called Fit Eagle Wellness, which provided chaplain support,
    psychiatric nursing services, nutrition services, physical
    therapy, to all the soldiers at all the base camps. As a matter
    of fact, twice a month these nurses made the rounds to assess
    the soldiers' needs.
        Deployed Army nurses have the skills, the training and,
    most importantly, the critical thinking skills to do whatever
    is necessary at hand to provide soldier care without
    compromising quality in any environment. Captain Teresa
    Duquette, head nurse of the 212th emergency medical team, sums
    it best when she says, this is what Army nursing is all about.
    Working in austere conditions, setting up field hospitals,
    training young troops to step up a level in any situation, and
    building systems which are the foundation for medical care.
        In the area of TRICARE, Army nurses continue to develop and
    implement initiatives that are driving down health care costs,
    expanding access, and improving quality. I would like to cite
    two of these initiatives.
        The first is a nurse at Fort Drum Hospital in New York
    noticed that there was a shortage in obstetrics and gynecology
    facilities at Fort Drum. She took the initiative and enlisted
    the aid of the Corps of Engineers, who contracted for a
    civilian space at a local hospital.
        As a result of this initiative, Fort Drum was able to see
    800 additional gynecology appointments per year, and saw an
    increase in deliveries from 30 to 45. We are planning on
    assigning an additional midwife to Fort Drum, which will bring
    an additional 15 deliveries to the facility. This move will
    save an estimated $383,000 per year, but most importantly it
    provides care to 120 additional families to the Tenth Mountain
    Division.
        In regards to TRICARE, the nurse-managed central triage
    center located at Martin Army Hospital in Fort Benning,
    Georgia, combined an advice line for hospital beneficiaries
    with a 24-hour emergency authorization service. This was
    instrumental in allowing patients who travel to access
    emergency authorization care 24 hours a day, and a secondary
    effect was that it helped decrease unnecessary emergency room
    visits. As you can see, today's Army nurses have responded with
    creativity and results in the TRICARE environment.
        In the area of nursing research, we definitely appreciate
    your support in the funding of the TRISERVICE nursing research
    program. Our researchers have responded to the challenge by
    examining ways to optimize nursing care by leveraging
    technology and the best business practices that are in our
    facilities today. Army nursing research studies funded by the
    triservice nursing research program this year run the gamut
    from a study examining ways to prevent the hospitalization of
    older military retirees, to studies that incorporate the latest
    exercise and diet strategies to improve soldier readiness.
        A previously funded study that will be completed this fall
    found significant links between levels of stress and delayed
    wound healing. Results of the study will be used to develop
    methods for alleviating soldiers' stress to accelerate wound
    healing.

                                army nurse corps

        Senator Inouye, the main challenge to us in the Army Nurse
    Corps today, in the coming months, is the projected national
    nursing shortage. According to a Sigma Theta Tau report that
    was issued in July of last year, there are three factors that
    are causing this problem. During the Nation's economic slump,
    many patients have neglected their care because of the cost.
    With the robust economy, now there is even greater demand for
    nurses, and especially nursing specialties.
        Second, registered nurse enrollments are decreasing for the
    third year in a row. Of particular concern is the baccalaureate
    enrollment, at a 6.6 reduction rate for this year.
        Third, due to higher hospital census and greater patient
    acuities, there is an increased demand for specialized nurses.
    Nationally, the baccalaureate of science nurse is in huge
    demand, based on their ability to contribute to the health care
    team as they lead multidisciplinary teams, function as patient
    educators, and manage patients across the age continuum.
        Similarly, Army nursing requires officers who can combine
    these skills, the right knowledge base, to deploy and rapidly
    adapt to any environment, and we are very much pleased with
    your position on maintaining the baccalaureate level as our
    entry level, just as our Surgeon General supports that
    initiative and is steadfast and states that it is a
    nonnegotiable issue. We again appreciate your support.
        We thank you for your support for the nurse accession
    bonus. Currently, we are using this bonus to recruit top-notch
    nurses from the Nation's talent pool, a very difficult task. We
    will need your continued support of this bonus to guarantee
    that we maintain the right number in the right specialty.
        Your continued support for the nurse specialty pay has been
    most helpful in both recruiting and retaining practitioners as
    well as nurse-anesthetists in this competitive hiring
    environment. Again, we thank you.
        In conclusion, sir, next year, February 2, Army nurses
    worldwide will celebrate 100 years of maintaining the highest
    standards of professionalism in nursing in the military
    service. As we meet to honor and reflect on our achievements,
    we also renew our commitment to meet the challenge of change
    and our efforts to support the health needs of soldiers and the
    beneficiary population. Our past has prepared us to meet the
    challenges of today, and ensures our ability to meet those of
    tomorrow.
        Senator Inouye, Army nurses remain, now and always, ready,
    caring, and proud. Thank you for this opportunity to tell you
    about Army nursing, and we will be happy to entertain your
    questions.
        [The statement follows:]
                   Prepared Statement of Col. Deborah Gustke
        Mr. Chairman and distinguished members of the committee, I am
    Colonel Deborah Gustke, Assistant Chief, Army Nurse Corps. This morning
    I'd like to highlight three areas where Army nurses are making a
    difference for America's soldiers and their families. These three areas
    are deployments, TRICARE and nursing research. I'll conclude with the
    challenges facing the Army Nurse Corps in the next few years.
        Deployments.--Beginning in September 1998 when the 1st Medical
    Group started the Bosnia support mission at Eagle Base in Tuzla,
    Bosnia, Army nurses have been critical in the success of these
    deployments. Not only have they done their health care mission well,
    but they have put significant time and energy into being United States
    ``ambassadors'' in the region and providing valuable training
    opportunities to multi-national medical personnel. Army nurses are
    adept at combining expert knowledge with care and concern in
    unstructured deployed environments to provide the very best care to our
    soldiers. For example; nurses of the 212th Mobile Army Surgical
    Hospital, the last remaining Mobile Army Surgical Hospital in the Army,
    designed a Contingency Medical Force package that is air-deployable,
    compact and can provide surgical resuscitative care to 36 major
    surgical patients for 72 hours before requiring re-supply. The system
    was battle-tested when components of the 212th were deployed to support
    initial entry operations in the Balkans. The Contingency Medical Force
    was packed, palletized and ready to go in less than 14 hours. After
    landing in the Balkans, the hospital staff set up the hospital and were
    treating patients in less than 6 hours. Three months later, the 212th
    moved to Macedonia to support operations there and again, had the
    hospital set up in under 6 hours when they received four gunshot
    victims a few hours later. Even with the rapid re-deployments and
    austere conditions, the compassionate care that highlights Army nursing
    is never left behind. Captain Mike Rizzo of the 212th intensive care
    unit says, ``Even a lifetime of television reruns of Mobile Army
    Surgical Hospital could never prepare me for facing an injured fellow
    United States soldier lying on a litter. I continually returned to the
    thought that the patient lying in front of me has a family that has
    entrusted him to my care and they are depending on me to keep him from
    making the ultimate sacrifice for his country.'' Nurses at Eagle Base
    in Bosnia saw over 700 patients in their first month there--the
    majority of the patients requiring immediate surgical intervention.
    During Operation Forge, emergency room nurses at Eagle Base implemented
    an emergency support line. Anyone on Eagle Base could call ``2-HELP''
    and be connected to emergency care 24 hours a day. Nurses at Task Force
    Med Falcon in Kosovo packed milvans, trained medics and cared for
    patients ranging in age from 2-75 years old. Nurses remembered to pack
    crucial life-saving equipment not standard to the field packs such as
    electorcardiogram machines, blood infusors and cardiac defibrillators.
    They cross-leveled supplies from different hospital sections to stay
    afloat when supply channels into Kosovo were cut due to security
    restrictions. Army nurses implemented cross-training programs so nurses
    could assist on different units when increases in patient acuities
    occurred. Another nurse developed a program called ``Fit Eagle Wellness
    Program'' that provided chaplain support, psychiatric nursing support,
    nutrition services and physical therapy to soldiers at all the base
    camps. Twice a month, they convoyed as a team to address soldiers'
    individual healthcare needs. Nurses deployed with Operation Provide
    Hope in the Ukraine. One of these nurses, Captain Pabliot Gahol was
    sent to provide training on intensive care unit equipment but found he
    spent most of his time training the nurses on simple skills such as how
    to use a stethoscope to listen to a patient's heart and lungs.
        Deployed Army nurses have the skills, the training and most
    importantly, the critical thinking skills to use whatever resources are
    at hand to provide soldier care without compromising quality. Captain
    Teresa Duquette, Head Nurse of the 212th Emergency Medical Team says it
    best; ``This is what Army nursing is all about--working in austere
    conditions, setting up field hospitals, training young troops to step
    up a level in any situation and building systems which are the
    foundation for the medical care. Deployment allows me to make a
    difference in the lives of my patients.''
        TRICARE.--Army nurses continue to develop and implement initiatives
    that are driving down healthcare costs, expanding access and improving
    quality.
        After co-implementing a ``MedTeams'' concept at the Madigan Army
    Hospital emergency room in Fort Lewis, Washington, the Army nursing
    Emergency Consultant found there was a 94 percent reduction in observed
    clinical errors, 80 percent reduction in risk management cases and a 5
    percent improvement in the quality of preparation for patients admitted
    through the emergency department. The MedTeams concept, developed in
    the civilian sector, is a medical error reduction tool that uses
    principles learned in Army Aviation Safety to improve performance,
    decrease errors and decrease costs. The highly successful program is
    being tested with the 47th Combat Support Hospital and the 44th Medical
    Brigade.
        A nurse at the Fort Drum hospital facilitated the first Army
    satellite Obstetrics and Gynecology Clinic at a civilian hospital. In
    response to a shortage of Obstetrics and Gynecology facilities at Fort
    Drum, New York, she enlisted the aid of the Corps of Engineers who
    contracted space from a local civilian hospital. This initiative allows
    an additional 1,800 Gynecology appointments per year and an increase in
    deliveries from 30 to 45 per month. The move will save $382,797 per
    year while providing military medical care to an additional 120
    families of the 10 Mountain Division (Light Infantry).
        A nurse-managed Central Triage Center recently instituted at Martin
    Army Hospital in Fort Benning, Georgia serves as an advice line for the
    hospital's beneficiaries, a triage area for the emergency room and a 24
    hour contact for soldiers and their families such that they can receive
    emergency authorization to seek care at civilian facilities while
    traveling. The Center maximizes access while decreasing unnecessary
    emergency room visits.
        Today's military healthcare system mandates quality, efficiency and
    cost effective care that promotes patient satisfaction. Army nurses are
    responding by implementing innovative solutions that remove barriers to
    quality care.
        Nursing Research.--Thanks to your support of the Triservice Nursing
    Research Program, our nurse researchers are pioneering new technology
    and new concepts that promise better outcomes for our patients. Nursing
    practice has changed dramatically with the need to examine current
    delivery models and to re-engineer delivery of nursing services. Our
    researchers have responded to this challenge by examining ways to
    optimize nursing care by leveraging technology and best practices. Army
    nursing research studies funded by the Triservice Nursing Research
    Program this year run the gamut from a study examining ways to prevent
    hospitalization of older military retirees to a study that incorporates
    the latest exercise and diet science into strategies to improve soldier
    readiness. A previously funded study that will be completed this Fall
    found significant links between levels of stress and delayed wound
    healing. Results of this study will be used to develop methods for
    alleviating soldier stress to accelerate and improve wound healing.
        The Triservice Nursing Research Program continues to evolve and we
    are getting better and better at using nursing research to address
    issues of quality, access and cost in the military healthcare system.
    Your continued advocacy and support for this program will insure
    military nurses can harness technology and science to improve care for
    our patients.
        A major challenge for quality healthcare in the coming months is a
    projected national nursing shortage. According to a Sigma Theta Tau
    nursing report released in July of last year, the shortage is being
    driven by three factors: (1) During the nation's economic slump, many
    people neglected their health care--now that the economy is up, so is
    the demand for healthcare; (2) Registered Nurses enrollments in schools
    of nursing are down; and (3) higher hospital census and greater patient
    acuity are causing a demand for experienced Registered Nurses in
    specialized areas such as intensive care unit, emergency room or the
    operating room. Nationally, the baccalaureate of science nurse is in
    huge demand based on their ability to contribute to healthcare by
    leading multi-disciplinary teams, serving as patient educators and
    managing care across the age continuum. Similarly, Army nursing
    requires officers who can combine expert skills with the right
    knowledge base to deploy and rapidly adapt to any global healthcare
    mission; nurses who can integrate multi-faceted problems in a managed
    care environment and keep doors to healthcare access open; nurses who
    have the research skills to build better patient outcomes from
    hypotheses and ``what-if'' ideas; in short--nurses who have the depth
    and breadth of experience and education that a Bachelor's of Science
    degree in nursing provides. This standard has helped Army medicine
    maintain its edge as a world class healthcare system. The baccalaureate
    prepares nurses who can manage and lead the delivery of healthcare in a
    wellness model. In fact, how we are able to contribute as nurses is
    tied to our educational preparation. Our education enables us to see
    the possibilities in science and use those possibilities to improve
    care for our patients. The proven success of military nurses, to a
    great extent, is linked to the commitment of the military healthcare
    system to require and maintain the highest standards for military
    nursing. As cost-cutting methods are sought to reduce the price tag
    associated with military health care, our use of the Bachelor of
    Science prepared nurse continues to be scrutinized. We appreciate your
    continued support of the Bachelor's of Science degree in nursing
    criterion for entry into active duty nursing.
        Thank you for your support of the nurse accession bonus. Currently,
    we are using the bonus to recruit top-notch nurses from the nation's
    talent pool. We'll need your continued support of this bonus to
    guarantee the right nurses for future deployments, humanitarian
    missions and beneficiary care. Your support of nursing specialty pay is
    enabling us to recruit specialty nurses in a competitive hiring
    environment. Thank you.
        Next year, on the second of February, Army nurses will celebrate
    100 years of maintaining the highest standards for professionalism in
    nursing and in military service. While meeting the challenge of change
    we have maintained our commitment of supporting the health care needs
    of soldiers and our beneficiary population. Our past has prepared us to
    meet the challenges of today and ensures our ability to meet tomorrow's
    challenges. Army nurses remain Ready, Caring and Proud. Thank you for
    this opportunity to tell you about Army nursing.

        Senator Inouye. Thank you very much, Colonel Gustke.
        Before I proceed, I would like to note that for the past 12
    years the Defense Appropriations Subcommittee has been
    privileged to have the services of an executive nurse intern
    from the three services. This year, we are assisted by
    Commander Cathy Wilson of the Navy, and we rotate among the
    services, as you know. We are very fortunate to have Commander
    Wilson with us, and if anything is wrong with my questions or
    statements--no, seriously, we are very fortunate.
        Colonel Gustke, I gather that you are here speaking on
    behalf of Brigadier General Promotable Bester.
        Colonel Gustke. Yes, sir, I am.
        Senator Inouye. He is the first male nurse to become Chief
    of the Army Nurse Corps, is that correct?
        General Gustke. Yes, sir, that is correct.
        Senator Inouye. Well, it is about time, I think.
        Where is Colonel Bester?
        Colonel Gustke. Sir, Colonel Bester is right behind me.
        Senator Inouye. Oh, please. Congratulations, sir.
        Colonel Bester. Thank you, sir. I appreciate it.
        Senator Inouye. We look forward to your services, and one
    of these days you will be sitting here.
        Anyway, as I noted to the panel that appeared before you, I
    have been a beneficiary of the military medical system for 55
    years, and during that period it became very clear to me that
    nurses were professionals, that they were capable of being
    autonomous, independent health providers, and accordingly I
    have tried my best to convince my colleagues of that
    conclusion, and I am glad that my colleagues have agreed.
        I am concerned about what I indicated to the panel, and I
    am pleased that your service chiefs have indicated that they
    were bad rumors. I hope they continue to be bad rumors.

                               Nurse anesthetists

        I have a few questions, if I may. What would be the
    implication if the certified registered nurse anesthetists were
    required to have direct physician supervision on all surgical
    cases? What would be the effect?
        Admiral Harmeyer. Sir, I will start with that question. We
    rely on our certified, registered nurse anesthetists to
    function in a broad scope of operational as well as health
    benefit arenas, and because of that, they need to have critical
    thinking ability. They need to have advanced decision-making
    skills.
        Those tools in their tool bag are accomplished by making
    decisions that are sometimes hard, and to impose supervision of
    that process would degrade their ability in those areas of
    critical thinking and decision-making, and also if a direct
    supervisor were required to be with them during things that
    would definitely make a big impact on their productivity and
    the productivity of the organization overall. It would not be a
    good thing.
        General Brannon. We currently have 25 certified registered
    nurse anesthetists practicing at facilities where there is no
    anesthesiologist, and were that requirement to be levied that
    they have one there over their shoulder, we would either need
    to recruit more anesthesiologists, or we would probably need to
    close some of those surgical units at the smaller facilities.
        Senator Inouye. Colonel.
        Colonel Gustke. Sir, I will preface my remarks by saying
    that we, too, in the military have several facilities where
    nurse-anesthetists are practicing without direct supervision.
    Problems would arise if we had to have that supervision. Like
    the Air Force, we would have to procure an inordinate amount of
    anesthesiologists for that supervision.
        It would have a severe impact of our recruitment and
    retention of our nurse-anesthetists today. They came into the
    Army and they applied to the nurse-anesthetist program because
    it is the best in the country, number 1. Number 2, it provides
    autonomous practice, and by using this intensive supervision it
    would definitely affect our numbers and then, of course, impact
    on all the services provided to our beneficiaries.
        Senator Inouye. Thank you. I have been told that whenever a
    very important person (VIP) gets surgery the anesthesia is
    administered by an anesthesiologist. Is there any truth to
    that, because unless I am not a VIP, I have had a nurse do the
    work.
        Admiral Harmeyer. Sir, I will jump right in here. Again,
    VIP's do not receive a different standard of care. There is one
    standard of care in our facilities, and that is the very, very
    best that we possibly can provide. All patients in our
    facilities are assigned based upon the patient's medical
    history and the complexity of the anesthesiology plan.
        General Brannon. It would only be based on the patient's
    condition, sir, not on their VIP status. If they required a
    higher level of skill, it would potentially be an
    anesthesiologist.
        Senator Inouye. I am glad to know that.
        Colonel Gustke. Sir, I would echo those comments and say it
    is a resounding no. As a matter of fact, yesterday at Madigan
    Army Medical Center a Navy admiral underwent anesthesia for a
    procedure, and it was provided by a nurse anesthetist and he
    recovered very well.
        Senator Inouye. Was he aware of that?
        Colonel Gustke. Yes, sir, and proud of it.
        Senator Inouye. What would be the impact if we did not have
    a permanently funded triservice nursing research program?
        General, let us start with you.

                      Triservice nursing research program

        General Brannon. Fine. Thank you. I think, frankly, we
    would be decreasing the amount of nursing research that was
    going to be conducted in our facilities. Research dollars are
    very competitive, and were we to seek dollars in the civilian
    sector, since many of the issues we want to explore in nursing
    research in the military are military-specific, they may not
    rate as high with our civilian counterparts.
        We have about six full-time nurse researchers in the Air
    Force, with the grant proposal-writing, and conducting of
    research, I think it would overwhelm them if we did not have
    those dollars more readily available.
        Senator Inouye. Colonel.
        Colonel Gustke. Sir, I would say that having the funds to
    continue the triservice research program has enabled us in the
    military to prioritize into military-unique research. It has
    been very instrumental in us looking at cost-effective ways to
    provide care, as well as to provide the most efficient means to
    access care and make our soldiers well.
        We have done considerable research in lung injuries, wound
    healing, diet, and exercise, which are critical for our
    soldiers, and eliminating this funding would impact our ability
    to address these critical issues that are related to soldier
    readiness and beneficiary care, and I would echo General
    Brannon's comments that it is extremely important, because many
    times civilian institutions do not understand the military
    uniqueness of much of our research, so it is imperative that we
    continue this.
        Senator Inouye. Does it make sense to have a School of
    Nursing in USUHS?
        Colonel Gustke. Sir, I would say that USUHS has been very
    supportive to the Army Nurse Corps in three venues. One is, we
    do educate some of our nurse-anesthetists in USUHS, and it is
    very important, because we only have a limited number of slots
    in our other military programs, and because they have been very
    vital in family nurse practitioner completion programs, because
    in the last few years we have seen the need for family nurse
    practitioners to be involved in primary care, and third, we now
    have full-time programs for our family nurse practitioners in
    USUSH, so it is very critical to us in primary care and in
    providing nursing anesthesia.
        General Brannon. I agree, but I would also add that having
    it at USUHS enables us to have some military-specific things in
    the curriculum, and we work very closely with the faculty there
    to make sure that the current needs are addressed.
        Admiral Harmeyer. And I agree, sir, that the military
    health care environment, as the actual practice area for them,
    is very, very important, and getting the operational picture at
    the same time is crucial.
        Senator Inouye. I think at this juncture I should note that
    the graduates of USUHS have a greater retention record than
    graduates of West Point, Annapolis, or Colorado Springs. I
    believe that 90 percent of the graduates of USUHS are still in
    the service. That is much, much higher than the Air Force,
    Navy, or Army special schools.
        I have a couple of other questions, if I may ask.

                                Nurse shortages

        Colonel Gustke noted that there is a shortage of nurses in
    the United States, and that has been a concern to all of us on
    this committee. Do you have any suggestions you can make as to
    how we can cope with that problem in the military? What do we
    need to recruit or retain nurses now? Are we doing the right
    thing? Should we do something else?
        Colonel Gustke. Senator Inouye, I would say we are doing
    the right thing, but I think we have to continue the accession
    bonuses. It is very necessary that we continue the specialty
    pay. It is the accession bonuses that allow us to attract
    nurses in the specialty areas and, coupled with that, in the
    Army we are engaging our new nurses in sending them into
    specialty courses, which is what they want to do, so we have a
    very robust program, but without that accession bonus it is
    very difficult to attract them away from some high-paying jobs
    in the civilian community.
        Our specialty pay is extremely important, especially for
    our nurse anesthetists, and I would say that for the first time
    in many years we have gotten near 100 percent to fill all of
    our positions in nursing anesthesia, and it is the specialty
    bonus that has done that.
        When you look at the pay for a nurse anesthetist coming out
    of a civilian program, their pay in the civilian community is
    $85,000 a year, very hard to equate that with a captain's pay,
    but the specialty pay goes a long way in doing that, so we have
    to have a need to continue those programs and I would say, if
    anything, that would be what we would ask this committee.
        Senator Inouye. Admiral.
        Admiral Harmeyer. I agree that having the incentive
    programs and those in place are very important. What is also an
    advantage for us has been our Reserve Officers' Training Corps
    (ROTC) graduates, our medical enlisted commissioning programs.
    Those are very effective in preparing for good nurses to come
    into our organization, and the interest in those areas has been
    very high.
        General Brannon. I would echo the comments of both my
    colleagues. We have a couple--one unique challenge in Air Force
    nursing, in that the majority of our new recruits need to have
    some experience, so they are much more difficult to attract.
    Oftentimes new nurses coming out of school have difficulty with
    their first placement because they do not have experience, and
    if they come into the military for that, it is an advantage.
        So I do not know that there is any one answer. We have
    several initiatives, very flexible things, working to try to
    attract those nurses. We are looking at loan repayment
    programs. We wrote the program objective memorandum (POM) for
    that in 2002. We are looking potentially at an early
    commissioning program where we could actually sign them up
    while they were still in school, still with that requirement
    for them to get the year's experience, but then give them
    credit for that year of service while they are in their
    educational program. Recruiting is a complicated issue.
        I also agree that one of the best ways I think we can get
    nurses for our active forces is by sending our enlisted members
    back for baccalaureate training. I think that is a wonderful
    source of good experience; people who are dedicated, committed,
    and know the ways of the military. I would like to see
    opportunities to robust that.
        Senator Inouye. Thank you very much, General.
        When I became a member of this committee, I do not believe
    there were any flag rank officers among the nurses. I still
    think that we do not have enough in the Nurse Corps. They are
    still fussing around and not giving you proper recognition.
        For example, your nurses do a good job. Recently, an Army
    nurse, Major General Nancy Adams, was given the assignment of
    being commander of Tripler. In her first year, in the
    certification tests, Tripler got 100 percent. Now, you cannot
    go beyond 100, and before then all commanders were men, and
    they never achieved 100. Once again, she is getting another
    100, so I hope you men will note that, please.
        Finally, as I call this hearing to a recess, some of my
    physician friends hate to hear this, but during my time in the
    military I think I saw a physician at the most twice a week.
    The rest of the time I was helped by nurses that did minor
    surgery, IV's, everything, and so when people tell me that
    nurses are not professional, I tell them to join the military
    and get injured, and you will find out.

                         Additional committee questions

        But once again, I thank you all for your testimony this
    morning.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
                 Questions Submitted to Secretary Rudy de Leon
                   Questions Submitted by Senator Ted Stevens
        Question. Do you have a Defense Health Program (DHP) budget
    shortfall in fiscal year 2000? What is the magnitude of the shortfall?
    What caused the shortfall?
        Answer. Yes. In addition to the fiscal year 2000 $228 million
    reprogramming included in the President's Budget, there is an
    additional requirement of approximately $626 million for contractor
    claims that the Department was not able to validate in time for the
    President's Budget submission. These include the pharmacy bid price
    adjustment directed by the Fiscal Year 2000 Defense Authorization Act
    and additional contractor claims that will require funding in fiscal
    years 1998-2001.
        Question. Did you adequately budget for fiscal year 2000? Were
    these shortfalls avoidable?
        Answer. The Department adequately budgeted for known requirements.
    However, increased contractor costs have significantly impacted the
    DHP. The primary reason for several of the most recent contractor
    claims is that contractor costs are higher than expected. Additionally,
    the costs of pharmaceuticals have been rising in both the private
    sector (as reflected in part by increased contractor costs) and in the
    medical treatment facilities. Additionally, the DHP cannot react to
    cost increases by reducing benefits or raising costs, thus leaving no
    way, other than increased funding, to respond to changing market
    conditions. If all of the Managed Care Support Contract (MCSC) claims
    are adjudicated in favor of the contractor, the DHP would most likely
    exceed its appropriation for prior years. The amounts cannot be
    determined until the claims are adjudicated.
        Question. Do you need supplemental funds to fully execute the
    fiscal year 2000 Defense Health Program?
        Answer. Yes. As indicated in the President's budget, the Department
    requires additional funding to execute fiscal year 2000. This includes
    $228.2 million reprogrammed from the Services and $8.5 million
    reprogrammed from DHP, procurement to DHP, O&M. The reprogramming will
    fund additional requirements including pharmacy, validated contractor
    costs, and custodial care. In addition to these reprogramming actions,
    there is an additional requirement of approximately $626 million for
    contractor claims that the Department was not able to validate in time
    for the President's Budget submission. These include the pharmacy bid
    price adjustment directed by the Fiscal Year 2000 Defense Authorization
    Act and additional contractor claims that will require funding in
    fiscal years 1998-2001.
        Question. Is your fiscal year 2001 medical request fully funded?
        Answer. Yes. The Department addressed all requirements for fiscal
    year 2001 in the President's Budget except those that would be included
    in a potential fiscal year 2001 budget amendment. The potential fiscal
    year 2001 budget amendment would include requirements for $626.5
    million to cover the pharmacy bid price adjustment directed by the
    Fiscal Year 2000 Defense Authorization Act and additional contract
    claims from fiscal year 1998 through fiscal year 2001. The amount may
    change as a result of on going negotiations and validations of
    additional contract claims by the Department over the next few months.
        Question. When he testified before this Subcommittee, Deputy
    Secretary Hamre said the medical budget was an area of great concern to
    him. If you are confirmed as Deputy Secretary of Defense, will defense
    health care issues continue to be at the top of your priorities?
        Answer. Yes, improving military health care will continue to be
    among my highest priorities, since it is critical to improving the
    quality of life for our service men and women.
        Question. Some have advanced proposals to greatly expand defense
    medical benefits at a cost up to $6 billion per year. Can DOD afford
    these proposals?
        Clearly, some of the more expensive ideas, did not make it in our
    budget request. Why were they not included?
        Some would say that we should fully fund the current benefit and
    medical program first, before we greatly expand the benefit. Do you
    agree?
        Answer. To help improve access and affordability of care for our
    beneficiaries, the fiscal year 2001 President's Budget adds two new
    funded initiatives proposed by the JCS for Active Duty Family members:
    (1) expansion of TRICARE Prime Remote to include family member
    coverage, which will improve access to health care and lower out-of-
    pocket costs for active duty families who do not live near military
    treatment facilities; and (2) the elimination of co-pays for all active
    duty family members enrolled in TRICARE Prime. The Department has
    provided $30 million and $50 million, respectively, in fiscal year 2001
    for these new initiatives. Additionally, the Department is committed to
    working closely with Congress on its efforts to review the health care
    benefits for retirees 65 and over to determine what, if any, new
    benefits can be accommodated within the Department's topline.
                                     ______

               Questions Submitted by Senator Christopher S. Bond
        Question. Mr. De Leon, although we have discussed healthcare
    challenges with respect to beneficiaries, there has been little
    discussion of the challenges with respect to health care providers. I
    am particularly concerned by reports of projected personnel shortages.
    Certainly, the socioeconomic factors outlined in Colonel Gustke's
    statement apply to the physician population as well. I am also
    concerned by reports that our military providers are getting frustrated
    with the new constraints imposed by managed care and that they are
    subsequently opting out of patient care into alternative specialties,
    such as Occupational Medicine and Preventive Medicine. Although you
    outlined the effects that various factors have had on beneficiaries, we
    have had little discussion of the effects on our health care providers.
        Please comment on the recruiting and retention of military
    physicians and nurses inpatient care arenas.
        As you know, Congress worked hard to include the Federal Employees
    Health Benefit Program-65 (FEHBP-65) in the Fiscal Year 1999 Defense
    Authorization Act. However, we were disappointed to learn that of the
    66,000 potential candidates, fewer than 2,000 signed up for the test. I
    have heard various explanations for this low enrollment figure,
    including a lack of education and high enrollment costs.
        What are the reasons for this low initial enrollment in the FEHBP
    test program and what is being done to enhance enrollment?
        Answer. Based on past estimates from the Congressional Budget
    Office, the General Accounting Office, and others, the Department
    expected many more responses. As of mid-March, about 2,500 of the
    70,000 eligible beneficiaries have enrolled. This represents an
    enrollment rate of about 3.5 percent.
        GAO is surveying eligible individuals to determine why they
    enrolled or not. There are several possibilities why enrollment has
    been so low. First, some beneficiaries may have had inadequate
    information, or not enough time to decide on whether to enroll. This
    possibility was the principal factor in our decision to work with OPM
    to mail additional information to all beneficiaries in late December,
    and conduct additional marketing activities in each site in early
    January. The number of additional enrollees since January 1 (nearly
    1,000) suggests that time and information may have played some part in
    the low participation. However, most of the more recent enrollees are
    from Puerto Rico, where we are aware of communications problems, rather
    than from all the sites. On balance, it does not appear that lack of
    information or time is the main reason for low participation.
        Second, there are clear patterns of enrollment response across the
    sites. Enrollment response has been best in those sites with very
    limited access to military health care--Puerto Rico, Greensboro, and
    Northern California. In locations with a military facility, or where
    beneficiaries have access to military pharmacy coverage, enrollment has
    been much lower--suggesting that access to military health care
    services may play a big role in beneficiary decision making.
        Third, beneficiaries may have made their health care arrangements,
    and be unwilling to change them for a limited-term demonstration. The
    Department's experience with the TRICARE Senior (Medicare Subvention)
    demonstration was similar, in that initial enrollment demand was
    considerably below early projections. In part, this can be attributed
    to the beneficiary education and marketing process, but beneficiary
    resistance to disrupting their lives to enroll in a temporary program
    is likely a factor also. GAO's review should shed light on the
    significance of this.
        Fourth, there may be a variety of other factors at work, and GAO's
    survey and evaluation may help uncover them. For example, age, health
    status, existing insurance coverage, financial status, and retired rank
    are some of the variables that may affect an individual's decision to
    enroll.
        The Department did four separate direct mailings to all eligible
    beneficiaries, providing a postcard, brochure, a guide to health plans
    in the program, and additional information after initial enrollment
    response was low. In addition, the Department conducted two waves of
    health fairs and town meetings in the demonstration sites, to educate
    beneficiaries about the program, and operated a toll-free call center
    to answer their question about the program.
        We undertook a very extensive educational effort, but acknowledge
    that this is a complicated subject. The information that the Department
    provided was clear and accurate, but the decision facing the
    beneficiary is complicated. In large measure, this is because of the
    complexity of FEHB and its relationship to a beneficiary's Medicare
    coverage: rather than a single benefit plan, FEHB is made up of
    numerous individual plans, each with its own benefit package, cost
    sharing requirements, and Medicare interaction. GAO is surveying
    beneficiaries to determine how well they understand the program. The
    temporary nature of a demonstration program, and the ability to
    reacquire former coverage may have had an effect on enrollment levels.
    Part of the problem is the complexity of this coverage issue--
    beneficiaries are protected if they have Medigap, but many have
    supplemental coverage that predates or is otherwise not under the
    Medigap rules, and thus they lack repurchase protections.
                                     ______

                      Questions Submitted to William Lynn
                   Questions Submitted by Senator Ted Stevens
        Question. I've read reports that your fiscal year 2000 shortfall is
    up to $500 million. Will you have a shortfall even after you reprogram
    funds?
        Answer. Yes. In addition to the fiscal year 2000 $228 million
    reprogramming included in the President's Budget, there is an
    additional requirement of approximately $626 million for contractor
    claims that the Department was not able to validate in time for the
    President's Budget submission. These include the pharmacy bid price
    adjustment directed by the Fiscal Year 2000 Defense Authorization Act
    and additional contractor claims that will require funding in fiscal
    years 1998-2001.
        Question. You have stated that the Defense Health Program is ``the
    biggest trouble area in the budget, in my view.'' That is an alarming
    statement. Please fully explain.
        Answer. The Defense Health Program presents a unique challenge in
    providing health care to the eight million eligible beneficiaries and
    six million users. Due to the unique dynamics of a number of factors
    such as: the rising cost of health care, estimating inflation in
    advance of actual execution, increasing non-active duty population, an
    aging population, and escalating retiree health care requirements all
    contribute to create a very difficult process of budgeting for the
    Military Health System. This concern has led to the effort to improving
    military health care as the Department's highest priority in fiscal
    year 2000.
        Question. Do you have large TRICARE liabilities without sufficient
    appropriated funds to pay them?
        If so, what is the total amount of the liability? How will you pay
    these bills?
        Answer. There is no shortfall for validated contractor claims in
    the fiscal year 2001 President's Budget. However, we anticipate that
    once new contractor claims are validated, the Department will submit an
    amended budget totaling an estimated $626.5 million for fiscal year
    1998-2001.
        The Department addressed all requirements for fiscal year 2001 in
    the President's Budget except those that would be included in a
    potential fiscal year 2001 budget amendment. The potential fiscal year
    2001 budget amendment would include requirements for $626.5 million to
    cover the pharmacy bid price adjustment directed by the Fiscal Year
    2000 Defense Authorization Act and additional contractor claims from
    fiscal year 1998 through fiscal year 2001. This amount may change as a
    result of ongoing negotiations and validations of additional contract
    claims by the Department over the next few months.
        Question. How did you get into this situation? Do you face a
    possible ``Anti-Deficiency Act'' violation?
        Answer. The primary reason for several of the most recent
    contractor claims is that contractor costs are higher than expected.
    Additionally, the costs of pharmaceuticals have been rising in both the
    private sector (as reflected in part by increased contractor costs) and
    in the medical treatment facilities. Additionally, the DHP cannot react
    to cost increases by reducing benefits or raising costs, thus leaving
    no way, other than increased funding, to respond to changing market
    conditions. If all of the Managed Care Support Contract (MCSC) claims
    are adjudicated in favor of the contractor, the DHP would most likely
    exceed its appropriation for prior years. The amounts cannot be
    determined until the claims are adjudicated.
        Question. I understand that DOD is making payments to Justice to
    pay for tobacco litigation, contrary to the expressed will of this
    Congress. Can you explain?
        Answer. The Department of Defense provided funds to the Department
    of Justice to support the tobacco litigation in response to a request
    from the Office of Management and Budget at the end of February. On
    March 8, the Department of Defense completed action to reimburse the
    Department of Justice $2.65 million from the Defense Health Program.
        The authority used by the Department of Defense to provide funds to
    the Department of Justice to support the tobacco litigation was Public
    Law 103-317, Title I, section 109 (August 26, 1994) which provides:
    ``Notwithstanding 31 U.S.C. 3302 or any other law, in litigation
    involving unusually high costs, the Department of Justice may receive
    and retain reimbursement for salaries and expenses, for fiscal year
    1995 and thereafter, from any other governmental component being
    represented in the litigation [28 U.S.C. 509 note].'' The Department of
    Defense has incurred large health care costs attributable to tobacco
    use. The litigation will attempt to recover these costs.
        Question. How do you justify making this payment from Defense
    Health Program funds and taking away from medical readiness for troops?
        Answer. The Department of Defense strongly supports the Federal
    government's effort--similar to the successful efforts of State
    governments--to recover enormous government health care costs
    attributable to use of tobacco products. In addition, from a strictly
    budgetary standpoint, if funds are recovered based on DOD health care
    costs attributable to tobacco use, we expect such recoveries to be
    credited to the Defense Health Program, under the Medical Care Recovery
    Act (42 U.S.C. 2651), one of the statutory bases for this litigation,
    and 10 U.S.C. 1095(g). The investment by the Defense Health Program in
    this litigation is quite reasonable in relation to the potential
    recovery for that program account. Finally, this expenditure will not
    adversely affect medical readiness for military personnel.
                                     ______

                Questions Submitted by Senator Pete V. Domenici
        Question. As you may know, the costs of some of the proposed
    legislation intended to address serious problems in the DOD health care
    system is quite expensive: Senator Johnson's S. 2003 will be estimated
    by CBO to cost $9 billion per year, or more over 10 years; Senator
    McCain's S. 2013 is variously estimated to cost between $2 billion and
    $5 billion per year; Senator Warner's S. 2087 is estimated to cost
    about $1 billion per year.
        What is your position on each of these bills?
        Answer. While the Department is committed to improving access to
    health care for our beneficiaries the benefit expansions proposed in
    these bills are not affordable within the Department's current funding.
    We generally agree with the estimated costs provided by CBO. For
    example, no cost FEHBP for retirees who enlisted prior to July 1956 is
    estimated to cost $4.5 billion per year. FEHBP for all other retirees
    is estimated to cost $5 billion, expansion of TRICARE Senior Prime is
    estimated to cost $350 million per year. The one-year extension of
    FEHBP-65 demonstration and indefinite continuation for demonstration
    enrollees is estimated to cost $75 million per year. The expansion of
    the pharmacy benefit is estimated to cost $455 million annually.
    Reduction in Catastrophic cap costs $40 million per year. Nonetheless,
    we are willing to work with the Congress and the Administration to find
    solutions to improving access to health care for all eligible DOD
    beneficiaries.
        Question. If enacted what would be their impact on other defense
    programs in the DOD budget?
        Answer. It is impossible to predict specific impacts but with
    estimated costs of these magnitudes and the current DOD budget there
    would most likely be a negative effect on readiness capabilities.
        Question. Are these bills affordable?
        Answer. Not within the DOD's current budget.
        Question. When will DOD submit a health care plan that addresses
    current problems and that you consider both comprehensive and
    affordable?
        Answer. We believe the current benefit we offer is a very
    comprehensive benefit that is a better deal with less out of pocket
    costs for our beneficiaries than many other options. It is necessarily
    constrained as the principal mission of the DOD is readiness and there
    is a limited amount of funding available.
        Question. Some have suggested that the Defense Health Program
    should be moved out of the DOD budget. What is your position on such
    proposals? Who in the Executive Branch would exercise oversight over a
    Defense Health Program not in the Department of Defense or its budget?
        Answer. The inextricable linkage of health care and combat
    readiness would strongly argue against placing the Defense Health
    Program outside the DOD. The majority of DHP manpower assets are
    related to the readiness mission. It would not be feasible to
    efficiently manage this program from outside the DOD.
        Question. Some have suggested that major parts of the Defense
    Health Program (DHP) should be moved to mandatory spending. How would
    this alleviate cost issues, either in the DHP or the overall DOD
    budget?
        Answer. If the mandatory spending portion remained in the DOD it
    would not alleviate cost issues. If the funding were to come from
    outside the DOD, it would still be subject to the upward pressures of
    health care in general but impact on the DOD would be reduced. A number
    of bills this year propose evaluating accrual funding for retiree
    health care to address the longer term funding issues for retiree
    health care.
        Question. Why should the Congress put the Defense Health Program on
    ``Automatic Pilot'' where cost growth would inevitably come out of
    other defense programs--when the on-budget surplus is limited?
        Answer. As a health program, the Defense Health Program is subject
    to many of the same pressures that are causing rapid rises in costs of
    private health plans and the FEHBP program. The Department is working
    closely with the Military Departments to determine how to fund the
    medical benefit, and the sources of such funding, in order to ensure
    that our Service men and women are provided the high quality health
    care they deserve.
        Question. Accrual financing for the Defense health program has also
    been suggested. How would this work? Would part of the costs be shifted
    to other parts of the federal government, as in the case of the
    military retirement system? What would be the costs to DOD and to the
    rest of the government?
        Answer. The health care liability for current retirees and the
    portion related to service completed by current active duty would be
    assumed by an agency outside of DOD. This would be similar to Treasury
    taking over responsibility for the retired pay accrual beginning in
    1985. The DOD would make periodic payments for current and future
    active duty based similarly to the retired pay contributions currently
    being made. Specific cost estimates are under development, but the
    liability currently is about $200 billion. The required future annual
    cost to DOD of active duty currently serving would be about $5 billion
    per year.
        Question. To exercise oversight, to control costs, and to maintain
    DOD jurisdiction over its own programs, why should the Defense Heath
    Program not continue to be paid for by annual appropriations in the DOD
    budget as overseen by this subcommittee and the Armed Services
    committee?
        Answer. Even with the accrual funding mentioned in the previous
    question, a major portion of the Defense Health Program Appropriation
    (related to Active Duty and Active Duty Family member care), would
    still be derived from annual appropriation through the DOD budget.
        Question. Will the Department of Defense prepare a plan for its own
    health care programs that comprehensively addresses the problems we
    have discussed today and that is affordable? When will such a plan be
    submitted under the current Administration?
        Answer. We believe the current benefit offered is a very
    comprehensive benefit that is a better deal for our beneficiaries than
    many other options. It is necessarily constrained as the principal
    mission of the DOD is readiness and there is a limited amount of
    funding available. Within the President's Budget there is a proposal to
    reduce out-of-pocket costs for Active Duty family members and to reduce
    the cost of care for family members assigned to remote locations.
                                     ______

                Questions Submitted by Senator Daniel K. Inouye
                              medicare subvention
        Question. From a finance perspective, what is your opinion about
    expanding the TRICARE Senior Program to our teaching facilities that
    support Graduate Medical and Nursing Education programs?
        Answer. TRICARE Senior Prime provides an opportunity to meet our
    commitment to beneficiaries while also supporting our graduate medical
    education programs in conjunction with comprehensive medical readiness
    training missions. Medical centers are also well positioned to provide
    both comprehensive and multidisciplinary specialty health care,
    important for an aging population. However, the Department believes
    that evaluating the existing demonstration, capturing the lessons
    learned and identifying the financial implications of expansion are
    crucial steps prior to recommending expansion.
        Question. Mr. Secretary, today we have current and former military
    members unhappy with the status of DOD medical programs. What, if any,
    actions do you see as affordable in the current budget environment?
        Answer. The fiscal year 2001 budget request essentially represents
    the same level of service as provided in fiscal year 2000. The fiscal
    year 2001 President's Budget restores some deferrals made in fiscal
    year 2000, adjusts for inflation, and adds new benefit additions for
    expansion of the TRICARE Prime Remote for active duty family members
    and the elimination of co-pays for active duty family members enrolled
    in TRICARE Prime. These proposals are intended to help improve access
    and affordability of care for our beneficiaries. The Department is
    committed to working closely with Congress on their efforts to review
    the health care benefits for retirees over 65 to determine what, if
    any, new benefits can be accommodated within the Department's topline.
                                     ______

               Questions Submitted by Senator Frank R. Lautenberg
                          patient medical information
        Question. There has been a lot in the news recently about medical
    treatment errors. Would not an electronic data system, capable of
    sharing patient medical information among DOD, the Veterans Affairs
    Department (VA), and their contractors help reduce medical errors?
        Answer. Implementation of the Military Computerized Patient Record
    (CPR) (CHCS II) will provide more accurate patient data through the use
    of standardized terminology, data sets and structure and will implement
    decision support; alerts, reminders, and access to knowledge bases. All
    orders entered will be checked for interactions or contraindications
    (drug--drug interactions, allergies, etc.). These alerts will be fed
    back to the provider during the ordering process. The Government
    Computerized Patient Record (GCPR), used as a translation and exchange
    mechanism, could provide more complete information by bringing together
    information residing in multiple agencies computer-based patient
    records.
        Question. It is my understanding that the primary rationale for the
    Government Computer-Based Patient Record (GCPR) program is to allow
    information to flow among DOD's health information systems, those of
    the (VA) Department and various private contractors. When are you
    projecting that you will achieve the capacity for this information
    exchange?
        Answer. Phase I, the development of a prototype framework that
    would facilitate access to information residing within each agency's
    computer-based patient record, will be complete in April 2000. Phase II
    (beginning in April) will pilot test this framework. The results of
    Phase II will influence the date that information exchange occurs.
        Question. How much has DOD included in its budget request for the
    Government Computer-Based Patient Record (GCPR) program?
        Answer. The fiscal year 2000 Defense Appropriations bill report
    language (p 253) identified ``Computer based patient records (Note:
    $4,200,000 is only for the further development of the Government
    Computer-based Patient Record).'' Congress also mandated a 0.38 percent
    reduction to all fiscal year 2000 appropriations. To protect patient
    care, a 1.752 percent reduction was applied to all non-patient care DHP
    programs, including GCPR which reduced its funding to $4.126 million.
        Question. In December 1999, President Clinton signed into law the
    Veterans Millennium Health Care Act allowing DOD health care
    beneficiaries to use VA facilities and VA patients to use DOD
    facilities. Has DOD begun negotiations to implement that law? Do those
    negotiations assume sharing patient medical data via GCPR?
        Answer. The Veterans Millennium Health Care Act (Public Law 106-
    117) requires DOD to enter into a reimbursement agreement with VA for
    medical care provided to VA Priority Seven (the lowest priority)
    veterans who are TRICARE-eligible and who enroll for care with the VA.
    In fact the two Departments have had initial meetings on the Act. The
    VA/DOD Executive Council has included it as an initiative to monitor
    and is creating a work group to manage its development. OMB is also
    involved in the agreement development.
        Because the reimbursement model, fee-for-service or capitation, has
    not yet been determined there is no assumption being made concerning
    the use of the Government-Computerized Patient Record (GCPR) in the
    agreement. If the reimbursement model selected were a fee-for-service
    option, the GCPR might be a valuable source of patient-level
    information.
                                     ______

                 Questions Submitted to Adm. Donald L. Pilling
                   Questions Submitted by Senator Ted Stevens
        Question. Why was the Defense Medical Oversight Committee formed?
    How does it function?
        Answer. The Department of Defense senior leadership strongly
    believes maximizing the health and wellness of our service members--and
    their families--is vital to readiness. DOD is acutely aware of the
    problems our medical system and our beneficiaries face, and is
    committed to working with Congress to improve the Military Health
    System. The Deputy Secretary of Defense convened a Medical Summit to
    discuss the Military Health System (MHS) and concluded that greater
    Service oversight was required in the operation of the health program
    and establishment of health care benefits and budget priorities.
        The Defense Medical Oversight Committee (DMOC) was formed in August
    1999, with membership consisting of the Under Secretary of Defense
    (Personnel and Readiness), the Assistant Secretary of Defense for
    Health Affairs, the military department Under Secretaries, the Under
    Secretary of Defense (Comptroller), the four service Vice Chiefs, the
    Director for Logistics from the Joint Staff and the Surgeons General.
        Since its inception, the DMOC has engaged senior military and
    civilian leadership in discussions and review of the health care
    benefit, Defense Health Program (DHP) funding requirements in the
    context of other service decisions, and management and reengineering
    initiatives. The group is committed to ensuring the MHS delivers a
    consistent, equitable benefit for all beneficiaries.
        The DMOC has two primary responsibilities: ensuring adequate
    funding for a high quality MHS, and strengthening the benefit offered
    our military families.
        Question. Explain the role of the DMOC in identifying and
    resourcing fiscal year 2000 and fiscal year 2001 DHP shortfalls.
        Answer. Since its inception, the DMOC has engaged senior military
    and civilian leadership in discussions and review of the health care
    benefit, Defense Health Program (DHP) funding requirements in the
    context of other service decisions, and management and reengineering
    initiatives. The group is committed to ensuring the Military Health
    System delivers a consistent, equitable benefit for all beneficiaries.
        In the past few months, the DMOC directed a thorough Budget Review
    of the DHP to determine the scope of current and projected funding
    requirements. Based on this analysis, the Department has reprogrammed
    funds in fiscal year 2000, reallocated resources to medical care in
    fiscal year 2001, and has made future years defense plan (FYDP)
    adjustments to increase medical support.
        Question. The Subcommittee is aware of alarming reports about
    shortfalls of $6 billion in the Defense Health Program across fiscal
    year 2002-fiscal year 2005; or about $1.5 billion per year. Is the
    Defense Health Program seriously underfunded in the outyears? Are these
    reports true?
        Answer. The DMOC is committed to improving access, satisfaction and
    health care delivery in the Military Health System (MHS), and keeping
    the promise of providing quality medical care to our retiree
    population. As such, last year we directed a thorough Budget Review of
    the health program to determine the scope of current and projected
    funding requirements. The results of this review highlighted a
    significant shortfall in the Defense Health Program.
        The DMOC responded by adding to the health program approximately
    $250 million in the President's Budget proposal for fiscal year 2001,
    and another $6 billion across the Future Years Defense Plan (FYDP).
        The DMOC has also taken actions to ensure that the MHS is not only
    on sound financial footing, but is structured to deliver care in an
    efficient manner. We have endorsed the MHS Optimization Plan, which
    will increase utilization of Military Treatment Facilities and improve
    access to care. To provide the necessary oversight of this plan, we
    will establish and regularly monitor metrics for the plan's
    implementation and the overall performance of the MHS.
        We also recognize that our current Managed Care Support contracts
    do not work as well as they should. Since it is critical that the next
    generation contract, the TRICARE 3.0 version, represents an improvement
    over the current system, we have arranged for an independent evaluation
    of the contract to ensure we achieve the most cost effective and
    efficient vehicle for health care delivery--especially from the
    standpoint of our beneficiaries.
        The DMOC believes it is essential for the MHS to have consistent
    and predictable funding, in order to effectively plan for and operate
    the health program. One means of achieving greater stability in the
    health program's funding could be to convert retired military
    healthcare from a pay-as-you-go system to an accrual financing system.
    We support the study of accrual financing of retiree health care.
        In summary, we are aware of the problems facing the health program
    and we are committed to solving them to improve health care for our
    beneficiaries.
        Question. What would be the benefits of using a full enrollment
    system?
        Answer. First and foremost, a full enrollment system enhances the
    quality of clinical services to the patient; it is truly good medicine.
    Only through enrollment can a patient have an ongoing relationship with
    a primary care manager (PCM), a provider who is familiar with the
    patient's history and treatment and who provides all routine care and
    referrals. Important, current issues in medicine, such as health and
    wellness promotion, disease management and population health, require
    consistent patient-provider relationships for success, and are
    attainable only through enrollment. Without enrolled populations,
    healthcare delivery risks becoming fragmented, episodic, and
    interventional rather than focused on prevention and wellness.
        Secondly, enrollment reduces health care costs for both the
    beneficiaries and the health care system. The patients enjoy lower out-
    of-pocket costs as opposed to the potential for annual deductible costs
    and significant cost-sharing requirements for non-enrolled
    beneficiaries. The overall cost to the system is decreased with an
    enrolled population due to better management of disease and the focus
    on wellness, as well as an increased ability to plan and structure the
    health care delivery system for a known number of enrollees.
        Question. In addition to improved access, better claims processing
    and a stronger network, what changes in the Military Health System
    could be implemented to improve the health benefit?
        Answer. The DMOC believes it is essential for the MHS to have
    consistent and predictable funding, in order to effectively plan for
    and operate the health program. Stable funding would allow facilities
    to invest in programs and technology to improve health care access and
    delivery. One means of achieving greater stability in the health
    program's funding could be to convert retired military healthcare from
    a pay-as-you-go system to an accrual financing system. We support the
    study of accrual financing of retiree health care.
        A full enrollment system would also contribute to stabilization of
    the benefit. If the population served by an MTF could be defined by
    enrollment, resources could be directed more effectively and
    efficiently. The population and its health status would be a known
    entity and facilities and providers could plan appropriate services.
    This would allow for true population health management, including
    timely preventive services to reduce the morbidity and cost of disease
    and injury.
        Question. What changes do you recommend to increase retiree
    enrollment in TRICARE Prime?
        Answer. Reduction or elimination of the enrollment fee would
    provide an incentive for increased enrollment in TRICARE Prime.
    Expansion of TRICARE Prime eligibility to those retirees over 65 would
    create an added enrollment incentive.
        The annual TRICARE prime enrollment fee of $230 for a single
    retired member or $460 for a retiree's family is seen as cost
    prohibitive to some retirees who spent much less on health care while
    on active duty. Findings in a 1999 congressionally mandated study of
    TRICARE by the Center for Naval Analyses have also indicated that out
    of pocket health care costs for retired members have increased since
    the implementation of TRICARE.
        The costs associated with reduced enrollment fees must be offset
    either by increased appropriations or by increased cost sharing by
    beneficiaries who chose to remain in TRICARE Standard. This
    restructured fee schedule would more closely mirror private insurance
    plans in which HMO options are the least costly for the beneficiary and
    fee for service plans are priced higher.
        Question. What initiatives has the DMOC undertaken to support the
    health care optimization plan?
        Answer. Since its formation last August, the DMOC has taken a
    critical look at the Department's strategy for improving TRICARE,
    focusing efforts in the following three areas: (1) optimizing the
    direct care system, (2) improving the Managed Care Support Contracts
    (MCSCs), and (3) appropriately shaping the benefit. The consensus of
    the DMOC membership is that optimizing the capacity of our military
    hospitals and clinics will decrease costs if workload shifts from the
    managed care support contracts back to the direct care system. Given
    existing medical manpower and facility resources required to support
    the Department's readiness mission, the direct care system is
    positioned to deliver additional care at a marginal cost rather than
    buying health care at full cost through the contracts.
        The DMOC has taken a number of specific actions designed to support
    optimization.
        First, to be effective, the military health system requires a
    stable funding stream. OSD (Comptroller) staff, at the request of the
    DMOC, completed a bottom up review of MHS requirements late last year.
    Based on their analysis, the Department has reprogrammed funds in
    fiscal year 2000, reallocated resources to medical care in fiscal year
    2001, and has made future year defense plan (FYDP) adjustments to
    increase medical support.
        Second, the contractual relationship between the Department and the
    managed care support contractors must be structured in such a way as to
    optimize care provided in our military facilities. To ensure that the
    new managed care support contracts, known as TRICARE 3.0, contained the
    appropriate incentives the DMOC directed two contract reviews. The
    initial review, conducted by the Center for Naval Analyses in,
    concluded that TRICARE 3.0 has the necessary financial incentives to
    support the in-house system in the recapture of purchased care. Based
    on that analysis, the Request for Proposal was issued on 18 February
    2000 for TRICARE Region 11, which is serving as the Department's
    prototype for the optimization plan. The DMOC has also directed a
    second TRICARE 3.0 contract review by an independent contractor to
    determine if additional refinements are needed. The contractor's report
    to the DMOC is scheduled for late-spring.
        Third, the DMOC is investigating the feasibility of accrual
    financing to pay for the costs of retired care in the future. We
    envision a program similar to the accrual financing system put in place
    in 1984 for military retirement pay, with payment through revised
    manpower programming rates in the Services. Stable financing for
    retiree medical care will support optimization by providing a
    predictable health care benefit for our beneficiaries as well as our
    health care providers. The DMOC plans to oversee the MHS progress
    towards optimization through regular briefings and metrics review.
        Question. Has the DMOC considered any alternatives for financing
    retiree medical health care?
        Answer. Yes, finding a long-term financial solution to Defense
    Health Program funding shortfalls will provide a strong foundation to
    meeting future challenges. One option discussed by the DMOC for
    financing retired military healthcare involves conversion from a pay-
    as-you-go system to an accrual financing system. In our current pay-as-
    you-go system, funding for retiree health care must compete with other
    Departmental priorities. Greater stability in the health program's
    funding could be achieved by converting to an accrual financing system.
    It is especially important to address this issue now, as retiree health
    care costs will continue to increase due to changes in life expectancy,
    a growing retiree population and medical inflation.
        In an accrual system, the healthcare costs for retirees would be
    funded in a fashion similar to that which the Department of Defense
    uses to fund retirement pensions. An accrued military health benefit
    liability recognizes the Department of Defense has an obligation to
    current and future military retirees to provide for their health care.
    In an accrual based accounting system, the post-retirement liability is
    an estimate of the total future costs of the health benefits earned
    during a member's service. Recognizing these costs in advance provides
    greater benefit security over the long term.
        The future healthcare cost for retirees would be included in active
    duty programming rates based on actuarial estimates and would accrue to
    a new trust fund.
                                     ______

                 Question Submitted by Senator Daniel K. Inouye
        Question. I understand that the Defense Medical Oversight Committee
    directed an analysis of the TRICARE 3.0 Request for Proposal (RFP) and
    that another more rigorous study is to be conducted. What is your
    opinion of testing TRICARE 3.0 in Region 11 prior to implementation
    world-wide?
        Answer. TRICARE 3.0 is significantly different from current managed
    care support contracts. We are shifting from prescriptive detailed
    requirements to outcomes based requirements with the bidders
    determining the best business practices to meet our goals.
        The financing and risk sharing are also different in 3.0, and it is
    believed these new mechanisms give greater opportunity to manage our
    resources. The TRICARE 3.0 demonstration has been started in Region 11.
    Timelines are tight, but lessons learned from both the demonstration
    and in-depth contract review can be incorporated into the RFPs for
    subsequent regions.
                                     ______

                Questions Submitted to Lt. Gen. Ronald R. Blanck
                   Questions Submitted by Senator Ted Stevens
                       fiscal year 2000 budget shortfall
        Question. Do you have a budget shortfall in fiscal year 2000? How
    much?
        Answer. Yes. The Army Defense Health Program (DHP) has a total
    projected shortfall in fiscal year 2000 of $174.1 million. The
    shortfall can be broken down into two distinctive groups. They are
    items that we will not do this year (suppressed) and items, which must
    be funded, which are not funded in the base. Suppressed items include
    equipment purchases, IM/IT investment, and Repair and Maintenance and
    total approximately $76 million. Must fund items include TRICARE Senior
    Prime demonstration project, base operations, restore government wide
    rescission and a pharmacy efficiency decrement and total $98.1 million.
    The above shortfall is in addition to any shortfall identified by
    Health Affairs related to the Managed Care Support Contract and in
    addition to $228 million required to preclude a reprogramming action
    currently pending at DOD level.
                   supplemental funding for fiscal year 2000
        Question. Does your ``direct care'' system need supplemental funds
    to be fully funded in fiscal year 2000?
        Answer. Yes. The $174.1 million shortfall identified above is for
    the ``direct care'' shortfall. TRICARE Management Activity is
    addressing the shortfall associated with private sector care.
                            fiscal year 2001 budget
        Question. Does the fiscal year 2001 budget as submitted reflect
    your full requirements?
        Answer. No. The Army Defense Health Program has a total projected
    shortfall in fiscal year 2001 of $85.9 million. The shortfall can be
    broken down into two distinctive groups. They are items that we will
    not do next year (suppressed) and items, which must be funded that are
    not funded in the base. In addition to these two critical areas, two
    additional areas, though not included in the above figure, should be
    considered to address our full requirements. The first is a long-
    standing backlog of Real Property Maintenance (RPM/MRP) projects that
    total $200 million. The second has been the annual erosion of our base
    funding predicated on a failed efficiency for anticipated Utilization
    Management (UM) ``savings''. Similar to the experience in the civilian
    health care environment, our annual, anticipated savings in UM have not
    materialized to the extent that dollars have been decremented in years
    past ($283 million). Some reinvestment of these dollars would enhance
    the productivity of the existing MTF infrastructure. The immediate
    shortfall includes: Suppressed for fiscal year 2001 (Equipment
    Purchases and RPM (restoration to 3 percent))--$25.2 million; and Must
    Fund--not in base (TRICARE Senior Prime and BASOPS)--$60.7 million.
          fiscal year 2000 and fiscal year 2001 unfunded requirements
        Question. Please provide a list of your fiscal year 2000 and fiscal
    year 2001 ``unfunded requirements.''
        Answer.
                                                                 In millions
    Fiscal year 2000:
        Suppressed Equipment Purchases................................$4.086
        Suppressed Travel............................................. 5.200
        Suppressed IM/IT..............................................11.000
        Suppressed RPM................................................17.838
        Restore RPM to 3 percent......................................37.900
        Restore PDM Pharmacy Decrement................................ 4.015
        TRICARE Senior Prime Network..................................16.800
        TRICARE Senior Prime MTF......................................25.200
        Restore government wide rescission............................21.242
        Base Operations:
            AFIP......................................................10.000
            Womack Army Medical Center................................ 3.000
            Walter Reed Army Institute of Research.................... 1.605
        Newborn Claims (estimate as of 27 Mar 00) (final amount yet to
          be determined)..............................................16.200
    Fiscal year 2001:
        Suppressed Equipment Purchases................................10.600
        Suppressed RPM to 2.63 percent................................ 9.400
        Restore RPM to 3 percent...................................... 7.700
        TRICARE Senior Prime..........................................45.000
        BASOPS (new mission).......................................... 7.900
        BASOPS (suppressed)........................................... 5.300
                          cost of medicare subvention
        Question. Regarding the Medicare subvention demonstrations, the
    Subcommittee is aware that the current negotiation with HCFA may
    actually cost DOD money. Can you please explain?
        Answer. Four issues have combined to create this situation. First,
    Health Care Financing Agency (HCFA) reimbursement is not dollar for
    dollar but only 95 percent of DOD expenditures; secondly, level of
    effort was based upon fiscal year 1996 funding level, which was prior
    to utilization management reductions to the Defense Health Program
    (most robust funding levels); third, HCFA requires the provision of
    services not previously offered or available from DOD facilities, such
    as home health care and rehabilitation services; fourth, since Medicare
    eligibles were seen on only a space available basis, DOD was not
    providing the full spectrum of care that is now being required. This
    last point highlights the point that Medicare previously paid for the
    more resource intensive portions of over-65 healthcare.
        Based on the joint agreement between DOD and HCFA, the Department
    receives monthly interim payments from HCFA's Medicare Trust Fund based
    on the enrollment level at each demonstration site. However, DOD is not
    entitled to keep these HCFA payments until DOD shows that its ``level-
    of-effort'' funding in the direct budget has exceeded the historical
    LOE, in accordance with the terms of the joint agreement. A
    reconciliation process is conducted annually (after completion of each
    calendar year demonstration period) to assess (1) if DOD is entitled to
    receive funding from HCFA and (2) how much of the interim payments
    received during the demonstration period DOD can retain.
        A preliminary calculation of CY 1999 reconciliation indicates DOD
    is entitled to receive HCFA reimbursement, but will only be able to
    retain an estimated 14 percent of interim payments received. The joint
    agreement terms requires DOD to exceed historic LOE spending for both
    its enrolled and non-enrolled Medicare-eligible beneficiaries. While
    the Department is exceeding its historic LOE spending to the total
    Medicare-eligible population, it is not meeting the historical LOE
    spending on its non-enrolled-Medicare-eligible beneficiaries.
        Based on this calculation, the Medicare Senior Prime (TSP)
    Demonstration is running at a loss. The capitation rates HCFA provide
    DOD do not cover the incremental costs of providing care. The payments
    DOD will be entitled to retain after the CY 1999 reconciliation will
    not even cover the cost of care purchased from civilian providers for
    its TSP enrollees. As a result, the funding received as interim
    payments does not augment the sites' budgets enough to break even. It
    is estimated the Army will require $42 million in fiscal year 2000
    above its current funding level to cover the costs for civilian
    purchased care and incremental costs at our demonstration sites.
                  breast and prostate cancer research programs
        Question. Can you give the Subcommittee a brief update on the
    breast cancer and prostate cancer research programs?
        Answer. The Fiscal Year 2000 Defense Appropriations Act provides
    $175 million to the BCRP to support innovative research directed toward
    the eradication of breast cancer. Additional funds are anticipated as a
    result of the Stamp Out Breast Cancer Act. A Program Announcement was
    released March 10, 2000 soliciting proposals in three categories:
    Research, Infrastructure, and Training/Recruitment. Submissions are due
    April 19, June 7, and August 2, 2000, depending upon the award
    category. Peer Review is scheduled for August and September 2000, and
    Programmatic Review is scheduled for early November 2000. Investigators
    will be notified in December regarding the status of their funding.
        The fiscal year 1999 Prostate Cancer Research Program (PCRP)
    Congressional appropriation of $50 million has enabled 106 proposals to
    be recommended for funding. Through this appropriation, the PCRP
    initiated four new Prostate Cancer Research Centers, each consisting of
    experts from multiple disciplines engaged in an integrated effort to
    study prostate cancer and to develop treatments. The PCRP also
    recruited 23 new trainees into prostate cancer research through 2
    different training award categories and supported 79 new research
    projects through 2 different research award categories. Negotiations
    are currently in progress for all awards.
        The Fiscal Year 2000 Defense Appropriations Act provides $75
    million to the PCRP to support innovative research directed toward the
    eradication of prostate cancer. The Program Announcement was released
    February 23, 2000 soliciting proposals for two mechanisms in the
    Research category, New Investigator and Idea Development awards and
    three mechanisms in the Training/Recruitment category, Postdoctoral
    Traineeships, Minority Population Focused Collaborative Training
    Awards, and Historically Black Colleges and Universities/Minority
    Institutions Academic Development Awards. In addition, Phase II of the
    Dual Phase mechanism, first introduced in the fiscal year 1997 program,
    will be executed using the fiscal year 2000 appropriation. Dual Phase
    Awards are intended to invigorate the prostate cancer research
    community by providing continued support to the most productive
    research identified in fiscal year 1997 Phase I awards. A total of 168
    investigators were invited to compete for Phase II funds. Proposals are
    due April 5 and May 17, 2000, depending upon the award group. Peer
    Review is scheduled for May and July 2000. Programmatic Review is
    scheduled for June and October 2000. Investigators will be notified of
    their funding status in July and November, and award negotiations will
    begin immediately.
                         overhead of research programs
        Question. How much overhead is required to carry out these research
    programs?
        Answer. The costs of the United States Army Medical Research and
    Material Command (USAMRMC) Breast Cancer Research Program (BCRP, fiscal
    year 1992-2000) and Prostate Cancer Research Program (PCRP, fiscal year
    1997-2000) consist of the following:
        1. Congressional and DOD Withholds (mean of 4.9 percent and 5.5
    percent of original appropriation, respectively): SBIR, STTR,
    inflation, etc., withheld prior to release of funds to the USAMRMC.
        2. USAMRMC HQ and Command Support (mean of 1.8 percent and 3.7
    percent of funds released to the USAMRMC, respectively): Personnel
    actions, budget management, legal services, contracting, logistics
    services, regulatory compliance (animal use, human use, environmental
    compliance, safety, etc.), building space and associated costs (water,
    electricity, upkeep, etc.), frequent information requests, and frequent
    visitors and requests for visits by key leadership and staff, including
    the Commanding General.
        3. Program Costs (100 percent of funds provided to managing
    office):
        L  3a. Management Costs (mean of 7.7 percent and 8.8 percent of
    funds released to management office, respectively): Expenses for the
    daily administration of the programs, to include building space and
    associated costs not covered by HQ, civil service personnel, other
    Government personnel, support contracts, proposal review and approval,
    contracting, regulatory compliance (animal use, human use,
    environmental compliance, safety, etc. not covered by HQ), travel,
    supplies, automation equipment, information management, etc.
          3b. Research Awards (mean of 89.6 percent and 88.8 percent of
    funds released to management office, respectively): Funds provided to
    award recipients.
        Item 1 is an overhead cost subtracted prior to release of funds to
    the USAMRMC. Items 2 and 3a are the USAMRMC overhead costs.
        Question. How does this overhead figure compare to other research
    programs?
        Answer. For the funds released to the sponsoring agency, the
    USAMRMC overhead is less than half that of the National Institutes of
    Health (NIH). The NIH uses the ``Taps'' Program whereby every Institute
    is ``tapped'' a percentage of its budget to pay for central services.
        1. Central Services (minimum of 20 percent of funds for
    Institutes):
        L  The Management Fund.--This fund, which was established June 29,
    1957 by Public Law 85-67, pays for the Office of the Director, the
    Clinical Center, the Center for Scientific Review, as well as for
    computer sciences support, security, vehicles, maintenance, utilities,
    engineering maintenance, space management, safety and environmental
    protection, housekeeping, mail, sanitation and general administrative
    support services. Each Institute is ``tapped'' for funds ranging upward
    from 20 percent of their budget according to a formula developed for
    that Institute. With the exception of the Clinical Center and its
    Center for Scientific Review, the services provided by this fund are
    analogous to the USAMRMC HQ and Command Support services.
          Service and Supply Fund.--This fund charges each Institute
    according to its usage of the services or need for special purchases.
    Examples are the purchase of special glassware, the repair of
    scientific equipment, and special library searches or translations.
    Services provided are charged according to an established hourly rate
    based on an activity based cost accounting system.
          Membership Fees.--These fees are for shared services such as
    basic services from the NIH Library.
        2. Institute Costs (100 percent of funds provided to Institutes):
    In addition to the minimum of 20 percent NIH withholds for central
    services, each Institute has its own management costs. For example, NCI
    published its budget in ``The Nation's Investment in Cancer Research--A
    Budget Proposal for Fiscal Year 2000'', as follows:
        L  2a. Management Costs (4 percent of funds released to management
    office): 4 percent for administration and management.
          2b. Public Service (3 percent of funds released to management
    office): 3 percent for communications regarding cancer issues.
          2c. Research Awards (93 percent of funds released to management
    office): 4 percent for training and education; 16 percent for
    intramural research; and 73 percent for extramural research.
        The NIH overhead consists of items 1, 2a and 2b.
        For the funds released to each agency, the USAMRMC BCRP overhead is
    a mean of 10.4 percent, the USAMRMC PCRP overhead is a mean of 11.2
    percent, and the NIH overhead is a minimum of 23.2 percent (more than
    double the USAMRMC rate).
        Question. Have they become more efficient over time?
        Answer. The overhead costs have increased since inception of the
    programs but is now stabilizing. Since fiscal year 1990, the USAMRMC
    has received almost $2.5 billion in special appropriations to fund
    research programs specified by Congress. The early requests from
    Congress were few and of low dollar value; therefore, they could be
    accommodated under the existing USAMRMC infrastructure and managed by
    existing USAMRMC personnel. The number of requests and the dollar value
    have escalated significantly--in fiscal year 2000, the USAMRMC received
    over $540 million in special appropriations for 73 special programs.
    This dollar amount more than triples the research being sponsored by
    the USAMRMC. Although the Command has the expertise to execute and
    manage these special programs, the significant and increasing workload
    has necessitated the use of a portion of the special appropriations to
    cover the headquarters support and program management costs, as is done
    with the other Defense and Army appropriations managed by the USAMRMC.
                                     ______

               Questions Submitted by Senator Christopher S. Bond
                                quality of care
        Question. We are all concerned over the quality of care our
    military beneficiaries receive. As we move to ensure greater access, we
    must balance this with quality of care. For example Lieutenant General
    Carlton mentioned in his statement that the Air Force is committed to
    25 patients per day per provider. This metric seems overly optimistic
    and will force physicians to see approximately 3 patients per hour.
    This severely reduces the doctors' time for completing administrative
    requirements, and, more important, it eliminates critical time for
    building the doctor-patient relationship. How will you maintain quality
    while increasing access?
        Answer. The imperative to maintain quality while increasing access
    will indeed be a challenge, but a challenge that can be met. We will
    continue to adhere to our quality improvement, quality assurance, and
    risk management policies and procedures irrespective of the number of
    patients seen per provider.
        The key to increasing access while maintaining quality is to ensure
    that we remove all the obstacles providers face which contribute to
    inefficient practice. Our basic assumption is that our providers desire
    an efficient practice environment in which they can maximize the number
    of patients they care for each day! In order to create an efficient
    practice environment we will remove the current impediments to
    efficiency. Some of these impediments include inadequate numbers of
    exam rooms per provider, insufficient support personnel per provider,
    cumbersome computerized medical information systems, and lack of
    standardization of practice patterns.
        We fully support Dr. Bailey's recent policy memorandum setting
    forth guidelines for the number of exam rooms and support personnel per
    provider and mandating by name enrollment of patients to primary care
    providers. We are drafting a battle plan to meet these challenges and
    will provide our clinicians with 2 exam rooms per provider and 3.25
    support personnel per primary care provider as the policy mandates. We
    are convinced that the by name enrollment policy will result in
    increased continuity of care with a resultant increased quality of care
    and enhanced provider-patient relationships.
        We believe that the CHCS II, a computerized medical information
    system, will enhance productivity by eliminating or minimizing much of
    the paperwork associated with the healthcare encounter. CHCS II will
    enable the clinician to rapidly search the patient's record for data
    related to the visit and will facilitate data entry which in turn
    should reduce medical errors associated with illegible handwriting.
    CHCS II will also provide the clinician reminders when clinical
    preventive service interventions (e.g., mammograms) are due.
        Our strong support of clinical practice guidelines is based on our
    belief that a more systematic approach to diseases will lead to
    increased efficiency. Guidelines address the process of care for a
    specific disease. Guidelines are developed to ensure that only those
    portions of the process of care that require a clinician are done by
    the clinician, thus enabling the clinician to devote her/his attention
    to the actions that demand her/his expertise. The remaining portions of
    the process become the responsibility of the support personnel.
    Guidelines promote quality as well as efficiency. Quality will increase
    as anecdotal practice is replaced by evidence based practice and
    variation in practice among providers and between patients is reduced.
    The guideline metrics provide quality benchmarks and facilitate
    monitoring of guideline implementation.
       department of defense/department of veterans affairs partnerships
        Question. While I am encouraged by the numerous references to
    partnerships with the Department of Veterans Affairs, contracting
    challenges are a continuing concern. For example, VA budget
    justifications and resources may not account for joint ventures. We
    must ensure that these agreements clearly outline responsibilities in
    order to maximize efficiencies without limiting flexibility. What
    impact will these agreements have on the VA's requirements and how will
    these partnerships be managed to ensure efficiency?
        Answer. Under the ``big'' umbrella of the VA/DOD Health Care
    Resources Sharing Program, the terms ``partnerships,'' ``joint
    ventures,'' and ``agreements'' are being used interchange-ably, and
    require separate definition .
        1. Partnering and Partnership: These terms are not defined under
    the scope and functions of the VA/DOD Health Care Resources Sharing
    Program. However, under this Program, the terms ``partnering'' and
    ``partnership'' are being used to refer to an ``informal working
    relationship'' between the DVA and DOD. The terms as used have no
    authority or legal consequences in that there is no legal documentation
    within the Program, known as or called a ``Partnership.''
        (2). Agreements: The term ``agreement'' under the VA/DOD Health
    Care Resources Sharing Program, does have a legal connotation in that
    there is a formal document, known as or called an ``Agreement.'' Under
    this Program, there are three types of, or specific agreements, that
    describe the legal, operational, and working relationships between the
    DVA and DOD. These three specific types of agreements as used in this
    Program are: ``joint venture agreements,'' ``resources support
    agreements,'' and ``resources sharing agreements.''
        (a). Joint Venture Agreements: This term refers to a VA/DOD
    Agreement funding mechanism, whereby each Agency (Partner) provides 50
    percent of the funding requirements of a capital expenditure
    investment. The capital expenditure may be either funding for the
    construction of a new facility, or the remodeling or renovation of an
    existing facility for joint VA/DOD occupancy or use. This type of joint
    funding may also be used for the purchase for capital equipment, that
    will be available for joint use by the two Agencies.
        At the present time, the AMEDD has three (3) joint venture funded
    construction projects, where new jointly occupied Outpatient Clinic
    facilities were constructed at TAMC in Honolulu, HI, at WBAMC in El
    Paso, TX, and at Reynolds ACH at Fort Sill, OK.
        An example, of a capital equipment funded joint venture expenditure
    for the purchase of capital equipment is the joint purchase project at
    Moncrief ACH, at Fort Jackson, SC, where each Agency provided 50
    percent of the capital funds for the joint purchase and use of
    $3,000,000 in MRI equipment.
        Funding for VA/DOD joint ventures is usually pre-approved
    Congressional funding for the specific joint venture project,
    therefore, it is the responsibility of both Agencies to make the
    project a win-win situation.
        Functional and operational management and responsibility of a joint
    venture in an effective and efficient manner is dependent upon both
    Agencies (Partners) working together to make the joint venture workable
    and satisfactory. Oversight responsibility for the success of the joint
    venture lies with the Veterans Integrated Systems Network (VISN) for
    the VA MTF, and with the Regional Medical Command for the Army MTF.
        (b). TRICARE Managed Care Support (MCS) Contractor Agreements:
    While this type of agreements are called ``support agreements,'' they
    are really ``contracts'' in that the VA MTF, as a Network Preferred
    Provider (NPP), is really a subcontractor to a MCS Contractor. As a
    Network Preferred Provider, the VA MTF is reimbursed for services
    provided at a discounted CHAMPUS maximum allowable charge, or as it is
    usually called, the CMAC rate. Again the success of this type of an
    agreement (contract) is dependent upon the effective working
    relationship between the MCS Contractor (the TRICARE MCS Contractor)
    and the NPP subcontractor (the VA MTF).
        The immediate management responsibility for the effective and
    efficient management of this type of agreement falls within the purvue
    of the TRICARE MCS Contractor. Oversight responsibility for this type
    of agreement lies with the Regional Lead Agent. The Army MTF and the
    Regional Medical Command have no direct management responsibility for
    this type of agreement because of the contractual agreement and
    relationship between the TRICARE MCS Contractor and the NPP
    subcontractor.
        (c). Resources Sharing Agreements: The third type of VA/DOD
    agreements, i.e., resources sharing agreements, are the VA/DOD Health
    Care Resources Sharing Agreement. VA/DOD Health Care Resources Sharing
    Agreements are usually locally negotiated between a local VA MTF and a
    local DOD MTF. These local VA/DOD Health Care Resources Sharing
    Agreements are usually entered into for one of the following reasons:
    cost avoidance through shared services, cost savings through reduction
    in duplication of services, or to obtain a service that either the VA
    or the DOD MTF is not able to provide itself because of lack of
    funding, or because of the non-availability of personnel to provide
    that service.
        Under the latter type of sharing agreements, reimbursement for the
    provided service may be by a negotiated rate not to exceed actual cost,
    usually based upon the MTF's MEPRS data, or by using the current fiscal
    year interagency rates for the provided service. The VA/DOD interagency
    rates are established and published annually by Congress. Again, the
    success and efficiency of the locally negotiated VA/DOD Health Care
    resources Sharing Agreements is determined by the cooperative working
    relationship between the two participating MTFs.
        Because this category of sharing agreement are negotiated at cost,
    or not to exceed actual cost, they are ``cost saving'' by their very
    nature. The direct management responsibility for the effective and
    efficient manner in which the agreement is carried out is the
    responsibility of the participating VA and Army MTFs at the local
    level. Oversight responsibility lies with their respective next level
    chain of command organizations, i.e, the VISNs for the VA MTFs and the
    RMCs for the Army MTFs.
        (3). Whether the VA and the DOD are participating together in a
    Joint Venture Agreement, a TRICARE Managed Care Support Agreement
    (Contract), or a VA/DOD Health Care Resources Sharing Agreement,
    participation by the two Agencies is voluntary. Once in an agreement,
    either party to the agreement has the option of ``opting'' out of the
    agreement at any time during the life term of the agreement, upon
    thirty (30) days written notice to the other party to the agreement.
        (4). The duties and responsibilities of each party to the agreement
    are generally spelled out in the joint general provisions of the
    agreement. Both parties are required to sign the agreement, indicating
    that they are in agreement with the terms and/or provisions of the
    formal agreement. By their signature to the agreement, they are
    expected to abide by same.
        (5). At any given time during the life term of the agreement, they
    have the following available options, i.e., either to: (a) ``opt out''
    of the agreement, or (b) amend the agreement, or (c) renegotiate the
    agreement.
                              pharmacy formularies
        Question. Military beneficiaries and health care providers have
    complained of pharmacy restrictions and inconsistencies. As you strive
    for greater uniformity across TRICARE regions, please comment on how
    you will correct inadequate and inconsistent formularies.
        Answer. The pharmacy benefit within the Department of Defense is a
    Triservice versus service specific issue. Significant improvements have
    been made since the implementation of TRICARE with the goal of
    providing a uniform, consistent, and cost effective pharmacy benefit to
    all eligible beneficiaries. The pharmacy benefit program is now
    centrally managed by the TRICARE Management Activity, the DOD Pharmacy
    Board of Directors, and the DOD Pharmacy and Therapeutics Committee.
    All corporate formulary decisions relating to the three points of
    service for the benefit (MTF pharmacy, National Mail Order Pharmacy
    (NMOP), and the Retail Pharmacy Network) reside with the DOD Pharmacy
    and Therapeutics Committee (P&T).
        The Basic Core Formulary (BCF) is the nucleus for all MTF
    formularies, with BCF policy established by Health Affairs Policy 98-
    034, dated April 27, 1998. The BCF is managed and updated by the DOD
    Pharmacy and Therapeutics Committee. The BCF is not a closed formulary,
    but rather is the listing of ``core'' formulary drugs that must be
    uniformly available as the primary care formulary at all MTF
    pharmacies, and available to all eligible beneficiaries independent of
    beneficiary category. Primary selection criteria by the DOD P&T
    Committee for inclusion on the BCF includes the drugs' clinical
    appropriateness and cost-effectiveness to meet the primary care needs
    of a majority eligible beneficiaries. Any restrictions on BCF drugs are
    permitted only for valid clinical reasons or based on evidenced based
    medicine protocols published by the DOD P&T Committee. Restrictions on
    any non-formulary medications are permitted only for valid clinical
    reasons or based on evidenced based medicine protocols approved by the
    local MTF P&T committee. Restrictions on any formulary or non-formulary
    drug may not be imposed solely as a cost reduction strategy, which
    could negatively impact patient care.
        The National Defense Authorization Act of 2000 has mandated the
    establishment of a ``Uniform Formulary'' for DOD. It is anticipated
    that this legislation coupled with additional funding for
    pharmaceuticals in the Medical Treatment Facilities will significantly
    improve the access to appropriate, cost-effective drug therapy for a
    majority of eligible beneficiaries.
                                     ______

                Questions Submitted by Senator Daniel K. Inouye
                           excess capacity in the mhs
        Question. As I understand, the MHS optimization plan will increase
    access to primary care is by using best business practices to increase
    the overall capacity and efficiency of the military direct care system.
    Currently, how much excess capacity, if any, do you currently have in
    your hospitals and clinics?
        Answer. The military treatment facility's capacity to enroll its
    beneficiaries is affected by the number of Primary Care Managers (PCM)
    at the MTF. Their availability to see patients, readiness
    considerations, patient demand for visits, and their productivity will
    be determined by the availability of sufficient clinic support
    personnel, facility redesign, and management actions that emphasize
    improved access.
        We are currently in the process of identifying our baseline.
        Health Affairs developed with Service input a uniform enrollment-
    capacity planning model that we are currently utilizing to determine
    our capacity. This model identified a framework to optimize MTFs and
    recapture appropriate network workload. Using the model provided, each
    MTF was tasked to identify its baseline enrollment capacity and to
    develop a plan to move toward an enrollment objective of 1,500
    enrollees per PCM. This is a critical component of meeting our MTF
    baseline optimization objectives. The Services are conducting their
    initial assessment of each MTF's present enrollment, availability of
    examination rooms and support staff and are expected to provide their
    input by 14 April 2000. A phased comprehensive capacity plan for
    achievable enrollment targets is scheduled for completion by 30 June
    2000.
        To reach 1,500 enrollees per PCM, significant reductions will be
    required in the average number of primary care visits per enrollee. The
    number of reduced visits will be offset by increasing their health and
    appropriate utilization of resources through demand management, e.g.,
    the use of nurse advice lines and nurse triage systems, self-help
    pamphlets, and prevention measures. The model requires greater
    productivity through the use of appropriate support staff, examination
    rooms, scheduling techniques and practice patterns. It will also
    require the availability of assigned PCMs to staff primary care
    clinics.
        We are committed to meeting our beneficiaries' expectations by
    providing more care in our MTFs.
                 care sent to managed care support contractors
        Question. In the facilities where you have excess capacity, how
    much care is being sent to the Managed Care Support contractors?
        Answer. In March, 2000 we began tracking the amount of care going
    to contractors. With the launching of the new MHS Optimization
    initiative, the enrollment capacity planning model, we are just
    beginning to analyze primary care access and timeliness of care data in
    a centralized, systematic way. Prior to now, MTFs developed and
    monitored their own metrics. As a starting point, we are currently
    monitoring average visits/provider/day and reporting on a monthly
    basis. Once we have a firm understanding of the baseline numbers, we
    can begin to examine barriers to productivity (lack of adequate space,
    lack of adequate support persons, etc.) and address them directly. The
    goal is to recapture workload from the contractor to the greatest
    extent possible.
                       medical errors and patient safety
        Question. The prevalence of medical errors has commanded the
    attention of this Congress and the nation. What initiatives do you now
    use that address the issue of patient safety?
        Answer. The AMEDD enthusiastically supports the Military Health
    System's (MHS) commitment to improving health care delivery processes
    and systems to minimize the chances of preventable medical errors. We
    are pleased to share the numerous innovative patient safety related
    initiatives which have been implemented throughout the AMEDD:
    DOD Pharmacy Technology Initiatives:
        Pharmacy Data Transaction Service (PDTS).--PDTS creates a central
    data repository for all prescriptions filled throughout the MHS to
    include: the direct care system (MTF), managed care contractor's retail
    pharmacy network, and the DOD national mail order pharmacy (NMOP).
    Aggregating prescription data from these disparate system enables PDTS
    to conduct prospective (real time) drug reviews of a patient's
    prescription against their total medication profile to identify drug-
    drug interactions, and duplication of therapy regardless of where they
    may have obtained their previous medications. The architecture of the
    process is unprecedented, and extends beyond the current technologies
    where these clinical screening processes are host or single system
    based.
        Outpatient Prescription Bar-Coding.--The DOD Composite Health Care
    System (CHCS) was enhanced this past year with an added feature to
    produce a bar code on the outpatient prescription label. To use this
    option, pharmacies must first obtain bar code printers, bar code
    readers, and appropriate labels. This option can be used to prevent
    dispensing a prescription to the incorrect patient as follows:
      --Patient ID card scanned at the pharmacy's dispensing window to
            identify the patient.
      --The prescription bar code is then scanned using the CHCS dispensing
            option that links these independent events to assure that the
            correct patient is receiving the intended medications. The
            dispensing option also documents the time of dispensing and the
            individual performing the dispensing.
        Status: The number of DOD pharmacies with bar code prescriptions
    are small, but continues to grow. Additional funding, to obtain the
    necessary equipment, is needed to fully implement bar option. Use of
    the dispensing option can become standard policy, once the appropriate
    equipment is operational.
        Robotics.--Several facilities have implemented Outpatient Pharmacy
    Robotic Systems that completely process a prescription order. These
    systems select, fill, and label the container to include any
    precautionary auxiliary labels. Some of these robotic systems will also
    cap the container and provide digital imaging of the contents for a
    final check of the preparation. These robotic systems incorporate bar
    coding and other proven technologies that remove humanistic
    opportunities for process errors. Process errors that can potentially
    be avoided include selecting and placing the wrong medication in a
    container, counting errors, and incorrectly labeling a container.
    MTF Medication Safety Initiatives:
        The Unit Dose Drug Distribution System, automated drug dispensing
    technologies, and the use of specially trained and certified Registered
    Pharmacists certified for preparation of IV admixtures and specialty
    drugs (such as chemotherapy) are safeguards against medication errors
    which have long been the standard of care in Army MTF's.
        All Adverse Drug Events are reviewed locally by the MTF Pharmacy
    and Therapeutics Committee with significant drug events reported to the
    FDA.
        Concentrations of intravenous infusions (such as pressors) are
    standardized for adults in the ICUs so as to eliminate calculation
    errors associated with varying strengths and infusion rates.
        Pharmacists accompany physician teams on rounds in the intensive
    care unit, advising on drug interactions and safety.
        Several MTF's use of the Omnicell dispensing system on the
    inpatient units to ensure the right patient gets the right medication
    by linking the computer order with the proper medication with the
    patient's name before it will allow the nurse to withdraw the
    medication. The use of Omnicell has greatly reduced the number of drugs
    openly stocked on the wards.
        High-risk medications are closely controlled:
      --Concentrated KCl solution is not allowed on stocked on units/
            clinics and all KCl containing intravenous solutions are
            prepared in the pharmacy.
      --Heparin and insulin are stored in separate areas.
      --Sodium Chloride is not available in concentrations greater than 0.9
            percent.
        Clindamycin, a commonly used peri-operative antibiotic, is no
    longer supplied to the OR in concentrated form, thereby obviating the
    risk of cardiac reaction from rapid infusion.
        Organizations administering chemotherapy ensure preparation in a
    specialized pharmacy under the direction of an oncologically trained
    pharmacist thereby reducing the risk of miscalculation of doses.
        Adverse drug reactions are broadcast on the hospital e-mail system
    thereby increasing physician awareness of common and uncommon problems
    and creating an opportunity for education and feedback. This has also
    increased the regular reporting of ADRs.
        Critical drug information can be provided in the comment fields of
    CHCS so that a prescriber is reminded of important information at the
    time a medication is ordered. For example, metformin is used to treat
    diabetes but can worsen renal failure. When the doctor initiates a
    prescription for metformin, he is reminded to check a creatinine.
        Pharmacy personnel regularly inspect stock medications including
    emergency carts for expiration dates, as well as proper storage.
        The Composite Health Care System (CHCS) automates the patients'
    records and performs an automatic crosscheck looking for drug-to-drug
    and drug-allergy contraindications. The system also requires the
    provider to enter in the height and weight of pediatric patients before
    a prescription can be written. The prescription is recalculated by the
    Pharmacist prior to it being filled.
    AMEDD Clinical Laboratory Initiatives:
        Many of the safeguards generated through CHCS, which ensure order
    accuracy, are applicable for the clinical laboratory. An additional
    safeguard is the bi-directional interface of clinical analyzers
    (downloads orders from CHCS to the analyzer and uploads results to
    CHCS). Presently, the DOD Laboratory Joint Working Group has an
    initiative to standardize laboratory data and gain interoperability
    between CHCS host computers.
        In the Blood Bank arena, the use of barcode has been one method of
    improving specimen identification processes. The sites with donor and/
    or transfusion functions have installed the Defense Blood Standard
    System (DBSS) supported computers to assist in the issue of blood
    products.
        Use of barcodes to register specimens. This has been emphasized
    throughout the entire laboratory and not just with Blood Banks. Machine
    readable (barcoded) labels reduce clerical errors associated with
    manual data entry of human readable labels.
        Use of automatic pipettes and other more fully automated analyzers.
    Minimization of operator intervention improves analytic accuracy.
        Unbundling of test panels. Not only is this more cost effective
    because it reduces unnecessary testing, but fewer tests mean fewer
    chances for error.
        Introduction of more sensitive and more specific tests. This
    provides clinicians with more accurate information on which to base
    diagnoses and influence more favorable patient outcomes. Examples
    include gene probes and DNA amplification assays as well as liquid-
    based cytology.
        Implementation of the FDA's current Good Laboratory Practices for
    improved process control.
        Increased emphasis on training and competency assessment for
    laboratory personnel.
        Panic/Critical Values are identified on lab studies to assure that
    healthcare providers are notified quickly and can institute
    appropriate, timely care.
    Centers of Excellence:
        The AMEDD has established Centers of Excellence as a means to
    improve patient outcomes for complicated surgical procedures by
    concentrating specialized medical expertise at one site.
    Evidenced-based Clinical Practice Guidelines:
        National Quality Management Program (NQMP) initiatives to identify
    best clinical practice continue. The NQMP has completed baseline
    studies determining the extent of compliance with DOD/VA and/or other
    national clinical practice guidelines so that the impact of
    implementing evidence-based disease management practice guidelines
    system-wide can be determined. The program will facilitate the
    benchmarking of DOD facilities against their federal and civilian
    peers' facilities on DOD/VA Practice Guideline and DOD Putting
    Prevention into Practice evidence-based process and outcome quality
    indicators. The JCAHO performance measurement program (ORYX), Special
    Studies and the annual Quality Management Reviews continue to be
    utilized to benchmark DOD facilities and identify best practices.
    MEDCOM Quality Management Directorate (QMD) Site Visits:
        In January 2000 the QMD implemented staff assistance visits to
    facilitate improving the communication and decreasing related risks
    within the AMEDD through the dissemination of risk trends and analysis
    and lessons learned. The current focus on improving patient safety
    through the elimination of medical errors requires a collaborative
    approach to collectively demonstrate our success in this arena.
    Information gathered from sharing lessons learned and best practices
    will position the AMEDD to proactively demonstrate our contributions to
    quality care.
    MedTeams Project:
        A pilot project to evaluate the role of human factors in adverse
    medical outcomes was implemented using the concept of Medical Team
    Management. The goal of MedTeams is to change the medical culture from
    one which is individually focused to one that is team focused, from a
    culture that often creates barriers to communication to a culture that
    fosters it. Ultimately, this will enhance safe and efficient
    accomplishment of good patient care while reducing the adverse medical
    outcome rate.
    Institute of Healthcare Improvement (IHI) Breakthrough Series (BTS)
            Collaborative:
        The AMEDD will be funding 4 MTF Teams and 1 Leadership Team to
    participate in the High Hazard Area BTS. IHI defines a Breakthrough
    Collaborative as ``an effort to bring together teams of healthcare
    providers with experts in the field in rapid cycle quality improvement
    projects''. They use the best information that research has to offer
    about what can be done to improve performance. IHI's experience in
    running such collaborative efforts suggests it is possible for health
    care sites to achieve improvement in performance of 25 percent or more
    within 12 to 15 months! Two MTF Teams each will evaluate ICU Practice
    (WRAMC & TAMC) and Labor & Delivery Practice (LARMC & WAMC). Each team
    will focus on an area of particular importance to their organization.
    Team members will work together on a frequent basis to execute ``small
    scale changes''. The focus of the ``learning sessions'' is to identify
    stretch goals, an action plan to implement the goals (recommended
    changes) and metrics to measure the effectiveness of the ``small scale
    changes'' immediately. There will be monthly ``coaching'' calls from
    the IHI Faculty.
    MTF Surgical Suite Initiatives:
        Procedures for conscious sedation have been standardized throughout
    each organization.
        Multiple level system of checks to validate surgery location--
    patient, record, nurse, anesthesiologist, and surgeon must all
    independently confirm that the proper surgery is planned. This further
    reduces the already small risk of wrong site surgery.
    Infant Security Program:
        Several MTF's have implemented electronic Infant Abduction Security
    Systems. Staffs assigned to Mother-Baby Units wear color-coded badges
    for easy patient identification of staff members authorized to take an
    infant from the mother's room.
    Radiology Initiatives:
        CHCS prompts questions regarding pregnancy. It is a ``must fill''
    block to draw attention to the importance of knowing the patient's
    status.
        Laboratory results of patient BUN and Creatinine levels attained
    prior to IV Contrast administration.
        Limit amount of radiation exposure through the mandatory use of
    lead body and gonadal shielding.
    Other Safety Related Initiatives:
        Each MTF widely disseminates and quickly implements all patient
    safety related lessons learned.
        Patients are educated on their medication and provided written
    instructions to ensure optimal understanding and compliance with their
    drug therapy.
        Facilities Managers/Safety Officers and Clinical Supervisors
    perform risk assessment surveys for hazards in patient areas on an
    established scheduled basis.
        Very proactive staff education and awareness programs impact
    positively on patient safety.
        Inpatients, with a history of falls, are put on a special falls
    alert status where the extra measures and visibility attempt to reduce
    their chances of falling again.
        Tamper-proof electrical outlets and covers have been installed in
    every area where pediatric patients or visitors spend any amount of
    time.
                                     ______

               Questions Submitted to Vice Adm. Richard A. Nelson
                   Questions Submitted by Senator Ted Stevens
        Question. Do you have a budget shortfall in fiscal year 2000? How
    much?
        Answer. Navy Medicine is short funded in the direct care system by
    approximately $140.4 million. This includes $4.8 million required for
    the Uniformed Services University for Health Sciences. The Navy is
    executive agent for the university.
        In addition, the Navy Surgeon General needs to make an initial
    investment in support of the Military Health System Optimization (MHS).
    This multifaceted plan is designed to optimize the use of readiness
    required military personnel in the delivery of peacetime health care.
    It employs the principles of Population Health to begin to focus our
    efforts on preventive care, to avert illness and injury, thus
    decreasing overall healthcare costs. MHS Optimization is strongly
    aligned with the overall concept of Force Health Protection. Analysis
    of our direct care system indicates that in many cases, Military
    Treatment Facilities are not optimally staffed and resourced to deliver
    efficient health care. For example, a Family Physician working with two
    clinical support staff may be able to effectively care for a panel of
    750 adults. If provided with the industry standard of 3.5 support
    personnel, that same provider can assume responsibility for 1,500-2,000
    adults. The Optimization Plan requires that the cost of the additional
    support staff be recouped via the higher throughput. In addition to
    increasing our marketshare, return on investment is generated as the
    actual cost of care is lower when that care is performed at marginal
    cost in the direct care system.
        To begin this process, we must make an initial investment in staff.
    The following are our estimated costs:
        Clinical support staff.--Clinical support staff to clinical
    provider ratio is presently 1.81. The MHS Optimization target is 3.50.
    The annual requirement for increase in staffing is estimated at 2,525
    workyears priced at $117.2 million per year (fiscal year 2000 rate). As
    it is anticipated that we could make these staff available in the
    fourth quarter of fiscal year 2000 the cost is $29.3 million. These
    staff are our highest priority.
      --Additional staff in the following categories:
        --Case Managers to coordinate care for the top 1 percent of
                medically complex cases, freeing clinical providers to do
                more direct patient care. (estimated full requirement 180,
                anticipate 50 could be brought on board for the 4th quarter
                of fiscal year 2000).
        --Utilization Managers to analyze trends in ambulatory care usage
                by diagnostic and patient category, and develop plans for
                population health interventions. (estimate 30 in fiscal
                year 2000).
        --Medical Record Coders to perform accurate and detailed ICD9 and
                CPT coding to account for workload and performance, thus
                ensuring marketshare is accounted for in comparison with
                contractor performed work. (estimated full requirement is
                80, 20 in fiscal year 2000).
        --The above categories are trained professionals ranging from GS9
                to 14. They have been priced at an aggregate GS11 rate for
                a fourth quarter fiscal year 2000 requirement of $1.52
                million.
        --Pharmacy technicians to support increased prescription volume
                with workload recapture (estimate 20 in fiscal year 2000).
                Priced at the GS 7 rate, this equates to a fourth quarter
                fiscal year 2000 requirement of $216,000.
        The Navy Surgeon General is aware that investments of this nature
    carry the inherent risk that return must be earned quickly enough to
    pay for the salary tails that will be created. He is firmly committed
    to changing the business practices and culture of Navy Medicine to
    recapture workload currently being done in the private sector.

    Summary

                                                                 In millions

    Budget Shortfall..................................................$140.4
    Optimization Initiatives..........................................  31.0
                                                                      ______
          Total Unfunded Requirement.................................. 171.4

        Question. Does your ``direct care'' system need supplemental funds
    to be fully funded in fiscal year 2000?
        Answer. The entire $140 million is the amount required in the
    direct care system. Amounts required for managed care support contracts
    would be in addition to the Navy $140 million shortfall.
        Question. Does the fiscal year 2001 budget as submitted reflect
    your full requirements?
        Answer. No, in fiscal year 2001 the amount necessary to fund our
    full requirement is $62 million. If we were to initiate Navy medical
    optimization initiatives, the amount required would increase by $122
    million, for a total of $184 million. (Please refer to the answer to
    question #1 for further detail).
        Question. Please provide a list of your fiscal year 2000 and fiscal
    year 2001 ``unfunded requirements.''
        Answer. The following is a table that contains Navy medicine
    unfunded requirements:

                                  [In millions]
    ------------------------------------------------------------------------
                                                           Fiscal    Fiscal
                                                            year      year
                                                            2000      2001
    ------------------------------------------------------------------------
    Non-Programmatic Cash Reductions:
        Program Impact:
            Healthcare Contracts........................      25.1  ........
            MRP.........................................       4.3  ........
            Initial Outfitting..........................      22.1  ........
                                                         -------------------
              Subtotal..................................  \1\ 51.5  ........
                                                         ===================
    Program Budget Unfunded Items:
        Medical Equipment...............................      20.0      20.3
        MRP to 3 percent................................      35.6      24.7
        Travel..........................................       8.2       1.4
        TRICARE 3.0 Support.............................       7.1   \2\ 3.5
        IM/IT...........................................       6.8  ........
        Family Practice Residency, CL...................       3.5   \3\ 3.0
        Dental Aux. Training............................       0.5   \4\ 0.5
        Ergonomics Program..............................       0.3       0.3
        Injury Rehabilitation Clinics...................       1.1       1.1
        IM/IT Data Quality..............................       1.0   \5\ 1.0
                                                         -------------------
          Subtotal......................................      84.1      55.8
                                                         ===================
    USUHS Issues........................................       4.8       6.8
                                                         -------------------
          Budget Shortfall..............................     140.4      62.5
                                                         ===================
    Navy Medicine Optimization Initiatives..............      31.0     122.0
                                                         -------------------
          Total Unfunded Requirement....................     171.4     184.5
    ------------------------------------------------------------------------
    \1\ Relates to Congressional budget execution reduction, TMA 1 percent
      withhold and Congressional directed rescission package (0.53 percent).
    \2\ Data validation to implement cross billing required for TRICARE 3.0
      in Regions 11 and 6.
    \3\ Implements family practice residency program to train additional
      primary care physicians.
    \4\ Training for additional dental technicians.
    \5\ Additional coding and certification of record keeping requirements
      associated with the ambulatory data system.

        Question. Regarding the Medicare subvention demonstrations, the
    Subcommittee is aware that the current negotiation with HCFA may
    actually cost DOD money. Can you please explain.
        Answer. The Health Care Finance Administration (HCFA) generally
    negotiates a reimbursement rate of 95 percent of the local adjusted
    annual per capita cost with Health Maintenance Organizations. The
    reimbursement rate negotiated between HCFA and the Department of
    Defense resulted in an effective reimbursement rate of 87 percent. In
    addition, the initial start up and overhead costs were not considered
    in calculating the cost of the subvention programs.
        The Defense Health Program must also provide Rehabilitative and
    skilled nursing facility care for TRICARE Senior Prime beneficiaries.
    Historically, military facilities have not provided this type of care
    and it must be purchased from civilian sources adding a significant
    cost to the overall program. In addition, utilization rates in the
    demonstration program are far above the national norms for Medicare
    HMOs. It is not yet clear whether utilization will decrease as
    neglected health care needs are addressed or whether the enrolled
    population has a unique risk profile. Collectively, the total costs of
    direct care and purchased care for enrollees has exceeded projections.
                                     ______

               Questions Submitted by Senator Christopher S. Bond
        Question. We are all concerned over the quality of care our
    military beneficiaries receive. As we move to ensure greater access, we
    must balance this with quality of care. For example Lieutenant General
    Carlton mentioned in his statement that the Air Force is committed to
    25 patients per day per provider. This metric seems overly optimistic
    and will force physicians to see approximately 3 patients per hour.
    This severely reduces the doctors' time for completing administrative
    requirements, and, more important, it eliminates critical time for
    building the doctor-patient relationship.
        How will you maintain quality while increasing access?
        Answer. Navy Medicine's goal is to increase the number of support
    staff to more efficiently and effectively assist our providers. These
    steps will minimize the time providers currently spend performing
    administrative duties; enabling the provider to spend more quality time
    with their patients while increasing their overall productivity.
        Assigning patients to a personal Primary Care Manager, who will be
    familiar with his/her patients, thus decreasing the time required for
    the physician to review the patient's history, will further improve
    continuity of care and customer satisfaction. The Military Health
    System (MHS) Optimization Plan will play a key role in allowing
    enrollee assignment to a PCM by name. This will be accomplished by
    determining demand, productivity, and capacity of our military
    treatment facilities to achieve optimum results in terms of quality,
    access, and cost. Once fully implemented, the MHS Optimization Plan
    will facilitate the ability of Navy Medicine and the MHS to enroll each
    of our beneficiaries to a personal PCM, with a 1:1,500 ratio as the
    eventual goal.
        Deployment of the Computerized Patient Record (CPR) will also
    increase quality and access. The CPR has been fully funded for
    worldwide implementation by the end of fiscal year 2002. When deployed,
    the CPR will provide a comprehensive life-long medical record of
    illnesses, hazardous exposures, injuries suffered, and the care and
    immunizations received by our beneficiaries. The CPR will also provide
    clinical decision support and gives military health care providers
    instant access to the health care history of each patient.
        Question. While I am encouraged by the numerous references to
    partnerships with the Department of Veterans Affairs, contracting
    challenges are a continuing concern. For example, VA budget
    justifications and resources may not account for joint ventures. We
    must ensure that these agreements clearly outline responsibilities in
    order to maximize efficiencies without limiting flexibility.
        What impact will these agreements have on the VA's requirements and
    how will these partnerships be managed to ensure efficiency?
        Answer. From the initial implementation of the DOD/VA Memorandum of
    Understanding for Health Resources Sharing for Joint Venture
    Construction, the intent of the agreements has been to share resources
    to maximize health facility utilization, improve health care delivery,
    and optimize cost effectiveness for both agencies. The DOD and VA plan,
    program, and execute joint venture construction projects only when it
    is in the best interest of the government to do so. Each agency must
    maintain a primary commitment to its own mission--providing health care
    services to its beneficiaries.
        The Joint Venture Agreements allow the VA to stretch their dollars
    to cover more veteran care. When VA medical facilities share excess
    capacity, they are reimbursed with DOD dollars which are then spent on
    health care delivery to veterans. VA is able to hire additional
    providers with DOD reimbursements which expands capability and
    flexibility in health care delivery. The VA also preserves resources by
    utilizing DOD services through Joint Venture Agreements. Cost benefit
    analyses of specific agreements have shown that both DOD and VA spend
    less than they would in procuring services from other sources.
        Partners in Joint Venture Agreements form a Joint Venture Planning
    Team which prepares a detailed Concept of Operations document for each
    specific agreement. This details a framework for the joint venture,
    expectations of the parties and the functional relationships. The
    Concept of Operations is reviewed and approved by the Assistant
    Secretary of Defense (Health Affairs) and the Undersecretary for
    Health, Department of Veteran Affairs, but ongoing management rests
    with the local partners, as delineated in the Concept of Operations.
    This allows those who are most familiar with the requirements inherent
    in a particular agreement to ensure the partnership remains effective
    and efficient.
        Question. Military beneficiaries and health care providers have
    complained of pharmacy restrictions and inconsistencies.
        As you strive for greater uniformity across TRICARE regions, please
    comment on how you will correct inadequate and inconsistent
    formularies.
        Answer. Virtually all patients seen at a Military Treatment
    Facility (MTF) receive all medications prescribed by MTF providers at
    the MTF pharmacy. Often, patients who are seen in the community and
    present at the MTF with civilian prescriptions are the most concerned
    with perceived inequities because the MTF formulary may not list every
    medication prescribed by the civilian provider. To avoid this
    situation, every attempt is made to contact the prescribing physician
    to encourage them to prescribe alternatives that are on the MTF
    formulary. Patients who are retired and under the age of 65 also have
    access to the retail pharmacy network and the National Mail Order
    Pharmacy (MOP). Medicare eligible retirees and beneficiaries may have a
    significant problem in obtaining needed medications because they may
    only be seen by an MTF provider on a space available basis, are
    ineligible for the contracted retail pharmacy network, and may be
    ineligible to use the NMOP. Certain exceptions are made for Medicare
    eligibles living in Base Realignment and Closure (BRAC) areas, allowing
    NMOP privileges.
        In order to insure a more consistent and adequate formulary at all
    MTFs, a basic core formulary was developed and is maintained by the DOD
    Triservice Pharmacy and Therapeutics Committee. Drugs are added to the
    formulary based on the needs of the majority of the beneficiaries and
    cost/efficacy considerations.
        A Pharmacy Pilot Program has been established for the over 65
    Medicare-eligible patient under the Military Health Care Improvement
    Act of 2000. Pilot Program participants in Kentucky and Florida, will
    have access to the NMOP and the Retail Pharmacy Network. Results should
    be influential in shaping a more permanent and much needed pharmacy
    benefit for the retired military Medicare-eligible population.
        Program Budget Decision number 041 provides some funds to directly
    support MTF formularies and the addition of new drugs to those
    formularies.
                                     ______

                Question Submitted by Senator Richard C. Shelby
        Question. Please provide me with an update on acute lung injury
    research, which has been identified by the Committee as a focus area
    for the DOD Medical Research programs.
        Answer. Current Navy research is focused on preventing acute lung
    injury in casualties by improving the initial resuscitation. In
    particular, anti-inflammatory agents are being examined that block the
    activation of inflammatory cells and their migration into the lung. It
    is too soon to tell whether such strategies will prove effective,
    however early results are promising.
                                     ______

                Questions Submitted by Senator Daniel K. Inouye
        Question. As I understand, the MHS optimization plan will increase
    access to primary care is by using best business practices to increase
    the overall capacity and efficiency of the military direct care system.
    Currently, how much excess capacity, if any, do you currently have in
    your hospitals and clinics?
        Answer. Presently there are no specific estimates on the amount of
    excess capacity at our MTFs. Even so, we do know there are facilities
    that could provide additional care for our beneficiaries with
    utilization of the MHS optimization concept.
        A critical point to make is that excess capacity is not typically
    idle capacity. The potential increased capacity can only be gained
    through efficiencies and better use of providers. For example, a
    provider with limited support may struggle through two patients an
    hour, if additional ancillary support is added the number can increase
    to 3 to 3.5. The provider is currently working as hard as he or she
    can, but with additional support, a 50 percent or greater increase in
    capacity is created.
        In another example, a provider now spends 5-10 minutes on each
    patient looking up data and performing administrative functions. An
    effective computerized patient record would reduce this to 3-5 minutes.
    In a 20 minute appointment, this represents a 25 percent gain that can
    be given back in quality time spent with the patient.
        MHS Optimization is designed to improve access and enhance capacity
    by increasing the overall efficiency of the direct care system in
    delivering ambulatory care. This will be accomplished by optimizing
    facility design and the alignment of support staff to ensure provider
    productivity, by focusing on continuity of care with an assigned
    Primary Care Manager, by streamlining appointment templates so that
    greater scheduling flexibility is achieved, and through an emphasis on
    preventive care that will ultimately decrease utilization rates.
        Question. In the facilities where you have excess capacity, how
    much care is being sent to the Managed Care Support contractors?
        Answer. We do not have idle capacity. The Military Health System
    (MHS) Optimization Plan will make more effective use of our assets to
    achieve recoupment of workload from the Managed Care Support
    Contractors (MCSC). MHS Optimization is designed to improve access and
    enhance capacity by increasing the overall efficiency of the direct
    care system and reducing reliance on the MCSCs. Modeling efforts are
    currently underway to quantify where each Military Treatment Facility
    (MTF) is today and where they could be if fully optimized. Each
    facility will then develop specific plans to reacquire workload from
    the MCSC.
        Question. The prevalence of medical errors has commanded the
    attention of this Congress and the nation. What initiatives do you now
    use that address the issue of patient safety?
        Answer. Navy Medicine has critically examined opportunities for
    improving patient safety. The following initiatives have been
    undertaken to improve quality of care:
      --A systems approach to improvement using a root cause analysis tool
            has been implemented at all of our facilities. This tool is
            used to analyze all adverse events and certain close calls and
            requires the involvement of a multidisciplinary analysis team.
            Information regarding common themes is reported back to our
            facilities for appropriate preventive action.
      --Participation in the Institute for Healthcare Improvement (IHI)
            Breakthrough Series to identify opportunities to implement best
            practices in four hospital high hazard areas: the Operating
            Room, Obstetrics, the Intensive Care Unit, and the Emergency
            Department.
      --Establishment of a Birth Product Line to address the delivery of
            our largest patient service and implement refined clinical
            practices across Navy Medicine. This will include a focus on
            reducing variation in access to anesthesia and pain control,
            and a standardized approach to perinatal education.
      --Promoting the use of Evidence Based Medicine with active
            involvement in the DOD/VA Clinical Practice Guidelines (CPG).
            Navy Medicine is sponsoring an evidence based CPG addressing
            urinary tract infections.
      --Implementation of Composite Health Care II System of computerized
            patient records to improve documentation of care provided
            including the follow up of laboratory, radiology exams, and
            pharmacy orders.
      --Deployment of the Pharmacy Data Transaction system to prevent
            prescription and allergy errors in a mobile population.
        Collaborative efforts to take advantage of lessons learned:
      --National Patient Safety Partnership Forum for Health Care Quality
            Measurement and Reporting Collaborative Work with the VA.
      --TRISERVICE DOD Patient Safety Subcommittee recently completed the
            DOD Instruction, ``Patient Safety Program in the Military
            Health System''. This instruction establishes a central MHS
            reporting system for adverse events through the Armed Forces
            Institute of Pathology (AFIP) with the goal of sharing lessons
            learned throughout the MHS. Projected implementation date is
            August 2000.
                                     ______

              Questions Submitted to Lt. Gen. Paul K. Carlton, Jr.
                   Questions Submitted by Senator Ted Stevens
                                medical programs
        Question. Do you have a budget shortfall in fiscal year 2000? How
    much?
        Answer. Yes. Air Force Medical Service core program is short by
    $235 million. In addition, there are a number of outstanding contract
    issues in the Private Sector Care that continue to be defined. These
    may generate additional significant bills for the Air Force Medical
    Service.
        Question. Does your ``direct care'' system need supplemental funds
    to be fully funded in fiscal year 2000?
        Answer. Yes. The Air Force Medical Service direct care system is
    $139 million short of being fully funded.
        Question. Does the fiscal year 2001 budget as submitted reflect
    your full requirements?
        Answer. No. Fiscal year 2001 budget is $79 million short of full
    funding of core requirements. In addition, there are a number of
    outstanding contract issues in the Private Sector Care that continue to
    be defined. These may generate additional significant bills for the Air
    Force Medical Service.
        Question. Please provide a list of your fiscal year 2000 and fiscal
    year 2001 ``unfunded requirements.''
        Answer.

                                  [In millions]
    ------------------------------------------------------------------------
                                                           Fiscal    Fiscal
                                                            year      year
                                                            2000      2001
    ------------------------------------------------------------------------
    Direct Care Operation...............................       $20  ........
    Real Property Maintenance...........................        72       $15
    Equipment...........................................        23        23
    Base Operating Support..............................  ........        17
    Education & Training................................  ........        15
    TRICARE Senior Prime................................        15         4
    Info Mgmt/Info Tech.................................         7  ........
    Dental Readiness....................................  ........         5
    Primary Care Training...............................         2  ........
    Known Private Sector Care...........................        96  ........
    Ill-Defined Private Sector Care.....................   ( \1\ )   ( \1\ )
                                                         -------------------
          Total.........................................       235        79
    ------------------------------------------------------------------------
    \1\ To be determined.

                              medicare subvention
        Question. Regarding the Medicare subvention demonstrations, the
    Subcommittee is aware that the current negotiation with HCFA may
    actually cost DOD money. Can you please explain?
        Answer. Under this demonstration, DOD is paid a lump-sum annual
    amount, called a capitated rate, for each enrollee to provide medical
    care. This rate is approximately 83 percent of the amount HCFA pays the
    average civilian Medicare+Choice health maintenance organization (HMO)
    for a comparable beneficiary. This reduced figure was derived from a
    variety of factors based on pre-existing DOD programs and resources as
    well as HCFA's intent for this program to be cost-neutral to HCFA for
    these enrollees.
        DOD receives capitated payments based strictly on enrollment. Even
    though our sites are nearly at 100 percent enrollment capacity, DOD is
    still not breaking even. Certain benefits, such as skilled nursing
    care, durable medical equipment and home health care, are Medicare
    requirements which are not normally covered under TRICARE. Payments to
    DOD by HCFA are first used to cover these expenses as well as the cost
    of civilian care obtained by demonstration participants. This has left
    no money to pass on to the MTFs to cover their in-house costs of
    providing care to these patients.
        The primary reason DOD is losing money on this demonstration is the
    higher-than-anticipated cost of providing civilian medical care for
    enrollees. There are several causes for this problem. First, enrollees
    appear to be using more medical services than anticipated. The reasons
    for this are unclear but are likely related to the lower cost of
    obtaining care under this demonstration than under traditional
    Medicare, including most Medicare+Choice plans. In addition, it is
    likely the space-available care they obtained in our MTFs only
    represented a portion of the care they received; many beneficiaries who
    could not receive care consistently from the MTF and needed to rely on
    civilian care to fill the gaps are now afforded consistent access to
    the MTF at no cost.
        The second reason for the high cost of civilian care is under my
    control. Frankly, it appears we are paying for civilian care we could
    provide in-house in too many cases. I'm pressing hard to re-engineer
    our direct care system to optimize how we use our resources.
    Specifically, by improving the support for my providers, I expect they
    will be able to provide care for more patients in a timely manner. This
    will allow us to recapture much of the work currently sent to the
    civilian sector, including care for TRICARE Senior Prime enrollees. In
    addition, these efforts will help us provide the right care at the
    right time, reducing enrollees' needs for medical services in general.
        Finally, the general shift of our MTFs to smaller, outpatient-
    focused facilities means more care must be obtained from the civilian
    sector than in the past. While a less significant issue at our medical
    centers (where the majority of care can still be provided in-house),
    this shift is definitely a concern at our smaller facilities. The
    discounted reimbursement from HCFA is lower than what the facilities
    must pay for civilian care.
        Even with our planned improvements in efficiency, I expect the
    current arrangement with HCFA to continue to cost DOD money. The
    absence of cost shares in the direct care system combined with broader
    benefits under TRICARE will continue to mean that we cannot operate
    this program in the black under the current arrangements. I would
    anticipate any expansion of this demonstration into more sites with
    small MTFs will operate at a substantial loss unless the reimbursement
    arrangements are changed.
                                     ______

                 Question Submitted by Senator Pete V. Domenici
                      clovis and cannon--medical facility
        Question. It seems that there is real potential for another joint
    facility at this location. I wanted to ask for your assistance
    investigating this possibility. Should it prove a viable concept, I
    would ask for your support getting a cooperative arrangement underway
    as soon as possible.
        Answer. The AFMS is eager to explore novel arrangements with local
    civilian communities to provide medical care for our beneficiaries. In
    the case of Cannon and the Clovis/Portales communities, it appears
    there is adequate inpatient care capability at the 106-bed Plains
    Regional Hospital in Clovis, about ten miles from Cannon. Plains
    Regional Hospital averages 60-70 beds occupied at any given time with
    approximately 20 of those beds occupied by Cannon military
    beneficiaries. The impact of a new medical facility in Portales and the
    resulting changes in referral patterns on Cannon, Clovis, and Portales
    would need careful evaluation. The Air Combat Command Surgeon and
    Cannon Hospital Commander agree that more study and data will be needed
    to determine the most appropriate sharing agreement in the Clovis/
    Portales area.
                                     ______

               Questions Submitted by Senator Christopher S. Bond
                    quality care for military beneficiaries
        Question. How will you maintain quality while increasing access?
        Answer. This is one of our main foci. Our civilian counterparts in
    primary care have been seeing 4-6 patients per hour without problems or
    quality-of-care concerns. We have investigated this and agree with your
    assessment that we cannot reach beyond 2-3 patients seen per hour,
    given the administrative responsibilities we have placed on our
    providers. Our new system is focused on Population Health and
    Prevention. The system is being restructured to form primary care
    teams, ensuring that primary care providers are appropriately supported
    by nurses, medical technicians, and health service managers. In
    addition to this restructuring, we have begun the training of these
    teams to function more effectively and efficiently. Realigning
    structure without changing process will not produce success. The
    beginning of process change is education. The Air Force Medical Service
    has trained over 900 primary care personnel from over 75 medical
    treatment facilities (MTFs) in methods to function more effectively.
    This training included nurse triage, technicians providing prevention
    counseling, and health service managers retrieving data to make the
    system more effective. This will free up the providers to do what they
    do best: provide high-quality medical care with continuity. This has
    initially been very successful, judged by feedback from front-line
    providers. There is also a monitoring plan in place to ensure this
    supportive effort is sustained. MTFs which have implemented the
    training have surpassed 25 appointments per day while improving
    customer satisfaction.
                                  partnerships
        Question. What impact will these agreements have on the VA's
    requirements and how will these partnerships be managed to ensure
    efficiency?
        Answer. I cannot speak for the Department of Veteran's Affairs
    regarding the impact of partnering agreements on their requirements.
    Our Air Force/DVA joint venture facilities are long-term commitments on
    the part of both partners. Both organizations preserve their overall
    organizational autonomy as appropriate at each location. As each of the
    three joint ventures developed, decisions were made about the
    appropriate organizational arrangement to meet the mission requirements
    of the Air Force and the VA. At the facility in Albuquerque, New
    Mexico, the medical group commander works closely with the VA Medical
    Center administrator to ensure efficient use of resources to provide
    beneficiaries of both organizations quality care in a timely manner. At
    Nellis AFB in Las Vegas, the medical group commander is dual hatted as
    the Mike O'Callaghan Federal Hospital Chief Executive Officer. At our
    newest venture in Alaska, there is a central Executive Management Team
    that directs and manages development and execution of the joint
    venture. Each joint venture is designed to meet specific local needs,
    mission requirements, and avoid costs.
        In addition to joint ventures, the Air Force actively supports
    combined DOD and VA programs. One example is the joint development of
    clinical guidelines. Working together, representatives from the VA and
    DOD have used their unique skills and talents to establish a program
    dealing with selected high cost, high volume diseases. The group worked
    jointly to select guidelines that will enhance continuity of care,
    reduce variability and facilitate cost effective practices for both
    agencies. The joint group selected the guidelines, worked on
    educational materials for providers, and is evaluating the new
    guidelines. Implementation of the guidelines will be Service specific.
    Each clinical guideline will be deployed with complementary ``tool
    kits'' and corresponding metrics.
        With your support, we will continue to work with the VA to identify
    and implement additional sharing opportunities in the future.
                   pharmacy restrictions and inconsistencies
        Question. As you strive for greater uniformity across TRICARE
    regions, please comment on how you will correct inadequate and
    inconsistent formularies.
        Answer. This is a triservice issue and is being addressed through
    TMA in conjunction with the DOD Pharmacy Board of Directors. Several
    specific steps have been taken to correct the inconsistencies among
    direct care (Military Treatment Facility) formularies and among sources
    of the pharmacy benefit: National Mail Order Pharmacy, retail network
    pharmacies and direct care pharmacies. Items under review for approval
    are:
        1. Establish policy where medications requiring prior authorization
    are consistent across the MHS (both purchased and direct care).
        2. Establish policy where any quantity limits on medications are in
    effect and consistent across the MHS.
        3. Expand the basic core formulary (BCF) for direct care pharmacies
    to provide more consistent availability of medication. The DOD Pharmacy
    and Therapeutics Committee approved twelve additional high use
    medications to the BCF January 26, 2000. The DOD Pharmacy and
    Therapeutics Committee in conjunction with the DOD Pharmacoeconomic
    Center will continue to review the over 200 classes and subclasses of
    medication and recommend expansion of the BCF on a bimonthly basis as
    additional direct care funding becomes available.
        4. Advances in Medical Practice (AMP). Approval of disbursement of
    funding for 32 high cost, unique medications through AMP is pending.
    Direct care facilities have begun providing these medications in
    anticipation of reimbursement through AMP.
        The point of contact for the Uniform Pharmacy Benefit is Captain
    Charlie Hostettler, TMA, 703-681-1740, ext. 5620. Captain Hostettler
    can provide additional information on specific actions being taken to
    ensure a consistent, uniform pharmacy benefit.
                                     ______

                Questions Submitted by Senator Daniel K. Inouye
                               medical facilities
        Question. As I understand, the MHS optimization plan will increase
    access to primary care is by using best business practices to increase
    the overall capacity and efficiency of the military direct care system.
    Currently, how much excess capacity, if any, do you currently have in
    your hospitals and clinics?
        Answer. Since the beginning of the Managed Care Support Contracts,
    the Military Treatment Facilities (MTFs) have been trying to work
    within the parameters of access, core proficiencies and contractor
    relationships. As a result, the emphasis was in making the contracts
    work, and understanding the impacts of each outsourcing decision. As we
    have now matured, we find that a portion of the care being provided by
    the contractors is for the type of services offered within the MTFs; in
    fact is directly competing with our MTF service lines. This is the
    workload we are targeting to recapture through our optimization
    efforts.
        We have not had an adequate view of excess capacity in our
    facilities. The Air Force Medical Service has recently constructed a
    data capture file that displays the type of services by catchment area
    being accomplished by the contractors and the MTFs. This data, along
    with our optimization strategies, will identify the excess capacity of
    facilities and provide the basis for decisions about the type and
    quantity of care to recapture into the MTFs.
        Question. In the facilities where you have excess capacity, how
    much care is being sent to the Managed Care Support contractors?
        Answer. The amount of contractor care in catchment areas is not
    effectively measured as yet. The Air Force Medical Service has recently
    constructed a data capture file that displays the type of services by
    catchment area being accomplished by the contractors and the MTFs. This
    is a service-wide coordinated effort to obtain and analyze appropriate
    data to make decisions about the type and quantity of care to recapture
    into the MTFs.
        Question. The prevalence of medical errors has commanded the
    attention of this Congress and the nation. What initiatives do you now
    use that address the issue of patient safety?
        Answer. The AFMS is working on a number of fronts to maximize
    patient safety. There are several initiatives in pharmacy and
    medication-dispensing processes. Medical treatment facilities (MTF) use
    the Composite Health Care System (CHCS) computerized pharmacy order-
    entry system that eliminates illegible handwriting. The pharmacy staff
    reviews each patient's electronic profile for allergies, drug
    interactions, therapeutic overlaps, and duplicate medication therapies
    before dispensing any prescription. The Pharmacy Data Transaction
    Service (PDTS), that integrates MTF patient data with TRICARE network
    retail pharmacies, and the National Mail Order Pharmacy (NMOP) will be
    deployed soon. The PDTS ensures patients' full medication histories are
    available wherever they receive their medications.
        Two Air Force pharmacies, Patrick AFB and MacDill AFB, were
    designated test sites to evaluate pharmacy robotics for outpatient
    dispensing. These systems are designed to assist in filling and
    checking new and refill prescriptions. The prescription is entered into
    the CHCS computer system where unique identification numbers are
    assigned and a bar code is generated to track prescriptions. The
    computerized robotic system automatically counts, labels, and fills the
    prescription. Medications are verified before dispensing at a checking
    station. At pickup, the patient receives drug information sheets and
    may request pharmacist counseling.
        The computerized systems have totally streamlined the prescription
    process and freed pharmacy personnel for additional patient-focused
    activities. Patients' waiting times show a documented decrease by as
    much as 60 percent, while prescription volumes continue to increase.
    The safety features of these systems represent the latest technological
    advances in pharmacy dispensing. Before implementation at Patrick AFB,
    over 50 percent of medication errors involved refills; now they have
    dispensed over 250,000 refills with a remarkable ``zero errors.''
        On our inpatient units, decreasing the stock medication
    administration system has reduced medication administration errors in
    our facilities. The unit-dose system has been widely implemented
    throughout our facilities.
        Each MTF has a Safety Committee with facility-wide membership. This
    committee analyzes key metrics such as medication errors, patient
    falls, and other unusual incidents for trends. Monthly environmental
    safety checklists are conducted in every unit and reports sent to the
    facility's safety officer and reviewed by the safety committee.
    Identified trends and discrepancies are corrected as soon as possible.
    The Safety Committee is accountable to the MTF's Executive Committee.
        When an event occurs, the Air Force fully complies with the Joint
    Commission on Accreditation of Healthcare Organizations (JCAHO)
    Sentinel Event reporting to include Root Cause Analysis (RCA) of each
    event. Copies of the RCAs are sent to the AF Quality Division where
    lessons learned are shared with other AF facilities.
        In addition to the above reporting, the Air Force initiates its
    Medical Incident Investigation (MII) process when a sentinel event
    occurs. The MII multidisciplinary team is composed of clinical experts
    not assigned to the MTF where the event occurred. Its purpose is to
    promote patient safety and to improve care at the MTF and throughout
    the AF. Team members review human factors (training, competency,
    fatigue) as well as operational and system factors (communications,
    equipment, supervision). The team briefs the facility commander prior
    to leaving and sends a report to the Surgeon General via the respective
    MAJCOM. Lessons learned in this process are also shared with other
    facilities via Notice to Airmen (NOTAMS)
        The Air Force is fully engaged with members participating in the
    DOD Patient Safety Working Group sponsored by the Quality Interagency
    Coordination Task Force (QuIC). This multidisciplinary group is
    reviewing patient safety issues in the military health system and
    creating the confidential error reporting system requested by President
    Clinton. Our Air Force team members have taken the initiative to
    develop a pilot project to track errors within the Air Force Material
    Command.
        In addition to the above, the Air Force is funding three teams from
    its medical centers to participate in the QuIC Breakthrough Series. The
    Institute on Health Improvement (IHI) is facilitating these teams as
    they review our current systems for opportunities to reduce errors in
    high hazard areas such as the emergency departments, operating rooms
    and intensive care units.
                                     ______

                   Questions Submitted to Col. Deborah Gustke
                Questions Submitted by Senator Daniel K. Inouye
                         nurse corps skill sustainment
        Question. How have the three Nurse Corps (active and reserve
    components) worked together on skill sustainment necessary to meet
    peacetime and contingency requirements?
        Answer. There are multiple Triservice and AC/RC initiatives to meet
    this challenge. The AMEDD Center and School at Fort Sam Houston, TX
    sponsors triservice classes preparing officers in nuclear and chemical
    casualty management and trauma care. Multiple exercises are held each
    year at the Joint Readiness Training Center (JRTC), Fort Polk, LA and
    reserve training sites (Fort Parks, CA, Fort McCoy, WI and Fort Gordon,
    GA) which test the reserve ability to backfill critical medical active
    duty shortfalls, and the active and reserve ability to provide care,
    evacuate patients, and coordinate command and control procedures.
    Exercise Roving Sands at Fort Bliss, TX each year combines the efforts
    of medical units in the Army, Navy, NATO Forces, USAR, and NG in
    providing patient care in combat situations, evacuating patients, and
    testing command and control interoperability. Golden Medic exercises
    are conducted at three reserve sites each year and combine triservice
    elements in testing patient evacuation and command and control
    procedures. In the overseas areas, Operation Bright Star in Egypt, and
    Operation Team Spirit in Korea, test our joint readiness capability.
    Furthermore, in all of these exercises we test the ability of our
    reserve forces to mobilize and backfill our medical treatment
    facilities.
                    nurses in executive or command positions
        Question. How many nurses do you have in executive or command
    positions?
        Answer. Currently, there are 4 Army Nurses serving as Commanders of
    Level 1 Medical Treatment Facilities: Moncrief Army Community Hospital,
    Fort Jackson, SC, USA MEDDAC, Fort Drum, NY, Reynolds Army Community
    Hospital, Fort Sill, OK, and Heidelburg MEDDAC, Heidelburg, Germany.
    There are 6 additional Army Nurses slated to take command of Level 1
    MTF's in the summer of 2000. With regard to executive positions within
    the AMEDD, Army Nurses are and have been in the past assigned to
    various DOD, DA, OTSG, and MACOM staff positions.
                    leadership training programs for nurses
        Question. What types of leadership training programs are available
    or are being planned?
        Answer. Currently, there are several leadership training programs
    within the AMEDD and programs specific to the Army Nurse Corps. AMEDD
    Leadership programs attended by Army Nurses include: Physicians in
    Management, Executive Skills Conference and the Interagency Healthcare
    Executive Course. Courses specifically for the Army Nurse Corps
    include, the Head Nurse Leader Development Course, the Advanced Nurse
    Leader Development Course, and the Wharton School of Business
    Executive's Course.
                                     ______

                Questions Submitted to Rear Adm. Kathleen Martin
                Questions Submitted by Senator Daniel K. Inouye
        Question. How have the three Nurse Corps (active and reserve
    components) worked together on skill sustainment necessary to meet
    peacetime and contingency requirements?
        Answer. The following are examples of Tri-Service efforts within
    the Nurse Corps to sustain the skills necessary to meet peacetime and
    contingency requirements:
      --The Joint Trauma Training Center (JTTC) initiative at Ben Taub
            General Hospital in Houston is an example of Tri-Service
            cooperation in trauma training. The JTTC provides Military
            Trauma Training Teams (MTT's) with high volume, real trauma
            treatment experience that can only be gained at an inner-city,
            Level 1 Trauma Center, in order to enhance combat trauma skills
            and medical readiness.
      --An Army Reserve unit drills at Naval Hospital Great Lakes and Navy
            Hospital Corpsmen drill with the Army unit.
      --The Navy and Army rotate nursing staff between National Naval
            Medical Center Bethesda, Maryland and Walter Reed Army Medical
            Center, Washington D.C.
      --The Navy and Air Force Nurse Corps are currently involved in a
            cooperative effort to provide increased opportunities for
            obstetrical nurse training for both services.
      --The Navy sends nurses to the Army's Colonel C.J. Ready course, an
            annual Joint Readiness Course for military nurses.
      --Fleet Hospital training sets at Naval Hospitals Camp Lejeune,
            Pensacola and Bremerton provide ongoing opportunities for
            active and reserve nurses to deliver patient care in the actual
            Fleet Hospital setting in order to sustain critical patient
            care skills.
      --Ongoing exercises occur on the hospital ships USNS COMFORT (T-AH
            19) and USNS MERCY (T-AH 20) in the form of formal exercises
            such as Kernel Blitz and Roving Sands as well as ``dock
            trials''.
        Question. How many nurses do you have in executive or command
    positions?
        Answer. 24 active and reserve component nurses serve as commanding
    officers, executive officers, or as deputies or chiefs of staff at
    military medical treatment facilities, lead agent staffs, and education
    commands. Nurse Corps officers command two of our active duty Fleet
    Hospitals. Reserve Nurse Corps officers command three of the eight
    casualty receiving hospital units. Reserve and active duty officers
    serve throughout the entire breadth of headquarters commands.
        Question. What types of leadership training programs are available
    or are being planned?
        Answer. The following leadership programs are available to Navy
    Nurse Corps officers: Navy Leadership Development continuum;
    Interagency Institute for Federal Healthcare Executives; Flag Officer
    CAPSTONE course; TRICARE CAPSTONE Course; Management Development
    Course; Shore Station Management Course; Prospective CO/XO Course in
    Newport, RI; Strategic Medical Readiness Contingency Course; Wharton
    School-Johnson and Johnson Leadership program; Annual Surgeon General's
    Leaders Conference; Annual Navy Nurse Corps Leadership Conference; and
    Executive Medical Education (EME).
                                     ______

              Questions Submitted to Brig. Gen. Barbara C. Brannon
                Questions Submitted by Senator Daniel K. Inouye
                                  nurse corps
        Question. How have the three Nurse Corps (active and reserve
    components) worked together on skill sustainment necessary to meet
    peacetime and contingency requirements?
        Answer. As the AFMS continues to rightsize, the number of clinical
    training platforms is steadily decreasing, making maintenance of
    clinical skills and meeting readiness training requirements a
    significant challenge. Air Force Nursing Services is committed to
    creating efficient and effective programs for nursing personnel to gain
    and maintain critical readiness skills. Air Force nursing consultants
    recently revised Readiness Competency Skills lists to reflect tasks
    nurses perform in contingency environments. Active duty, reserve, and
    guard nursing personnel will use these lists to assess their clinical
    capabilities and training requirements. Programs are already being
    developed to meet identified needs.
        TopSTAR, Sustainment Training to Advance Readiness, expanded to a
    second location last year. Travis Air Force Base opened a TopSTAR unit
    in addition to the original site at Wilford Hall Medical Center.
    TopSTAR is currently used by active, reserve and guard personnel to
    validate clinical skills and it is also being evaluated as a training
    platform for nursing personnel to update their skills prior to
    assignment overseas.
        Exceptional training opportunities also occur during medical
    exercises and real-world contingencies. Medical exercises in Asia and
    within the Continental United States, and contingency operations in
    Central America, Asia, and Europe, allowed active duty, reserve, and
    guard personnel to test their skills. These deployments were also
    particularly helpful in identifying tasks that required follow-on
    training.
        Two other training success stories were the Joint Military Trauma
    Training program at Ben Taub General Hospital in Houston, Texas, and
    the Jefferson Barracks Trauma Training pilot program in St. Louis,
    Missouri. The Ben Taub clinical rotation for tri-service military teams
    provided four times the patient admissions, blunt trauma cases, and
    penetrating trauma cases than experienced by teams at Wilford Hall
    Medical Center during the same time frame. At the Jefferson Barracks
    pilot program, similar training opportunities are potentially available
    to provide our active, reserve, and guard medics excellent experience
    in trauma management.
        Question. How many nurses do you have in executive or command
    positions?
        Answer. Active duty Air Force nurses currently command 32 percent
    (24 of 75) of our medical groups and 18 percent (50 of 271) of our
    squadrons. In addition, 9 percent (7 of 75) of our deputy medical group
    commanders are nurses. The first nurse to serve as a Command Surgeon, a
    Reserve nurse at the Air Force Reserve Personnel Center, was appointed
    last year. Nurses also command 29 percent (21 of 72) of the Air Reserve
    medical squadrons and 15 percent (15 of 101) of Air National Guard
    medical squadrons.
        There is a chief nurse assigned to every facility who is a member
    of the executive team. A senior nurse is also assigned to each of the
    nine Major Commands on the medical leadership team.
        Question. What types of leadership training programs are available
    or are being planned?
        Answer. Nurses attend a Squadron Commander's Course sponsored by
    the gaining MAJCOM and the Group Commander's Course upon selection to
    those positions. Nurses are also eligible to attend Physicians in
    Management seminars, the annual Air Force Medical Service Senior
    Leadership Symposium, the Interagency Institute for Federal Healthcare
    Executives, and Medical Capstone.
        In addition, the annual Nursing Executive Leadership Symposium
    targets Chief Nurses and enlisted nursing superintendents for
    attendance. To provide more formalized training, the Air Education and
    Training Command was recently tasked to explore the feasibility of an
    intermediate executive skills course that would include break-out
    sessions for newly appointed Chief Nurses.

                              subcommittee recess

        Senator Inouye. The subcommittee will meet in 3 weeks, on
    Wednesday, March 29, at 10 o'clock to review Air Force
    programs.
        Thank you very much.
        [Whereupon, at 12:10 p.m., Wednesday, March 8, the
    subcommittee was recessed, to reconvene at 10 a.m., Wednesday,
    March 29.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 2001

                                  ----------

                           WEDNESDAY, MARCH 29, 2000

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:39 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Ted Stevens (chairman) presiding.
        Present: Senators Stevens, Cochran, Bond, Hutchison,
    Inouye, Leahy, and Dorgan.

                             DEPARTMENT OF DEFENSE

                          Department of the Air Force

                            Office of the Secretary

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

                    OPENING STATEMENT OF Senator TED STEVENS

        Senator Stevens. We are sorry for the delay. We appreciate
    your courtesy. We have had an interesting morning here going
    through some of the background in our closed session.
        First, General Ryan, let me thank you for taking the trip
    to Alaska this last weekend. Reports of your presentation are
    just overwhelming and we are delighted you were up there. That
    is a tradition we have had and you, in your position, really
    made a great impression on our people. Thank you. We thank you
    very much.
        General Ryan. Thank you, Mr. Chairman.
        Senator Stevens. In this open session, we want to welcome
    your assessment of the progress made to fix the retention
    challenges in the Air Force, and we are also looking at the
    threats faced by our tactical forces and the development of the
    F-22 and the Joint Strike Fighter programs. We would like to
    see if we can get a report from you on the substantial funds
    that we have already made available to reconstitute the Air
    Force following the war in Kosovo. It is really our feeling
    that we should get an across the board sort of estimate of
    where you are now.
        I do thank you, Secretary Peters, for appearing here also.
        Senator Inouye, you have an opening statement? I will just
    put the balance of mine in the record.
        [The statement follows:]

                   Prepared Statement of Senator Ted Stevens

        Let me begin by welcoming both Gen. Ryan and Sec. Peters
    back before the subcommittee.
        Earlier this morning, members of the committee were
    provided an update, in closed session, on Air Force tactical
    aircraft programs.
        That presentation addressed both the threats faced by our
    tactical forces, and development of the F-22 and Joint Strike
    Fighter programs.
        As we shift to open session, the committee welcomes your
    assessment of progress made to fix the retention challenges
    facing the Air Force.
        In addition, the Congress add substantial funds to
    reconstitute the force following the air war in Kosovo, and
    reverse the downward trend in mission capable rates. We would
    appreciate a status report on these efforts.
        Finally, I want to thank Gen. Ryan for appearing at the
    annual military appreciation dinner in Fairbanks on Saturday.
        Your appearance was a great boost to the Air Force and Army
    communities in Fairbanks, and your remarks were extremely well
    received by everyone.
        Mr. Secretary, Gen. Ryan, your prepared statements will be
    made part of the record.
        Sen. Inouye, would you care to make an opening statement?

                 OPENING STATEMENT OF Senator DANIEL K. INOUYE

        Senator Inouye. Thank you very much. I wish to join you in
    welcoming Secretary Peters and General Ryan.
        I note that the budget request increases the fiscal year
    2001 by $4 billion, but I am certain all of my colleagues will
    agree that, though it is significant, it is not as much as we
    would like to see. I note that you have problems in, well,
    recruiting and retention. Pilots are still leaving the force
    and we must continue to do everything we can to turn these
    indicators around. So I can assure you that I will do my best
    to work with my colleagues to bring this about.
        Mr. Chairman, I ask that the full statement be made part of
    the record.
        Senator Stevens. Yes, sir.
        [The statement follows:]

                 Prepared Statement of Senator Daniel K. Inouye

        Mr. Chairman I want to join you in welcoming our Air Force
    leaders here today.
        The fiscal year 2001 budget request for the Air Force would
    increase funding for the service by approximately $4 billion.
        This increase in funding is significant, but not as much as
    many of us would like to see.
        While I understand you are seeing some positive results in
    retention, unfortunately, many problems remain.
        Mission capability rates remain down.
        Recruiting goals are going unmet.
        Pilots are still leaving the force in large numbers.
        We simply must do all that we can to turn these indicators
    around.
        Mr. Chairman, I am sure you agree with this sentiment. We
    need the support from our colleagues to keep funding levels up
    to be successful.
        Again, General Ryan, Mr. Secretary, we welcome you back
    before the committee today and look forward to your testimony
    on these and other important matters.

        Senator Stevens. Senator Bond.

                    STATEMENT OF Senator CHRISTOPHER S. BOND

        Senator Bond. Thank you very much, Mr. Chairman. Good
    morning, Mr. Secretary, General Ryan.
        I would just make a brief statement. You might never guess
    what it is about, but I am very encouraged by your statements
    that you intend to put people first, and I understand the
    support this Congress has given in the area of pilot retention
    shows signs of turning around what was not a good trend in this
    area.
        While pay and benefits help, they are very important, I
    feel it is also vitally important that we have a clear strategy
    for the employment and deployment of our forces overseas. A
    lack of a clear entry and exit strategy has had a detrimental
    effect on the number and length of deployments and the
    resultant stress that is placed on the active and reserve
    forces and their families.
        I also understand lack of adequate funding of contingency
    operations is placing undue burdens on our forces as we raid
    accounts to support ongoing operations for which we have not
    had adequate budgets.
        I also know and support your priorities, the F-22, the C-
    17, but I do want to put in a word for the F-15E. Let me remind
    you that our most recent overseas engagement, Operation Allied
    Force, was a major theater conflict, assets deployed to Europe
    from all over the world. At its conclusion you determined that
    our efforts had a profound impact on people and equipment that
    would enable the Air Force to be relieved from normal
    deployment rotations for 6 months to be able to reconstitute.
        The work horses were the F-15C's and F-15E's from
    Lakenheath. Four of six enemy aircraft encountered were downed
    by F-15's and the F-15E was the only fighter able to operate
    around the clock in all weather conditions, using the AGM-130
    precisely to target and destroy high-value enemy targets. No
    other fighter in history as far as I know has turned in this
    kind of remarkable performance with associated readiness and
    safety.
        Because of higher utilization rates of our assets, it
    appears to me to be sound judgment to maintain F-15E production
    at a very slow rate in order to maintain and to replace an
    adequate number of front-line strike fighter aircraft until we
    have in production the next generation strike fighter in
    significant numbers.
        We also need to pursue foreign military sales and, while we
    had a setback in Greece, we understand and appreciate your
    support in moving forward to at least explore the possibilities
    that Israel and Saudi Arabia may be purchasing. We need to make
    sure that we have a good industrial base to support the men and
    women who are risking their lives.
        I have a longer statement that I will submit for the
    record. I look forward to discussing some of these issues with
    you further during the question and answer period.
        Thank you, Mr. Chairman.
        Senator Stevens. Yes, sir.
        [The statement follows:]

               Prepared Statement of Senator Christopher S. Bond

        Good morning Secretary Peters and General Ryan. Thank you
    for coming today. Please allow me to make a brief statement
    before addressing the questions I have for both of you.
        I am encouraged by your statement that you intend to put
    people first and I understand that the support this Congress
    has given in the area of pilot retention shows signs of turning
    around what was not a good trend in this area. While pay and
    benefits help I fear it is also vitally important we have a
    clear strategy for employment of our forces overseas. Our lack
    of clear entry and exit strategies has had a detrimental affect
    on the number and length of deployments and the resultant
    stress that is placed both on our active and reserve forces and
    their families.
        I also understand the lack of adequate funding for
    contingency operations is placing undue burdens on our forces
    as we raid accounts to support ongoing operations for which we
    have inadequately budgeted.
        This must not continue if we are to adequately address our
    training and modernization needs and I stand ready to assist
    you in getting the necessary support.
        The F-22 is clearly one of your highest priorities along
    with increasing our logistical airlift capacity with
    acquisition of the C-17, and I support you in your efforts to
    field the best equipment available. As you know we have
    differed on the issue of priorities in one area, and that is
    the F-15E and its continued production.
        First let me remind you our most recent overseas
    engagement, Operation Allied Force, was a major theater
    conflict. Assets deployed to Europe from all over the world to
    support our efforts. At its conclusion you determined that our
    efforts had such a profound impact on people and equipment that
    the Air Force should be relieved from normal deployment
    rotations for six months to be able to reconstitute. The
    fighter workhorses of the conflict were the F-15Cs and F-15Es
    from the 48th Fighter Wing, Lakenheath Air Base, England.
        Four, of six, enemy aircraft encountered were downed by F-
    15s, and the F-15E was the only fighter able to operate around
    the clock in all weather conditions using the AGM-130 to
    precisely target and destroy high value enemy targets on the
    ground. No other fighter in history has turned in this kind of
    remarkable performance with its associated readiness and safety
    record.
        Because of the higher utilization rates of our assets as
    evidenced by the operational tempo of recent years it has been
    my intention to maintain F-15E production at a snails pace in
    order to maintain an adequate number of frontline strike
    fighter aircraft until we produce the next generation strike
    fighter in significant numbers.
        Our nation's interests are also well served by the pursuit
    of Foreign Military Sales to Allied Nations. While we endured
    some setbacks with the decision on the part of Israel and
    Greece not to pursue FMS we were aware of credible evidence to
    suggest Saudi Arabia and South Korea might yet purchase the F-
    15.
        We understand that F-15 production cannot continue
    indefinitely but we also understand that FMS will help maintain
    our critical industrial base and its highly skilled workforce.
    As our defense industries continue to consolidate it is
    critical that we maintain as much of our remaining skilled
    workforce as possible because we will not be able to
    reconstitute these assets at a moments notice, just as we
    cannot rapidly recreate our pilot base once it is threatened or
    lost.
        We are both accountable for maintaining a core of skilled
    pilots and personnel so that when needed our forces can respond
    with devastating precision. You take this responsibility
    seriously and I commend you for it.
        Likewise, we both have a profound responsibility to protect
    our manufacturing base so that when called upon our two sole
    tactical fighter companies, Boeing and Lockheed-Martin, will be
    ready to quickly and reliably respond to our equipment needs.
    How much is enough? That is a question that is difficult to
    answer in these uncertain times but one thing is clear. If we
    have the potential to support our critical manufacturing base
    with Foreign Military Sales we are remiss if we do not do all
    we can to secure them. With the real potential to secure FMS we
    moved to continue F-15 production in fiscal year 2000 and will
    continue to try and secure funding for fiscal year 2001.
        In the meantime we are doing all we can to determine the
    viability of FMS to Saudi Arabia and South Korea. Your support
    of our efforts is essential!
        It is not always possible for us to agree. That is the
    nature of our form of government and in part what our founding
    fathers intended when they designed this great nation. But in
    the case of continued F-15E production I believe we both share
    a common responsibility to ensure our two remaining
    manufacturing bases, Lockheed-Martin and Boeing, remain as
    strong as possible, just as we both share a common
    responsibility to ensure we have sufficient numbers of pilots
    and other skilled personnel to field the best Air Force
    possible.
        I assure you that I am as committed as any of my colleagues
    in ensuring the next battle we face will not be a fair fight.
    Your programs are of great interest to me, and the men and
    women whom you serve can count on my support.
        Secretary Peters, General Ryan I look forward to discussing
    these and other important defense issues with you and your
    staff as our hearing process continues. Again, welcome!. You
    serve our nation's defense department faithfully and I wish you
    well in your continued endeavors.

        Senator Stevens. Senator Dorgan.

                      STATEMENT OF Senator BYRON L. DORGAN

        Senator Dorgan. Mr. Chairman, just briefly, let me thank
    the Secretary and General Ryan for being here again. I will not
    provide a lengthy statement except to say that, while I support
    the F-22 and the Airborne Laser (ABL) and a range of other
    programs that I think we should fund adequately, I am concerned
    about a couple of issues that I will ask about during the
    questioning round.
        One is the F-16 aircraft that are virtually out of time in
    the 119th Fighter Wing. The estimate is to replace them in
    2007. I do not think that is going to work. The underfunding of
    the B-52 bomber and the stretch-out of the ABL--there are a
    series of difficulties that I want to ask about, but I will do
    that during the question round. I am anxious to hear the
    testimony.
        Senator Stevens. Yes, sir. Thank you.

                      prepared statement of senator craig

        Senator Craig has also submitted a statement which we will
    include in the record at this point.
        [The statement follows:]

                  Prepared Statement of Senator Larry E. Craig

        Mr. Chairman, thank you for allowing me to submit this
    statement and question for the record to the Air Force during
    this subcommittee hearing. I would like to thank Secretary
    Peters and General Ryan for the support the Air Force has given
    Mountain Home Air Force Base and the men and women, who day-in,
    day-out are prepared to lay their lives on the line for our
    country.
        The 366th Wing is the Air Force's premier air expeditionary
    wing. The wing blends the firepower of various weapons systems
    to form a single, cohesive aerial strike force. As you know,
    the Gunfighters are a composite force already built and
    trained, ready to fight, at a moments notice, anytime,
    anywhere.
        Mountain Home is also home to the Aerospace Expeditionary
    Forces Battlelab, which identifies and rapidly proves the value
    of innovative ideas for the Commander In Chiefs' employment of
    Aerospace Expeditionary Forces throughout the spectrum of
    warfare. With all of this in mind, Mountain Home Air Force Base
    is key to the Air Force being able to implement the
    Expeditionary Aerospace Force structure.
        I would also like to thank you for your support of the
    Enhanced Training Range in Idaho. This range will provide
    realistic, flexible, and efficient training scenarios while
    minimizing environmental impacts associated with readiness
    training. Not only will the Air Force save approximately $30
    million in the first three years of operation, but it will
    allow the men and women of the 366th Wing to prepare to fight
    the next war, not the last, with fewer combat losses through
    improved training. I commend the Air Force in working
    diligently with the Federal Aviation Administration, the
    Federal Department of Transportation, the Bureau of Land
    Management, Idaho State officials, and local land users to
    ensure that all concerns were addressed and effectively
    handled. I would encourage you to let me know if I can be of
    assistance to the Air Force with any other issues relating to
    the final stages of implementation.
        I was pleased to see the announcement by the Air Force that
    Mountain Home Air Force Base was being considered for bed down
    of the F-22 Raptor. I hope that the Air Force would seriously
    consider this option. As I understand the Expeditionary
    Aerospace Force implementation, Mountain Home Air Force Base
    would be the most logical choice for bedding down the first
    operational F-22 units. Not only is the 366th one of the first
    to deploy anywhere in the world when a conflict erupts, it is
    also home to the Aerospace Expeditionary Forces Battlelab, and
    will have the newest and best day-to-day training ranges in the
    United States.

        Senator Stevens. Gentlemen, proceed as you wish. Thank you.
        Mr. Peters. Mr. Chairman, Senator Inouye, thank you for the
    opportunity to be here this morning. We have submitted a
    lengthy posture statement that we would ask to be put in the
    record.
        Senator Stevens. They are both in the record to start with.
        Mr. Peters. And if I may, just to give then a very short
    opening. Our goal in developing the fiscal year 2001 budget was
    to provide a balanced, integrated, and time-phased plan that
    supports our evolution into an Expeditionary Aerospace Force
    and which also implements key lessons learned from Kosovo. Over
    the last 18 months, the Air Force has shown that its
    investments in stealth, precision munitions, unmanned vehicles,
    and improved intelligence, surveillance, and reconnaissance
    systems have matured into really unparalleled combat power.

                         Expeditionary Aerospace Force

        For the first time in history, we have deployed a
    significant number of Global Positioning System (GPS)-guided
    munitions in combat and demonstrated an all-weather, day-night
    precision strike capability far more lethal and accurate than
    ever before possible. We also have deployed our new
    Expeditionary Aerospace Force. Each of these 10 forces
    represents a fundamental restructuring of the way the Air Force
    does its business.
        By structuring our people and assets as 10 rotational
    forces, we ensure that the majority of our forces are trained
    to meet our obligation to be ready on very short notice to
    fight and win two nearly simultaneous major theater wars. At
    the same time, we have two very highly capable forces deployed
    or trained and ready to deploy at any time for contingency
    operations and to support the increasing need for a persistent
    forward presence in the aftermath of regional contingency
    operations.
        We are, as we speak, fielding forces five and six. Each of
    these is made up of combined active duty, reserve, and guard
    units. By rotating our forces this way, the Air Force has
    provided a stable and predictable deployment schedule for all
    of its forces, addressing one of the most serious complaints
    from our airmen, namely the high operational tempo. This
    structure has, in turn, allowed the guard and reserve to
    participate in deployments in larger numbers, cutting the work
    load on the active force.
        As we continue to implement the Expeditionary Aerospace
    Force concept, we should be able to reduce the time all of our
    airmen are deployed, as well as the workload at home when units
    are deployed.

                            Recruiting and retention

        Last but certainly not least, with the help of this
    committee and Congress we are addressing serious pay,
    personnel, modernization, and readiness challenges. Let me just
    touch on a few highlights. First, we are, in fact, seeing
    increasing retention in our enlisted force. In the month of
    February, for example, we retained almost 60 percent of our
    first-term airmen against a goal of 55 percent. This is still
    early, but we are doing better and we hope it continues.
        Thanks to the new pilot bonus program, our pilot shortage,
    once predicted to be about 2,000 pilots short this year, will,
    we think, bottom out at about 1,200 pilots and should go back
    up to about 600 pilots short at the end of fiscal year 2001.
    But again, this is based on early trends which will have to
    continue.

                                  Spare parts

        We do, in fact, have an increasing inventory of spare
    parts, thanks to the funding that we have received from this
    committee and the rest of the Congress. Our back orders for
    spare parts are down by over 50 percent from just 1 year ago
    and our mission capable rates appear to be stabilizing.
        On the other hand, on our recruiting programs, we are still
    not doing as well as we hoped. We plan to have a major blitz
    here at the end of the fiscal year, but it looks like we are
    going to have great difficulty meeting our requirements on
    recruiting.

                                 Modernization

        Finally, in this budget we have in place modernization
    programs to refurbish or replace virtually all of our aircraft
    and space systems, and we are also making investments in new
    capabilities, such as Global Hawk, the Unmanned Combat Air
    Vehicle, and increased numbers of joint direct attack munition
    (JDAM).
        This budget is also guided by our recent Kosovo experience,
    which has underscored the fact that the Air Force must remain
    ready to respond to a full range of missions, from humanitarian
    and peacekeeping operations to cyber terrorism, weapons of mass
    destruction, and major theater wars. To do this, we have placed
    renewed emphasis on upgrading our intelligence, surveillance,
    and reconnaissance assets and also our space assets, and we
    continue to fund significant improvements in our
    communications, network defense, and command and control
    infrastructure.

                               prepared statement

        Working together with this committee, we are taking the
    best, most potent aerospace force in the world and making it
    even lighter, leaner, more lethal and more flexible to meet the
    national security challenges of the next century.
        Thank you, Mr. Chairman. I look forward to taking your
    questions.
        Senator Stevens. Thank you, Mr. Secretary.
        [The statement follows:]
     Prepared Statement of Hon. F. Whitten Peters and Gen. Michael E. Ryan
                           af posture statement 2000
        Mr. Chairman and members of the committee, the Air Force fiscal
    year 2001 budget, though constrained, is a balanced, integrated,
    carefully crafted plan that supports our transformation as an
    Expeditionary Aerospace Force. With your continued support, it will:
        Put our people first.--We can never lose sight of the fact that it
    is our great people--active-duty, guard, reserve and civilian--who make
    the Air Force the world's premier aerospace force. This budget
    continues our commitment to improving pay, benefits, and quality of
    life. It also contains increased emphasis on improving recruiting and
    retention to ensure that we are growing the force of the future.
        Emphasize readiness.--The Air Force has been in a constant state of
    high operations tempo since the end of the Cold War. We are smaller
    than we have ever been, yet tasked at a level many times the Cold War
    pace. The stress is showing. By committing to better organization, more
    money for spare parts, and increased training, we will halt the
    downward readiness trends of the late 1990s.
        Continue our carefully balanced, time-phased modernization
    program.--There is no single modernization program that is a ``silver
    bullet'' for the Air Force. Instead, we are committed to modernizing
    existing systems, where it makes sense and provides the needed
    capability. Likewise, we must purchase new systems to ensure we
    maintain our ability to provide the full spectrum of aerospace
    capability. We continue to believe that the key to success is an
    integrated system of systems. That will provide the global reach,
    global power, and global vigilance that make the Air Force a premier
    instrument of national defense and national security. Our fiscal year
    2001 modernization plan touches every part of the Air Force, including
    space, mobility, surveillance, power projection and information
    superiority, just to mention a few.
        Without the steadfast support of the President and Congress, the
    stunning successes of the last several years would not have been
    possible. We are a combat-proven, mission-focused, decisive fighting
    force for America. With your support we will remain so.
                                  introduction
        The United States Air Force enters the 21st Century as the most
    powerful, swift and flexible military force in the world. Aerospace
    power was born in America with the Wright brothers and was proven
    decisive in combat by American commanders who understood the imperative
    of dominating the skies: Mitchell, MacArthur, Eisenhower, Nimitz,
    Arnold, and many more. Aerospace power became America's unique
    asymmetric advantage.
        For more than fifty years, the Air Force has been the nation's
    primary provider of aerospace power. Today, aerospace power gives the
    nation a strategic advantage and is its most rapid instrument of
    military choice. It is aerospace power that has made it possible for
    our nation to lead critical security commitments, while remaining ready
    to engage rapidly anywhere on the globe.
        Everything we do in joint military operations requires control of
    air and space. Without aerospace power, our joint forces could not
    effectively deploy, fight, or win. With aerospace power, joint forces
    can secure our objectives quickly with minimum loss of life. We are a
    combat-proven, mission-focused, decisive fighting force. The following
    paragraphs outline how your Air Force, with continued support from
    Congress, will organize, train, equip, and operate in the coming years.
    Aerospace Power in the Geostrategic Environment
        World events over the past decade have highlighted the value of
    aerospace forces. They were the conclusive instruments of military
    power in the three major conflicts of the last decade--the Gulf War,
    Bosnia-Herzegovina and Kosovo. Throughout the 1990s, aerospace power
    delivered results not only in combat but in many different types of
    operations: providing presence around the world to shape the security
    environment; flying relief supplies into areas struck by disaster;
    delivering aid to nations and peoples in need; patrolling no-fly zones
    over Iraq and Bosnia-Herzegovina; providing awareness with space
    assets; and standing nuclear alert. These are just a few of the
    examples of how America has used its aerospace power.
        Today, our national security policy relies on the steady engagement
    of air forces in several regions. While the other services use their
    aviation arms primarily to assist their principal forces, the Air Force
    provides the essence of our nation's aerospace power.
        The Air Force is preparing for a range of potential threats that
    will vary in character and intensity as the 21st century unfolds. A
    hostile state actor, weapons of mass destruction, cyberterrorism and a
    heightened need for defense of the American homeland: all are possible
    challenges in the future. Security can be fragile. Tomorrow's weapons
    have the potential to be devious and destructive. New threats can
    emerge quickly, and our ability to counter them must never be taken for
    granted.
        Given the uncertainty and diversity of these threats, aerospace
    power, with its unique capabilities, will be more important than ever
    in carrying out America's security goals. First, aerospace power is
    far-reaching. Our aircraft can reach any point on the globe within
    hours, with the flexibility to supply relief or to produce combat
    effects. Second, it is a lethal fighting force. We can control enemy
    maneuver in the battlespace and find and destroy targets with great
    precision. Third, aerospace power is vigilant. Airmen link aircraft,
    satellites and information systems to create global situational
    awareness. Vigilance takes many forms, from security forces patrolling
    the base perimeter to nuclear forces on alert. These three
    characteristics combine to make aerospace power a highly flexible,
    powerful military force--indispensable to our nation.
    Our Focus
        The United States Air Force defends the United States and protects
    its interests through aerospace power. Our fundamental capability is to
    dominate the aerospace realm to ensure freedom from attack, freedom to
    maneuver and freedom to attack. This capability stems from our core
    competencies: aerospace superiority, global attack, precision
    engagement, information superiority, rapid global mobility, and agile
    combat support. Our heading stays constant: the Air Force vision of
    global reach, global power and global vigilance is the guiding
    principle behind our strategic plan and budget programs for aerospace
    power.
        Aerospace power cannot be defined just as fighters, bombers or
    satellites. Aerospace power comes from talented, trained people
    employing a combination of systems and capabilities. It starts with our
    ability to operate out of austere bases--and that requires constant
    attention to the fundamentals of food, shelter, force protection,
    communications, airfield and mobility operations, and civil
    engineering. It includes the world's most capable air mobility assets
    and infrastructure, empowering the global reach capability without
    which forces and equipment could not move onto forward bases. At the
    next level, aerospace power requires Intelligence, Surveillance and
    Reconnaissance (ISR) assets in space and in the air that are
    interoperable and that can communicate information back to centers
    where data can be fused and commanders can use that fused information
    to command their forces and the battlespace. The constant requirement
    for data, communications, and systems that turn data into information,
    in turn, requires capabilities that run the gamut from prediction of
    solar weather to satellite command and control to computer network
    defense. What makes the Air Force such a flexible and effective tool is
    our focus on maintaining a balanced aerospace force that provides the
    full range of capabilities required to put bombs on target or to
    rapidly deliver humanitarian supplies.
        In one contingency, our primary contribution may be C-17s
    delivering relief supplies. But as important as the C-17 is to this
    operation, it would be of little use without the material handling
    equipment that allows it to be loaded and unloaded. Moreover, relief
    missions depend on layers of support from information systems,
    communication satellites, weather, navigation, and air refueling that
    come together to form an Air Force unique capability: an air bridge.
    Similarly, the B-2 dropping the Joint Direct Attack Munition (JDAM) is
    an outstanding capability. But the B-2 cannot perform that mission
    without targeting data, which depends on our ISR and communications
    infrastructure, as well as the Global Positioning System (GPS) which,
    in turn, requires a supporting infrastructure of space launch ranges
    and launch vehicles.
        Our fiscal year 2001 budget program is based on sustaining our
    decisive fighting force through a balanced program that pays attention
    to all the systems required to perform our mission, modernizes our
    systems, takes advantage of innovation, and prepares for the challenges
    of the future. Most importantly, we are providing better support for
    our most valuable assets--our people.
    The Air Force Leads Defense Transformation
        The Air Force's legacy of organizational and operational
    flexibility leave it prepared for the challenges of the 21st Century.
    As security goals shifted in the 1990s, we vaulted ahead with two major
    transformations that greatly increased our decisive power projection
    capabilities. These transformations--one organizational, the other a
    result of the ongoing revolution in military affairs, form the
    foundation of our strategic plan.
        The Air Force has always been an expeditionary force: going ``over
    there,'' to Europe, the Pacific, Southeast Asia, or the Persian Gulf
    region to join with allies and defeat adversaries. Since the early
    1990s, the Air Force has downsized by more than one-third and cut
    overseas basing by two-thirds. We retired older Cold War force
    structure and emerged as a lighter, leaner, and more lethal force.
    Bombers designed to carry nuclear weapons now carry precision-guided
    conventional munitions. A tanker force designed to support nuclear
    operations became the backbone of overseas force deployment. Never in
    history have aerospace forces demonstrated their flexibility with
    greater clarity.
        But during the downsizing, contingency operations multiplied and
    organizational strain emerged. Soon the Air Force was engaged in many
    times as many operations as during the Cold War--we were 40 percent
    smaller than our 1987 levels, but much busier. Like marathon runners,
    we had to find the right pace. First, the Air Force transformed itself
    into an expeditionary aerospace force configured for the full spectrum
    of global operations. In response to seemingly irreconcilable stresses,
    the Air Force increased its expeditionary capabilities so that we could
    both deploy forces faster, and be able to keep up a constant presence,
    for years when necessary, to fulfill long-term multi-national
    commitments. We did this using forces that were structured to fight and
    win two major theater wars.
        The new Expeditionary Aerospace Force (EAF) concept enables the Air
    Force to meet the Nation's increased demand for deployed forces.
    Without this reorganization, we could not sustain that demand with the
    force levels we have today. EAF allows us to provide tailored forces to
    regional commanders, while keeping the force trained and ready to meet
    major commitments. But most importantly, it gives our people more
    predictable deployment schedules, adding needed stability to their
    family lives and career paths. Equally important, EAF allows us to make
    more effective use of the Guard and Reserve, reducing the operations
    tempo for all our forces. The new concept works by designating ten
    packages of our forces--known as Aerospace Expeditionary Forces
    (AEFs)--and rotating two at a time to be on call or deploy to regional
    hotspots. It also provides for five rotating mobility headquarters
    units, to meet demands for airlift. The reorganization required for
    this transition is largely complete. However, we must continue
    exercises and initiatives to improve our expeditionary capability by
    reducing deployment times, improving communications and en route
    planning, streamlining equipment loads and honing our ability to
    operate from austere locations.
        The second major transformation emerged in the last decade when the
    Air Force became a stealth-enhanced, all-weather, day/night, precision
    force. In the 1990s, Americans became accustomed to seeing gun camera
    video of precision-guided bombs hitting buildings, bridges and tanks.
    Laser-guided bombs debuted in the early 1970s, but in 1991 just 9
    percent of the weapons delivered by aircraft in Desert Storm were
    precision weapons, and only the F-117, with two bombs on board, was
    able to penetrate heavy air defenses to drop these weapons. Just four
    years later, in 1995, more than 90 percent of the bombs dropped during
    Operation Deliberate Force were precision-guided weapons. In 1999, the
    stealthy B-2, flying from the United States, with 16 JDAMs on board hit
    multiple targets at night, in all kinds of weather in its combat debut
    over Kosovo and Serbia. In addition, B-52s fired GPS-guided
    Conventional Air Launched Cruise Missiles (CALCMs) hundreds of miles
    with great accuracy. Our fighter aircraft also dropped precision laser-
    guided bombs when weather permitted, and we were prepared to use laser
    designators from the Predator Unmanned Aerial Vehicle (UAV) to enable
    laser-guided bombs to be dropped through the clouds onto intended
    targets. In short, during Kosovo, all our attack platforms were able to
    hit multiple targets per sortie with great precision and much-reduced
    collateral damage. Past air commanders could only dream of the level of
    accuracy and reduced collateral damage that we achieved in Kosovo.
        But the precision revolution also has costs. First, is the cost of
    integrating our new precision weapons onto our existing platforms--in
    many cases this requires extensive modifications. Now that we can bomb
    at night, we must also be able to fly safely at night, and that means
    installing night vision goggles and related lighting into all our
    combat aircraft. Precision weapons also require precise data on the
    location of targets--data that today must come from operations centers,
    satellites, UAVs, and supporting aircraft. This in turn drives a
    requirement for linking our aircraft together through high-speed
    digital networks and for better on-board targeting systems. We must
    also complete the integration of precision weapons into our Guard and
    Reserve aircraft--for EAF and precision to work, every strike aircraft
    must be capable of dropping precision ordnance. Finally, we must also
    invest in a suite of capabilities and training to shorten the time it
    takes to identify and strike targets from hours to minutes.
        Your Air Force is funding the programs required to move these two
    critical transformations to the next level. As we move forward, we will
    continue to define the next steps in this revolution, and we will
    ensure that this transformation has many more cycles. Making our force
    stealthy will allow us to protect the force from evolving counter-air
    systems. New munitions, like the Small Smart Bomb and Low Cost
    Autonomous Attack Systems (LOCAAS) on stealthy platforms, will extend
    all-weather, day/night, and stand-off capabilities and will provide
    better capability against moving targets. They will also further
    minimize collateral damage and enable many more targets to be destroyed
    with a single sortie. Real time, adaptive targeting will combine with
    stealth and precision to take this revolution to a new level of combat
    power.
        Both of these major transformations depend on increased aerospace
    integration. Air and space are seamless. We operate aircraft and
    spacecraft optimized for different environments, but the art of
    commanding aerospace power lies in integrating systems to produce the
    exact effects the joint force commander needs. To meet this need, we
    have changed our command organization, established a Space Warfare
    Center and an Aerospace Basic Course, and added space training to the
    air combat training given at our Weapons School. Most importantly, we
    are putting air and space operators into all our key commands and
    training courses. We are also investing in the information
    infrastructure to further link air and space platforms and testing
    those links in exercises and experiments. This year, we formed an
    Aerospace Integration Center at Nellis AFB, NV, where younger officers
    will learn how to employ and command the totality of aerospace forces.
    Today, our innovations are bearing fruit--the Air Force is an
    integrated expeditionary aerospace force.
    Operation Allied Force: Total Success . . . and Forging the Way Ahead
        Expeditionary operations and precision, all-weather strike
    converged in the spring of 1999 when NATO airpower compelled Yugoslavia
    to remove military forces from Kosovo. For the Air Force, Operation
    Allied Force was equivalent to a major theater war.
        We proved expeditionary aerospace power was decisive. From the
    operational perspective, airmen damaged over 85 percent of critical
    infrastructure targets and attacked more than 850 Yugoslav army ground
    mobile targets (such as tanks, artillery pieces and trucks.) From the
    strategic perspective, aerospace power demonstrated NATO's might and
    resolve to Serbian leaders and in the end, Serbia complied with NATO
    demands.
        The success of Operation Allied Force stemmed from our long-term
    investment in aircraft modernization and stealth, as well as a range of
    precision, near-precision and stand-off weapons; real-time
    communications; UAVs, space systems and ISR aircraft. We gleaned many
    insights from this conflict, and they are reflected in the budget and
    program now before the Congress.
      --Expeditionary operations worked. With seeming ease, our airmen
            deployed to more than 20 expeditionary bases, bringing with
            them the force protection, logistics, sustainment, and
            communications systems that supported expeditionary combat
            operations.
      --Reachback worked. Satellite communications enabled warfighters to
            reach back to the United States for real-time information and
            analysis, while avoiding the need to deploy such systems. By
            reaching back to CONUS for real-time support, theater forces
            were both leaner and better supported than if we had deployed
            CONUS forces and their equipment to Europe.
      --Logistics worked. Depots surged and provided some 500,000
            additional hours of work. With Air Mobility Command's worldwide
            express package delivery system, 93 percent of replacement
            parts got to forward expeditionary bases in Europe in an
            average of just 3.7 days. The engaged force averaged a 92
            percent mission capable rate, much better than the peacetime
            average, because it had adequate parts and a full complement of
            experienced maintenance personnel.
      --Technology worked. The many areas where technology gave us great
            advantages are the same areas that offer us the chance to
            modernize and improve our forces, gaining greater capability
            and saving dollars. The most promising of these are high
            priorities in this year's budget submission.
        While individual weapons systems were hailed in the press for their
    capabilities, it was the successful integration of a broad range of
    weapons systems and supporting aircraft and space systems that won the
    day over Kosovo. While the world marveled at JDAM, the war could not
    have been won without the use of proven precision munitions guided by
    laser, electro-optical, and inertial guidance systems. Success came
    from understanding how our weapons systems complemented each other and
    blended together into a balanced fighting force with capabilities that
    matched requirements. The synergy that resulted from combining air,
    space, and information operations allowed NATO to attack strategic,
    operational, and tactical targets, day and night, and often in adverse
    weather conditions, within hours of being identified. Having said all
    that, the greatest advantage we have is our outstanding people.
    Decisive Fighting Force
        Our airmen are a national treasure--they are a combat-proven,
    decisive, fighting force. They perform superbly wherever they are,
    whoever they are: the crew chief maintaining an F-16 for combat
    operations from Aviano AB, Italy; the C-17 loadmaster flying all over
    the world from Charleston, South Carolina; the captain and his wingman
    deploying from Alaska to Korea; the lieutenant flying satellites at
    Schriever AFB, Colorado; or officers standing alert at a Minuteman
    missile launch control center near Minot, North Dakota. Airmen are
    motivated, trained and ready to serve their country.
        But their jobs are not easy. The uniformed Air Force of the year
    2000 is the smallest in history: 358,000 active-duty members, plus
    107,000 in the Air National Guard and 74,000 in the Air Force Reserve
    for a total of 539,000. On any given day, 90,000 airmen--almost one-
    sixth of the Total Force--are operating forward at 12 overseas bases
    and 16 forward operating locations.
        The personal commitment of our men and women deserves an equal
    commitment from the Air Force, the Congress, and the American people.
    People are the key to the Expeditionary Aerospace Force, and we must do
    all we can to give our fighting forces what they need to carry out
    their mission.
    People
        People are our top priority. Because multiple deployments, crisis
    responses and aging equipment are stressing our manpower levels, we
    know we need to move additional manpower into the forces directly
    supporting the EAF. We moved 2,640 positions into the EAF in fiscal
    year 2000, and this budget will move 3,180 additional authorizations in
    fiscal year 2001. In addition, we recognize that unfilled manpower
    authorizations are of no use, so we have requested 300 new manpower
    positions for recruiters in fiscal year 2001. We have also commissioned
    a major study of our end strength requirement and are prepared to
    request additional end strength, if needed.
        Recruiting and retaining the highest quality men and women are
    among our greatest challenges in the current economic environment. To
    date, we have been able to recruit men and women of extremely high
    caliber--99 percent have high-school diplomas. However, during fiscal
    year 1999, the Air Force fell short of its recruiting goal for the
    first time in 20 years. To meet this year's goal, we are increasing our
    recruiter force and launching new efforts in paid advertising.
        Retention has also declined. The Air Force needs to retain highly
    trained people; but the high operations tempo, the strong civilian job
    market, and previous dissatisfaction with pay and retirement benefits
    have hurt both enlisted and officer retention.
        The bottom-line for retention is that quality of life counts. The
    pay and compensation package Congress and the administration approved
    in 1999 and the restoration of 50 percent retirement benefits sent the
    right message. In addition, quality of life initiatives at the base
    level are essential. We realize that while we recruit individuals, we
    retain families. Especially with so many military members deployed, our
    programs in spouse employment, personal financial management
    assistance, childcare and youth centers, and commissaries and military
    exchanges are tangible commitments that make a difference in quality of
    life every day. Our Dormitory Master Plan to improve facilities is well
    underway, and we have also funded improvements to family housing
    through our Housing Master Plan. Additional DOD support for market-
    based basic allowance for housing (BAH) will reduce out-of-pocket
    expenses for our families assigned to high cost areas. TRICARE, which
    was fully implemented in June 1998, continues to receive our constant
    attention, with focus on customer satisfaction. While surveys indicate
    that satisfaction is increasing, we are a long way from complete
    success. Congress' continued support for our budget will sustain
    efforts in all of these areas.
    Training
        Several new programs are in place to train our force for 21st
    Century expeditionary and integrated aerospace operations. Deploying is
    now a way of life. The vast majority of our force never knew the
    garrison-style life of the Cold War Air Force. Accordingly, airmen
    recruits confront the real world during the new Warrior Week encampment
    at Lackland AFB, Texas, where they learn to operate from a bare-base
    site. At Maxwell AFB, Alabama, the Aerospace Basic Course extends to
    new officers and selected civilians a working knowledge of how the Air
    Force fights. As air, space and information systems become more
    sophisticated, the Air Force views ongoing training and education as
    the key to successful command and employment of aerospace power. New
    training systems like Distributed Mission Training place airmen in a
    synthetic battlespace, connected electronically to other airmen joining
    the simulation from bases in other states.
    Readiness
        Today's global environment demands that we be ready for operations
    from Kosovo to the South Pole. Our people are ready to meet this
    demand, but years of ongoing operations and difficult funding choices
    pose a threat to near-term readiness. Keeping that threat at bay is one
    of our major concerns and a major focus of this year's budget.
        The average Air Force aircraft is 20 years old and even with the
    introduction of new airframes, the average age will be 30 years by
    2015. Supply systems are pushed to their limits as Air Force units
    deploy continually. Overall, average mission capable rates for aircraft
    have declined due to the high operations tempo and shortages in parts,
    equipment, and skilled manpower. With the help of the administration
    and Congress, we provided obligation authority of $382 million in
    fiscal year 1999 for more spare parts inventory, and 100 percent
    funding for spares should reverse the shortage in 2000. We have put the
    brakes on declining engine readiness, but are still 25 percent short in
    some war readiness spares. Readiness remains an area of vital concern.
    Modernization
        The Air Force's modernization strategy has three aims: to maximize
    combat performance, build the force of tomorrow and exploit new
    technologies that enhance warfighting capability. The Air Force is
    sized and shaped to be flexible enough to perform several basic
    missions with the same force: sustaining deterrence, winning two major
    theater wars in close succession, rapidly responding to small scale
    contingencies, deploying for sustained peace enforcement operations,
    and conducting humanitarian operations. That places a premium on
    modern, flexible forces and people who know how to do their jobs in a
    variety of operations.
        Our continued innovation begins with basic technological research
    and program integration. Today's nascent programs are tomorrow's joint
    warfighting capabilities. Our successes in Kosovo have demonstrated
    that great military value can come from integration of air and space
    systems. For this reason, we are doubling our current budgetary
    expenditures for space science and technology between fiscal year 1999-
    2005. This will further enhance our integrated capabilities and lower
    the cost of space support. For this reason too, we have established the
    Aerospace Command, Control, Intelligence, Surveillance and
    Reconnaissance Center (ASC\2\ISRC) charged with integrating our
    multiple data, intelligence, and analysis systems into a comprehensive
    Aerospace Operations Center, and the Space Battle Lab charged with
    finding innovative ways to combine space and air systems.
        As we look to our future integrated aerospace force, however, we
    cannot forget that aerospace power is complex and is built on a broad
    infrastructure that must also be modernized in parallel with combat
    systems. To meet Commander In Chief (CINC) requirements, for example,
    our budget includes capabilities ranging from satellites to smart cards
    to the Red Horse civil engineers to new forms of combat rations. Tested
    and proven over time, this phased, balanced modernization program will
    ensure the future of your Air Force as the most powerful aerospace
    force in the world.
        As the Air Force modernizes its capabilities, we are mindful that
    they must be interoperable with the other services and contribute to a
    wide range of capabilities for Joint Operations. For example, the Air
    Force provides strategic airlift for all ground forces, long-range
    aerial refueling for naval and allied aircraft in combat operations,
    and assured access to space for a range of Department of Defense
    missions. The array of systems and capabilities we supply is broader
    and more diverse than that required of other military forces. This is
    not because of the importance of the Air Force as an institution. It is
    because of the growing importance of aerospace power in our Nation's
    joint military operations.
        Finally, we must always analyze emerging requirements. We face a
    mixture of threats, and our budget seeks funding to improve our
    capabilities against emerging threats, such as chemical and biological
    weapons, terrorism, and efforts to deny or exploit our mastery of
    space. We also have a program of experimentation that will show us how
    to improve our capabilities now and to stay aware of potential
    technology synergies and operational concepts that could be important
    in this new century.
    Investing in the Core Competencies of Aerospace Power
        It takes the full set of competencies--aerospace superiority,
    global attack, precision engagement, information superiority, rapid
    global mobility, and agile combat support--to create aerospace power.
    These core competencies are operational capabilities that exploit the
    advantages of aerospace operations and enable many other types of joint
    operations. We cannot let down in any of these areas or we will put at
    risk our nation's ability to prevail in conflict. Therefore, we have
    taken a balanced approach to sustaining these core competencies in the
    fiscal year 2001 budget request.
        Aerospace Superiority is the control of air and space and the
    foundation of joint force, full spectrum dominance. From our nation's
    geographic position in the Western Hemisphere, we rely on aerospace
    superiority to protect our homeland and to enable us to deploy and to
    communicate to and from overseas theaters. Through aerospace
    superiority operations, we establish freedom from attack, freedom to
    maneuver and freedom to attack for all joint forces. Not since the
    Korean War have American soldiers been attacked by enemy aircraft. The
    Air Force is committed to ensuring that it never happens again so we
    are investing in modified systems, new systems and ISR platforms which
    support the core competencies, like upgrades to the F-15 and F-16 and
    the development of the F-22, as well as systems like the Space Based
    Infrared System (SBIRS), Airborne Laser (ABL), and Space Based Laser
    (SBL), to name a few.
        Global Attack assets allow our nation to deter war and to strike
    any point on the earth's surface within hours of the decision to do so.
    Improvements to the B-2's low observability and integration of advanced
    weapons in the B-2, B-1 and B-52, as well as phased upgrades to the F-
    15, F-16, and F-117 aircraft and the development of the Joint Strike
    Fighter, will significantly enhance our global attack capabilities.
    Looking to the future, we are funding an experimental unmanned combat
    vehicle (UCAV) program.
        Precision Engagement means precision strike of targets, in all
    weather, day or night. Beyond these combat applications, precision
    engagement also refers to our ability to get supplies and people to the
    right place at the right time to further policy goals. In our budget,
    new families of weapons are in the spotlight, including the Joint Air-
    to-Surface Standoff Missile (JASSM), Joint Standoff Weapon (JSOW), JDAM
    and the Wind-Corrected Munitions Dispenser (WCMD). These programs have
    joint application and are the promise of a new transformation in power
    projection and decisive attack operations. In the area of precision
    support, we continue to fund all aspects of our mobility systems.
        Information Superiority is the collection, control and exploitation
    of the information domain. An uninterrupted flow of data and knowledge
    of the battlespace are critical to success in current and future
    military operations. The Air Force meets many service and joint
    requirements with an information superiority architecture that is at
    the cutting edge of technology. This truly unique asset is a collection
    of ground, airborne and space platforms, sensors and systems that
    represents a key contribution to joint operations. Our evolutionary
    modernization plan focuses on support to the expeditionary warfighter
    and includes upgrades to many of these systems. Key among them are the
    Joint Surveillance Targeting And Reconnaissance System (JSTARS), AWACS
    and U-2 aircraft, as well as the Predator and Global Hawk UAVs. We're
    also taking a step toward migrating some capabilities to space with the
    National Reconnaissance Office and the Defense Advanced Research
    Projects Agency in our joint investment on the Discoverer II space-
    based radar.
        Rapid Global Mobility is the ability to quickly position forces--
    from our own forces to those of our sister services or coalition
    partners--on or near any spot on the globe. Whether employing on-scene
    Aerospace Expeditionary Wings or deploying contingency forces in
    response to a crisis, mobility assets make the difference in speed and
    stamina. Procurement of the full complement of C-17s, development of
    the CV-22, aggressive C-130 and KC-135 modernization and C-5 upgrade
    programs, as well as development of the Evolved Expendable Launch
    Vehicle (EELV) will ensure there are no gaps in our global mobility for
    the early 21st Century.
        Agile Combat Support is the flexible and efficient sustainment of
    combat forces. As an expeditionary force, we are aiming for continued
    progress in reducing the deployment footprint, and speeding the
    delivery of the right supplies to the warfighter. To meet those needs,
    the Air Force is revamping its combat support systems. New logistics
    decision support tools and the Global Combat Support System are key
    enablers that will improve global logistics support.
    Air Force Fiscal Year 2001 President's Budget Submission
        Overall, the Air Force Budget continues to carefully integrate and
    balance competing priorities. The budget puts people first, emphasizes
    readiness, and continues to sustain relevant time-phased modernization
    and infrastructure programs. This plan continues our transformation and
    improvement as an Expeditionary Aerospace Force.
        The fiscal year 2001 Air Force Budget sustains the people,
    readiness and modernization gains included in last year's Budget. In
    addition, we made some key investments that target specific
    capabilities or issues. For example, we've added funds for Basic
    Allowance for Housing (BAH), recruiting, and advertising to increase
    retention and ensure we have the people needed to improve historic
    mission readiness trends. Other additions such as Large Aircraft
    Infrared Countermeasures (LAIRCM) and JSTARS address specific
    operational requirements, while additional modest increases for Science
    and Technology help underpin our future core capabilities. We've also
    added resources to cover ``fact of life'' cost increases for
    Peacekeeper and Minuteman missiles, fuel, and consumption of spare
    parts.
        However, our budget is filled with many of the same challenges as
    last year. This budget continues to provide resources to hold readiness
    levels at the fiscal year 2000 mission capable level. We need
    Congressional support for the fiscal year 2001 budget to reverse losses
    to our mission capable levels that we endured in fiscal years 1998-
    1999. We are hopeful that the adds for BAH, recruiting, and advertising
    will help improve personnel readiness. Finally, the Air Force still
    faces a low infrastructure re-capitalization rate. Our backlog of
    infrastructure maintenance and repair continues to grow and total
    facility replacement remains on a 200 year cycle.
                                    summary
        That is why we have crafted a carefully balanced plan that
    addresses the broad range of mission-critical needs of the service.
        The security challenges of the 21st Century are difficult to
    predict. What we do know is that America will meet those challenges
    through joint operations built around decisive power projection with
    aerospace forces. The United States Air Force has a unique and broad
    set of responsibilities to defend the United States, protect its
    interests, project power, extend a helping hand, and enable joint
    forces to carry out a full spectrum of operations. The fundamentals of
    aerospace power--fast, flexible air, space and information systems,
    skillfully commanded by aerospace warriors--will be the building blocks
    of 21st Century security. With Congressional support, the Air Force
    will maintain strategic deterrence, meet regional security challenges
    through expeditionary operations, support global information exchange,
    and engage with allies to reinforce multinational security measures.
    The inherent flexibility of aerospace power and the capabilities
    achieved through the synergism of aircraft, spacecraft and information
    systems will be the key components of national security against
    emerging threats. The United States is an aerospace nation, and your
    United States Air Force is now prepared and poised to meet the demands
    of ongoing global security commitments and must be in the future.
        Security in the 21st Century depends in no small part on continuing
    to provide aerospace power that gives this nation its rapid global
    reach, decisive power and constant vigilance. Our world-class people
    make it work--they will always be our first priority. We are an
    expeditionary aerospace force configured for the long haul. We are
    continuing cycles of revolution as we transform into an information-
    rich, precision force and as we integrate aerospace systems ever closer
    together. We are an aerospace force that will grow ever more accustomed
    to operating in and from space. Our budget balances today's commitments
    with tomorrow's opportunities. We are prepared for the future and
    committed to serving the nation. We are a combat-proven, mission-
    focused, decisive fighting force. With your support, we will remain
    that way.
                                 combat proven
    The United States Air Force in 1999
        Since the dawn of flight, America's airmen have answered the
    nation's calls. Last year was no different. Despite a huge drawdown
    over the past decade and a surge in contingency responses, last year
    was a time when the active duty Air Force was tasked more heavily (by
    percentage of force) than in either Desert Storm or Vietnam. The B-2
    saw combat for the first time and the B-1 for the second. We fought an
    air war with the greatest degree of precision and integration ever seen
    in the history of aerospace power, while at the same time patrolling
    the air over Iraq and keeping the peace in Korea.
        The Air Force played a dominant role in NATO's air war against
    Serbia. Operation Allied Force was the equivalent of a major theater
    war for the Air Force. We had over 500 aircraft and 44,000 people from
    our active and reserve components committed to this significant combat
    operation. Some of our airmen fought from home bases in the U.S. or
    overseas, but many deployed into 1 of the 21 expeditionary operating
    locations we created during the crisis.
        For example, the international airport at Tirana, Albania was
    turned from a remote airfield into both a major humanitarian relief
    center and a combat location for Task Force Hawk in less than 12 days.
    Five C-130s arrived from Ramstein AB, Germany on March 30th and by
    April 4th, the first C-17 was offloading outsized cargo for the Army's
    Apache helicopter unit. From the time our expeditionary airmen landed
    at the airport to the time combat helicopters landed in Tirana was only
    9 days. By mid-April the airfield was fully operational, flying
    approximately 25 airlift sorties per day--carrying supplies and
    equipment for Task Force Hawk and humanitarian relief for Joint Task
    Force Shining Hope. Throughout this short time period, Air Force civil
    engineering units steadily improved airfield operations and living
    conditions by setting up water, sewer, electricity, roads, and critical
    runway repairs and upgrades. By the end of operations, 1,240 sorties
    would fly into Tirana.
        During the 78 days of combat, 14 NATO nations flew 38,000 sorties
    and dropped 27,000 munitions against a wide range of Serbian targets in
    a small battlespace. Our Air Force provided nearly 50 percent of the
    coalition aircraft, dropped 70 percent of the munitions, and provided a
    large portion of the support aircraft. These support aircraft flew
    critical intelligence, surveillance, reconnaissance, and mobility
    missions which were key ingredients to the operation's success. During
    combat missions, hundreds of aircraft from many countries flew in close
    proximity over the Balkans; at some times, as many as five aerial
    refueling tracks were operational over the Adriatic at one time,
    competing for airspace with the tracks for ISR and command and control
    aircraft. The fact that none of our sorties resulted in a friendly
    mishap is testimony to the great leadership of our Air Component
    Commanders, the plans and operations skills of our Air Operations
    Centers, and the tremendous professionalism of United States and NATO
    airmen.
        As in other conflicts, a key consideration during Allied Force was
    the minimization of both combat losses and collateral damage. Because
    the Air Force continued its legacy of innovation, most joint and
    coalition strike aircraft were able to employ precision weapons while
    staying above much of the ground threat. And because of the Air Force's
    investments in stealth and precision weapons, the B-2 and F-117 were
    able to strike safely at heavily defended, strategic centers of gravity
    far inside Serbia. In all cases, multiple targets could be hit with a
    single sortie. Our goal in this fight was no combat losses and no
    avoidable collateral damage--we achieved both. We had no combat losses
    and our actual collateral damage rate per sortie was .0005.
        This incredibly low collateral damage rate resulted from the
    dedicated effort over several years to incorporate precision munitions
    across our fighting force and NATO's. More than 90 percent of the
    combat sorties delivered precision-guided munitions: B-2s used JDAM; F-
    15s, F-16s, and F-117s used laser-guided and stand-off precision
    munitions; B-52s fired Conventional Air Launched Cruise Missiles
    (CALCMs). Additionally, B-1 and B-52 aircraft dropped 10,000 non-
    precision munitions to close airfields and strike concentrations of
    opposing forces. These strike sorties were highly effective and
    successful because of our well-trained people and our unquestioned
    ability to control the air above the fight.
        It wasn't just precision munitions, however, that made the outcome
    of Operation Allied Force so successful. The integration of manned and
    unmanned air and space weapon systems were truly merged in one
    aerospace domain where intelligence, surveillance, and reconnaissance
    from air or space platforms were step-for-step synchronized with our
    combat operations at all levels of warfare--from the strategic level to
    the tactical level. While much of the world watched the battle unfold
    through the lens of our precision munitions, it was the integration of
    weapon systems in the aerospace domain that was the force multiplier.
    From communications and weather to navigation and combat assessment,
    this integration was pivotal to the successful outcome and validated
    our balanced investment strategy over the years.
        Kosovo was such an overwhelming display of the capabilities of
    aerospace power that even our staunchest critics were heard to
    grudgingly admit that airpower could single-handedly win a war. While
    Allied Force was our single greatest combat achievement in 1999, it was
    not our only combat operation. Before the conflict in Kosovo, we built
    up our forces in the Persian Gulf to respond to increased Iraqi
    violations of United Nations resolutions. After that build-up, we
    unleashed that potent force during Operation Desert Fox. It wasn't long
    after Desert Fox that Allied Force began. Simultaneously, we've
    continued to respond to Iraqi aggression on almost a daily basis as we
    enforce the no-fly zones in Iraq. In Korea, our airmen stand ready to
    provide critical aerospace power on a moment's notice if required.
        As you can see, 1999 was a very busy year for our expeditionary
    airmen as they've answered the nation's calls. But we're not just
    resting now, we're busily honing our warfighting operations and
    refining investment strategies given our lessons learned from the many
    combat operations.
                                mission focused
    Our Role in National Security
        The Air Force works with other governmental agencies to meet the
    national security challenges and the objectives laid out in the
    National Military Strategy. This requires us to shape and respond to
    today's security challenges and stand prepared for those of the 21st
    century.
        Today's global security environment demands that the Air Force
    maintain a mission-ready force necessary to deter aggression, conduct
    ongoing contingency operations at a very high pace, meet a wide range
    of peacetime missions, and support two nearly simultaneous major
    theater wars. In addition, the Air Force must be ready to counter
    potential enemies who are increasingly likely to attack American
    interests asymmetrically. In 1999, the Air Force was continually
    tested, and each time, vigorously supported the national strategy by
    shaping and responding with its mission-ready forces while preparing
    for the challenging and complex future ahead.
                                    shaping
        The Air Force continues to help shape the international security
    environment by deterring would-be aggressors with our formidable
    aerospace power, our global intelligence and surveillance operations,
    our forward presence, and our ability to reach any place on the globe
    within hours. Air Force people enhance regional stability through
    numerous exercises and training programs, which build confidence with
    our allies and coalition partners.
    Deterrence
        While the nuclear threat has diminished, the requirement to
    demonstrate our national resolve to defeat any potential aggressor
    remains at the heart of our nation's security. Air Force watch officers
    maintain constant global vigilance over events on the ground, in the
    air, and in space. From the high ground of space, and from manned and
    unmanned airborne reconnaissance platforms, data streams back to
    command centers from Greenland to Guam and from Saudi Arabia to South
    Korea. Air Force airmen also maintained around-the-clock alert with
    Peacekeeper and Minuteman III intercontinental ballistic missile forces
    in the U.S., and flew B-1, B-2, and B-52 ``global power'' missions
    staged from the U.S. to distant locations, demonstrating to the
    international community our capability, commitment and resolve to
    respond anywhere on the globe within hours of an alert.
    Promoting Stability
        The Air Force seeks to promote international stability by building
    broad relationships with the militaries of other nations and promoting
    regional security through our presence. These ties increase mutual
    understanding and enhance interoperability. Air Force engagement
    programs facilitate cooperation and access during contingencies and
    enable future coalitions of willing and capable allies.
        Recently, Air Force international engagement and stability efforts
    have focused on support of Joint Chiefs of Staff (JCS) and
    international exercises, the Partnership for Peace Program, Military
    Contact Programs, Operator-to-Operator talks, International Armaments
    Cooperation Programs, and Security Assistance efforts. Last year, the
    Air Force was engaged in 84 international exercises in 95 locations
    throughout the world. These included 15 exercises with 34 Partnership
    for Peace countries and nearly 300 focused Military Contact Program
    events.
        Last year we also conducted a series of seven Operator-to-Operator
    talks, continuing a tradition spanning 17 years. These talks allow for
    open discussion of key interest issues such as doctrine, employment of
    airpower, tactics, coalition relationships, exchange of operational
    information, and training. The program currently involves active
    participation with several nations and is designed to provide direct
    interface with our allies. Under the International Armaments
    Cooperation Program, the Air Force has more than 300 agreements with
    allies and coalition partners to share the cost of developing and
    producing robust, interoperable systems and technologies. These
    programs involve cooperative research, development, production,
    scientist and engineer exchanges, equipment loans, and scientific and
    technical information exchanges.
        In a very successful effort to promote stability and
    interoperability among allies and potential coalition partners, the Air
    Force Foreign Military Sales (FMS) program managed more than 3,900
    contracts for aircraft, spare parts, munitions, and training in excess
    of $108 billion. Meanwhile, the International Military Education and
    Training (IMET) Program continued to emphasize management training and
    professional military education. Under IMET, the Air Force trained
    1,298 students from 95 countries. These efforts have enhanced stability
    and promoted improved relationships with the U.S.
    Threat-Reduction Efforts
        Not all threats to the national security of our nation are
    conventional in nature. Potential adversaries will increasingly rely on
    unconventional tactics to offset our superiority in conventional forces
    and technology. The Department of Defense as a whole must counter these
    asymmetric threats, and the Air Force is heavily engaged in this joint
    effort. As identified by the National Defense Panel, the key emerging
    threats are those that seek to deny us forward bases, disrupt our
    supply lines, and inflict casualties both within the United States and
    abroad. The Air Force is heavily engaged in both offensive and
    defensive strategies to defeat the capabilities that support these
    threats: information warfare, chemical and biological warfare, force
    protection, and counter-drug operations.
    Information Superiority and Network Defense
        The Air Force has become increasingly dependent on information
    networks and information systems, and in the future will become even
    more dependent on a secure, timely, and accurate flow of information.
    Indeed, a key enabler for expeditionary operations is the ability to
    leave a large number of combat support personnel at home base, linking
    them to engaged commanders through our information systems. Moving
    information rather than people and equipment reduces airlift
    requirements and limits the exposure of our forces to terrorism and
    chemical and biological attack. Robust information networks also enable
    the key concepts of modern logistics systems: time-definite resupply;
    in-transit visibility; and the reliance on support outside the engaged
    theater to minimize people, equipment, and supplies that must be moved
    to theater. The war in Kosovo tested this vision in combat and proved
    the validity of our reachback concept--through which we used
    communications to CONUS-based support elements for the processing of
    intelligence and targeting data and sustained some two dozen forward
    expeditionary bases.
        In 1999, we worked across the board on the fundamentals of
    information superiority. Our logistics, financial management, and audit
    communities continued their efforts to ensure the trustworthiness of
    the data flowing through our systems by ensuring the accuracy,
    timeliness, and ``auditability'' of our key data systems. Our
    communications and computers community continued its efforts to protect
    all base data networks by routing all traffic through a central base
    Network Control Center (NCC) and protecting that traffic with
    appropriate firewalls and intrusion detection systems. In 1999,
    firewalls and NCCs were installed in all of our major bases at home and
    abroad. Similar equipment and procedures will be deployed to all Air
    Force installations--Active and Reserve--in the near future. In
    addition, we deployed a robust suite of tools to all of our bases to
    allow commanders to check for security holes in their information
    systems, and network protection was made a special interest item in all
    Inspector General inspections and a high priority audit issue for our
    Auditor General. Finally, the Air Force Computer Emergency Response
    Team continuously monitors all Air Force systems to identify computer
    intrusions and forwards advisories to all bases as new forms of
    intrusion are detected.
        We are full partners in the recently established Joint Task Force
    for Computer Network Defense through our base network control centers,
    major command network operations security centers, Air Force Network
    Operations Center, Air Force Information Warfare Center, and Air Force
    Computer Emergency Response Team. We have made substantial progress in
    our Operationalizing and Professionalizing the Network (OPTN)
    initiative. Our objective is to organize, train, equip, operate, and
    protect our essential information networks just like our other mission-
    critical weapons systems.
        Building on this foundation of trustworthy, protected data, the Air
    Force is designing a standardized Aerospace Operations Center for its
    theater and deployed commanders, drawing on our state-of-the-art
    theater and wing-level operations centers at Vicenza and Aviano, Italy.
    Through our Joint Expeditionary Force Experiments (JEFX 98 and 99), we
    are also trying revolutionary ways of using existing data to support
    Air Force, joint, and coalition commanders. In 1999, we fielded several
    ``stars'' of JEFX 98, including ``NIMA in a Box,'' which provides
    expanded access to geospatial and mapping data, and the Joint Targeting
    Workstation, which permits the fusion of national and tactical
    intelligence data--including Predator video feeds--for rapid targeting.
    Early versions of these systems were used with spectacular success in
    Kosovo.
        The Air Force fully supports the Global Command and Control System
    (GCCS) through its C\4\ISR Center and will shortly field the Theater
    Battle Management Control System (TBMCS), which is the core of the Air
    Force GCCS system. At the end of 1999, the Air Force also established a
    key headquarters element to monitor and coordinate the development and
    fielding of the Global Combat Support System (GCSS) within the Air
    Force. Over the next year, we plan to continue to strengthen our Chief
    Information Officer structure to ensure that we move toward
    interoperability of all Air Force information systems and that network
    defense remains a very high priority.
        In the immediate future, improved network defense will require the
    fielding of the DOD Public Key Infrastructure (PKI). We have budgeted
    funds for PKI for several years, and intend to embrace PKI as it
    becomes a technical reality. Within the next two years, all personnel
    will have smart cards to support digital signatures in software
    applications, data encryption, and facility and system access control.
    It is our intent to certify all active-duty, civilian, Guard, and
    Reserve personnel in PKI as smart cards and associated equipment and
    software become available. We also intend to deploy PKI throughout our
    communication architecture to support user identity, access control,
    non-repudiation, data confidentiality, and data integrity.
        Our defense-in-depth approach is paying off. The growing malicious
    software threat has had little if any impact on our network operations.
    Intense efforts by hackers and organized groups to disrupt networks
    during Operation Allied Force were of little or no consequence. We are
    blocking an increasing number of daily hacker intrusion attempts and
    the Air Force Office of Special Investigations, teamed with the FBI and
    other federal law enforcement agencies, has identified, caught and
    prosecuted a number of hackers.
        While our network defenses are improving, so is the threat; it is
    real and dangerous. We will continue to shore up our defenses through a
    well-funded and rigorous defense-in-depth program that will deliver the
    information and mission assurance vital to our expeditionary
    operations.
    Countering Chemical and Biological Weapons
        The threat or use of chemical and biological warfare (CBW) is
    likely in future armed conflicts and poses a genuine danger to global
    stability and security. The Air Force continues to improve its C\4\ISR
    capabilities to identify and locate CBW weapons, storage, and
    production facilities. We are seeking to advance our counterforce
    capabilities to destroy CBW weapons, including those in hardened and
    deeply buried facilities and improve our ability to actively defend
    against and effectively manage the consequences of CBW if they are
    used. On the first point, the Air Force has just incorporated a
    penetrator warhead in the CALCM missile. The Air Force has moved
    decisively to prepare and protect its first responders and combat
    aerospace forces around the globe from the CBW terrorist threat. We
    have developed counter-Nuclear, Biological and Chemical (NBC) doctrine
    and concepts of operation, incorporating CBW issues into our training
    programs, to prepare our men and women to effectively counter the
    threat posed by CBW.
    Force Protection
        Protecting our people is a major part of our threat reduction
    efforts and continues to be a top priority at all command levels. The
    Air Force has institutionalized force protection by training our
    people, equipping and reorganizing our security forces, and exploiting
    technology.
        Throughout their careers, airmen are taught the fundamentals of
    force protection. Our goal is to create a force protection mindset
    within the service. In 1999, the Air Force incorporated force
    protection academics as a part of Warrior Week during basic training
    and provided antiterrorism awareness training to personnel who deployed
    or moved to overseas locations.
        In support of the EAF, the Air Force organized and equipped the
    820th Security Forces Group (SFG), to provide stand-alone, rapidly
    deployable forces with a wide range of force protection skills to
    secure operations at forward locations. These skills include security,
    intelligence, medical, communications and engineering. The 820th SFG
    was developed at the Air Force Security Force Center, Lackland AFB.
    Upon maturity it will be transferred to Air Combat Command (ACC) and
    relocated to Moody AFB, GA. This process has begun with an initial
    small cadre assigned with duties to stand up the first squadron of 325
    with an additional 215 military positions arriving during fiscal year
    2001. In 1999, the 820th deployed to Tirana, Albania in support of
    Allied Force and flawlessly demonstrated this dynamic capability.
        Technology continues to provide force protection options to our
    troops. The Force Protection Battlelab at Lackland AFB, Texas, conducts
    research on new procedures and technologies to enhance our force
    protection posture. The lab's success stories for 1999 include the
    testing of a Remote Visual Assessment Strategy permitting rapid
    assessment of security situations and alarms at remote locations such
    as ICBM launch facilities and the perimeters of our forward located air
    bases. The lab also conducted a successful Proof of Concept
    Demonstration of the Sub-Tactical Unmanned Aerial Vehicle Surveillance
    System which can support deployed forces in hostile locations with an
    ``eye in the sky'' to assess beyond the detection zone of our forward
    air bases. Yet another example of the lab's success in 1999 was the
    development of the Vehicle Entry Explosive Search Strategy to improve
    our ability to safely screen vehicles for explosives and thus increase
    entry point protection and security of our deployed AEF forces.
    Implementation guidance was published in a Vehicle Bomb Mitigation
    Guide which presents ready reference material associated with planning
    and executing programs and operations for protecting Air Force
    personnel and assets against the threat of vehicle bombs.
        The Air Force also conducted extensive vulnerability assessments to
    improve security at permanent and expeditionary locations. In 1999,
    Joint Service, Air Force, and MAJCOM teams conducted 53 assessments of
    Air Force installations. The Service is mitigating identified
    deficiencies and aggressively pursuing permanent solutions. These
    assessments continue to improve our force security at home and abroad.
    Counter-Drug Operations
        The Air Force continues its role in assisting drug enforcement
    agencies in deterring the influx of illegal drugs. Air Force airborne
    and ground-based radars along with sophisticated intelligence and
    collection platforms work around the clock to identify suspected drug
    traffickers long before they enter U.S. airspace. Working together as a
    Total Force, our active and reserve airmen track, intercept and
    identify drug smugglers far from our borders. Within the U.S., Air
    Force working dogs stop significant quantities of illegal drugs at U.S.
    ports. In addition, the Civil Air Patrol (CAP) supports law enforcement
    agencies through aerial reconnaissance, airlift, and communications
    support.
                                   responding
        The Air Force is prepared to respond with a wide range of options,
    should deterrence and promoting stability fail to meet national
    security objectives. From major theater wars to contingency operations
    to peace-keeping and humanitarian efforts, the Air Force's ability to
    rapidly respond anywhere on the globe made it the force of choice in
    1999.
    Operation Allied Force
        As discussed previously, the benchmark for military responses to
    national security comes in the form of combat operations. Operations
    Desert Fox, Allied Force, and Northern and Southern Watch were four
    combat responses we participated in during the past year. Our airmen
    responded with great skill and courage.
    Contingency Operations
        Despite our heavy commitment to operations in Kosovo, the Air Force
    provided support to contingency operations around the world throughout
    all of 1999. In Southwest Asia, we participated in simultaneous air
    campaigns--Operations Northern and Southern Watch. In 1999 we flew over
    18,400 sorties over Iraq, employing over 1,200 munitions at a cost of
    $64.7 million. We contributed 73 percent of the air assets patrolling
    the northern no-fly zone, produced 75 percent of the total sorties
    flown, and delivered 95 percent of the precision weapons dropped in
    response to Iraqi violations and aggressions. In the southern no-fly
    zone, the Air Force provided 35 percent of the total air assets and
    flew 68 percent of the sorties. In the Balkans we flew 25 percent of
    the missions in support of the Dayton Peace Accords and continued our
    successes utilizing state-of-the-art reconnaissance platforms to
    monitor compliance during Operation Eagle Eye. At the same time, the
    Air Force continued to support operations on the Korean peninsula out
    of permanent bases at Osan and Kunsan and through expeditionary forces
    deployed from Alaska into Taegu. Finally, when violence erupted in East
    Timor, the Air Force provided planning, airlift and security forces for
    Operation Stabilise.
    Humanitarian Operations
        With global power and global reach comes the ability to extend a
    helping hand for humanitarian relief operations, whether they are in
    the far reaches of the globe or right here in our back yard. The Air
    Force provided more than 900 personnel and flew more than 700 airlift
    sorties in support of Operation Shining Hope, which provided civil
    engineering, logistics, and security for some of the more than 1.3
    million Kosovars displaced in the region. When massive earthquakes
    devastated Turkey and Taiwan, the Air Force provided airlift for much-
    needed supplies and provided transportation for crucial search and
    rescue teams. In July 1999, the Air Force demonstrated its quick global
    reach and versatility by flying to the South Pole to airdrop medical
    supplies to a U.S. researcher. In October, we returned again, this time
    to pick up a doctor who needed urgent medical attention. At home, the
    Air Force provided expertise in the fields of fire-fighting,
    environmental leadership, explosive ordnance disposal, emergency
    medical response, and search and rescue. During Hurricane Floyd, the
    Air Force flew more than 40 search and rescue missions, saving more
    than 200 lives. And, as in every other year, the Air Guard, acting in
    state status, responded to scores of civil emergencies throughout the
    United States.
                                   preparing
        To stand prepared to meet national security demands, the Air Force
    must maintain its superiority in the face of evolving threats, high
    operations tempo, and reduced funding. To help us better meet these
    challenges, we implemented the EAF concept, focusing our Total Force
    team to further our aerospace integration efforts and to explore
    innovative ways to meet tomorrow's security requirements.
    Expeditionary Aerospace Force
        Since the Gulf War, America's Air Force has been asked to engage on
    a continuous basis in contingency operations across the spectrum of
    peace and conflict, frequently in austere locations, yet all the while
    remaining ready to fight in two major theater wars. To meet these
    requirements, we revamped our concept of operations to become an
    Expeditionary Aerospace Force (EAF)--changing how we organize, train,
    equip, and sustain our forces to meet the challenges of today's global
    security environment. The EAF concept represents an evolutionary
    transition from our Cold War operations and organization.
        Prior to 1989, the Air Force was postured against one primary
    threat, the Soviet Union. Much of our force was forward deployed and if
    called to fight, would do so from home base or would deploy to a well-
    established, permanently manned facility. While our mobility forces
    deployed in support of humanitarian operations, our combat forces
    generally did not deploy away from well-established bases. Since the
    Gulf War, however, deployments of both combat and mobility forces to
    austere forward locations has become a way of life for the Air Force.
    The consequences of this change are far-reaching. To name a few:
      --Our men and women are separated from their home bases and families
            for unpredictable and extended periods every year--with a
            significant negative impact on retention;
      --Our home-station manning has become inadequate--and workload has
            increased--because forces are frequently deployed even though
            home-station operations must continue at near-normal pace;
      --Our units deploying forward must carry much more infrastructure to
            expeditionary bases;
      --Force protection and critical mission security for forward-deployed
            forces is a major consideration;
      --The demands on our smaller units, such as ISR and combat search and
            rescue units, have dramatically increased--they are properly
            sized for two major theater wars, but some are inadequately
            sized for multiple, extended contingency operations;
      --Due to the unpredictable nature of contingencies, training
            requirements have been expanded, and training cannot always be
            fully accomplished while deployed supporting contingencies; and
      --Because contingencies are unpredictable, it is much more difficult
            to use Reserve Component forces, many of whom need time to
            coordinate absences with civilian employers before they are
            free to take up their Air Force jobs.
        The EAF structure is a revolutionary transition intended to respond
    to all of these problems. First, we have created a rotational structure
    by reorganizing our Active and Reserve Component deployable forces into
    10 Aerospace Expeditionary Forces (AEFs). These AEFs are employed two
    at a time for 90 days over a 15-month rotation cycle. During every
    cycle, the two engaged AEFs have enough equipment and forces to address
    steady-state contingency requirements, such as Operations Southern and
    Northern Watch, the Balkans, and counter-drug operations, as well as
    significant contingency operations short of major theater war. In
    addition, there are five lead mobility wings responsible for opening
    and operating airfields and assisting in humanitarian relief
    operations; each wing is on call for 90 days every 15 months. Finally,
    there are also two contingency response wings held in reserve to
    satisfy unplanned requirements above steady-state commitments. These
    wings will alternate on-call every 90 days and will eventually become
    part of the 10 AEFs as the EAF concept matures.
        Second, we have added manpower to the primary bases that support
    each EAF component, so that there will be sufficient manpower on a base
    to support both home station and deployed operations. In fiscal year
    2000 we will move 2,640 authorizations from predominately ``tail'' to
    ``tooth'' to support the EAF. We have programmed some 3,180 additional
    positions for fiscal year 2001, and will need to continue to address
    the resourcing needs of some of our career fields, such as security
    forces, to fill base operating support requirements at contingency
    bases.
        Third, we are working on making all of our deploying units lighter
    and leaner so that they can deploy in 72 hours or less. This effort has
    many dimensions. For example, we must use our space systems to allow us
    to ``reach back'' to CONUS for combat support. We must reduce the
    amount of equipment and spares that move forward, which requires us to
    perfect two-level maintenance, time-definite resupply, in-transit
    visibility, and a host of modern logistics improvements. We must also
    perfect our deployable support equipment, which provides food, tents,
    beds, power, communications, sanitation, and all of the basic
    requirements of life. And we must augment the equipment that is
    necessary to run operations from austere fields, such as radar approach
    control equipment, maintenance equipment, fire fighting equipment, and
    special purpose vehicles.
        Fourth, we must organize and train our deploying forces, especially
    our expeditionary combat support, and tailor them to the requirements
    of the contingency operation they will perform. This task includes
    major innovation to prepare and employ teams in unit type codes (UTCs)
    within the joint warfighting planning systems. This effort allows us to
    present our total force capabilities more effectively while providing
    the predictability and stability our people need in their lives.
        The EAF concept is revolutionary as it helps balance the aerospace
    challenges of the future, the conflicting demands of broad engagement
    operations, diverse CINC requirements, while providing a clear response
    to our people's needs--offering them more reason to stay with the
    greatest aerospace power team ever fielded.
        On October 1, 1999, the Air Force began the AEF rotation cycle
    transition period and expects to be fully operational by March 2000.
    Building on EAF concepts in Kosovo, in which we were able to open,
    equip, man, and operate some 21 expeditionary bases in Europe, we
    expect early AEF rotations to be successful. Our initial deployments
    have in fact been very successful; however, challenges remain as we
    fully implement the EAF concept. Global taskings for our low-density/
    high-demand (LD/HD) platforms--intelligence, surveillance and
    reconnaissance, command and control, and search and rescue assets--
    continue to strain our people and equipment. Similarly, we have
    identified shortfalls in some capabilities, such as suppression of
    enemy air defenses (SEAD), which will require us to add new aircraft to
    make all of our AEFs roughly equivalent. We will continue to hone and
    improve the EAF concept as we implement it, incorporating lessons
    learned from ongoing AEF deployments.
    Total Force Integration
        The U.S. Air Force is an integrated Total Force that relies on
    critical contributions from active-duty members, Guardsmen, Reservists,
    civilians, and contractors. Each brings unique and complementary
    characteristics to produce a strong and versatile team. The active
    component drawdown, in concert with a shortage of trained aircrews on
    active duty and the increase in operations tempo, has dramatically
    increased our reliance on the Air National Guard and Air Force Reserve.
    For example, in EAF, the Air National Guard will rotate 25,000 airmen
    through contingency assignments in the first 15 months, and combined
    with the Reserve, will supply 10 percent of the deployed forces in each
    rotation. The Guard and Reserve are also actively moving into less
    traditional roles at home. The Air National Guard is transitioning to
    F-16 training missions at Kelly AFB, Texas, and Springfield Air
    National Guard Base, Ohio, and to F-15 training at Tyndall AFB,
    Florida. The Reserve is also transitioning to the F-16 training mission
    at Luke AFB, Arizona, and is conducting test support at Edwards Test
    Center, California; flight check functions at Air Force depots; and
    instructor duties at primary pilot-training bases. We continue to
    increase the number of reserve associate units established alongside
    active F-16, F-15, Airborne Warning and Control System (AWACS), KC-135,
    C-5, C-141, C-17, Special Operations C-130 units, and space operations
    units. Associate units have no assigned aircraft and use active-duty
    aircraft for training and mission accomplishment.
    Aerospace Integration
        Since its inception, the Air Force has made great strides in
    gaining air superiority and exploiting space. We view the flight
    domains of air and space as a seamless operational medium. Their
    integration is essential to advancing our warfighting capabilities in
    support of the nation's security obligations. We are committed to
    providing effective and interoperable aerospace capabilities for the
    nation.
        The merger of air and space operations is a continuing journey. For
    the past decade, the barriers between air and space planning and
    operations have diminished substantially. Through further integration,
    we seek to produce the most efficient military effects for the joint
    force commander without regard to where platforms reside.
        The Air Force is not America's only operator in air and space, but
    we do account for over 85 percent of DOD's personnel, budget, assets
    and infrastructure for space-related activities. On a daily basis, U.S.
    military forces depend on the full set of space assets acquired and
    operated by the Air Force. In addition, our nation's investment in and
    reliance on space-based capabilities to support the national
    information and commercial infrastructure is increasing. As more
    countries enter the space domain, potential threats will increase, and
    space control will become a more important capability of the Air Force.
        Over the past two decades, the Air Force has developed a number of
    key capabilities that demonstrate the further potential of integrating
    air and space competencies. For example, to facilitate the timely
    development of space forces, the Air Force has placed an emphasis on
    space control in the requirements generation process. The Counterspace
    Oversight Council (CSOC) has been created to validate Air Force
    counterspace requirements and ensure space control priorities are
    adequately considered. Furthermore, intelligence, surveillance, and
    reconnaissance (ISR) systems, which combine air, space, and ground
    sensors, are becoming the standard for global ISR capabilities. In
    Operation Allied Force, our U-2s flying over Kosovo and Serbia relayed
    their data via satellite in real time to CONUS, where that data was
    analyzed and sent back to the theater. Real-Time-Into-Cockpit (RTIC)
    information capabilities have taken intelligence, surveillance, and
    reconnaissance a step further. RTIC conveys perishable battlespace
    information directly to the cockpit, enabling aircrews to take
    advantage of new target opportunities while avoiding new threats. This
    concept became a reality with the Multi-Source Tactical System (MSTS)
    and Track II systems that provide satellite communications links to
    strike aircraft already en route to the target area.
        Integration of air and space systems also requires integration of
    education and training. The Air Force has initiated a number of new
    programs to accomplish such training. The Aerospace Basic Course at Air
    University lays the foundation for understanding aerospace concepts
    that will shape the culture of tomorrow's Air Force. All new officers
    must attend this course, in which they will learn how to defend an
    expeditionary force and how to plan and execute an integrated aerospace
    tasking order (ATO), which is the gameplan for modern combat
    operations. In addition, we established the Space Warfare Center and,
    in conjunction with the Air Warfare Center, are developing tactics,
    techniques, and procedures for better warfighting capabilities.
    Finally, we established the USAF Weapons School Space Division at
    Nellis AFB, Nevada, to provide intensive, graduate-level education for
    space and missile operations officers alongside fellow officers from
    the fighter, bomber, command and control, rescue, intelligence, and
    tactical airlift communities.
        In an effort to improve the effectiveness of Aerospace Operations
    Centers (AOCs), we also established the Aerospace Integration Center at
    Nellis AFB, Nevada. This is a fully equipped, state-of-the-art AOC,
    where airmen can learn the basics of battle management and test new
    theories in conjunction with real and simulated operations on the
    Nellis ranges. The integration center is a significant step toward
    normalizing the AOCs like any other weapon system, with the goal of
    ensuring proper training, certification, and management for personnel
    with air, space, and information credentials for assignment to AOCs.
        We have identified a number of goals over the next few years to
    further integrate our air and space capabilities. We will:
      --Provide career-broadening opportunities for our people to develop
            an aerospace mindset throughout the Air Force;
      --Expand education and training for our enlisted members to ensure
            they can appreciate their contribution to the aerospace force;
      --Normalize Air Operations Centers as weapon systems;
      --Broaden the training of our joint force aerospace component
            commanders (JFACC) to include specific aerospace education and
            field experience;
      --Exploit data-fusion capabilities to support AOC functions by fusing
            aerospace ISR data, exploiting distributed networks, building a
            comprehensive view of the battlespace, and providing near real-
            time inputs for existing battle management systems;
      --Develop dynamic space scenarios for exercises and wargames to train
            our personnel in the use and limitations of existing and future
            aerospace capabilities; and
      --Improve the ability of our acquisition community to evaluate
            ground, air, information, and space options based on military
            performance, cost, and effectiveness.
    Innovation
        Innovation has always been the key to ensuring today's Air Force
    will meet the challenges of tomorrow. Innovation has played a crucial
    role in our aviation heritage, and it will enable the Air Force to
    continue to apply and upgrade its capabilities to meet the future
    security needs of the nation. The Air Force is committed to a vigorous
    program of researching, experimenting, testing, exercising, and
    evaluating new operational concepts and future systems for aerospace
    power.
    Battlelabs
        The Air Force continues to reap the benefits of the six battlelabs
    created in 1997. The six battlelabs--Air Expeditionary Force, Space,
    Information Warfare, Force Protection, Unmanned Aerial Vehicles, and
    Command and Control--are small, focused groups of operators developing
    high-payoff concepts as we seek to support DOD's missions. The
    battlelabs help us to develop superior ways to organize, train, equip,
    plan, command, and employ aerospace forces. Some early benefits of the
    labs include development of the Enhance Linked Virtual Informations
    System (ELVIS), Joint Surveillance Target Attack Radar System (JSTARS)
    Battlespace Imaging, Network Attack Visualization, Ground Based Radar
    Site Protection, Expeditionary Operations Centers, and Space
    Surveillance Network Optical Augmentation. Each of these innovations
    allows us to provide cost-effective capabilities for combatant
    commanders and enhanced joint operations.
    Joint Expeditionary Force Experiment
        Last year's Joint Expeditionary Force Experiment was the second in
    a series of Air Force experiments designed to explore new operational
    concepts and advanced technologies. JEFX 99 expanded the command and
    control experimentation developed in JEFX 98, enhancing the integration
    of space capabilities into the integrated command and control system
    distributed architecture and incorporating coalition forces into the
    Air Operations Center. In JEFX 00, we will focus on agile combat
    support while continuing our efforts in expeditionary operations,
    information operations, common operational picture, and medical
    readiness.
    Wargaming
        The Air Force conducts two major wargames to explore new
    strategies, concepts, capabilities, and doctrine. Each wargame is held
    biannually on a rotating basis. The first, Global Engagement, explores
    emerging aerospace concepts set approximately 10-15 years into the
    future. The second, Aerospace Future Capabilities Wargame, evaluates
    strengths and weaknesses of future forces and operational concepts 20-
    25 years from now by comparing them against our Vision and Strategic
    Plan. The outputs from these wargames provide insights and suggest
    additional analyses that eventually feed into research, experiments,
    exercises, and the operational Air Force.
    Headquarters Air Force 2002
        Headquarters Air Force (HAF) 2002 will bring us into the new
    millennium in a manner consistent with our Vision. It will create a
    military headquarters that is more effective, more efficient, and a
    better place to work. HAF 2002 is a response to the changing dynamics
    of our expeditionary aerospace force, which necessitate a headquarters
    that is equally agile in providing the appropriate plans, policies, and
    resources our forces need. Early initiatives have included
    reorganization of information networks and support offices to permit
    electronic transmission of tasks and documents throughout the
    headquarters and the creation of a single executive secretariat to
    manage work flow. We are also reorganizing our public affairs and
    legislative affairs offices in an effort to permit better coordination
    of information flowing to Congress, the media, and the public. HAF 2002
    seeks to rethink and redesign processes to achieve dramatic performance
    improvements and to leverage the talents and improve the quality of
    life for all Air Force members assigned to the headquarters. It will
    focus on cutting costs, eliminating redundancies, reducing work of
    little value, and creating the agility to better adapt to a constrained
    resource environment.
    Defense Reform Initiative/Air Force Management Reform
        The Office of the Secretary of Defense has established the Defense
    Reform Initiative (DRI) to improve the way DOD works by reallocating
    resources from support areas to fighting forces. The ultimate goal is
    to balance the demands of meeting current requirements with the
    imperative to invest for the future. In today's era of tight budgets,
    the Air Force is committed to reducing overhead functions and moving
    maximum capability to its combat units.
        We continue to aggressively scrutinize management headquarters
    levels to ensure they are the absolute minimum to execute the
    operational mission. In fact, reductions in management headquarters
    have outpaced those of overall force structure since the drawdown began
    in 1987. However, recent significant shifts in how and where we deploy
    our forces in response to worldwide contingencies caused dramatic
    increases in the demands on our staffs. In particular, to make
    expeditionary operations work, our forward forces must reach back to
    CONUS-based staffs for combat support functions. We must therefore,
    maintain adequate management headquarters staff capable of the
    tremendous logistical and planning efforts necessary to execute our
    military objectives. We are already at the limit of staff reductions we
    can take and still support assigned missions.
        We continue to execute the public/private manpower competitions
    that have become a DRI success story. The Air Force fully executed its
    1999 plan for announcement of OMB Circular A-76 studies, with 9,083
    positions added to the study pool. We concluded 15 cost comparison
    initiatives, covering 1,205 positions which resulted in 60 percent of
    work being contracted and the remainder going to the government's most
    efficient organizations. Additionally, we completed 31 initiatives to
    contract via the direct conversion process, covering 646 positions. The
    average savings was 35 percent. We conducted a top-to-bottom
    ``commercial activity'' review of our manpower authorizations, yielding
    additional competition candidates. This continues to be a promising
    initiative and will be completed annually. Our efforts to incorporate
    better business practices and efficiencies are not limited solely to
    commercial activities. By utilizing a strategic sourcing approach, we
    will continue to find better ways to do business in areas that are not
    commercial in nature. Establishing an overarching strategic sourcing
    program that complements OMB Circular A-76 competitions with other
    efficiency tools such as reengineering extends our opportunities for
    improvement into inherently governmental functions as well.
        In support of the DRI and Defense Reform Initiative Directive
    (DRID) #49 which addresses specific goals for utilities privatization,
    we are tracking the status of 640 utility systems (water, wastewater,
    electrical, and natural gas) in the Air Force inventory. We have
    determined 78 utility systems were already privatized prior to the DRI;
    23 systems are owned by others (for example, owned by host nations at
    overseas locations); 98 utility systems are exempted due to readiness
    requirements; leaving 441 systems as candidates for privatization. We
    have awarded contracts for analysis of 288 systems to determine the
    feasibility for privatization. We are also applying these same goals to
    military housing. Since fiscal year 1998, we have added eight projects
    to our family housing privatization efforts. This gives the Air Force a
    total of ten pilot housing privatization projects for fiscal year 1998-
    2000. The privatization effort is critical to our overall housing
    revitalization program as outlined in our Family Housing Master Plan,
    approved in August 1999.
    Financial Management Reform
        The Air Force, as a prudent steward of public funds, is working
    diligently to comply with the Government Performance and Results Act
    (GPRA) and the Chief Financial Officers (CFO) Act. We have already
    begun incorporating key GPRA measures into our financial statements.
    Last year the Air Force passed audit tests on some of the most
    important portions of its CFO financial statements, including
    disbursements and budgetary resources provided. We have instituted
    specific organizational and training changes aimed at improving
    internal controls to help prevent fraud and improve confidence in our
    financial performance. The Air Force also has an ongoing program to fix
    its financial systems, a key step in moving toward unqualified audit
    opinions on all its financial statements. As we improve our financial
    systems, the Service will focus first on those improvements that help
    commanders make better decisions.
                            decisive fighting force
        The Air Force meets the nation's challenges because of our world-
    class people, readiness, modernization, and infrastructure. However, we
    must continue to address challenges that threaten to undermine our
    status as a decisive fighting force. We work hard to ensure we recruit
    and retain quality people, meet our near-term readiness goals with the
    proper equipment and training, and meet our long-term readiness
    objectives with a time-phased modernization effort. We are extremely
    grateful to Congress, the President, and the nation for the historic
    gains in compensation and benefits made in fiscal year 2000. These
    recent gains positively impact retention and quality of life for all
    our personnel and puts us on the road to recovery.
                                     people
        The cornerstone of our Air Force is our airmen who get the job
    done, whether maintaining a fighter for combat operations over the
    Balkans, serving as a loadmaster on a C-17, controlling satellites from
    Colorado, or standing alert at a missile launch control center in
    Wyoming. Our airmen are well-trained, fit, motivated, and ready to
    serve their country. They are our most valuable resource and our top
    priority.
        Because our people are the key to accomplishing our mission, we
    continually review our personnel end strength levels and size these
    levels to support evolving mission requirements and fact-of-life
    personnel dynamics. We determine our military and civilian manpower
    needs programmatically through a requirements-based process linked to
    the National Military Strategy. The Air Force continues to capitalize
    on technology, modernization, and Total Force integration, as well as
    aggressively pursuing opportunities to achieve best value by
    commercially competing non-military essential support functions. We
    have recently commissioned an independent study of Air Force manpower
    requirements, focusing on the needs of the EAF at a time when our aging
    aircraft fleet is also driving increased maintenance manpower
    requirements. This study, to be performed by RAND with outside
    reviewers, will seek to define required manning levels and also provide
    sourcing strategies for required manpower, including using the best
    combination of Guard, Reserve, civilian, and contract manpower.
    Recruiting
        Even in the competitive job market of the 1990s, the Air Force has
    continued to recruit men and women of extremely high caliber. We are
    committed to building and maintaining a decisive fighting force and to
    do this we must continue to access high quality people despite the
    current recruiting challenges. Over 99 percent of our accessions have
    high school diplomas, and 76 percent rate in the upper half for test
    scores achieved on the Armed Forces Qualification Test. Because we
    depend heavily on highly technical skills honed over years of
    experience, we seek to recruit the very best, and then retain them for
    a career.
        Although we are proud of our recruiting record, we must improve.
    Our recruiting environment faces the most intense hurdles we have
    experienced in our history. Interest in military service among
    America's youth was relatively low, but stable in the late 1990s (13
    percent for men and about 7 percent for women) after declines in the
    early 1990s. At the same time, the job market is strong, especially in
    the high-tech industries--the Air Force's biggest competitor.
    Unemployment in 1998 was at its lowest level in a generation at 4.5
    percent. Preliminary data shows that the unemployment rate for 1999 was
    4.2 percent. These factors coupled with the increase in the percent of
    college-bound high school youths, now over 65 percent, have further
    reduced the number of potential recruits.
        We need to be aggressive and creative in meeting the challenges of
    today's recruiting environment. During 1999, for the first time in 20
    years the Air Force missed its recruiting goal. We actually accessed
    more recruits in 1999 than in 1998, but our recruiting goal was raised
    in 1999 because of our retention declines. Compared to the 1998
    recruiting goal of 31,300, our 1999 goal grew to 33,800, and the 2000
    goal is 34,000. To help meet this growing challenge for new recruits
    and proactively frame our future recruiting efforts, we conducted a
    Recruiting Summit (a top-to-bottom recruiting and accession review). As
    a result of this review, we have developed a multi-faceted strategic
    plan including more than 120 initiatives we are now considering for
    implementation to combat the recruiting shortfall. Reprogrammed funds
    of $8 million in fiscal year 2000 and $20 million in fiscal year 2001
    will target: expanding our recruiting force; stepping up marketing and
    advertising; broadening awareness of the Air Force; and fielding more
    enlistment incentives.
      --Expanding our recruiting force. Although they enjoy exceptionally
            high productivity, Air Force recruiters are currently
            outnumbered by our sister services by a ratio of 13 to 1. A
            single Air Force recruiter is expected to produce over 2.5
            recruits per month compared to the DOD-wide average of
            approximately one per month. Recognizing the importance of our
            ``front line'' ambassadors, we have increased recruiter
            production to fill 100 percent of our existing authorized
            billets. As a result, production recruiter manning has
            increased from 985 in fiscal year 1999 to over 1,140 today and
            is projected to increase to 1,209 by March 2000. We will
            continue our ``full court press'' through March 2001 to
            increase recruiters by an additional 300 to 1,509 total. In
            order to support this increase, we will also invest
            approximately $8 million in fiscal year 2001 in new facilities
            and support equipment for these recruiters.
      --Energizing new, creative, and innovative marketing and advertising
            efforts. In the past, we have successfully attracted enough
            recruits without focussed market strategies. However, in
            today's strong economy, many other attractive options are
            available to the high quality person we are attempting to
            recruit. For the first time in our history, we have budgeted
            for prime time television advertising. We are also expanding
            our marketing and advertising to include new technology venues:
            in-system high school television advertising; theater;
            Internet; and interactive CD-ROMs. In addition, we have refined
            our advertising efforts in radio, magazines, newspapers and
            targeted base-level and regional influencer tours. For fiscal
            year 2000, we have allocated over $65.4 million to these
            efforts and plan to invest $59.2 million in fiscal year 2001 to
            continue to project our Air Force image to America's youth,
            sending a message that highlights a healthy mix of intrinsic
            and incentive benefits.
          In a parallel effort, we are establishing a centralized Air Force
            Marketing Office to direct all Air Force marketing and
            advertising efforts. Its charter will include consolidating all
            marketing and advertising funding and research, expanding
            marketing and advertising expertise, and developing an
            integrated, comprehensive multi-media program for the Total
            Force. We recognize we must leverage our marketing and
            advertising efforts and associated resources to optimize our
            ability to specifically attract our target audience and
            increase our visibility at all levels, from the broad national
            perspective to the local community.
      --Broadening awareness of the Air Force by increasing our presence in
            America's local communities. We are opening new high school
            Junior ROTC (JROTC) units and adding a college Senior ROTC
            detachment. Although JROTC is a citizenship and leadership
            development program, nearly 45 percent of all JROTC graduates
            historically affiliate with the military. Therefore, with
            reprogrammed funds and support from Congress and DOD, the Air
            Force is expanding the number of high school JROTC units from
            609 today to 945 by fiscal year 2005. And although ROTC
            enrollments have been down, in fiscal year 2001 we will open a
            new Senior ROTC detachment in Alaska.
      --Developing and expanding accession incentives. Competition for
            high-quality candidates is at an all-time high. To continue to
            attract America's best and brightest and maintain our technical
            edge, we are committed to developing and expanding accession
            incentives. As a result of our Recruiting Summit, the Air Force
            is investing $5 million in a pilot College Loan Repayment
            Program in fiscal year 2001. We have also expanded our
            Enlistment Bonus Program to include over 100 skills and
            increased the maximum bonus amount to $12,000 for selective
            six-year enlistments for combat controller and pararescue
            specialties. These increases have met with great success--68
            percent of our bonus eligible accessions selected a six-year
            initial enlistment in fiscal year 1999. Expanded funding for
            critical skill enlistment bonuses was also included in our
            fiscal year 2000 budget. In addition, a six-month test to award
            $3,000 enlistment bonuses to members enlisting for four years
            in the mechanical area (a mechanical aptitude index of 44 and
            higher) is included in the fiscal year 2001 budget.
          We also plan to expand our Prior Service Enlistment Program,
            which accessed 605 prior service members in fiscal year 1999
            compared to 196 in fiscal year 1998, and develop a pilot
            program to test a new Prior Service Enlistment incentive. We
            have developed an Enhanced Prior Service Program that expands
            the number of career fields for former Air Force members who
            honorably served in any specialty, possess the necessary
            aptitude and are willing to retrain into any critically manned
            career field. In addition, we have also expanded the
            opportunities for former sister service members who meet our
            entrance criteria. Paralleling these efforts, we are investing
            $2 million in fiscal year 2001 to develop and field a prototype
            Prior Service Enlistment Bonus Program targeted at former Air
            Force members who can move into hard-to-fill or critical career
            fields.
          We believe these four targeted efforts, in addition to the
            compensation gains provided in the fiscal year 2000, will have
            a significant impact in our ability to make choosing an Air
            Force career a viable and realistic option, as well as restore
            our competitive recruiting edge.
    Retention
        Our need to retain a highly skilled force remains a top priority.
    The Air Force's high level of concern has increased because of
    continued declines in enlisted and officer retention as well as an
    unbalanced civilian workforce. From fiscal year 1998 to fiscal year
    1999, first-term enlisted retention dropped from 54 percent to 49
    percent, short of our goal of 55 percent. Likewise, career airmen
    retention fell from 93 percent to 91 percent, below our goal of 95
    percent. Although second-term airmen retention stabilized at 69
    percent, it is below our goal of 75 percent.
        Officer retention is also challenging, especially among our pilots.
    Last year, pilot retention fell from 46 percent to 41 percent. However,
    the fiscal year 1999 long-term pilot bonus take rate, a forward-looking
    measure of pilot retention, rose to 42 percent, up 15 points from
    fiscal year 1998's long-term rate of 27 percent, permitting a measure
    of guarded optimism. Navigator retention remained steady at 62 percent.
    On the mission support officer side, retention rates actually improved
    from 43 percent to 44 percent, while retention rates for non-rated
    operations officers dropped from 57 percent to 56 percent.
        Many factors affect the decision to stay in or leave the Air Force.
    Our quality of life and exit surveys over the last three years have
    surfaced reasons our members are dissatisfied. High operations tempo
    has consistently been a leading motivator to separate, along with the
    ready availability of well paid civilian jobs, existing wage gaps, and
    dissatisfaction with the Redux retirement plan. Additionally, reduced
    quality of life and job security concerns due to competitive sourcing
    and privatization initiatives are also key influencers for personnel
    who have separated from the Air Force.
        The Air Force greatly appreciates Congressional support for our
    fiscal year 2000 compensation initiatives that will help combat
    declining retention rates. Our men and women seeking tangible
    incentives which might influence them to remain a part of the Air Force
    Family are experiencing the largest pay raise in almost 18 years (4.8
    percent--effective January 2000). These initiatives coupled with the
    ongoing efforts to close the pay gap with the civilian sector, display
    sincere gratitude for the daily sacrifices of our service men and
    women. All of these efforts will make continued service more
    attractive. Although too early to assess the full retention impact, we
    believe the benefits gained through fiscal year 2000 legislation will
    have a positive impact on Air Force personnel contemplating a ``stay or
    go'' career decision.
        Several other key programs were also in fiscal year 2000
    legislation. Enactment of the Career Enlisted Flyer Incentive Pay
    (CEFIP) will encourage enlisted aircrew members to join and remain in
    the aviation career field. Reducing out of pocket expenses for first-
    term airmen assigned to their first duty station through the enactment
    and implementation of a Temporary Lodging Expense (TLE), which did not
    exist before, as well as an adjustment to the Basic Allowance for
    Housing (BAH), will help improve retention.
        The authority provided in fiscal year 2000 to expand the Aviation
    Continuation Pay (ACP) Program is a significant part of the multi-
    faceted approach designed to improve pilot retention in fiscal year
    2000 and beyond. Mid-career and senior pilots have been separating in
    unprecedented numbers in recent years. In fiscal year 1999 for every
    two pilots that we trained, three walked out the door. However, we are
    optimistic that pilot retention will improve due to changes to the ACP
    program. The restructured program takes full advantage of the authority
    the Service has been given by increasing the annual amount of the bonus
    to $25,000 per year and extending the length of the bonus out to 25
    years of aviation service. This compensation package is designed to
    retain pilots through a full military career. As we witnessed the long-
    term pilot bonus take rate increase from 27 percent in fiscal year 1998
    to 42 percent in fiscal year 1999, we believe that this leading
    indicator of pilot retention will continue to reflect an improved
    retention environment as we implement the fiscal year 2000 program.
        The Aviation Continuation Pay (ACP) Program was enacted and
    implemented in 1989 to influence rated retention and stabilize the
    rated force. In exchange for additional commitment to service, ACP is
    offered to a targeted group of pilots to arrest declining retention due
    to the significant ``pull'' of airline hiring and ``push'' of
    operations tempo. The Air Force is capitalizing on this increased
    authority by restructuring its ACP Program and expanding the eligible
    population of aviators.
        We have implemented other ideas and incentives to eliminate the
    reasons our people leave the Air Force. We implemented the
    Expeditionary Aerospace Force concept, which will give our people more
    stability and predictability in their deployment schedules. Whenever
    possible, we minimized our participation in exercises, and lowered the
    frequency of our operational readiness inspections, yet still ensuring
    combat readiness. In an effort to encourage the number of reenlistments
    needed in certain skills to sustain the specialty career force
    objectives, we have more than tripled the number of specialties
    eligible for Selective Reenlistment Bonuses since 1995. Now,
    approximately two-thirds of all specialties qualify for a bonus in one,
    some, or all of the three bonus zones. Also, as part of our multi-
    faceted approach to abate our pilot exodus, we increased Aviation
    Career Incentive Pay (flight pay) from $650 to $840 at 14 years of
    service, prioritized our requirements, reviewed alternative staff
    manning, and increased our pilot production and service commitment.
        Air Force civilians are an integral part of our aerospace team. In
    an effort to provide commanders with a state-of-the-art, sustainable
    civilian workforce capable of meeting tomorrow's challenges, we are
    working on the following solutions: managing our accessions with
    properly sized force renewal programs; expanded and targeted training
    and retraining; and separations management through the use of buyouts
    (incentives) for force shaping.
        To sustain a civilian workforce, we need the right mix of new, mid-
    level, and senior employees. In the last nine years we have seen a 62
    percent drop in employees with less than eight years of service and a
    10 percent increase in the number of our employees who are eligible for
    retirement. In five years, over half of our civilian work force will be
    eligible for optional or early retirement. This imbalance occurred
    through a combination of loss programs and constrained accessions. Loss
    programs included early retirements and separation incentives that
    trimmed the more senior year groups while minimizing involuntary
    actions, such as reductions in force. Constrained accessions limited
    the number of new hires while the force was reduced over the last nine
    years. These factors are leading to sustainment problems and a shortage
    of mid-level managers and administrators from which to select future
    Senior Executives. ``Currency of skills,'' particularly in our high-
    tech area, is another issue related to civilian retention. Without an
    adequate influx of new employees with current, state-of-the-art skills,
    our acquisition, scientific, and technical workforce is not
    sustainable.
        Air Force senior leadership is committed to developing a plan to
    better manage and further improve our Total Force retention. We have
    scheduled a Retention Summit, similar to the Recruiting Summit, to
    review retention issues covering the full range of concerns to include
    operations tempo management, quality of life (medical care, education,
    etc.), assignment system, mentoring, and leadership. Field focus group
    visits will validate findings and initiatives resulting from the
    Retention Summit. We remain optimistic that these changes and
    improvements will renew our people's faith in our ability to provide
    the quality of life they deserve and reaffirm our commitment to recruit
    and retain a dedicated quality Air Force into the 21st Century.
    Quality of Life
        Our most valuable resource is our people and we are committed to
    taking care of them and their families. Quality of life initiatives
    acknowledge the increasing sacrifices our people make in support of our
    national objectives and are pivotal to recruiting and retaining our
    people. Quality of life for our people occupies a prominent position in
    Air Force strategic planning and ranks with modernization and readiness
    as Air Force's top priorities. The welfare of the men and women serving
    our nation is a critical factor to our overall readiness. Therefore,
    the Air Force will continue to place people and quality of life
    investments in a balanced funding priority with readiness and
    modernization. We will continue, with your support, to pursue quality
    of life priorities such as fair and competitive compensation and
    retirement systems; balanced PERSTEMPO; safe, affordable, adequate
    housing; increased support of community and family programs; expanded
    education programs; and improved access to quality health care.
        The fiscal year 2000 compensation initiative recognizes our people
    as a valuable asset, acknowledges their contributions, and provides
    superb quality of life enhancements. We are greatly encouraged by the
    improved compensation strategy and increased benefits--full restoration
    of the military retirement system; a 4.8 percent pay raise; future pay
    raises set at Employment Cost Index plus 0.5 percent; pay table reform;
    Career Enlisted Flight Incentive Pay approval; Basic Allowance for
    Housing increase; Aviation Continuation Pay enhancements; Temporary
    Lodging Expenses for first term airmen; and the Air Battle Managers
    save pay provision--and its potential to affect recruiting and
    retention.
        In addition to these gains presented by fiscal year 2000
    legislation, the Air Force is making every effort to further enhance
    our airmen's quality of life. To help arrest the increasing operations
    tempo levied on our people, we implemented the Expeditionary Aerospace
    Force concept, which will give our people more stability and
    predictability in their deployment schedules. Additionally, the need
    for sustained investment levels, coupled with cost-based housing
    allowances and the ability to competitively source and privatize ailing
    infrastructure will go a long way to provide access to safe,
    affordable, and adequate housing. Our infrastructure bears the brunt of
    funding pressures in a budget-constrained environment and sustained
    deferment of maintenance over many years further complicates the
    problem. Even within these pressures, we have applied $91.6 million on
    this budget submission toward our Dormitory Master Plan to eliminate a
    deficit of dormitory rooms and replace the worst facilities. We have
    adopted a 1 + 1 (one airman living in a room sharing a bath) plan to
    house unaccompanied airmen and currently 75 percent of our
    unaccompanied airmen housed on base have a private room with a shared
    bath. We have also funded $223 million for our Family Housing Master
    Plan, which improves and renovates military provided housing. In
    addition, DOD has introduced a proposal to adjust basic allowance for
    housing (BAH) to reduce out-of-pocket expenses to 15 percent by fiscal
    year 2001 and potentially eliminate out-of-pocket expenses within five
    years. Finally, personal fitness contributes to Air Force readiness by
    increasing productivity, providing preventive health benefits, and
    long-term medical cost savings. As such, we dedicated $33.4 million for
    fitness facilities and an additional $3.5 million for in-theater
    fitness, sports, and recreational equipment.
        In the Air Force, we realize that while we recruit individuals, we
    retain families. In addition, as large parts of our force deploy for
    extended periods, our ability to care for their families becomes
    increasingly important. Consequently, we continue to demonstrate our
    commitment to our airmen and their families through programs such as
    chaplain services, spouse employment, personal financial management
    assistance, childcare and youth centers, surviving spouse casualty
    support, relocation and transition assistance, commissaries, and
    military exchanges. Also, for our junior airmen, we offer a Personal
    Financial Management Program to help deal successfully with today's
    heavily credit-based society. In order to expand and enhance our
    childcare and youth activities, we have dedicated $4.5 million for
    child care center construction. We further dedicated $2.9 million to
    our deployed spouse outreach programs, which increases Internet
    capability at deployed locations to provide worldwide connectivity
    between deployed troops and their families. Our family readiness staff
    members at each Air Force base provide a wealth of information and
    support for families of deployed airmen.
        An important quality of life factor that significantly impacts
    recruiting and retention is expanded educational opportunities. For
    airmen working toward attaining their initial college degree, the
    Community College of the Air Force allows them to combine college
    credits and military education and experience to earn an associate
    degree. For both undergraduate and graduate education, the Air Force
    Tuition Assistance Program pays up to 75 percent of tuition costs for
    accredited colleges and universities, and the Air Force Civilian
    Tuition Program supports self-development for civilian employees.
    Although educational pursuits are difficult given our high operations
    tempo, our current distance learning initiatives offer our deployed
    personnel distributed learning through CD-ROM and interactive
    television (paper-based). We are developing an advanced distributed
    learning initiative through web-based education for the future. The Air
    Force supports elimination of the $1,200 payment required to receive
    the education benefit of the Montgomery GI Bill. In addition, we
    support expanding enrollment opportunities for those not currently
    covered by the bill. These Air Force educational programs give our
    people valuable motivational benefits.
        Perhaps the biggest quality of life issue facing the Air Force
    today and in the coming years is medical care. Access to quality health
    care is crucial to the quality of life of our airmen (active duty and
    retirees) and their families and greatly affects our recruiting and
    retention efforts and, ultimately, our readiness. TRICARE, the DOD
    program to ensure health care at a reasonable cost, is designed to
    provide a quality health care benefit, improve beneficiary access,
    preserve choices for our beneficiaries, and contain costs, all while
    providing a structure to support the military medical forces needed to
    deter and fight the nation's wars. TRICARE was fully implemented as of
    June 1998 and is a good start to providing quality health care.
    However, there have been problems, such as access to care, claims
    processing, reimbursement levels, and TRICARE management requires
    constant attention. Several of these issues have been resolved, and the
    rest are being worked aggressively. Our latest Air Force Inspection
    Agency audit concluded customer satisfaction with TRICARE is
    increasing.
        The Air Force Medical Service initiated bold reengineering efforts
    to increase access to Military Treatment Facility (MTF) medical care
    and provide a much stronger emphasis on preventive services. The goal
    is to enable all TRICARE Prime beneficiaries to be assigned to an MTF
    Primary Care Manager by name, as well as to be guaranteed access for
    acute, routine and preventive appointments. At the direction of the
    Secretary and the Chief of Staff, the Air Force Surgeon General (SG)
    developed a campaign plan to ensure line commanders understand TRICARE
    and know how to help subordinates with problems. Preliminary results
    from this program, Operation Command Champion, have been very
    encouraging.
        Also, numerous demonstration projects to improve the quality of
    TRICARE are under way, especially for retirees and Medicare-eligible
    beneficiaries. For example, a Medicare Subvention program called
    TRICARE Senior Prime is currently active at five Air Force locations;
    the MacDill 65 subvention program cares for up to 2,000 enrollees in
    the Tampa, Florida region; and the Federal Employee Health Benefit
    Program (FEHBP) 65 test, a nationwide program at eight selected
    locations, is slated to begin in spring 2000.
        We are now working TRICARE and health care issues through the Joint
    Chiefs of Staff and the Defense Medical Oversight Committee (DMOC),
    which has been formed to ensure optimum Service participation in the
    health care agenda and improve health care for active and retired
    members. This board consists of USD (P&R), Service undersecretaries,
    Service vice chiefs, and ASD (HA) as voting members. The Service SGs
    participate but are non-voting members. The main purpose of this board
    is to define the medical benefits and establish budget priorities.
    Equal Opportunity
        The strength of the Air Force is in its talented, dedicated, and
    diverse men and women working together as professionals to accomplish
    the Air Force mission. Creating and sustaining an environment that is
    free from unlawful discrimination and harassment is therefore a vital
    part of the Air Force readiness equation. And the commitment to fully
    utilize the talents and capabilities of a diverse workforce is critical
    to achieving the Air Force mission. Every Air Force member and civilian
    employee deserves the opportunity to realize his or her full potential
    and to work and live in an atmosphere that respects and values human
    dignity and each has concomitant obligation to treat co-workers and
    subordinates in the same manner.
        Air Force policy on unlawful discrimination and harassment is very
    clear: zero tolerance for such behavior in any form. Harassment,
    threats or ridicule of individuals or groups based upon their real or
    perceived differences have no place in the Air Force and will not be
    tolerated. We will provide equal opportunity and treatment for all
    members and employees regardless of race, color, religion, national
    origin, sex, and in the case of civilian employees, disability and age.
        The Air Force is also committed to eliminating behavior and
    unintended barriers that hinder successful performance, and to creating
    an environment where every person has an opportunity to serve. We are
    committed to providing our Total Force with strong leadership,
    effective policies and programs, training and education opportunities,
    enforcement and resolution tools. We will continue to strive for
    improvement through an ongoing program of evaluation and assessment.
        Commanders and supervisors have a responsibility to combat the
    effects of unlawful discrimination and harassment and to promote a
    healthy environment and human relations climate. Equal Opportunity is a
    critical performance factor for all military and civilian leaders,
    supervisors and managers.
                                   readiness
        The Air Force must be ready to respond rapidly anywhere in the
    world on very short notice. We are ready to meet this demand every day,
    as we demonstrated this past year in operations from Kosovo to the
    South Pole. However, too many years of high operations tempo, aging
    equipment, lack of spare parts and engines, and the cumulative effect
    of chronic underfunding threaten the Air Force's near-term readiness
    levels.
        Our aggregate readiness levels are tied to upkeep of equipment,
    training and ranges, and mission-related infrastructure. We are making
    progress in all these areas, but challenges remain.
    Upkeep of Equipment
        Greatly increased deployments since 1990, aging aircraft, problems
    in funding spares through most of the 1990s, and low retention of
    maintenance technicians in recent years have combined to cause a 9.9
    percent drop in mission capable rates over the Air Force fleet since
    1994. As discussed below, since 1997, the Air Force has addressed a
    number of issues relating to spare parts. As a result, non-mission
    capable rates relating to spares (NMCS) appear to be stabilizing.
    Unfortunately, low retention of maintenance manpower caused by very
    heavy workloads and deployments has caused a 2.1 percent increase in
    non-mission capable for maintenance (NMCM) rates since 1994. For
    example, maintenance manning at the journeyman Senior Airman level has
    decreased from 100 percent in fiscal year 1994 to 71 percent in fiscal
    year 1999. In addition to the retention initiatives that apply
    throughout the Air Force, we are working to increase maintenance
    manning through both retention and recruiting incentives and ultimately
    by increasing the manning throughout our maintenance career fields.
        We have a multi-faceted strategy to improve the materiel system
    that supports equipment readiness. First, we have fully funded ``depot
    level repairables'' accounts, which are used by operating units to
    ``buy'' spare parts from DOD and Air Force sources. Second, we
    increased inventory levels of critical spares by increasing the
    obligation authority of certain Working Capital Funds, and we are
    programming budget authority to pay for these spares as they are
    delivered. Third, we are working to consolidate Air Force depots and to
    make the parts system more efficient, to keep down the cost of spare
    parts. Unfortunately, the consolidation is itself causing near-term
    spares problems. Fourth, we are modernizing critical subsystems in our
    older aircraft where it is no longer cost effective to make repairs on
    individual components, or where manufacturing sources for component
    repair are no longer available.
    Spares Funding
        Adequate spare parts are essential for ensuring our equipment
    remains combat ready. Spare parts shortages, arising from funding
    problems in the 1990s, were a major contributor to the Air Force's
    readiness decline over the past several years. Downsizing of the Air
    Force spare parts inventory went too far. Supply systems were pushed to
    the limits as Air Force units deployed more often. As a result, the
    non-mission capable rate attributed directly to supply shortfalls
    increased from 8.6 percent in fiscal year 1991 to 14 percent in fiscal
    year 1999.
        In fiscal year 1999-2001, Congress, DOD, and Air Force took
    specific actions to address shortfalls in spare parts funding. In
    fiscal year 1999 and fiscal year 2000, Congress supported the spare
    parts recovery with an increase of $194 million and $85 million,
    respectively. Additionally, the Kosovo Emergency Supplemental added
    $387 million to spares for surge and reconstitution efforts.
    Consistently, DOD and Air Force committed to the obligation authority
    to match these resources, and to the $382 million required to resolve
    the bow wave shortfall that had accumulated over the past several
    years. Also in the Air Force fiscal year 2000 and fiscal year 2001
    President's Budget, we fully funded the spare parts validated
    requirement. Currently, we are completing an analysis of Kosovo lessons
    learned and thorough review of RSP kit levels, and other spare part
    levels, to ascertain the criticality of increases in this area.
        Anecdotal evidence indicates progress is being made in availability
    of spare parts, although masked to some extent by increased
    requirements due to Kosovo and disruptions in parts supply due to BRAC-
    directed workload transitions. The Air Force supply business area, for
    example, saw an upward turn in almost all its fiscal year 1999
    performance metrics when compared to its fiscal year 1998 results.
    Backorders fell from a peak of 615,000 in December 1998 to 374,000 by
    the end of fiscal year 1999 (39 percent reduction). We are now working
    hard with major vendors to cut the elapsed time between the date a part
    is ordered and the date it is delivered, so we can turn dollars into
    parts in less than the historic 18-24 months.
        We have also seen a trend toward stabilization in total NMCS rates.
    The overall Air Force rate increased only 0.1 percent from fiscal year
    1998 to the end of fiscal year 1999, even though we fought a major
    theater war in Kosovo in the middle of fiscal year 1999. Monthly NMCS
    rates also held fairly steady over the past 12 months. Unfortunately,
    there continue to be ``technical surprises'' that dramatically reduce
    mission capable rates in individual weapons systems. For example, late
    in 1998, all C-5 aircraft were inspected and some were grounded because
    of a crack found in a major structural member in the tail. In September
    and October 1999, C-5 mission capable rates dropped because of problems
    with the newly fielded FMS-800 modification/upgrade to avionics. At the
    same time, inspections of KC-135 aircraft disclosed problems with
    stabilizer trim brakes, which caused inspections, groundings, and
    ultimately a shortage of KC-135 stabilizer trim assemblies.
        We anticipate that the improved spare parts funding in the
    remainder of the FYDP will arrest the decline in NMCS rates.
    Spares Inventory
        In the early 1990s, the Air Force changed from three-level
    maintenance to two-level maintenance in an effort to cut operating
    costs. Under two-level maintenance, operating units no longer make
    repairs at the base level. Instead, spares parts are sent back to
    depots for repair, receiving a repaired part in return for a defective
    part. Theoretically, the combination of fewer inventory points and
    better transportation would reduce the requirement for spare
    inventories. In fact, efficiency gains were much lower than projected,
    with the result that the Air Force inventory system has been short of
    spare parts for some time. To rectify this, the Air Force received
    approval from DOD in fiscal year 1999 to add to spare parts inventories
    through an increase in working capital fund obligation authority of
    $381.8 million. These funds were put on contract in fiscal year 1999,
    with anticipated deliveries through fiscal year 2002. At the same time,
    $135 million was added for the Oklahoma City Air Logistics Center (ALC)
    because of increased sales at that center.
        During Kosovo, depots and contractors surged to provide increased
    parts support to the units flying Operation Allied Force. When that
    operation ended, Air Force senior leadership made a decision to keep
    the depots in surge until the end of fiscal year 1999 to ensure that
    there were enough parts to take care of maintenance that was deferred
    during the war. The depot surge was funded with $387.3 million fiscal
    year 1999 obligation authority, pending the release of Kosovo
    supplemental funding.
        The result of these three efforts is to increase depot level
    repairable item inventories by $904 million, which should lead to an
    improvement in stockage effectiveness and a reduction in repair times
    in Air Force depots as parts are delivered against these funds.
        Consumable spare parts have also caused mission outages.
    Consumables are managed by the Defense Logistics Agency (DLA) in
    support of all the Services. While DLA has an average stockage
    effectiveness level of 85 percent, that level has been much lower for
    aviation spares which tend to be high cost, low demand items. This
    situation has resulted in operational aviation units and depots in both
    the Air Force and Navy receiving increasingly lower rates of support,
    resulting in a devastating impact particularly on engine readiness. DOD
    has recognized this situation and directed DLA to take immediate
    corrective action. In response, DLA added $500 million for consumable
    aviation spares across the FYDP, including $100 million in fiscal year
    2001. Action was also taken to accelerate the ordering process, through
    the working capital fund, in order to guarantee more rapid deliveries
    in fiscal year 2001.
    Depot Consolidation
        Fiscal years 1998-2001 are a time of transition for Air Force depot
    maintenance, as two of our five principal depots complete the process
    of BRAC-directed closure and their workloads are transferred to our
    remaining depots and commercial sources of repair. The C-5, Sacramento,
    and Propulsion Business Area public-private workload competitions,
    which were a part of this process, resulted in estimated savings of
    over $2.6 billion over the life of the contracts.
        In 1998, we began the move of competed workloads from our Air Force
    depots. The C-5 workload has now largely stabilized at Warner Robins
    ALC. The transition of A-10 and KC-135 heavy maintenance to Ogden ALC
    is essentially complete. However, significant challenges remain in
    moving the F100 engine workload to Oklahoma City ALC and the
    ``commodities'' workload (hydraulics, instruments, and a wide range of
    aircraft components) to Ogden ALC. At Oklahoma City, shortages of
    skilled workers, the sheer number of processes that must be transferred
    and proved, difficulties posed by proprietary technical processes, and
    the requirements of Kosovo have combined to slow the transition from
    original plans. At Ogden, shortages of skilled workers coupled with the
    need to move, reconstitute, and calibrate complex and sometimes
    delicate equipment has caused major disruptions in the ramp-up of
    production of commodities parts. In addition, the Kosovo conflict
    resulted in unusually high spares consumption rates, using up the
    spares that Sacramento had stockpiled for the transition period. The
    result has been shortfalls for many Ogden-repaired items.
        The Air Force has taken aggressive action to correct technical data
    deficiencies, install and calibrate specialized support equipment,
    train the workforce, and streamline the production processes for the
    commodity workloads. By December 1999, the commodity production at
    Ogden ALC had reached a level almost equal to the previous Sacramento
    ALC production output. Ogden has established a ``get well'' target of
    summer 2000 to produce commodities in sufficient quantities to
    significantly reduce customer backorders and satisfy mission capable
    requisitions. In the interim, ``bridge contracts'' with commercial
    suppliers have been put in place to mitigate production shortfalls.
        We believe that the consolidation of workloads will ultimately
    lower costs by increasing efficiencies in the remaining three Air Force
    depots. With the turmoil of the BRAC years behind us, we are beginning
    to see the promised gains. All Air Force depots performed remarkably
    well in fiscal year 1999, considering that over 35 percent of the total
    workload was in transition and that the remaining depots were engaged
    in extensive hiring and training of new personnel while meeting the
    surge demands of Kosovo.
        Schedule performance improved in fiscal year 1999, as the time
    needed for aircraft repair dropped for the second consecutive year. The
    elapsed time for aircraft to move through the entire depot repair
    process, measured in flow days, was reduced by an average of more than
    30 percent. For example, flow days per aircraft for the F-15, C-5, C-
    130, and C-141 were reduced ranging from 15 to 82 days. F-16 and B-1
    flow days were cut by 22 and 24 days, respectively. Depot Maintenance
    financial management also improved in fiscal year 1999. Revenue was
    higher than expected primarily due to increased Kosovo commodity repair
    requirements. Due to prudent management, expenses, which were only
    slightly higher than planned, were more than offset by increased
    revenue. As a result, the fiscal year 1999 profit objective was
    exceeded by over $60 million, where there had been losses in the
    hundreds of millions of dollars in many prior years.
        Finally, a word must be said about the work of the depots during
    Kosovo. The Air Force responded to Kosovo by surging its depots. The
    depots implemented temporary duty recalls, scheduled additional shifts,
    weekend hours, and accelerated contractor and depot repair operations.
    These extraordinary actions increased depot production of commodities,
    engines, and aircraft by 500,000 hours and ensured support to units
    performing peacetime missions while satisfying operational requirements
    of the conflict. The Air Force continued the surge through the end of
    fiscal year 1999 to support reconstitution and recovery of our combat
    units and to reduce existing backorders. We are extremely proud of the
    men and women who worked weekends and evenings to support the
    warfighters in the field.
    Equipment Modifications
        The age of Air Force weapons systems is unprecedented. This year
    the average age of our aircraft is 20 years. Under current
    modernization plans, the average age will increase to 30 years by 2015.
    The cost of maintaining this older equipment is growing. Fatigue,
    corrosion, and parts obsolescence are driving up the costs of
    maintaining older planes and reducing overall equipment readiness.
    Worse, the industrial base that supports older aircraft is drying up,
    as aerospace companies leave niche markets, particularly in
    electronics, where commercial systems have long ago abandoned
    technology still in use in the Air Force. If the Air Force is to
    continue making readiness affordable--indeed, possible--we must balance
    the cost of maintaining weapons systems against the cost of replacing
    major subsystems or the weapon system itself. With our large transport
    aircraft and bombers, it has proven both feasible and cost-effective to
    replace subsystems rather than complete aircraft. What we have
    attempted to do is to group related modernization efforts into
    ``campaigns'' where the work on many systems will be performed during
    one maintenance cycle. This reduces overall costs, while limiting the
    number of aircraft out of service at any one time. Modernization
    programs of this type include:
      --The Pacer CRAG program which replaces or modifies radar components,
            provides a GPS-based navigation system, and adds the Traffic
            Collision and Avoidance System (TCAS), as well as navigation
            modifications required to meet the Global Air Traffic
            Management (GATM) system standards;
      --The C-130 Avionics Modernization Program (AMP), to go on contract
            in 2000, incorporates navigation safety, GATM, and expanded
            TCAS systems into a completely revamped ``glass'' cockpit; it
            also replaces the APN-59 radar system with a more capable and
            cost-effective radar;
      --The C-5 AMP, which has already begun, provides a modern ``glass''
            cockpit and replaces the avionics, radios, and flight
            computers; and
      --The C-5 Reliability Enhancement and Re-engining program, scheduled
            to begin engineering design in fiscal year 2000, includes
            upgrades for engines, hydraulic, pressurization, airframe,
            electrical, and landing gear systems.
        In the bomber fleet, the B-52 and B-1 have modernization efforts
    planned. Both are experiencing aging aircraft problems, and require
    extensive upgrade programs, particularly in the avionics arena. The
    following are the major planned modification efforts for the bomber
    fleet:
      --The B-52 Avionics Midlife Improvement (AMI) program will upgrade
            the aircraft's offensive avionics system (OAS) while preserving
            all current B-52 combat capability. Because the current
            offensive avionics system is based on 1970's technology, it is
            suffering from obsolescence and supportability problems. The
            AMI program will upgrade the OAS by replacing three line
            replaceable units (LRUs) and developing new aircraft software;
      --B-1 mission capable (MC) rates have steadily declined since fiscal
            year 1996. The ``MC Rate Red Team'' has been established to
            determine the reasons for the decline and develop a program to
            improve B-1 performance;
      --In addition, programs are currently in place to fix problems on the
            B-1. The Defensive Systems Upgrade Program will replace aging
            components with a newly developed, joint Navy/Air Force
            Integrated Defensive Electronic Counter Measures (IDECM)
            system, scheduled for initial qualification in the spring of
            2000. The communication system on the Block D models will be
            upgraded this year to correct a problem with bleed over in both
            plain and encrypted text. Finally, a study is being conducted
            to look into a problem with unacceptably high numbers of
            retained weapons, or ``hung stores''.
        In the fighter fleet, there are two kinds of modernization efforts.
    The first is service life extension programs for the A-10 and F-16
    fleets. These include avionics and structures modifications. The second
    type of program involves capability improvements, which not only
    provide improved lethality, but frequently have the added benefit of
    reliability and maintainability improvements through more modern
    avionics components. Continued funding for these and other modification
    programs is critical to ensure our weapons systems are ready and able
    to meet future contingency tasking. Examples of major modifications for
    both the A-10 and F-16 fleets, as well as a cost-of-ownership reduction
    plan for the F-117, are as follows:
      --The F-16 Falcon Flex program replaces the most unreliable and
            obsolete radar components while significantly reducing the
            ownership costs;
      --F-16 electronic countermeasure and navigation systems are also
            receiving upgrades;
      --Falcon UP and the planned Falcon STAR programs include numerous
            depot level structural modifications required to extend the
            service life of all F-16 aircraft to 8,000 hours;
      --The F-16 CUPID program is bringing our older F-16s (Blocks 25-32)
            new life by adding night vision equipment, enhanced avionics,
            and the ability to carry an infrared targeting pod and laser-
            guided munitions. Ultimately, CUPID-modified aircraft will have
            the capability to carry JDAM and other GPS-guided munitions;
      --The A-10 Hog Up program will inspect, repair, replace and overhaul
            many structural and mechanical systems; it is the first step to
            enable the aircraft to remain viable until the year 2028. The
            Hog Up configuration is the required baseline for the Aircraft
            Structural Integrity Program, which will allow the A-10 to
            reach a service life of 16,000 hours; and
      --The F-117, the world's first operational low-observable (LO) combat
            aircraft, is participating in the Single Configuration Fleet
            (SCF) program. The goal is to reduce the total ownership costs
            of the F-117 by standardizing the fleet to a single optimized
            spray/sheet coating and edge configuration. This will reduce LO
            maintenance requirements and take advantage of state-of-the-art
            robotic technology.
    Engines: A Special Case
        The Air Force has made significant progress to stop the decline in
    engine readiness. Improved engine funding, engine life management
    planning, and better partnering with vendors have contributed to slow
    but steady readiness improvements in most of the Air Force engine
    fleet. However, technical surprises, forecasting, spare parts problems,
    and a lack of experienced manpower still prevent us from meeting our
    wartime spare requirements for approximately 25 percent of our systems.
        The Air Force is taking action to rectify this situation. Ongoing
    F-16 engine safety upgrades and modifications have been accelerated by
    two years to correct six of the most serious technical problems and
    reduce the risk of engine-related accidents. In addition to the F-16
    safety upgrades/modifications, we have been working several other
    initiatives to upgrade and modernize aircraft engines. The TF39 engine,
    which powers the C-5 aircraft, is currently undergoing a high-pressure
    turbine modification which greatly improves reliability. Approximately
    $31 million will be spent to upgrade the T56-7 to the -15 configuration
    on the C-130 aircraft. Nine additional KC-135s are programmed for
    reengining starting in fiscal year 2002 and beyond, funded at
    approximately $263 million. Over $225 million in the FYDP is programmed
    for modernization of the oldest (F100-100 & -200) F-15 engines.
    Finally, the engine problems in the T-38 aircraft are being addressed
    with almost $289 million in the FYDP for J85 engine modernization and
    other propulsion upgrades.
        Improvements have been made in partnering with vendors to reduce
    the spare parts acquisition lead time. For example, the GE engine
    contract reduces acquisition lead time from more than two years to 90
    days on catalog items. In addition, the Air Force has identified the
    need for additional engine manning requirements and will address these
    in future Air Force budgets.
    Training
        Training a quality force is instrumental to our readiness. From the
    day airmen and civilians join our team, we invest in their education
    and training to prepare them for today's demanding operational
    environment and tomorrow's challenges. Over the past few years, we have
    introduced several new programs to further hone our military skills and
    understanding.
        For our new airmen, Warrior Week at Basic Military Training
    provides a realistic, weeklong exercise at a bare-base site. This
    program introduces airmen to the expeditionary nature of today's Air
    Force and serves as a transition from a classroom environment to the
    real-world, high-stakes environment typical to our deployed forces.
    Participants experience, first hand, the challenges associated with
    deploying to a bare-base location, setting up an operating base,
    implementing force protection measures, and commencing operations, all
    under austere living conditions. Similarly, Air Force Academy cadets
    are introduced to the expeditionary nature of today's Air Force by
    participating in Global Engagement week at the United States Air Force
    Academy. Initial skills training for the enlisted corps is also
    essential for mission accomplishment in an Expeditionary Aerospace
    Force. Upon completion of basic military training, all enlisted
    personnel attend initial skills training and receive their copy of the
    Airman's Manual, an operational handbook. The Mission Ready Airmen and
    Mission Ready Technician programs are designed to prepare an apprentice
    to accomplish the basic technical skills necessary to perform in his or
    her specialty.
        The Aerospace Basic Course (ABC) provides new officers and
    civilians a foundation in the profession of arms and a working
    knowledge of the unique contributions of aerospace power. Through this
    entry-level professional military education program (PME), Air Force
    lieutenants and key civilians gain a deep appreciation of Air Force
    values, history, doctrine, and the skills required to operate and fight
    from austere, forward bases, fully exploiting the medium of aerospace
    for the joint force.
        The Air Force develops its leaders deliberately, using a proven
    process that exposes them to Air Force and joint operations, PME, and
    increasing command and staff responsibilities. The depth of an airman's
    expertise is developed through a series of operational assignments that
    make him or her an aerospace power authority. Having always placed a
    premium on education for officers, enlisted members, and civilians, our
    PME system prepares leaders for the challenges they will face in their
    immediate future. As airmen progress through their careers, the Air
    Force competitively selects the very best to command and lead its
    squadrons, groups, and wings. The Air Force relies on a comprehensive
    series of additional leadership and command courses to supplement
    continuous mentoring that produces leaders who are able to make the
    right decision, whether in peace or war.
        Operationally, the Air Force continues to train its aircrews and
    support personnel by participating in numerous joint and combined
    exercises around the world. These training opportunities encompass both
    field exercises and simulations. Distributed Mission Training (DMT)
    holds great promise. Using state-of-the-art simulation technology, DMT
    permits aircrews to train in synthetic battlespace, connected
    electronically to other aircrews at distant air bases. Importantly, DMT
    delivers this enhanced training from the home station, helping the Air
    Force limit the amount of time airmen spend deployed and facilitating
    the training of AEFs as they prepare for deployment. Multiple aircraft
    Mission Design Series (MDS) are currently under development for DMT. An
    initial delivery of F-15C Mission Training Centers (MTC) has been
    configured at Langley AFB, VA, and Eglin AFB, FL, and will reach full
    operational capability in mid 2000. Contracts for new F-16 and AWACS
    DMT simulators have been awarded and are expected to be delivered this
    year.
        Air Force civilians are an integral part of the aerospace team.
    They work side-by-side with airmen in some operational roles, as well
    as most support roles. They play an essential part in the development
    and acquisition of the aerospace and information technologies that will
    maintain the Air Force's dominance. The active component drawdown will
    increase their presence in non-military essential functions and senior
    leadership positions across the Air Force. To prepare them for the 21st
    century, the Air Force is making a concerted effort to integrate
    military and civilian training, to the greatest extent possible, and to
    streamline human resource development services to simplify and speed
    delivery of cost-effective training to the Total Force. In addition,
    the Air Force is engaged in a top-to-bottom review of professional
    development, training, and education for managers and executives;
    general work force proficiency, specialized, and career progression
    training and education to maintain minimum skill and currency; and the
    development of wage grade supervisors and employees in the trade,
    craft, and technical maintenance fields. We have increased
    opportunities for professional development through PME, developmental
    assignments with increasing command and staff responsibilities, and
    through participation in the Defense Leadership and Management Program
    (DLAMP). The goal is to produce technically proficient civilians who
    are well versed in Air Force missions, structures, and doctrine.
                                 modernization
        At the beginning of the last century, a relative few shared a
    vision and dream of flight. Today at the dawn of a new century, the men
    and women of the Air Force share a common vision of becoming a light,
    lean, and lethal Expeditionary Aerospace Force. The Air Force
    Modernization Program is a critical enabler of that vision. We will
    leverage technology to improve combat effectiveness through upgrades of
    legacy systems, selective new starts, and investment in critical
    technology programs for advanced systems. This revolution in military
    affairs we are undertaking requires a revolution in business affairs.
    The Air Force will continue to lead the way in acquisition reform,
    using proven commercial and industry practices. We will develop and
    deliver new technologies and weapon systems more quickly and cheaper
    than traditional DOD methods have allowed in the past.
        Our challenge in formulating the modernization strategy is how best
    to balance our sustainment and modernization efforts given the
    constraints we face and the needs of the warfighter. Currently 60
    percent of Air Force Total Obligation Authority is spent on sustainment
    and 40 percent on modernization. We have funded both modifications and
    procurement as highlighted in the tables on page 57.
        The Air Force's long range vision to become a light, lean, and
    lethal Expeditionary Aerospace Force complements Joint Vision 2010--the
    conceptual template for how America's Armed Forces will channel the
    vitality and innovation of our people and leverage technological
    opportunities to achieve new levels of effectiveness in joint
    warfighting. Thus, our modernization focus is synchronized with Joint
    Vision 2010. Now we must carefully execute our modernization plan to
    extend our position as the world's preeminent aerospace power.
    Full Spectrum Dominance
        Full Spectrum Dominance is required to provide the joint force
    freedom from attack, freedom to maneuver, and freedom to attack at a
    time and place of our choosing regardless of weather. Key to this is
    the Air Force's current high-low mix fighter force structure. This
    high/low fighter force structure is based on a high capability fighter,
    the F-15 now and the F-22 in the future, to provide air superiority and
    a low cost fighter, the F-16 now and the JSF in the future, in large
    numbers for attack capability. Another key is the heavy bomber force,
    adding prompt global reach independent of theater basing constraints
    and high-mass precision engagement capability. America displayed its
    current aerospace dominance with the success of Operation Allied Force
    in Kosovo. Maintaining and improving the Air Force's ability to achieve
    future Full Spectrum Dominance is a primary objective of the Air Force
    Modernization Program.
    Aerospace Superiority
        The ability to control the vertical dimension so the joint force is
    both free from attack and free to attack is the key to achieving Full
    Spectrum Dominance. In the 21st Century, aerospace superiority will
    depend on the F-22 Raptor to defeat enemy aircraft; the Space-Based
    Infrared System (SBIRS) to provide early warning of long range hostile
    missile threats; and the Airborne Laser (ABL) to provide a credible
    defense against theater ballistic missiles.
        The F-22 Raptor is the replacement for the F-15. The F-22 will
    dominate the vertical battlespace of the 21st Century with its
    revolutionary combination of stealth, supercruise, maneuverability, and
    integrated avionics. The F-22, armed with the AIM-9X infrared short
    range air-to-air missile, an improved AIM-120 AMRAAM missile, and the
    Joint Direct Attack Munition will be able to destroy threats to our
    forces in the air and on the ground when it enters service in December
    2005. In 1999, the F-22 logged its 500th flight test hour, continuing
    flight envelope expansion, successfully demonstrating supercruise and
    high angle of attack post-stall flight with thrust vectoring. The F-22
    avionics program also made major strides with the early delivery of the
    Block 1 software to the manufacturing line for installation in the
    first avionics test aircraft. Testing of future versions of F-22
    software was also initiated in the one-of-a-kind F-22 flying test bed
    with the delivery of Block 2 in October. The unique capabilities of the
    flying test bed to check out, modify, and verify software performance
    prior to F-22 flight testing will enable the rapid introduction and
    check out of Block 2 and Block 3 avionics in CY00 and the initiation of
    F-22 Block 3 fight testing.
        The F-15C/D will remain the Air Force's lead air superiority
    fighter until the F-22 is operational. It is being upgraded to add
    increased reliability and enhanced capabilities. These upgrades include
    the APG-63(V)1 radar providing greatly improved reliability; the APG-
    63(V)2 Advanced Electronically Scanned Array (AESA) radar providing
    improved performance; the Joint Helmet Mounted Cueing System and AIM-9X
    missile providing a first shot/first kill capability in the within-
    visual-range arena; enhanced combat identification for beyond visual
    range identification of airborne targets. Forty-eight F-15C/Ds deployed
    in support of Operation Allied Force and shot down four MiGs.
        The Air Force is a major contributor to DOD's tiered architecture
    to counter the ever-growing theater ballistic missile and cruise
    missile threats. This architecture is based on an integrated capability
    to detect, classify, intercept, and destroy or negate the effectiveness
    of enemy missiles prior to launch or while in flight. This capability
    is vital to protect U.S. and coalition forces, high-value assets, and
    population centers within an assigned theater of operations. Numerous
    Air Force programs and systems discussed throughout this document
    contribute to this architecture. The SBIRS and the ABL programs are
    critical in addressing the theater ballistic missile threat. The Air
    Force is aggressively pursuing new technologies within our laboratories
    to counter the emerging cruise missile threat. Many of these
    technologies have been transitioned to current weapon systems. The
    Radar System Improvement Program (RSIP) for the E-3 Sentry Airborne
    Warning and Control System is one example, and the F-22 with its
    advanced radar and sensor fusion capabilities will capitalize on the
    newest technologies for cruise missile defense.
        The SBIRS includes both high and low components that will provide
    missile warning to national and theater commanders. It will improve our
    capability to detect and track theater missile launches, cue missile
    defense systems, and contribute to the characterization of the theater
    battlespace and the technical intelligence missions.
        The integrated SBIRS architecture incorporates a ``systems of
    systems'' concept that provides information for target acquisition,
    cueing and track data to interceptor systems, and a defense battle
    manager. This cueing effectively extends an interceptor's range and
    effectiveness over autonomous radars alone. The SBIRS constellation
    consists of highly elliptical orbit (HEO), geosynchronous orbit (GEO),
    and low earth orbit (LEO) spacecraft that receive and transmit data to
    an integrated ground system.
        The SBIRS program has four associated increments. Increment 1
    consolidates Defense Support Program (DSP) ground processing into a
    master control station located at Buckley ANG Base in CO. Increment 2
    consists of two HEO sensors and four GEO satellites with first launch
    in fiscal year 2004. Increment 3 will be comprised of 24 LEO satellites
    with first launch in fiscal year 2006. Increment 4 will optimize the
    entire system and define requirements for further deployment.
        The ABL will be a key Air Force contributor to the Nation's multi-
    layered theater missile defense architecture. It is DOD's only boost
    phase intercept system--with a planned fleet of seven operational
    aircraft. Last year, the Air Force successfully tested an improved
    version of its flight-weighted laser module and also demonstrated the
    baseline version of the battle management software. Just this past
    January, ABL accepted delivery of its first 747 aircraft, with
    modifications set to take place through early 2002. ABL is on track for
    a lethal demonstration against a theater ballistic missile in fiscal
    year 2005.
    Global Attack
        Global Attack assets allow our Nation to successfully conduct
    military operations across the spectrum of conflict. Global Attack
    programs include modernization of the Minuteman III intercontinental
    ballistic missiles (ICBMs), B-1, B-2, and B-52 bombers, and F-15E, F-
    16, and F-117 fighters. Coupled with precision-guided munitions, these
    platforms produce a potent force for deterrence of both nuclear and
    conventional conflict.
        The Air Force is continuing to fund several ICBM modernization
    programs designed to extend the operational life of the Minuteman ICBM
    weapon system beyond 2020. The Guidance Replacement Program (GRP) is
    replacing failing Minuteman guidance system electronics, while the
    Propulsion Replacement Program (PRP) is remanufacturing all three
    Minuteman solid fuel stages to correct age-related degradations and
    maintain weapon system reliability. A GRP full rate production contract
    was awarded in December 1999, with a full rate production decision on
    PRP scheduled for September 2000. The PRP first asset delivery to Air
    Force Space Command is scheduled for March 2001.
        The current bomber inventory includes 94 B-52s (built 1960-1962),
    93 B-1s (built 1980-1986), and 21 B-2s (built 1988-1999). The B-1s are
    assigned to five main operating bases, including the two Air National
    Guard at McConnell AFB, KS and Robins AFB, GA. This mix of bombers
    provides the capabilities required to meet Air Force commitments--each
    can attack from the U.S. The B-2 can penetrate against high-value,
    heavily defended targets; the B-1 is the conventional interdiction
    workhorse and can penetrate for high volume direct attack in a medium
    threat environment; and the B-52 equipped with CALCMs provides long
    range standoff precision and direct attack in a low threat environment.
        The B-2 can meet any global power projection mission, anytime,
    anywhere. The Air Force continues to make improvements to the
    maintainability of the B-2's low-observable coatings and integrate
    advanced weapon systems beyond the Joint Direct Attack Munition (JDAM)
    used successfully by the B-2 over Kosovo, to include the Joint Standoff
    Weapon (JSOW), Joint Air-to-Surface Standoff Missile (JASSM), and EGBU-
    28. The B-1 and B-52 continue to provide firepower to the joint force.
    Upgrades to the B-1 include the capability to carry JDAM and improved
    defensive systems; a small number of B-1s are already JDAM capable. The
    B-52H is now operationally capable of employing JDAM; communications
    and navigation system upgrades will keep it viable through 2040. An Air
    Force Reserve (AFR) unit operates and trains in the B-52H, providing
    significant value to wartime mission readiness. The Reserve is
    evaluating upgrades to improve the B-52H bomb bay camera that will
    allow crew members to effectively perform safety inspection for unspent
    munitions after bombing operations. Both the B-1 and B-52 are being
    upgraded to carry JSOW and JASSM.
        The bomber force made significant contributions to Operation Allied
    Force. It delivered over 6 million pounds of ordnance and struck over
    50 percent of all Allied Force targets. The B-2 destroyed 11 percent of
    the total targets while flying only 1 percent of the total sorties. The
    B-1 flew 100 percent of sorties assigned and proved the performance of
    the ALE-50 towed decoy to negate the effects of enemy fired surface-to-
    air missiles. The B-52 maintained a 98 percent mission capable rate and
    led the attack with CALCMs. The use of data links will greatly enhance
    flexible targeting capabilities, and coupled with the sustained use of
    precision-guided munitions, will increase the lethality of these EAF
    forces.
        The F-15 Eagle and F-16 Falcon, the Air Force's legacy fighters
    which entered the service in 1975 and 1980 respectively, provide a
    potent mix of air-to-air and air-to-surface capability. Operation
    Allied Force reinforced the Air Force's need to ensure a viable fighter
    force structure until legacy systems are replaced. While the F-15E
    provides significant air-to-air capability, it is optimized for the
    air-to-ground mission. Future planning calls for a replacement for the
    F-15E to be procured in the 2015 timeframe. In the interim, the Air
    Force continues F-15E modernization activities. Improvements are
    planned for electronic defenses, computers, and the addition of a
    fighter data link. Twenty-four F-15Es deployed in support of Operation
    Allied Force, and expended more than 2.7 million pounds of bombs and
    missiles in target destruction.
        One hundred F-16 Block 40/50 aircraft participated in Operation
    Allied Force and delivered over 4,000 bombs on target. The principal
    lessons learned were the need for Night Vision Goggle (NVG)-compatible
    aircraft lighting, improved precision targeting pod capability, and an
    air-to-air interrogator. Kosovo also reconfirmed the need for the
    present major modernization programs for the Block 40 and 50 aircraft
    covered under the Common Configuration Implementation Program (CCIP).
    CCIP includes a new aircraft computer, color displays, Joint Helmet
    Mounted Cueing System (JHMCS), AIM-9X, Link-16, and NVG-compatible
    aircraft lighting. The new aircraft computer increases capacity and
    throughput and solves diminishing manufacturing source problems while
    enabling the use of future weapons systems. Color displays will present
    aircraft and combat information to the pilot more effectively for
    easier interpretation as compared to the present monochrome displays.
    The JHMCS provides the off-boresight missile targeting capability to
    employ the AIM-9X, the future high off-boresight air-to-air missile.
    Link-16 will provide the pilot improved combat situational awareness
    and NVG-compatible aircraft lighting will provide a permanent
    modification to the aircraft to allow the unencumbered use of NVGs.
    Additionally, the Block 50s will receive an air-to-air interrogator
    capability and the ability to carry both a targeting pod and the HARM
    targeting system pod to better conduct the suppression and destruction
    of enemy air defense (SEAD/DEAD) missions. One of the major
    modification programs for the F-16 Block 25-32 aircraft, principally
    flown by Air National Guard (ANG) and Reserve, is known as Combat
    Upgrade Plan Integration Details (CUPID). CUPID consists of four
    separate upgrade programs: Global Positioning System integration,
    countermeasure systems mechanization, Situation Awareness Data Link
    (SADL), and NVG-compatible aircraft lighting. Global Positioning System
    integration will provide the ability to accurately deliver smart
    munitions. The improved Counter-Measure System mechanization will
    enhance the self-protection capability. Situation Awareness Data Link
    (SADL) will provide the pilot improved combat situational awareness.
    NVG-compatible aircraft lighting will enhance the aircraft's night
    combat role.
        The Joint Strike Fighter (JSF) is the ``low end'' of our high/low
    affordable fighter mix philosophy--ensuring sufficient quantities of
    very capable attack aircraft to give the U.S. dominant force across the
    spectrum of conflicts. The JSF program will develop and field a highly-
    common family of next-generation strike fighter aircraft for the Air
    Force, Navy, Marine Corps, and our allies. Current program emphasis is
    on facilitating the evolution of fully validated and affordable joint
    operational requirements, demonstrating cost-leveraging technologies
    and concepts, and completing the Concept Demonstration Phase. First
    flights of the contractor demonstration aircraft are scheduled for the
    spring of 2000. The Engineering and Manufacturing Development phase
    will begin in fiscal year 2001.
        The F-117 Nighthawk plays a key role in global attack as it
    penetrates dense threat environments and delivers precision weapons
    against high-value, highly defended, and time-critical targets. The Air
    Force continues to modernize this weapon system to improve capability,
    survivability, and sustainability in the 21st Century. The top
    modernization program is Single Configuration Fleet (SCF), which
    provides the fleet with a single radar absorbent material
    configuration, reducing maintenance man-hours by 50 percent. The need
    to employ precision, all-weather, GPS/INS weapons was reinforced during
    Operation Allied Force; this capability is included in Block Cycles 1
    and 2 upgrades. The smart weapons program will incorporate all-weather
    JDAM, WCMD, and the EGBU-27. Operation Allied Force highlighted the
    need for smart weapons on the F-117 as over 50 percent of the F-117
    sorties were cancelled for weather, impacting the ability to deliver
    ordnance.
        Modern warfare has led to an increase in airborne combat under the
    cover of darkness. To ``Own the Night,'' the Air Force is pursuing a
    multi-faceted strategy. First, we are upgrading our F-16 aircraft with
    the Night Vision Imaging System (NVIS). This upgrade ensures the
    aircraft internal and external lighting is compatible with night vision
    devices. Second, we are procuring and fielding F-4949 and AN/PVS-7
    Night Vision Goggles for our air and ground personnel. Third, we are
    developing the next-generation of NVGs called Panoramic Night Vision
    Goggles (PNVGs). For the Block 25-32 F-16 aircraft, the LITENING II Pod
    procurement is the number one priority program undertaken by the
    Reserve and Guard from fiscal year 1999 to fiscal year 2004. In
    addition to LITENING II Pods, the Reserve is planning to procure more
    advanced Multi-Function Displays for its F-16 fleet starting in fiscal
    year 2001. These efforts will effectively enable the Reserve to meet
    modern combat standards and better serve as a member of the Total
    Force. All of these modernization activities will significantly improve
    personnel safety, operational tactics, and mission effectiveness.
        The Air Force is also actively upgrading laser eye protection for
    aircrew and ground personnel from a wide range of lasers. The Air Force
    initiated a three-phase Engineering and Manufacturing Development
    program in fiscal year 1999 to counter this emerging threat. The threat
    includes military lasers, commercial lasers, and foreign lasers
    specifically developed to damage the eyes or cause temporary vision
    loss. The ultimate goal in developing laser eye protection is to
    provide full retinal coverage at any angle, while allowing visibility
    of the aircraft cockpit displays and good light transmission for use in
    night operations. The fiscal year 2001 President's Budget includes
    $13.8 million to procure over 26,000 devices.
    Precision Engagement
        As shown in Operation Allied Force, theater commanders must have
    the ability to strike targets precisely in adverse weather conditions
    while minimizing risk and collateral damage. The Air Force's new
    generation of guided weapons uses the Global Positioning System (GPS),
    coupled with an inertial navigation system (INS), to put bombs on
    targets precisely, night or day, in all weather conditions. Because our
    legacy precision-guided munitions (GBUs/LGBs) can generally be employed
    successfully only in clear weather, the Air Force is upgrading limited
    quantities with GPS/INS guidance units giving them an immediate all-
    weather capability. The Conventional Air Launched Cruise Missile
    (CALCM), Joint Air-to-Surface Standoff Missile (JASSM), Joint Standoff
    Weapon (JSOW), Joint Direct Attack Munition (JDAM), and the Wind-
    Corrected Munitions Dispenser (WCMD) are among the Air Force's high-
    priority precision engagement programs.
        CALCM is a long-range, large payload cruise missile employed by the
    B-52 against high priority and heavily defended targets. CALCM
    continues to be the CINC's first strike weapon of choice during
    contingency operations, as demonstrated by its superb performance
    during Operations Desert Fox and Allied Force. Current replenishment
    programs will convert an additional 322 ALCMs to CALCMs by July 2001.
    Future plans call for the initiation of an extended range CALCM (CALCM-
    ER) program to fill mid-term long-range cruise missile needs.
        JASSM is a highly accurate, stealthy, standoff missile employed by
    both fighters and bombers to destroy heavily defended, hard, fixed, and
    relocatable targets with virtual impunity. As a result of acquisition
    reform, the JASSM price is one quarter of the cost, and its development
    schedule is half the time, of similar missile programs. JASSM is
    currently undergoing flight tests during Engineering and Manufacturing
    Development and is scheduled to begin production deliveries in 2003
    with 768 JASSMs purchased by the end of the FYDP.
        JSOW is an accurate, adverse-weather, glide munition, which was
    successfully employed in Kosovo and Iraq in 1999. The Air Force will
    use it to deliver cluster munitions that seek and destroy armored and
    soft targets at ranges up to 40 nautical miles. We are buying two
    variants: the JSOW/A delivers 145 Combined Effects Bomblets and the
    JSOW/B delivers 6 BLU-108 anti-armor submunitions. We will procure
    3,000 of the A variant and 3,114 of the Bs. We took our first JSOW
    deliveries in November 1999.
        JDAM provides the Air Force the capability to deliver 1,000- and
    2,000-pound, general-purpose and penetrator warheads in adverse weather
    with precision accuracy. We will use JDAM to destroy high-priority,
    fixed, and relocatable targets from multiple platforms. The first
    operational use of JDAM was from a B-2 during the first night of
    Operation Allied Force. The B-2/JDAM combination was 96 percent
    effective and targets attacked using JDAMs were damaged or destroyed 87
    percent of the time. The current plan is to buy more than 40,000 JDAM
    kits from fiscal year 2001-fiscal year 2005, with a total program buy
    of approximately 62,000 kits.
        The Miniaturized Munitions Capability (MMC) program is in the
    Concept Exploration phase with supporting work on-going in the
    laboratories. Two laboratory technology demonstrations being evaluated
    in the MMC program are the Small Smart Bomb (SSB) and Low Cost
    Autonomous Attack System (LOCAAS). SSB is a 250-pound to 500-pound
    class penetrator with GPS/INS and a terminal seeker. LOCAAS is a 95-
    pound mini-cruise missile with a LADAR seeker, a 3-mode warhead, and a
    miniature turbojet engine enabling a 100-km range and 30 minutes of
    search for mobile targets. The objective is to field adverse-weather
    precision munitions that are significantly smaller in size and provide
    increased combat effectiveness against fixed, relocatable, and mobile
    targets. This would enable carrying more weapons per sortie and
    increase sortie effectiveness, key to such aircraft as the B-2, F-22,
    F-117, and JSF where carriage is limited to the internal bay for
    stealth reasons. Interim results from the on-going Analysis of
    Alternatives (AoA) points to the MK-82 (500-pound) JDAM as a near-term
    low risk solution against fixed targets. With internal weapons rack
    modifications, B-2s and B-1s would be able to carry approximately 80
    Mk-82 JDAMs per sortie, significantly increasing target kills per
    sortie.
        Wind Corrected Munitions Dispenser (WCMD) is an INS-guided tail kit
    that enables us to accurately deliver dispenser weapons from medium to
    high altitudes. WCMD tail kit-equipped weapons are expected to be
    available in late 2000. We will buy 40,000 tail kits for integration
    with Sensor Fuzed Weapon (SFW), Combined Effects Munition, and the
    Gator mine dispenser.
        The Sensor Fuzed Weapon, when mated with a WCMD, will provide a
    first time capability to accurately engage armored targets from medium
    to high altitudes. We plan to buy 5,000 SFWs, all of which will be
    mated with the WCMD.
        This combination of next generation weapons provides a balanced
    force structure enabling our warfighting CINCs an unprecedented ability
    to attack targets with highly accurate weapons at any time of the day
    or night in adverse weather and survive the hostile environment well
    into the 21st Century.
    Information Superiority
        The capability to collect, process, and disseminate an
    uninterrupted information flow while exploiting or denying the
    adversary's ability to do the same, will be critical to success in
    future military operations. Integrating Command and Control,
    Intelligence, Surveillance, and Reconnaissance (C\2\ISR) assets enables
    the Air Force to leverage combat capabilities to the maximum extent.
    Our evolutionary modernization plan to support the EAF includes
    upgrades to many systems within the information superiority core
    competency.
        A robust C\2\ISR infrastructure is key to providing an
    uninterrupted and timely flow of information. The Air Force has
    embarked on a study to analyze end-to-end bandwidth requirements, with
    the goal to ensure sufficient funding is programmed to meet warfighter
    requirements.
        The Aerospace Command and Control, Intelligence, Surveillance and
    Reconnaissance Center (AC\2\ISRC) is the Air Force organization tasked
    to standardize and integrate Air Force C\2\ and ISR systems across
    joint and coalition systems and create a C\2\ISR investment plan that
    meets future challenges. AC\2\ISRC is working to rapidly identify,
    through joint experimentation, advanced capabilities to transition to
    the theater commanders that will enable them to get inside an
    adversary's operating cycle and use information against the enemy.
    AC\2\ISRC's key thrust is creating a ``reach back'' air operations
    center that provides modernized command and control through the Global
    Combat Support System (GCSS-AF) and the Theater Battle Management Core
    System (TBMCS) program.
        JSTARS and AWACS provide theater commanders real-time, wide-area
    surveillance of enemy ground and air movements. The delivery of three
    aircraft in fiscal year 2000 will increase the JSTARS fleet to eight
    aircraft. In addition, we are developing enhanced JSTARS capabilities
    through the Radar Technology Insertion Program (RTIP), which will
    significantly improve situational awareness and real-time processing of
    fixed and mobile targets. Air surveillance will also be improved when
    the AWACS fleet achieves initial operational capability with the Radar
    System Improvement Program (RSIP) in June 2000. RSIP provides increased
    detection range for low radar cross section targets.
        The Air Force's Unmanned Aerial Vehicle (UAV) programs, Predator
    and Global Hawk, are maturing rapidly to support intelligence,
    surveillance, and reconnaissance operations. During Operation Allied
    Force in Kosovo, we took real-time video imagery from Predator and
    fused it with digital terrain data on the ground in Italy to produce
    highly precise target coordinates for our precision-guided munitions.
    These coordinates were then relayed to attack aircraft, typically in
    minutes. The potential for JSTARS-Predator integration was demonstrated
    by manually correlating data from both platforms--laying the ground
    work for future automated correlation and exploitation of the data. We
    also took Predator beyond its normal ISR mission and into the realm of
    attack operations by equipping it with a laser target designator.
    Although the laser designator has not been used in combat, it has been
    tested, and has the capability to allow laser-guided bombs to be
    dropped through weather. Air Combat Command is in the process of
    developing a long-range plan to incorporate a laser designator into the
    sensor package on all Predators.
        The Air Force will continue to exploit the technological promise of
    UAVs and explore their potential uses over the full range of combat
    missions. At present, the Air Force has committed $80 million across
    the FYDP to support the Defense Advanced Research Projects Agency
    (DARPA) Phase II Unmanned Combat Air Vehicle (UCAV) Advanced Technology
    Demonstration (ATD), which is designed to answer multiple questions
    regarding the potential application of UCAVs throughout the spectrum of
    conflict, with emphasis on C\2\ISR feasibility.
        Global Hawk is approaching the end of its Advanced Concept
    Technology Demonstration (ACTD). It is in the user demonstration phase
    and has achieved over 27 hours endurance on a single flight, reached
    over 66,000 ft. altitude and totaled nearly 500 hours of flight time.
    It has participated in several joint exercises, including an over-water
    flight to and from Alaska and transmitting imagery to ANG, Air Force,
    Navy and Marine Corps units. Following a Milestone II acquisition
    decision in late 2000, the Air Force will begin a one-year design
    update period and produce two post-ACTD air vehicles. The Global Hawk
    program will provide a cost-effective and useful system to the user at
    the earliest possible date through spiral development of platform,
    sensors, and other capabilities.
        Global Hawk's first Outside Continental United States (OCONUS)
    deployment will occur March 2001 when it deploys to Australia under a
    50/50 cost-share agreement with the Australian government. This will be
    Global Hawk's first opportunity to demonstrate its interoperability
    with a coalition ground exploitation system. Other nations have also
    expressed interest in Global Hawk and its capabilities.
        When Global Hawk begins operations with Block 5 aircraft in fiscal
    year 2003, it will be used to augment the U-2 fleet, enhancing the Air
    Force's overall ISR capabilities. In the long-term, the Air Force
    expects to improve Global Hawk payload capabilities to the point where
    it could fulfill many missions now executed by U-2 and JSTARS.
        The U-2 and RC-135 Rivet Joint continue to be the primary DOD
    aircraft for ISR data collection to support the joint forces commander.
    The Air Force is currently upgrading the U-2's defensive system
    capabilities and synthetic aperture radar to provide near-real-time
    targeting capability for precision-guided munitions. The first
    reengined Rivet Joint is undergoing flight testing and will provide
    improved battlefield coverage as a result of higher altitude and longer
    loiter times.
        Discoverer II is seeding the transformation to global space-based
    surveillance. The Air Force's Discoverer II partnership with the
    National Reconnaissance Office (NRO) and DARPA will develop and
    demonstrate space-based radar capabilities against time-critical moving
    ground targets in fiscal year 2005. Discoverer II is a two-satellite
    R&D program that will demonstrate affordable satellite manufacturing by
    leveraging commercial processes, provide key enabling technologies for
    advanced radar payloads, and show the operational benefit of the deep-
    look, continuous, broad-area coverage space provides against an
    adversary's ground moving targets. Satellite design trade studies are
    ongoing by three competing contractor teams: Lockheed-Martin; TRW and
    Spectrum Astro; and Northrop-Grumman and Raytheon. Each team has
    successfully completed initial hardware tests for competing radar
    payload designs.
        As the developer and operator of the Global Positioning System
    (GPS), the Air Force provides the world continuous position, velocity,
    and timing data in all weather, to an unlimited number of users, free
    of charge. For the Joint warfighter, GPS navigation information is
    being integrated into nearly all facets of the modern battlefield. The
    Air Force is modernizing GPS systems and fielding GPS navigation
    warfare upgrades that will ensure continued U.S. and allied military
    access to GPS while preventing adversarial use and preserving civil use
    outside of an area of operations.
        Modernization also includes transitioning the ground control
    segment from a legacy system to a distributed architecture that will
    facilitate full utilization of the increased capabilities being
    incorporated into the next generation of space vehicles. In order to
    address the evolving and expanding threats to GPS, the fiscal year 2001
    budget provides funding for the addition of a new military code and a
    high power spot beam on future satellites. The fiscal year 2001 budget
    request expands the program from last year, providing additional power
    to military users in a region of conflict and providing military and
    civil signals on earlier satellites. This modernization program
    provides the warfighter with significant increases in protection of
    military GPS signals from intentional and unintentional interference,
    beginning with initial deployment of satellites and receivers equipped
    to process new military signals in the last half of this decade and
    growing to provide a worldwide robust system about 10 years later. Once
    fielding of the new equipment is complete, we will have a secure
    worldwide navigation and timing source for all our weapon systems,
    augmented by higher power signals in one or more theaters of operation
    simultaneously as required by senior unified commanders.
        MILSATCOM systems, notably the Defense Satellite Communications
    System (DSCS) and Milstar, continually support contingency and current
    operations. These systems place powerful communication tools in the
    hands of battlefield commanders and warfighters around the world,
    enabling information reachback to CONUS, continuity with the National
    Command Authority, and intra-theater communications. Global Broadcast
    Service will replace DSCS. Advanced Extremely High Frequency (EHF) will
    replace Milstar in fiscal year 2006.
    Rapid Global Mobility
        Modernization of the Air Force's mobility assets is integral to the
    daily execution of our National Security Strategy (NSS) and is integral
    to supporting the EAF concept. Acquisition of the C-17 Globemaster III
    through 2005 remains the flagship of airlift modernization. The C-17
    will replace the C-141 Starlifter force. The Air Force has fielded 57
    C-17s and key mobility studies could result in additional buys beyond
    the currently planned force of 135. The Mobility Requirements Study
    Fiscal Year 2005 (MRS-05), an update to the 1995 Mobility Requirements
    Study/Bottom-Up Review Update, will determine the ultimate mix of end-
    to-end mobility assets. MRS-05 results are scheduled to be released in
    spring 2000. Using MRS-05 data, Air Mobility Command's Oversize and
    Outsize Analysis of Alternatives will determine the most cost-effective
    strategic airlift fleet mix to achieve our National Military Strategy
    from various postures of engagement. The Tanker Requirements Study for
    fiscal year 2005, baselined from MRS-05, will determine the number of
    tankers needed to carry out the NSS.
        The C-130 Avionics Modernization Program (AMP) and procurement of
    the C-130J will consolidate 20 C-130 aircraft configurations into two
    supportable configurations. AMP will install a state-of-the-art
    avionics suite to increase reliability, maintainability and
    sustainability of the C-130 fleet well into future, and eliminate the
    navigator and simplify training and operational employment. The program
    will make the aircraft Global Air Traffic Management (GATM) compliant
    and meet identified navigation and safety mandates.
        The Air Force plans to procure the C-130J to replace its oldest
    1960's vintage C-130Es. The C-130J will provide increased range,
    performance, and cargo capacity over the current C-130E/Hs. The Air
    Force Reserve and Air National Guard C-130 fleet will undergo an
    extensive AMP that will be followed by a structural, engines, and
    environmental improvement program. The tactical airlift mission will
    continue its modernization transformation with the addition of C-130Js.
    Four C-130Js are being delivered to Reserve units this year while
    several more are on contract for future delivery.
        The Air Force has begun a Large Aircraft Infrared Countermeasures
    (LAIRCM) initiative to counter increasingly prolific Man-Portable Air
    Defense Systems (MANPADS). LAIRCM will use state-of-the-art technology
    to provide active defenses for airlift- and tanker-sized aircraft
    against widely deployed shoulder-launched surface-to-air missiles.
    LAIRCM will build on existing systems designed for helicopters and
    small fixed-wing aircraft. It will add new missile warning and tracking
    systems to locate and direct the laser at an incoming missile. The
    laser will jam the missile, driving it away from its target.
    Operational capability is expected on the first C-17s in fiscal year
    2003, with C-130s receiving LAIRCM beginning in fiscal year 2004.
    Additional airlift and tanker aircraft will be outfitted with this
    system later in the FYDP.
        Equipping a limited number of aircraft with LAIRCM gives the Air
    Force an initial capability to support a small-scale contingency or
    other missions that require this additional IR missile protection. A
    major advantage of LAIRCM over traditional IR countermeasures is the
    ability to counter an incoming IR missile without deploying self-
    protection flares as currently used. This greatly reduces the
    complicated logistics and political sensitivities associated with the
    use of flares.
        Whether employing on-scene Aerospace Expeditionary Wings or
    deploying contingency forces in response to a crisis, mobility assets
    make the difference in speed and stamina. Procurement of the 60,000-
    pound capacity (60K) Tunner aircraft loader and Next Generation Small
    Loader (NGSL) will replace aging equipment and significantly increase
    throughput and our ability to rapidly offload cargo from both military
    and commercial aircraft. We are moving forward with the application of
    space assets to enhance mobility operations via ``In-Transit
    Visibility,'' a satellite linked worldwide identification and tracking
    system.
        KC-135 Pacer CRAG (Compass, Radar, and Global Positioning System)
    upgrades are replacing 1950's technology compass and radar systems.
    Pacer CRAG eliminates the navigator on most missions, improves
    operational capability and reduces maintenance-related costs. The KC-
    135 is also being upgraded with TCAS (Traffic Alert and Collision
    Avoidance System) and TAWS (Terrain Avoidance Warning System), systems
    vital in today's crowded skies. Pacer CRAG serves as the foundation for
    the Global Air Traffic Management (GATM) modification, ensuring
    unrestricted access to global airspace and will meet FAA and ICAO
    requirements.
        C-5 Galaxy modernization continues to be a top mobility airlift
    priority to improve our global rapid response and delivery of outsize
    and oversize cargo. Improving C-5 reliability, maintainability, and
    availability while reducing operating costs are the cornerstone
    objectives to improving fleet capability. The Air Force has in place a
    multiphase modernization plan for the C-5. It includes an ongoing high-
    pressure turbine upgrade to the engines, an avionics modernization
    program to comply with new GATM requirements of the 21st Century, and a
    reliability enhancement and re-engining program.
        Our procurement of the full complement of required C-17s and CV-
    22s; aggressive C-5, C-130, and KC-135 modernization programs;
    procurement of new ground handling equipment; and global access,
    navigation, safety, and avionics upgrades to the entire mobility fleet
    will ensure Global Reach well into the 21st Century.
        Likewise, the Evolved Expendable Launch Vehicle (EELV) will provide
    the Nation rapid access to space. EELV will institutionalize payload
    processing with a fleet-wide standard payload interface specification
    and standard launch pads. Key benefits include 24-month payload to
    booster build integration timelines (reduction of 50 percent over
    today's systems) and common mating procedures. EELV standard launch
    pads and pad operations will reduce on-pad cycle time to 1-9 days
    versus 60-180 days for current launch systems.
        Boeing will develop a Delta IV family of launchers around a common
    core booster which will be powered by a new Boeing/Rocketdyne liquid
    hydrogen/liquid oxygen RS-68 engine. This 650,000-pound thrust engine
    is the first new liquid propulsion engine developed in the U.S. since
    Rocketdyne developed the space shuttle main engine in the early 1970s.
        Lockheed Martin's family of launchers is also developed around a
    common core, which will be powered by the Energomash RD-180 liquid
    oxygen/kerosene engine. This 860,000-pound thrust engine is derived
    from the RD-170 engine currently used in the Russian space programs.
    The RD-180 is the world's highest specific thrust liquid oxygen/
    kerosene engine. It is reliable, demonstrated, and currently ready for
    its first launch of a commercial payload in a Lockheed Atlas III. To
    ensure a foreign supplier cannot deny the U.S. access to space, it is
    DOD policy that former Soviet Union propulsion systems must be
    converted to U.S. production prior to use for national security
    missions. The use of the Energomash RD-180 engine leverages Russian
    investment in developing over 50 new engines in the past 40 years,
    transfers unique Russian technology to U.S. manufactures, and provides
    a path for cooperative ventures between Russia and the United States.
    Agile Combat Support
        Through Agile Combat Support (ACS), the logistics and combat
    support communities create, deploy, sustain, and protect personnel,
    assets, and capabilities across the spectrum of operations. A strong
    and robust ACS is key to the success of the EAF concept and supports
    the Air Force core competency of Rapid Global Mobility. Effective
    beddown support and sustainment allow deploying forces to downsize the
    amount of equipment to start up and sustain base operations. This
    reduced deployment footprint lowers the need for prepositioned assets
    and airlift requirements.
        To meet these needs, the Air Force is revamping its combat support
    systems in many areas. Time-definite delivery provides users with
    reliable, predictable delivery of mission-critical parts and reduces
    inventory investments. Reachback provides ready access to rear or U.S.
    based organizations for support, reducing the deployment footprint, and
    saving associated costs. Logistics Command and Control (C\2\) and other
    logistics decision support tools leverage information technology,
    improve base support planning, and enhance tailoring deployment
    packages for specific locations and scenarios. Global Combat Support
    System-Air Force (GCSS-AF) is a key enabler of ACS and provides a
    framework for integrating our critical combat support information
    systems and processes across functional areas. It will provide the
    warfighter and supporting elements with timely, accurate, and trusted
    ACS information to execute the full spectrum of military operations.
    Leading edge technologies, such as Survey Tool for Employment Planning,
    will continue to enhance ACS in the future.
    Science and Technology
        The Air Force is committed to a strong science and technology (S&T)
    program that will enable a fully integrated aerospace force to meet the
    challenges of the 21st Century. The Air Force S&T investment strategy
    has been focused through a series of six integrated technology
    thrusts--Space Superiority, Information Dominance, Agile Combat
    Support, Aircraft Sustainment, Training for Warfighting, and Precision
    Strike--that directly correlate to and will fully enable the Air
    Force's six core competencies. These six integrated technology thrusts
    are multidisciplinary and are distributed across the majority of the
    ten technology areas in which the Air Force invests. The portion of the
    Air Force S&T budget relating to space will be doubled by fiscal year
    2005 relative to fiscal year 1999, in recognition of the growing
    importance of space to all facets of Air Force operations. Topline
    funding for Air Force S&T has improved over last year's President's
    Budget request. The additional funding has, for the most part, gone
    into two areas: Basic Research (Budget Activity 1) and Propulsion.
    Indeed, one result of the changes has been to make Propulsion (i.e.,
    air- and space-related propulsion technologies) the single largest
    investment area in Air Force S&T (approximately 16 percent of the
    total.) Moreover, special emphasis is being placed on technologies that
    will make both current and future weapon systems ``lighter, leaner, and
    more lethal,'' thereby directly supporting the Expeditionary Aerospace
    Force concept. Also, detailed planning efforts have been completed that
    identify high payoff investments in directed energy technologies for
    the full spectrum of operations.
        In recognition of the importance of an agile, highly competent
    workforce to our future success, the Air Force Research Laboratory
    (AFRL) has instituted major personnel initiatives under the Laboratory
    Demonstration Program. Additionally, AFRL is now building new
    collaborative arrangements with universities and industries under the
    auspices of the S&T Workforce for the 21st Century (STW-21) Study. This
    government-operated, collaborator-assisted approach will consist of a
    team of career civil servants, military scientists, and engineers, and
    collaborators from the top academic and industrial research groups and
    Federally Funded Research and Development Centers (FFRDCs). The
    objective is to engage a small number of non-government collaborators
    with high national repute to augment the AFRL's on-site government
    technical workforce.
        Several new civilian personnel initiatives are also being explored
    under STW-21 that should enhance AFRL's ability to attract the best and
    brightest cadre of civilian scientists and engineers. A contingent
    appointment authority would provide the ability to immediately hire
    civilian scientists and engineers for up to 5 years (with a 1-year
    extension). A second initiative allows appointment of up to 50 eminent
    civilian scientists and engineers for up to 4 years (with an option to
    extend 2 years) at salaries up to Level 1 of the Executive Schedule.
    Another initiative we pursued is high-grade relief to allow AFRL to
    manage grade/salary levels without artificial constraints. Fiscal year
    2000 legislation has already provided AFRL with this exemption, and we
    thank Congress for this relief.
        Through a carefully balanced investment portfolio of basic
    research, applied research, and advanced technology development, the AF
    S&T program will both protect the future and transition focused
    technologies to current and planned weapon systems to improve their
    performance, supportability, and affordability. The end result is the
    assurance our warfighters will have the tools they need to remain
    technologically superior in the new millennium.
    Acquisition Reform
        The criticality of the revolution in business affairs demands our
    commitment to continuous acquisition reform. We have taken major steps
    toward commercial off-the-shelf solutions, migration from military
    specifications to commercial standards, and increased commitment to
    cooperative development programs. We are institutionalizing acquisition
    reform initiatives such as Cost As an Independent Variable (CAIV), and
    Reduction of Total Ownership Cost (R-TOC) to improve affordability. Our
    R-TOC program establishes a comprehensive, long-term, cradle to grave
    process for Air Force cost reductions.
        We will continue to look for new areas in which we can improve our
    ability to deliver systems and capabilities faster and smarter.
    Promising areas include the integration of the requirements and
    acquisition processes, cycle-time reduction initiatives, contractor
    incentive programs, evolutionary acquisition guidance, commercial
    services, streamlining of the modification management process, and
    further improvements in electronic business/electronic commerce with
    such initiatives as the Automated Business Services System and
    Electronic Posting System.
        The Air Force fiscal year 2001 Modernization Program is a balanced
    approach to securing the required capabilities for Joint Vision 2010
    and the Expeditionary Aerospace Force. We are upgrading existing
    equipment that is still viable and procuring revolutionary new weapon
    systems where they are needed.
                                 infrastructure
        Combat support provides the foundation that enables global
    engagement and is a linchpin that ties together Air Force core
    competencies. It includes those actions taken to create, deploy,
    employ, generate, sustain, maintain, protect, and redeploy aerospace
    personnel, assets, and capabilities through all peacetime and wartime
    military operations. The fundamental mission for infrastructure
    incorporates the unique contributions and capabilities of aerospace
    power: speed, flexibility, versatility, and global reach. It is a
    collection of physical elements, such as squadron operations buildings,
    and processes, such as the military personnel flight operations.
    Infrastructure supports operations across the spectrum of conflict in
    both garrison and expeditionary environments. Some infrastructure areas
    of concern are mission and base property related. Some areas of
    advancement are in flight ranges, environment, and space
    infrastructure.
    Mission Related Infrastructure
        Getting our forces there safely and ready to fight has become more
    crucial than ever in the rapid response environment we now live in. Our
    en route petroleum infrastructure equipment and reserves stand ready to
    support airlift operations worldwide. However, antiquated fuel systems
    are a major impediment to air mobility and their timely support to the
    warfighter. As the airlift fleet modernizes, these old fuel systems
    will be the number one reason why we cannot meet the theater CINC's
    delivery schedule of combat troops and equipment. Especially hard-hit
    is the Pacific theater which suffers from a 50-year-old system that
    constantly fights corrosion in the humidity of the tropics. We have
    Defense Logistics Agency (DLA) Military Construction (MILCON) projects
    valued at $275 million from fiscal year 2001 through fiscal year 2005
    to both upgrade and increase that support. Other en route
    infrastructure has experienced a severe funding shortfall over the past
    decade. An air mobility survey team identified over $1 billion of en
    route infrastructure deficiencies. Inadequate infrastructure has a
    drastic negative effect on cargo throughput supporting geographical
    CINCs. Worldwide air mobility en route system infrastructure has
    downsized and is deteriorating. In 1992 we supported 40 locations--
    today we support just 12. The Air Force needs continued strong
    congressional funding support for mission related infrastructure, most
    notably in the European and Pacific theaters. Host-nation funding
    helps; however, that support can be limited and/or unpredictable. In
    addition, because today's changing strategic environment will involve
    the Air Force in numerous contingencies in unpredictable locations,
    access agreements to strategic locations are becoming more critical.
    The Air Force is working very hard to ensure continued access to these
    ``gateways'' which allow air power to be applied anywhere in the world,
    anytime, while we have reduced the U.S. footprint abroad. Significantly
    increased infrastructure investment and access agreements will be key
    as the Air Force continues to maintain global power projection across
    the spectrum of conflict.
    Military Construction and Real Property Maintenance
        In the competition for funds, military construction (MILCON), and
    real property maintenance (RPM) often lose out to more pressing
    requirements. In addition, funding available for MILCON and RPM could
    be better spent if the Air Force base infrastructure were properly
    sized for the force structure it supports.
        In the past decade, reductions in Air Force manpower and force
    structure have outpaced those in infrastructure. As a result, the
    Service is spending scarce resources on unneeded facilities, spreading
    its airmen too thin, and struggling to maintain readiness and its
    modernization program. The need to fund higher priority programs has
    caused the Air Force to invest less in base operating support, real
    property maintenance, family housing, and MILCON than it otherwise
    would have. For fiscal year 2001 our MILCON request is approximately
    one-third of our validated need. To enhance readiness the Air Force
    must be allowed to reduce its base structure. Consequently, the Air
    Force fully supports Defense Secretary Cohen's proposal for two
    additional BRAC rounds.
        The fiscal year 2001 Air Force MILCON budget request is $596
    million, which funds the Air Force's highest priority MILCON projects.
    Congressional support for this budget request is appreciated,
    especially for overseas infrastructure. Host nation support alone is
    insufficient to preserve the infrastructure and quality of life
    initiatives in Europe, the Pacific, and elsewhere. The emergency
    funding the Congress provided in fiscal year 1999 for overseas MILCON
    projects was much needed. If the Congress decides to provide the Air
    Force additional MILCON funding, consideration should be given to
    overseas MILCON projects to address readiness and quality of life
    requirements for our airmen on the front lines.
        RPM is funded at a minimum sustainment level intended to accomplish
    only the day-to-day maintenance required to sustain real property
    facilities and infrastructure. It does not provide the resources
    necessary to reduce the backlog of repair and maintenance. As a result,
    our backlog of repair and minor construction is over $4 billion and
    will continue to grow.
    Ranges and Environment
        Maintaining continued access to Air Force land, ranges, and
    airspace is vital to sustaining mission readiness. The Air Force
    recognizes the need to balance its test, training, and readiness
    requirements with responsible environmental stewardship. Over two-
    thirds of Federal lands are accessible for various public uses. The
    Service actively participates in collaborative processes and regulatory
    partnering initiatives that enhance our military operations, address
    public interests in compatible uses (such as hunting, grazing, etc.),
    and safeguard the natural and cultural resources on our test and
    training ranges. This year we started construction of a new training
    range in Idaho which will significantly enhance local training for our
    Air Expeditionary Wing at Mountain Home AFB. The success of this range
    initiative was the result of extensive cooperation between the Air
    Force and State and Federal agencies, dialogue with Native Americans,
    active public involvement, and strong Congressional support. We were
    able to find common ground which allowed us to not only enhance our
    operations but also end 10 years of conflict and enter a new era of
    cooperation.
        Additionally, this year Congress renewed the withdrawal of public
    lands which comprise the Barry M. Goldwater Range in AZ and the Nellis
    Air Force Range in NV. These two ranges have been used to train
    America's airmen since World War II and represent over 60 percent of
    all Air Force lands. The Service worked closely with the Department of
    the Interior, State agencies, interested citizens in both states, and
    the Congressional delegations for over five years. The extension of the
    withdrawal of the Nellis Range for 20 years and the Goldwater Range for
    25 years will assure the Service the stability it needs to address its
    test and training needs for the future and to implement successful
    resource management and public interaction programs necessary for long
    term sustainment of these two vital ranges.
        We continue to look at our training airspace and ranges to provide
    the Service the operational flexibility, efficiency, and realism we
    need to continuously enhance our readiness and still minimize, to the
    extent possible, the impacts associated with our testing and training.
    Currently, we have a proposal to consolidate some of our bomber
    training infrastructure and rearrange some existing airspace closer to
    our bomber units in Texas and Louisiana. This proposal will allow our
    bomber crews to convert the time they currently spend flying to remote
    ranges into effective and efficient integrated training. We are
    committed to working with all stakeholders to improve training
    capability for our bomber crews while addressing citizen concerns to
    the maximum extent possible. The Service is committed to prudent
    integrated range and airspace management to sustain operations, sustain
    the environment, and sustain community support.
        Similar to its commitment to protect rangelands, the Service
    promotes pollution prevention programs to help reduce or eliminate
    existing and future environmental compliance burden. Where past
    practices have disturbed the environment, the Air Force is now more
    focused on pollution prevention, and also continues to implement clean-
    up programs and make progress towards clean-up completion.
    Space Launch Infrastructure
        Assured access to space is vital to U.S. national security and
    important to our economic well being. Mission success will be enhanced
    through the Air Force's Evolved Expendable Launch Vehicle (EELV) and
    spacelift range modernization programs.
        The introduction of EELV system will provide modernized launch and
    processing facilities which will improve on-pad processing time from
    months to days. The Air Force has partnered with industry to develop a
    national launch capability that satisfies government requirements,
    reduces the cost of space launch by 25 percent, and improves
    operability. This equates to a $5 to $10 billion savings through 2020.
    EELV will reduce on-pad processing time, due in part to the standard
    configuration of each booster. Launch operations times are reduced
    through the use of a new standard payload interface, standard launch
    pads, common components across each family of launch vehicles, and off-
    pad payload processing (to include encapsulating the payload off-pad.)
    The reduction in processing time will free up range resources, launch
    property and services currently occupied by tasks unique to each
    booster configuration, thereby realizing efficiencies to effectively
    increase spacelift range capacity.
        The Air Force's innovative contract for EELV launch services will
    develop the launch vehicles and associated launch infrastructure to
    support commercial launches beginning in fiscal year 2001 and national
    defense launches beginning in fiscal year 2002. This acquisition
    approach should enable U.S. commercial launch service providers to
    become more competitive, not only from a cost position, but also from
    vehicle availability and flexibility standpoints.
        The Eastern and Western Spacelift Ranges, headquartered at Patrick
    AFB, FL and Vandenberg AFB, CA, respectively, provide tracking,
    telemetry, communications, flight analysis, and other capabilities
    necessary to conduct DOD, civil, and commercial spacelift operations
    and DOD ballistic missile test launches. Much of the range
    infrastructure is outdated, inefficient, unreliable, and costly to
    operate and maintain. To better support the evolving spacelift mission,
    the AF has undertaken a phased modernization program, emphasizing
    standardization and automation of the ranges, to produce a Spacelift
    Range System (SLRS). Key objectives include reducing reconfiguration
    times from days to hours and reducing operations and maintenance costs
    by 20 percent.
        Over the past year, the Air Force has sponsored numerous meetings
    with industry, NASA, FAA, and other interested federal, state and local
    agencies to ensure that we understand the needs of the civilian space
    industry. We will continue to work in partnership with industry and
    civilian agencies as we modernize our ranges for the future.
                                   conclusion
        America is an aerospace nation. Its aerospace forces are the
    military instruments of choice for rapid, tailored, and effective
    response for a wide range of contingencies. Air Force strengths--
    quality people, Total Force participation, expeditionary capabilities,
    and advanced technology systems--allow us to offer military options
    that meet national objectives, save American lives, and conserve
    resources in crisis or conflict. We are a combat-proven, mission-
    focused, decisive fighting force for America.
        In this millennium, we are faced with new challenges and critical
    choices. Limited resources and the increased likelihood of encountering
    non-traditional threats will require us to reassess our program and
    make minor adjustments as required. However, steady and unchanged are
    our commitments to combat readiness, our people, and providing this
    nation those aerospace tools required to meet America's interests
    around the world. We are organized to win, preparing for the future,
    and committed to the security needs of the nation.

        Senator Stevens. General Ryan.
        General Ryan. Chairman Stevens, Senator Inouye, and members
    of the committee: I appreciate the opportunity to appear before
    you on behalf of the dedicated men and women of the United
    States Air Force.

                                   Readiness

        I want to again thank the administration, Congress, and
    particularly this committee for responding to our most critical
    readiness needs described over the last several years. With
    your support, the increase in funding we received in 1999 and
    2000 helped to address some of our most immediate concerns, but
    I am optimistic that if we continue to sustain funding for
    readiness we can turn around our readiness problems.
        I can report to you, Mr. Chairman, that while our readiness
    trend has not yet turned the corner, our airmen continue to
    perform their worldwide missions with great pride and
    professionalism. As you know, 1999 was a very busy year for the
    Air Force. Our airmen put forth a tremendous effort in the air
    war over Serbia. We opened 21 expeditionary locations, employed
    over 500 aircraft and, together with our sister services and
    our North Atlantic Treaty Organization (NATO) allies, air power
    played a key role in forcing Milosevic to cease his tyranny in
    Kosovo and to withdraw his forces.
        Our airmen performed superbly in a just and righteous cause
    and they did it in the face of great danger, and we are all
    very proud of them.
        During and following that operation, we continued a
    marathon effort, flying sustained air combat throughout the
    year in Iraq and responding on short notice to multiple
    humanitarian crises such as earthquakes in Turkey and Taiwan
    and hurricanes and floods in the United States and Latin
    America, and we are just wrapping up an operation in
    Mozambique.

                            Recruiting and retention

        Despite these successes, we have had many challenges. As
    the Secretary said, we are losing too many of our experienced
    people, both enlisted and officers. And last year, though we
    recruited more airmen than we had in the previous years, we
    missed our goal, which we had reset, by 1,700. We are behind
    again for this year's goals, but we are putting forth a great
    effort to turn that around.
        Regarding retention, I am particularly concerned about our
    midcareer non-commission officers (NCOs) and, though we have
    seen a turnaround in the last several months, I am hopeful that
    that will be sustained, that the increased pay, benefits, and
    retirement that were approved last year by this committee,
    along with the stability provided by our Aerospace
    Expeditionary Force (AEF) concept, will begin to help us retain
    more of these airmen we so value.
        Last year I testified that pilot retention was again a
    major concern and we ended the year about 1,200 short. We are
    still about 1,200 short. The good news is that the indicators
    are positive, though we have a very small sample size on this.
    The new bonus system approved last year in the legislation is
    helping influence many of our folks to stay for a career.

                              Aircraft maintenance

        With a progressively aging aircraft fleet, our people are
    working harder to maintain readiness. We have addressed most of
    our critical readiness requirements in this budget by funding
    the needed spares and by trying to revitalize some of our older
    aircraft, like our airlift force and our bomber force, and by
    beginning to replace systems that are approaching the end of
    their operational life, such as the F-15, with the much needed
    revolutionary capability of the F-22 Raptor.

                           Real property maintenance

        Unfortunately, current funding levels do not allow us to
    address the infrastructure shortfalls we have across the Air
    Force, such as construction and real property maintenance. So
    our infrastructure will continue to deteriorate and will
    ultimately impact long-term readiness if we do not adequately
    fund these in the years ahead.

                                  Health care

        Finally, I remain concerned about health care provided for
    the Air Force people, both active duty and retired. And
    although the amount of funds required to address that issue is
    uncertain, it is certain that our active duty and retirees and
    their families deserve our support to keep the health care
    promise.
        I look forward to working with the committee as we tackle
    these challenges and strive for a full recovery of our force
    readiness levels today and build our needed capabilities for
    tomorrow.
        Thank you for inviting me to speak on behalf of the men and
    women of the Air Force. We are so proud of them. They
    selflessly serve for all of us. Thank you, Mr. Chairman.

                                      F-22

        Senator Stevens. Thank you very much, General.
        Let me start with you, Secretary Peters. It is my
    understanding that the Department of Defense (DOD) Cost
    Analysis Improvement Group (CAIG) has reviewed the F-22 costs
    and restated its belief that those costs, the engineering and
    manufacturing development (EMD) costs, will exceed the cap that
    was established. Now, this is worrisome to us, particularly in
    view of this 40-day labor strike at Boeing. Could you tell us
    first what will be the impact on that strike now, have you
    analyzed that, on the program and its costs? And how will the
    Air Force handle this $200 million increase in estimate of F-22
    development that we have heard based on both the CAIG group and
    Lockheed's estimate?
        Mr. Peters. Let me start with the cost estimate, Mr.
    Chairman. As the General Accounting Office (GAO) has found in a
    recent report, we are actually on track to meet our EMD
    requirements. We said 1 year ago that we were going to save x
    number of millions of dollars. We have had an ongoing dispute
    with the Office of the Secretary of Defense (OSD)-CAIG about
    whether we would meet those goals or not. We already have met
    them. We have met them and we are on track actually to do
    slightly better than predicted, and the recent GAO study found
    that we would, in fact, finish within the cap based on where we
    are today.
        In fact, our belief is----
        Senator Stevens. Including the strike?
        Mr. Peters. Including the strike. We do not think the
    strike is going to have a major impact on costs. Let me talk
    about schedule in just a minute. We had our most recent Chief
    Executive Officer (CEO) conference, where all of the major
    vendors, Boeing, Lockheed and Pratt, as well as the Air Force,
    sat down and went through the analysis of the estimate to
    complete EMD, and we think we are going to be several tens of
    millions below the EMD cap if we stay on the course we are
    currently on.
        Now, the difficulty we are going to have is that the strike
    is, in fact, going to put in high risk our ability to get the
    so-called Block 3 software--that is the first level of software
    which has the full integrated sensors with it--into Aircraft
    No. 5 and fly it by the end of the year. If you recall, last
    year there was an exit criterion that we had to have that
    avionics block actually in one of the F-22's as an exit
    criterion to go into low rate initial production.
        At that time, that was probably a moderate risk item. But
    the effect of the Boeing slip from the Boeing strike, is
    essentially a day-to-day slip in the dates, which we are trying
    to recover from. I think it is now fair to say it is high risk
    as to whether we will have the software actually flying on an
    F-22.
        We will have that block of software out of the integration
    laboratory. We will have it in the flying testbed, but we will
    not actually--we may not have it in the actual airplane. Our
    experience to date has been that the software in the lab, in
    the integration lab, and in the flying testbed, in those
    settings we catch about 97 percent to 98 percent of the
    problems. So, we may be in a position to urge this committee
    not to include that exit criterion, but to allow us to meet the
    normal testing on the flying testbed.
        But at this point it looks like we will be very close to
    where we thought we would be last year, but it is high risk.
        Senator Stevens. General Ryan, what does this Block 3
    software really mean to the functions of this airplane?
        General Ryan. The Block 3 software will be the software
    that integrates the avionics system and some of the defensive
    systems and communications systems on the airplane into the
    displays that are part of the revolutionary capability of this
    airplane. Being able to use different antennas and receive
    different wave forms and then display that in terms of things
    that the pilot can use in combat is the important part of the
    Block 3 software.
        Senator Stevens. Mr. Secretary, are you indicating you
    think that there could be a catch-up now despite the 39, 40 day
    delay at Boeing? As I understand it now, this initial
    production contract is conditioned upon that Block 3 software.
        Mr. Peters. It is so conditioned in last year's
    appropriation act. It is conditioned on the Block 3 software
    actually being in the aircraft. We are going to make an effort
    to try to catch up and get to that point, but the experts think
    that that is a high risk area and we may not make it.
        Now, our view would be that low rate initial production
    (LRIP) is still appropriate so long as the software has been
    successfully demonstrated in the integration laboratory, which
    is a ground-based, full-up mockup of the F-22, and also has
    been demonstrated to work in the flying testbed, which is a 757
    aircraft that has been modified to have many, but not all, of
    the F-22's sensor systems on it. It is an asset we have been
    using for some time.
        As I said, we think those two demonstrations would show
    that we are very close to having workable software on the
    aircraft. We will have, between now and then, additional
    software upgrades on the aircraft and we anticipate that we
    will have quite a few additional hours of test on the basic
    aircraft in some of the earlier versions of the software. But
    at this point it is high risk that we will actually have Block
    3 in an airplane by the end of December of this year.
        Senator Stevens. I want to get back to it later.
        Senator Inouye.

                              F-22 testing program

        Senator Inouye. Mr. Chairman, if I may follow up on your
    questions, which talked about the cap. What is the status of
    your testing program on the F-22?
        Mr. Peters. The F-22 testing program is a pyramidal
    program. It starts with hundreds of thousands of hours of tests
    in wind tunnels and individual component tests. We now have
    three aircraft at Edwards. Two have flown in test activity out
    there. One has just been ferried from Marietta to Edwards. We
    have about 580 flight hours on the aircraft.
        We have had no major glitches. There has been some concern
    expressed by Mr. Coyle, the head of Director of Operational
    Test and Evaluation (DOT&E), about whether we will make up some
    months that we are behind. As you may recall, about 1\1/2\
    years ago we had trouble with the aft booms on the aircraft,
    the way they have been manufactured, and that has slowed the
    test program by several months.
        We are about 450 test points short of where we thought we
    would be at this point, and as we increase aircraft we actually
    could surge and our belief is we could make that up. Our belief
    right now is that if we were as much as a 1,000 or even 2,000
    test points short, if we were at this point a year from now we
    would have five or six flying assets and we could make those
    test points up in a matter of approximately 1 month at a cost
    of roughly $20 million.
        So while we are behind where we had thought we would be, we
    are not in a position where we are not going to be able to
    test. We are going to be able to get those test points done and
    we will get them done pretty close to where we had originally
    thought we would be. As I say, if we had to we could extend the
    tests and delay initial operational test and evaluation (IOT&E)
    by perhaps 1 month and probably make up all the ground we have
    lost to date.
        So our plan is to try to get back on schedule, probably to
    do some surge on the aircraft. We have not, for example, by and
    large been flying on weekends, which we could do. And once we
    get more assets out there, we will assess the situation. Our
    hope is that with additional tankers and longer flights we will
    increase the number of test points that we get done per flying
    hour and we will get back on track.
        Senator Inouye. Are you ready to make the decision in
    December, the production decision?
        Mr. Peters. I think we are ready to make the decision,
    based on where we estimate we will be at that time. Whether or
    not the Block 3 software is actually in the airplane, I think
    we will have enough risk reduced to know that it would be a
    prudent decision.
        Senator Inouye. Are you satisfied with the testing program
    so far?
        Mr. Peters. I am, and I actually spent an hour with Dr.
    Coyle last week one on one to go over this. I am convinced that
    we are still fine. His main concern is whether we will be able
    to pick up the test point production. I think we will. I think
    we have a robust and smart program to do that, and at this
    point I think the EMD cap is appropriate. It is an important
    management tool, and I think we are going to get where we need
    to be.
        General Ryan. Senator Inouye, just one point also. By the
    time we come to the decision in December, we will have tested
    this airplane airborne more than we have tested any other
    aircraft when we made a production decision for low rate
    production, including the F-15, the F-16, and the F-18. We have
    put substantial amount of testing into this airplane, not just
    airborne, which is high, but we have done things in the lab and
    in the flying testbed that give us great confidence that this
    is going to be a great airplane.
        Senator Inouye. You are satisfied with the flight testing.
    What about other testings?
        Mr. Peters. At this point, Senator Inouye, all of the
    testing has gone well. There have been no major problems. As
    was reported in the press, we did have a structural member, an
    element called a flaperon, break at 143 percent of design load.
    It is a composite item. It has been rapidly and correctly
    repaired. We can use titanium for the time being and it is not
    a major issue.
        So at this point all of the loads testing, all the flying
    testing, all the avionics testing to date, has shown that we
    have a very, very good design and one that is performing in the
    way that we had predicted when we did all the computer modeling
    and simulation years to decades ago.
        Senator Inouye. If I may, I would like to submit for the
    record technical questions on the F-22. I am doing this because
    we may have need of such information as we get into conference.

                                      C-17

        I have just one other question: C-17, multi-year
    procurement program, the contract; are the costs going to stay
    down?
        Mr. Peters. Yes. With the adjustment we made. There is,
    however, one requirement to keep the costs essentially where
    they are, and that is that the advanced procurement money that
    was appropriated last year for 15 aircraft remains available to
    us even though we are only going to buy 12 in the coming fiscal
    year. Three are slipped by approximately 90 days into the
    following fiscal year. We need to keep that, all the advance
    appropriation money, to keep the parts line flowing to make
    that happen.
        Given that, we will have no cost increase at all on the
    basic airplane. There is about an $880,000 financing change on
    the engines. But we had anticipated when we entered into the
    multiyear that we could slip aircraft. And I would suggest it
    does look positive that the United Kingdom may pick up the
    three we slipped.
        In addition to that, it is becoming apparent to us that we
    need a bit of time to catch up things like pilot training and
    infrastructure construction with the airplane delivery. I was
    out at McChord about 1 month ago and literally the concrete is
    not drying by the time the planes get there. So a 90-day slip
    to let us train more air crews and load masters and to get the
    infrastructure built would synchronize the delivery of aircraft
    with our ability to actually use them.
        So I think we are on a very prudent course and would
    suggest we stay where we are.
        Senator Inouye. Thank you. I will come back again.
        Senator Stevens. Senator Bond.
        Senator Bond. Thank you, Mr. Chairman.
        Following up on that, Mr. Secretary, we have been hearing
    from the Commander in Chief (CINC's) that they think they are
    going to need more C-17's, and this committee recommended last
    year an additional buy of 60 additional aircraft. Is it your
    intention to get back up at least to 15 aircraft in the next
    budget submission?
        Mr. Peters. Yes, it is. We intend to keep the same profile
    through 2002 and 2003 as we have in the 2001 budget, which gets
    us back to 15 and then the remainder in 2003.
        With respect to the additional aircraft beyond that, we are
    waiting for the Mobility Requirements Study 2005 to come out of
    the Joint Staff. It was originally on track for about now. It
    has now slipped to the summer time. Until we have a chance to
    look at that and then do the analysis of alternatives between
    C-17 and C-5, we are really not in a position to make an
    intelligent decision on what to do with the C-17 line.
        But we should begin making those decisions in late summer
    time to the end of this year.
        Senator Bond. Well, I would think the sooner you can make
    it, because if there is a need, as has been suggested, I would
    think that possibly with a multiyear contract you could bring
    the price down on most of these things. If you know where you
    want to go and you are willing to make a commitment, you can
    get a lot more, you can get a lot more power for your dollars.
    We will await with interest your recommendations on that.

                                     F-15E

        You and I have had the opportunity to discuss and I have
    mentioned before the F-15E production. It was the intention of
    the committee and the conference committee to provide for the
    procurement of five aircraft. Because of requirements and
    different things, we know that the cost is definitely above $55
    million. And while we do not know what the status is of the
    supplemental and there are efforts going under way, we do not
    know when we can have an answer on that.
        I wonder if it is possible for you to conclude with the
    manufacturer your requirements for what can be done with the
    money available now so that they can begin the planning and get
    into the business of producing at least the four that could be
    produced.
        Mr. Peters. We have been talking with Boeing. Our current
    plan is to try to get them on contract by the end of April. We
    are looking at a fixed contract for three aircraft, which is
    all the available money allows us to buy, with two options each
    to buy one additional airplane. We would need to reprogram
    procurement money or get about a $25 million add in the
    supplemental to buy the fourth aircraft, and we need $90
    million above what was appropriated to buy all five aircraft.
        My understanding is the $90 million figure is in the
    supplemental at the moment. So that is where we are.
        Senator Bond. Well, we will wait and see how that works
    out. The House has obviously its views and the Senate will work
    its views. But I hope that you are at least able to get the
    work started on the three, and certainly I will do my best to
    see that there are the funds for the additional, for the
    additional aircraft that were originally envisioned.
        One of the questions--and I guess I direct this question to
    General Ryan. From the Air National Guard standpoint, one of
    the things they are concerned about in the Air Guard is funding
    equipment upgrades. Every year we have had to add funds for
    modernization. Now, I understand that the number one issue for
    the F-15 community both in Air Combat Command and the Air
    National Guard (ANG) is the Bofors Launchers Infrared (BOLIR)
    countermeasures system that has been highly effective on the
    Navy's F-14 fleet.
        The ANG fleet of 126 F-15's is tasked for increasingly
    sophisticated threats throughout the world as a part of the
    Expeditionary Aerospace Force, and the lack of robust
    protection affects its combat capability. I believe that we
    should consider very seriously adding funding for this
    important upgrade, and I would appreciate your thoughts on the
    importance of this particular upgrade and what you think about
    the need for the upgrade.
        General Ryan. We have looked at the BOL capability as a
    countermeasure to help the survivability of the aircraft in the
    end game of a missile shot at it and we do believe it has
    merit. We have not put money against it to upgrade the aircraft
    to put that kind of capability on. We currently have chaff and
    flares that also perform that mission and have a fairly
    substantial stock of those to do it.
        I think that BOL has some significant capabilities. It is
    an affordability issue for us.
        Senator Bond. Thank you, Mr. Chairman.
        Senator Stevens. Yes, sir.
        Senator Dorgan.
        Senator Dorgan. Mr. Chairman, thank you.

                                   Retention

        Again, Secretary and General Ryan, thank you for being
    here. Let me ask about retention. Can you describe what kind of
    experience you have had on retention since last year, when we
    increased some of the compensation and also adjusted some of
    the retirement benefits?
        Mr. Peters. Let me start off, and the Chief probably would
    like to add some words as well.
        The increased compensation, of course, did not actually
    take hold until January 1. The retirement benefits happened
    immediately. The pay table reform does not take effect yet, I
    think, until July 1. But my sense from talking with airmen in
    the field is that they are extremely grateful that their needs
    have been met. They feel that the Air Force leadership, the
    administration, and this Congress have all gotten the word and
    are out to try to really make sure that they can afford to stay
    in the military, which many of them like very much.
        I think the impact has been seen earliest on the enlisted
    side. On the enlisted side, we are doing better on first term
    and second term retention and have been doing that for the last
    several months. In the month of February alone, we reached
    almost 60 percent first term and almost 75 percent second term
    retention, both of which are excellent. We are still in the low
    90's with what we call career retention, which is third term
    and after, and that's probably about right. We have a metric of
    95 percent, but we are at 91 to 92 percent--and it looks like
    it is stable, so that is not a major issue.
        On the enlisted side, specific career fields are still a
    problem. In computer communications, we still have a situation
    where staff sergeants leave the Air Force and come back and
    work for contractors at $80,000 a year rather than what we pay
    them as a staff sergeant. We still have some critical career
    fields, because of Operations Tempo (OPSTEMPO); the maintenance
    area in particular is one that comes to mind.
        On the officer side, while the pilot bonus looks like it is
    having a major impact and will ultimately get us out of our
    pilot shortage several years earlier--that is based on early
    returns--we still have specific career fields, again computer/
    communications is one that jumps out, where the market is so
    strong we are having a great deal of trouble keeping our junior
    officers. And there are several of those career fields.
        So while I think the overall picture is positive on our
    first and second term enlisted side, it is very much a mix on
    the other side.
        General Ryan. Just a couple of issues. Though we have some
    indications in these first few months of turnaround, most of
    the people who were going to leave had made their decision
    probably 1 year ago and had started to divest themselves of the
    things that would allow them to reverse their decision. So we
    are not quite sure yet what the dynamic is. I do not think we
    will know until probably this summer if we really are on a
    trend or whether this is just a seasonal change.
        Anecdotally, talking to our young people in the field, they
    are very appreciative of the fact that Congress has taken that
    step. We in the Air Force are a family Air Force. Almost 70
    percent of our folks are married. What they are looking for is
    stability, stability in their home life and stability in their
    family life and stability in their pay. In this booming
    economy, there are lots of alternatives for our very highly
    technical folks that serve in our Air Force.
        I think that the follow-through has to be that we stay the
    course on bringing back pay to an equitable level, particularly
    for those who are affected by the employment opportunities that
    these people have as an alternative. So I see it is too early
    to call the current positive signs a success. We must sustain
    the proposed employment cost index (ECI) plus .5 raises on out
    through the Future Years Defense Plan (FYDP).
        Senator Dorgan. I appreciate the answer. It is an important
    issue because all of the other plans we have for our armed
    forces do not mean very much if we cannot retain our key
    people.
        Let me ask briefly about the F-16, the ABL, and the B-52. I
    will not have time to get all of them because I know Senator
    Cochran has some questions.

                                      F-16

        The F-16, you propose ordering no new F-16's. Yet in my
    judgment we need some. I have written you a letter about the
    119th Fighter Wing. As you know, that is an Air National Guard
    wing that has twice won the William Tell Award. They are the
    best fighter pilots in the world. In fact they won it with the
    wrong airplane. They are flying some of the oldest F-16's
    around and so obsolete they are incompatible with active duty
    units and cannot be effectively employed, I am told, in certain
    combat situations.
        I have written you a letter about that. We really need to
    address that equipment problem for the Happy Hooligans. I hope
    it is not a source of embarrassment to other pilots anywhere
    else in the world, but these are druggists and farmers and
    mechanics and professors, and they won the title of the best
    pilots in the world twice in recent years. So we need to
    address that.
        General Ryan. Yes, sir. You know we are committed to
    upgrading the equipment there. It is an issue of affordability
    for us right now and sequencing when they come in the sequence.
    What we are doing is trying to buy 30 additional Block 50 F-
    16's for the active duty and that will allow us to modernize
    our A model F-16's throughout the force up to the C model
    capability.
        Senator Dorgan. But that is another 7 years or so.
        General Ryan. Yes, sir.
        Senator Dorgan. We need to talk more about that.
        My time is up. I would like to just make one comment. I
    hope--I have toured the ABL project. I am very impressed with
    what they are doing and impressed with the technology there,
    and I hope that the slippage that was envisioned in some of the
    funding issues, that we can try to restore some of that and get
    back on track. I think that is an impressive program.
        Senator Stevens. Senator Cochran.
        Senator Cochran. Mr. Chairman, I am pleased to join you in
    welcoming the Secretary of the Air Force and General Ryan to
    our committee hearing today reviewing the budget request for
    the next fiscal year.
        We are very proud in Mississippi to have a close connection
    with the Air Force. We are very pleased that at Keesler Air
    Force Base we have the headquarters of the Second Air Force,
    the Education and Training Command, and a training wing. We
    also have in our State at Columbus Air Force Base a pilot
    training facility that we are very proud of and which was
    designated by the Air Force in the last base closure round as
    its number one pilot training facility in the country.
        We also have Air National Guard units at Jackson, Meridian,
    and Gulfport. We have the famous hurricane hunters that are
    located down on the gulf coast as well, flying the C-130J's.
        So we are very interested in the budget request that you
    submitted. We notice that you have some requests for a training
    facility for construction at Keesler Air Force Base. I think it
    is a $15 million item. We are pleased to see that included.

                                      C-17

        We also hear in connection with the C-17's that are under
    construction and are being delivered to units around the
    country that the facility in Jackson, the Air National Guard
    unit there, is the first Air National Guard unit in the country
    that will receive C-17's. When Secretary Peters was down there
    just recently, he was brought up to date on the preparations
    that are being made to receive those aircraft and we know that
    there are going to have to be some MILCON projects approved,
    some training undertaken, so that we will be able to manage the
    hosting requirements for the C-17's.
        There has been a review underway to be sure this is a good
    decision that is being made. I wonder if Secretary Peters can
    tell us about the status of that review.
        Mr. Peters. Our current plan is certainly to stay the
    course with getting C-17's into Jackson. In fact, one of the
    reasons I went down there a couple of weeks ago was to make
    sure that I understood the planning, and also the contingency
    planning, in the likely event that C-17's are delivered early,
    which they may well be.
        We do in fact, if recollection serves, have the
    construction projects in the FYDP where we think they need to
    be. A simulator was purchased in the fiscal year 2000 budget to
    get into Jackson, so we will have that capability. We need to
    continue to review where we are in light of the actual delivery
    schedule of C-17's, which at the moment is 5 months early. The
    unit told me that they could, in fact, probably take aircraft
    early with their current facilities. Obviously, they would not
    be able to get a C-17 into their hangars because the doors are
    not high enough, but some of that could follow on.
        I think the major concern we have is the training pipeline
    is now pretty full. The real issue is going to be getting
    pilots through the pipeline. I think the simulator at Jackson
    will help a lot with that, and we are going to have to review
    the ramp-up schedule. As things stand now, we are actually
    behind on both pilot and air crew production versus the
    delivery of the airplanes because they are so early. So we are
    going to have to work that some more.
        Senator Cochran. Last year we were concerned that, because
    the delivery schedule was running behind by 180 days, I think
    was the testimony last year, that this could cause some
    difficulties with related military construction (MILCON)
    projects, one of which involves a corrosion control and
    maintenance hangar. Last year we asked if we should move that
    up because of the slippage of the schedule. The original
    project cost was estimated at $12.8 million. The 2001 budget
    contains $10.5 million for the corrosion control and
    maintenance hangar.
        Can the project be completed at this reduced amount and
    would it help to accelerate the construction?
        Mr. Peters. You are taxing the limits of my memory on that
    one. If I may get back to you for the record on that, I could
    provide an answer.
        Senator Cochran. That would be good to have for the record.
        Mr. Peters. I will get that for you.
        [The information follows:]

                 Military Construction in Connection With C-17

        The C-17 Corrosion Control and Maintenance Hangar is in the
    fiscal year 2001 President's Budget, which is the correct year
    for executing the project. The significant cost reduction made
    to this project during the budget process does present
    contracting and execution challenges. The Air National Guard
    will have to apply cost-cutting measures to execute this
    project.

        Senator Cochran. We want to be sure that everything is done
    to receive these aircraft and that the projects that are on
    schedule are kept on schedule.
        Let me ask you also about the housing situation. We had
    some people come up to the office the other day expressing
    concerns about the lack of adequate housing. This was
    particularly true of the Columbus Air Force Base. There does
    not seem to be any plan for improving the housing there for the
    next several years.
        They expressed concern also that the plans the Air Force
    has for building two-bedroom housing facilities are beginning
    to be unpopular and they are concerned because, with the pilot
    retention problem, we know that the airlines are attracting Air
    Force pilots and the difficulties with scheduling family life
    in general is putting a lot of pressure on pilot retention.
        What is the situation, General Ryan? Would building some
    more modern and better designed housing facilities be indicated
    to you to help with the pilot retention problem and general
    morale on our Air Force bases around the country?
        General Ryan. Absolutely, sir. We have over 110,000 family
    housing units, about half of which ought to be completely
    rehabbed or plowed under and started all over again. We are
    looking at innovative ways to try and finance the
    recapitalization of our housing. It is very, very important to
    our people that their families are in safe locations,
    particularly at the high OPSTEMPO that we run when the members
    are away from home a great deal. So yes, sir, it is very high
    on our priority list.
        Senator Cochran. Thank you.
        Mr. Chairman, I have some other questions, but I will wait
    for the second round, on missile defense.
        Senator Stevens. Yes, sir. Well, we will get back on
    another round, I hope.
        I am interested in continuing the discussion of the C-17.
    Last year Senator Inouye and I, joined by our colleagues,
    increased that buy by 60 and we are now up to 134, as I
    understand it. I do not know whether the administration has
    agreed to that yet, but I assume they have.
        I am concerned and I think my colleague from Hawaii is
    about the deployment plan for C-17's. Forces in our two States
    are semi-forward deployed, both offshore, and yet those forces
    are going to have to wait for C-17's to come from enormous
    distances in order to project the forces stationed in our
    States out into the area of possible crisis in the Pacific.
        Now, General Ryan, the lift requirements and distance in
    the Pacific theater are well-suited--the C-17 is well-suited
    for those distances, is it not?
        General Ryan. Yes, sir.
        Senator Stevens. Have you made the decision yet as to--I
    know Secretary Peters said there is a study being made. Maybe
    we cannot forejudge that, prejudge that. But it seems to me
    that in the long term we need more 17's and we need to
    recognize that the C-5 cannot fulfill that requirement out
    there. Has that been assessed yet in the Air Force?
        General Ryan. Sir, the mobility requirements study, which
    is a look at our two nearly simultaneous major theater war
    contingencies, will be completed this summer. Indications are
    that it is going to come forward and say we do not have enough
    lift in our current configuration.
        Senator Stevens. It does not take a rocket scientist to
    figure that out right now, General.
        General Ryan. I do not think so, sir, but I think we need
    to document it, and that is what that study is going to do.
    Then the question is, ``what is the solution?'' As you know,
    the C-5 does not achieve a very high in-commission rate. In
    fact, it is at 60 percent right now. And our plans call for it
    to be at 75 percent when we have one of these major
    contingencies. So we are 15 percent short of where we need to
    be with the C-5's just to begin with.
        So I think when we finish this study this summer we will
    have some insight into whether we want to continue on with C-5
    upgrades or whether we want to balance that in some way against
    an additional C-17 buy.
        Senator Stevens. I am worried, and I think I have expressed
    this to you and others before, I am worried that the current
    plan for stationing the C-17 is going to result in the Army
    deciding that they want to have their deployable troops
    stationed within a few miles of those three bases in the
    continental United States, so they can be rapidly moved by the
    airlift. There would be less time involved in deployment, and
    the net result will be, because of the decision on the
    stationing of the C-17, we will alter the total alignment of
    bases within the contiguous 48 States.
        Meanwhile, forces that are stationed in our two States will
    really just be sitting there waiting for others to be airlifted
    over them and we are going to lose the whole concept of the
    advanced deployment out into the Pacific of the forces
    stationed in Hawaii and Alaska.
        Does anyone else share that fear?
        General Ryan. I do not share the fear that they would be
    jumped over. I think that the forces in Alaska, the ground
    forces both in Alaska and Hawaii, are very important to the
    stability in the Pacific region. I do not see them being pulled
    back in any way. I know of no plan to do that.
        Senator Stevens. I do not see them being pulled back. I
    just do not see them being able to respond to crises in the
    timeframe they could if they have to wait for airlift from the
    State of Washington or Nebraska or maybe even South Carolina.
    It just does not make much sense.
        Beyond that, I also think that the 134 we have now, if that
    is going to be our one aircraft that we primarily rely upon to
    have deployability to prevent crises from developing, that that
    is not enough. Now, I am happy that I can say that. I do not
    have any production in my State. I have no provincial interest
    in it other than looking at it from the point of view of how do
    the forces in our States get deployed in order to prevent
    crises from developing in the Pacific.
        I urge that that study be completed as soon as possible.
    And I think it is going to affect that chart that shows the
    allotment of funds out into the future. We have to take into
    account the additional numbers of C-17's we will need or if you
    decide to do the C-5.
        I have got to tell you, I voted for the C-5, but it has
    been a disappointment to me as a pilot. I just do not think it
    has performed as we thought it would, and it does not have the
    endurance in the long run that we thought it would have.
        I do hope that we will get some information hopefully
    before--when is that decision going to be made, Secretary
    Peters?
        Mr. Peters. I think it is currently in the July timeframe
    for the Mobility Requirements Study (MRS) 2005. We have done
    preliminary work on an analysis of alternatives for what we
    call outsized and oversized cargo, which is the issue, the mix
    of C-5's and C-17. Our analysis, which has been done primarily
    by Mobility Command and United States Transportation Command
    (USTRANSCOM), is that C-17 overall is likely to be a very cost
    effective fleet.
        The issue arises whether you want to have only a single
    strategic airlifter and that is the very difficult judgmental
    decision that has not been made yet. The difficulty is we
    recently had to ground 200 of our 550 tankers, for example,
    because of a single parts failure, and if you put all your eggs
    in one basket like C-17 and you have a similar part failure,
    you could find yourself very, very short of lift very quickly.
        So the logisticians believe and are urging that we keep
    both C-17 and C-5, and we are going to have to look at what it
    really takes to keep C-5's. There are different alternatives,
    from at the high end, reengining and doing other systems, to at
    the low end, going through the avionics modernization program
    which we have done, and perhaps putting the C-5's in the
    Reserve and Guard where greater maintenance experience might
    bring them back to life or at least sustain them at the
    mission-capable rates they have.
        So there are a number of those basing alternatives and
    force structure alternatives that we really need to try to
    resolve. Hopefully they will be resolved in time for the fiscal
    year 2003 cycle or possibly for fiscal year 2002, depending on
    how quickly it is done.
        Senator Stevens. Well, we will go into that later in
    another hearing. I would like to know what that transfusion for
    the C-5's is going to cost compared to increasing the C-17's.
        Have you got another one on the boards? Are we looking for
    a replacement for the C-5, or is the C-17 the only replacement?
        Mr. Peters. The C-17 is the only one at this point.
        General Ryan. And the C-17 quite honestly can do the work
    that the C-5 does. It does not have the capacity that the C-5
    does, but it can carry the outsized and oversized cargo with
    the exception of just a few pieces of equipment.
        Senator Stevens. Thank you very much. Sorry to take so much
    time. Senator Inouye.
        Oh, by the way, I am going to put in some questions for the
    record that, like Senator Inouye, we do need some information
    as we prepare. And I will state for the committee it is my
    intention to try and get us an airplane to take the committee
    down to Marietta, Georgia, and have a full briefing there where
    we are talking to people who are involved in the F-22 and see
    to it that the questions that anyone has here are answered. We
    hope to be able to do that on either a Friday or a Monday
    morning, depending upon the schedule. We will try to work it
    out with you all.
        But I think it is highly important that more people go and
    see F-22 and talk to the people who are doing this testing and
    get an understanding of where we are and what the holdup is. We
    have done that and I am convinced in my mind that none of them
    are serious enough to warrant any hiatus as far as the
    procurement rate or the appropriations for procurement during
    this coming year.
        Senator Inouye.
        Senator Inouye. Thank you, Mr. Chairman.
        I would like to associate myself with your statement and
    question on the C-17 and just underscore that by suggesting
    what others have suggested to us, that we should be carefully
    considering the potential impact of the recent Taiwan
    elections. The instability that exists in the Korean peninsula
    is still there. There is instability in India-Pakistan. The
    Southeast Asia-Indonesia problems are still not resolved. I
    would think that the concerns expressed by the chairman should
    be taken very seriously.
        If I may ask a question, General, we added about $2 billion
    to your readiness budget. Is that enough?
        General Ryan. No, sir. We still have readiness shortfalls
    in terms of spares, in terms of engines, reliability and
    maintainability modifications that we can do, in terms of
    training shortfall for munitions. We are still short in the
    readiness account.
        Senator Inouye. What amount do you think would do it?
    Another 500?
        General Ryan. On the readiness side, I'd have to answer--I
    can give you the answer for the record. But we submitted along
    with our testimony, along with our posture statement, an
    unfunded priority list which lists in detail about $3.5 billion
    that we think we are short in the budget this year to be able
    to execute and turn around our readiness and our modernization.
        Senator Inouye. Would you share that with us for the
    record?
        General Ryan. Yes, sir, I will answer that on the readiness
    side for the record.
        [The information follows:]

                                Readiness Budget

        Our unfunded readiness priorities include 19 separate
    requirements totaling $1 billion. Without funding for these
    requirements, we can only sustain readiness gains made in last
    year's budget. No significant improvement can be made to Air
    Force readiness without this additional investment. Specific
    readiness requirements were provided to you on 8 February.

                                 Pilot shortage

        Senator Inouye. General, on the matter of pilot shortage,
    we have been advised that you have placed in headquarters
    nonpilots to make certain that the pilot requirement is
    maintained.
        General Ryan. Yes, sir.
        Senator Inouye. But at the same time, one would think that
    you need pilots in the headquarters, men who have had
    experience, the know-how. What do you think about that?
        General Ryan. What we have done, Senator, is at the wing
    level and below protect the pilot manning, and we have taken
    the shortfall in the headquarters above, which means that we
    are short about 40 percent of the pilots that we need in the
    headquarters to do the work that we have laid out.
        We have put some nonpilots into some of those positions,
    and then we are working our pilot force very hard at the
    headquarters level, very, very hard. We had some relief in the
    legislation that was helpful. It allowed us to hire back, at
    full rate, retirees who had pilot experience to help us in
    those headquarters jobs. But those retirees are only, quite
    honestly, good for 2 or 3 years because they lose their
    currency then, and you need to bring in fresh and more current
    people.
        So we have tried to protect our fighting force at the wing
    and below level and it has been at the expense and on the backs
    of the pilots who serve in headquarters.
        Senator Inouye. Well, that situation is not desirable, is
    it?
        General Ryan. No, sir, not at all.
        Senator Inouye. What do we have to do here to bring about
    some resolution of that problem?
        General Ryan. Sir, I would say that we need to wait just
    about 6 months to see whether this turnaround in pilot
    retention as a result of pilot bonuses, some of the things we
    have done in AEF, the retirement, the pay raises, et cetera,
    will convince enough of our pilots to stay for a career.
        These are wonderful people who are leaving us at the 9, 10-
    year point. They have served their country. They have done
    everything we have asked them to do. We have sent them to war
    for the most part. Most of them served in the desert. It is our
    fault that they do not want to stay for a career.
        But I think the incentives are there right now to turn
    around the pilot shortage and if we sustain what we have seen
    in the first 4 months of this year, we should cut the pilot
    deficit in half in about 2 or 3 years. So we see some positive
    trends there.
        So we will give a report back to you here in about 6 months
    on where we think the real trend is.
        [The information follows:]

                                 Pilot Shortage

        Last fall, the Secretary of the Air Force approved a white
    paper entitled ``The Pilot Shortage: USAF's Integrated Plan,''
    which was widely distributed to Congress. This white paper
    provided a comprehensive overview of the issues associated with
    the pilot shortage, and what the Air Force was doing to address
    them. This paper is due to be updated by 31 October 2000, which
    closely coincides with the timeframe that the Chief of Staff of
    the Air Force promised to report back to the Senate
    Appropriations Committee, Defense Subcommittee. The Air Force
    will provide an update of the pilot white paper in October,
    which will include a summary of the results of the fiscal year
    2000 Aviator Continuation Pay (ACP) Program.

        Mr. Peters. If I may add one thing, one of the other ways
    we have alleviated the shortage is to make very good use of our
    Guard and Reserve. Now the Guard and Reserve are beginning to
    see some of the same strains in their full-time forces as well
    as their part-time forces that we have had because of OPSTEMPO
    and the pay level. I think one of the things that is very
    important is to make sure we continue toward pay and benefit
    parity for the Guard and Reserve forces that serve with us so
    often.
        Senator Inouye. Thank you, Mr. Chairman.
        Senator Stevens. Yes, sir.
        Senator Dorgan.
        Senator Dorgan. Mr. Chairman, thank you.

                                    Airlift

        With respect to the questions about the C-17, I have
    supported the C-17. But I think the chairman asked questions
    about what about beyond, what about in circumstances where a
    contingency lift is needed. I know the Air Force at one point
    kicked around the notion of commercial lift capability, the
    acquisition of 747's, for example, as backstop. Where are you
    in that discussion?
        Mr. Peters. We have a robust and funded civil reserve air
    fleet program. In fact, we do not have another airlifter on the
    books, but 747 space has been available and actually has been
    used heavily. We also are using a lot of charter air for
    personnel movements.
        We also have been working with industry to look to see if
    there is a commercial market for C-17, which we think is a
    business case that may be there if we have a multiyear
    contract. We have been working with some very experienced
    people in industry and the financial world in New York to look
    to see whether some of the larger freight carriers might take a
    commercial version of C-17 in circumstances under which we
    would have early call on those if we needed them for a
    contingency operation.
        I will tell you the business case has not been there in the
    past. We think we are getting close to it. It requires more
    work. But we have asked the task force we have working with,
    which includes General Walt Cross, the former Commander of
    Transportation Command, and a number of other retirees and
    businessmen, to keep going and to try to see whether there is,
    in fact, a case that can be made to American transportation
    companies that they should buy C-17's.
        So that is the immediate course we are following.
        Senator Dorgan. Mr. Secretary, thank you.

                                 Airborne Laser

        On Airborne Laser, I note that the restoration of the $92
    million is high on the Air Force list of unfunded priorities.
    If Congress were to restore the $92 million in the ABL for
    fiscal year 2001, would the Air Force restore the $800 million
    that is now missing in the out years? What is your impression
    of where we go with ABL?
        Mr. Peters. We would try hard. The numbers that are in this
    year's budget represent a compromise between the Air Force,
    which like you, thinks the ABL is a fabulous project, and
    several folks outside the Air Force but inside the Government
    who still have doubts that they raise every time we come around
    to a budget question about the effectiveness of ABL. So what we
    have reached is a compromise. We have kept the program on track
    in fiscal year 2000 so money could be added.
        Our view is the program is very well managed, it is very
    capable, it is meeting its technical hurdles. And we did make a
    major milestone, which was to convince Dr. Gansler to agree
    that we could start the modification of the first ABL aircraft.
    So that is ongoing. There was a minor impact from the Boeing
    strike, but that is ongoing.
        So the program is preserved so that we could add the money
    and keep it going on track, and we would try hard to do that.
        Senator Dorgan. The ABL I assume when deployed under
    certain circumstances has National Missile Defense
    capabilities, is that correct?
        Mr. Peters. We think it could. We certainly think its
    sensor suite could be very important in terms of locating
    missiles and doing target analysis, and it may also help us
    actually roll in a B-1 or a B-2 to hit the missile launchers.
    But we believe it does have capability beyond theater missiles.
        Senator Dorgan. I would like to, Mr. Chairman, submit some
    questions on the B-52 and also National Missile Defense. I will
    just submit them for the record and ask if I can get responses
    to them.
        Senator Stevens. Yes, sir. Thank you.
        Senator Dorgan. Let me again thank General Ryan for your
    service. We have two bases in North Dakota we are very proud
    of. One is a core tanker base, the other is a Minuteman missile
    and B-52 base. I know Secretary Peters has been there a number
    of times, as has General Ryan.
        Anyway, thank you for your service.
        Mr. Peters. Thank you.
        Senator Stevens. Senator Cochran.
        Senator Cochran. Thank you, Mr. Chairman.

                             Airborne Laser Program

        Following up on Senator Dorgan's questions on the ABL, let
    me ask you. In last year's budget the request was for $308.6
    million, which you received, for the Airborne Laser Program.
    The plan accompanying the request included $1.71 billion for
    the fiscal year 2001 through 2005 period, with a first
    intercept attempt in fiscal year 2003 and an initial operating
    capability in fiscal year 2007.
        Last year you certified to the Congress that the ABL
    program was making satisfactory progress in reducing risk in
    five key areas and it was indicated was on schedule, on budget,
    meeting or exceeding its technical requirements.
        In last year's budget submission, the Air Force had all the
    money it needed for ABL in its out-years plan. In the fiscal
    year 2001 budget request, $895 million or 52 percent is cut
    from ABL over the fiscal years 2001-05 period. You testified
    before the House Appropriations Committee that this was due to
    affordability concerns.
        How is it that the ABL was affordable and fully funded in
    last year's plan, but this year it is now deemed to be
    unaffordable despite its remaining within the budget?
        Mr. Peters. It is unaffordable because of the higher
    priority other items have had. It is still on budget, it is
    still on schedule, it is still, in my view, meeting all
    technical requirements. There are still some who worry about
    the technical requirements point, but in the wake of Kosovo a
    number of items became more important. One of the things,
    Global Hawk for example, which we really felt we needed, and we
    have accelerated that. Another, Joint Surveillance Target
    Attack Radar System (JSTARS).
        So, there are other items which we think are more pressing.
    As General Ryan said, we think we have a $3.5 billion deficit
    in the fiscal year 2001 budget of hard items that we could
    execute today, and part of that is Airborne Laser.
        Senator Cochran. The ABL system program office and the
    prime contractor agree that cutting the program by $895 million
    will delay the intercept attempt by at least 3 years and delay
    the initial operating capability for the system by 5 to 7 years
    and add $1 to $1.2 billion to the cost of the program. You also
    testified to the House Appropriations Committee that cutting
    the program by more than half would have no effect on the
    initial operating capability of fiscal year 2007.
        How is it possible to cut over 50 percent of the program's
    budget over the next 5 years and have no impact on its
    deployment date?
        Mr. Peters. I do not remember testifying to that, except to
    say at the time we made the decision we knew we were cutting
    the intercept date from fiscal year 2003 to 2005, which I think
    is still actually the position of the program office. The
    contractor has said that the sky falls when we do that. My own
    view is if the system works as planned in fiscal year 2005,
    that people will want to accelerate its introduction, because
    it, in fact, would be a very important capability.
        Obviously, if it does not work in fiscal year 2005 we would
    take the money for something else. But the state of the debate
    is that the intercept is a critical issue in the program, and
    if, in fact, it works as we hope it does in fiscal year 2005 it
    will be an extremely effective theater missile defense (TMD)
    system that will be available or could potentially be available
    and deployed earlier than other theater missile defense systems
    that are on the books.
        So my belief is that if it meets its requirements
    throughout, it is highly likely that it would be funded at a
    higher and more rapid rate after it demonstrates capability.
        Senator Cochran. The unclassified summary of the current
    national intelligence estimate on ballistic missile threats to
    the United States makes three key points. First is the theater
    ballistic missile threat to deployed U.S. forces exists now;
    second, that the United States will face a long-range ballistic
    missile threat from states like North Korea and Iran in the
    near future; and third, that the ballistic missile threat will
    continue to become more severe for the foreseeable future.
        I am advised that the ABL aircraft now being modified in
    Wichita will be the first capability the United States has
    against North Korean missiles of all ranges if the fiscal year
    2000 schedule is maintained.
        Given the fact that in August 1998 North Korea tested an
    intercontinental ballistic missile (ICBM), why do you believe
    it prudent to delay the capability presented by the first ABL
    aircraft?
        Mr. Peters. Because, Senator, the theater missile defense
    is one of a series of threats and problems that we have. We are
    short on money and, as I have said before, there are others who
    doubt the technical capability of the aircraft. This was a
    compromise between many people and many other programs to try
    to come up with a budget which met all of the needs we have
    while being $3.5 billion short in the 2001 fiscal year.
        So it is not a problem with the airplane. It is that we
    have so many other systems which so desperately need money and
    attention.
        Senator Stevens. Could I interrupt?
        Senator Cochran. Yes, sir, Mr. Chairman.
        Senator Stevens. What is the total amount needed, Mr.
    Secretary?
        Mr. Peters. It is on our unfunded priority list.
        To restore the Airborne Laser, it is $92 million in fiscal
    year 2001. It is a total of about $850 million, I think,
    throughout the FYDP. But it is $92 million in fiscal year 2001,
    $74 million in fiscal year 2002, and it ramps up from there.

                      Space based infrared system (SBIRS)

        Senator Cochran. My last question, Mr. Chairman. I see you
    cut off the light. That means I ask one more question?
        Senator Stevens. You can have all the time in the world.
        Senator Cochran. On SBIRS Low, this is another program that
    I think is very important. It is the program definition risk
    reduction (PDRR) program for SBIRS Low. The 38-month program
    began in fiscal year 1999. It was recently described to Senate
    staff by Air Force officials as a classic PDRR program for a
    space system.
        After spending 5 years and $1.2 billion on the
    demonstration and validation phase of the SBIRS Low program,
    the Air Force still has not set the requirements for the
    program and does not know how many satellites will be part of
    the objective system.
        Given this record, why should we be confident the Air Force
    intends to pursue this system aggressively, at a time when we
    think it is of crucial importance to the ballistic missile
    defense programs?
        Mr. Peters. Let me address that. First of all, the
    requirements are not being set by the Air Force. They are set
    by the Ballistic Missile Defense Organization (BMDO) and by
    OSD. So the requirements are not within our control, number
    one.
        Number two, a decision was made by Secretary Cohen some
    months ago that we need to do spiral development on this
    program because it is a high-risk program in terms of schedule
    and that the priority ought to be to support the National
    Missile Defense (NMD) and TMD mission. When that decision was
    made, General Ryan and I urged that the program actually be
    taken back into BMDO because that is where the requirements are
    actually coming from and where the technical integration has to
    occur, not in the Air Force.
        So at the moment where we are on it is trying to get all
    affected players, which is BMDO, the Joint Staff, Navy, and
    Army, all of whom play in these systems, together. One of our
    greatest difficulties is that this system supports the so-
    called C-2 capability of NMD and there is no definition for
    exactly what C-2 is, nor is there today a contract out for a C-
    2 system.
        So it goes beyond simply deciding what SBIRS Low needs to
    be. We have to decide what the C-2 capability is, what the
    technical requirements are, and where those technical
    requirements are met between SBIRS High, SBIRS Low, and
    indigenous and NMD systems. So we are in the process of trying
    to sort this out. I have discussed this at some length with Dr.
    Gansler, and the need for a better forum to try to tighten up
    these requirements and make this prediction.
        But this is a hard problem because we are trying to make a
    SBIRS Low design today that is going to match a system that we
    have not actually designed in the 2010 period. So we need to
    move along on several different fronts, only one of which is
    under our control.
        Senator Cochran. It seems that after spending 5 years and
    $1.2 billion, now we are being told that we are starting over
    with a classic PDRR phase. It makes you wonder what the Air
    Force was doing with all the money and the time preceding the
    beginning of this phase in fiscal year 1999.
        Mr. Peters. Senator, this has been a high-risk program
    technically, and now from the schedule standpoint, for some
    time, as confirmed by the Defense Science Board. The
    difficulty, as you know, is that the NMD system itself has been
    a moving program. It is very difficult to define requirements
    and reduce risk when you do not know what this system
    integrates into, and that is the continuing problem.
        Senator Cochran. In the defense authorization bill in
    fiscal year 1996 there was this provision: ``Although Space and
    Missile Tracking System (SMTS)''--meaning SBIRS Low at the
    time--``Although SMTS can over time become a multifunctional
    sensor system capable of fulfilling missions such as technical
    intelligence and battle station characterization, the conferees
    direct the Air Force to ensure the SMTS flight demonstration
    system (FDS) and block one system be designed primarily to
    satisfy the missile defense mission. Missions not related to
    theater and-or national ballistic missile defense should not be
    allowed to add significant cost, weight, or delay to the SMTS,
    FDS, or block one system.''
        That is the quote, and to my knowledge this requirement has
    not changed since this 1996 defense authorization bill was
    passed.
        Mr. Peters. We would agree with you, Senator. But that is
    not the view of some of the other services who have to use
    this, nor at the moment is it clear it is the view of the Joint
    Staff. So again, this is a problem that we are an integral
    participant in trying to resolve, but it is one that requires
    all of the players to get focused on this.
        The ultimate problem, as you know, those early systems on
    SBIRS Low proved to be so cost prohibitive that we had to
    cancel them, and that, of course, has been a setback as well.
    But the difficulty now, as I say, is trying to predict exactly
    what the technical requirements are overall for NMD and which
    system in the system of systems provides those requirements. It
    is, in fact, the Air Force view that we ought to be focusing on
    NMD and TMD, but that is not the view of others in the
    Department. That is what we are trying to sort out at this
    point.
        Senator Cochran. You are saying you have basically been
    overruled in your effort to comply with this provision by the
    higher-ups in OSD?
        Mr. Peters. No, it is simply unresolved at this point. Let
    me put it this way. We have proposed, and others feel, that
    there needs to be earlier capability, for example TMD
    capability, as well as NMD capability. And now the difficulty,
    as you know, is the NMD system has been evolving. So we do not
    have the C-2 capability on contract. My understanding is it is
    not designed. And yet this satellite system has to feed
    information into the C-2 configuration.
        So we are trying to work the baseline for what is the C-2
    configuration as well as SBIRS Low all at the same time.
        Senator Stevens. Senator, if I could interrupt just a
    minute. Senator Inouye and I have to go meet our old friend the
    president of Egypt. So would you mind chairing now?
        The next hearing for this committee will be next Wednesday
    at 10 a.m., when the Army will appear before us. But if you and
    Senator Hutchison would continue the questioning, I would
    appreciate that.
        Senator Cochran. I would be glad to, Mr. Chairman.
        Senator Stevens. Thank you.
        Senator Cochran. So you are basically saying your hands are
    tied and that you are not going to be able to ensure that the
    requirements for other mission areas do not encroach on SBIRS
    Low ballistic missile defense missions?
        Mr. Peters. We are certainly urging the position that you
    just read, that they should not, and that is what I have urged
    as recently as last week to Dr. Gansler. But the difficulty is
    to get a consensus on exactly what that means, and also then,
    as I say, the further technical problem of trying to design
    this, what is essentially a subsystem of a missile defense
    system, to marry up with the other pieces, which are BMDO,
    Navy, and Army systems. So that is the difficulty, trying to
    get everybody on the same page, and it is a difficult problem.
        Senator Cochran [presiding]. Senator Hutchison.
        Senator Hutchison. Thank you, Senator Cochran. And I
    appreciate your questions on the Airborne Laser because I am in
    agreement with your position.

                      Base closure and realignment (BRAC)

        I understand a lot of the issues have already been taken up
    and I want to just ask one question. It is on the Brooks Air
    Force Base issue that you have certainly been forward thinking
    about. That is the city base pilot program that is getting
    ready to be put in place so that you can have more of a sharing
    of infrastructure costs on bases. I want to say first that I
    appreciate very much your willingness to think beyond the box
    in looking at ways to make our bases more efficient while we do
    not have a BRAC in place. I am one who does not support a BRAC
    right now because I do not think we have absorbed the last
    ones.
        But having said that, I wanted to ask you how you think the
    pilot program is going, what you think will be usable in other
    bases, and if you think that we can do enough efficiencies with
    this kind of sharing that perhaps it would alleviate the need
    for future BRAC's or even one less future BRAC?
        Mr. Peters. Let me say, Senator, that when I have traveled
    around the country talking about BRAC issues, State and local
    government officials everywhere I have gone have said that: If
    you would let us start the renewal and the reengineering before
    you kill the base, it sure would help us out.
        As you know, Kelly Air Force Base was subject to a BRAC and
    is now doing fairly well. But the point that many officials
    have made, if you would let us start the reuse before you shut
    the whole base, then we would have an economic base. Then even
    if you decided to shut it, it would not be such an impact on
    the local community.
        So what we are trying to do with the Brooks city base
    concept is build on a significant interest from the city of San
    Antonio and the State of Texas to try to demonstrate that
    underutilized areas of the base can be reutilized in advance of
    a BRAC, with the idea that space which is today kind of vacant
    land would actually be able to be used for facilities perhaps
    similar to what we have there, which is medical research, or
    alternatively for innovative concepts such as a tourist mecca
    in an area of the city which is part of urban renewal.

                             Brooks Air Force Base

        So we are using all of our tools, actually including things
    like historically underutilized business (HUB) zones, to try to
    work to build the city and the base closer together. As I have
    talked to Members in the other House about this concept, which
    has been an area which has had some concern, I think there is
    now agreement that the Brooks concept is a very, very good one
    in many areas where we have bases. Many of our bases are
    located next or near to urban environments where there is a
    strong demand for business. We think there is a synergy, for
    example, between the medical research we are doing at Brooks
    and things that the university system in Texas may want to do.
        Similarly, we have other tenants on bases. For example in
    Albuquerque we have Department of Energy (DOE) and others on
    the base. It seems to me that one could easily see universities
    and others being interested in being on the base and utilizing
    property that is underutilized today and sharing some of the
    costs of the base. So I think this is potentially exportable to
    many of our bases and perhaps many of the other services' bases
    which are located in areas of the country which are enjoying
    economic expansion, as San Antonio is, indeed, as much of the
    country is today.
        So our hope would be that this will be a success. Right now
    there are some, what I would call tweaks, that several Members
    of the House would like to see in the bill. My understanding is
    we have worked out a fairly good compromise on what that needs
    to be. The environmental impact statement is the next step, as
    it always is. It is funded and is under way.
        So I think as soon as we have a final version of
    legislation, whenever that would be, in the next several
    months, even as late as late summer, we would be prepared to
    move out. We would have done the environmental work. And we are
    actively talking with the city of San Antonio about their
    plans. I know they are actively talking to both industry and
    academia about various plans that work on the site.
        Senator Hutchison. Well, I know I was speaking to a border
    health conference a couple of weeks ago in San Antonio and I
    think some of the research on some of the diseases that are
    particularly prevalent on the border may be done at Brooks.
    That is just one more area where I think there could be a
    really good base of operation for research facilities.
        But let me ask the second part of my question again, and
    that is if you see this not as necessarily a transition to
    closing a base, but if there could be enough efficiencies by
    this kind of sharing that it might make the base more desirable
    and also be a substitute for a future BRAC?
        Mr. Peters. I think the economic studies that we and the
    city of San Antonio have done show that if we are successful
    with what is left there, the part of Brooks we actually use
    today, would, in fact, be a very economically efficient base
    and would be one that would be advantageous probably to keep,
    given the sharing of costs and things that would go on.
        We have looked around Air Force bases and believe this
    would provide a model in a number of other areas which would
    allow us to get rid of excess space without actually shutting
    down the base. Now, we do not really have a good handle yet on
    how many places that would be, but I think it might be a
    significant number. How exactly it would play into BRAC I am
    not sure. We have some bases, which I think are not readily
    adaptable to reuse in this way and some of those I believe
    would still be excess.
        Senator Hutchison. All right. Thank you, Mr. Chairman, for
    letting me ask those questions.
        Once again, I want to thank you, Secretary Peters and
    General Ryan. I know I came to the earlier briefing on the F-22
    and I thought it was an excellent briefing about the strategic
    need for the F-22. I appreciate having that and hope others
    will be able to get the benefit of that information.
        I just want to thank you for working with us in Texas.
    Certainly we have a number of bases and a number of issues, and
    we appreciate the cooperation and the good working relationship
    that we have had.
        Mr. Peters. Thank you, Senator.
        Senator Hutchison. Thank you.
        Senator Cochran. Thank you, Senator.

                         Additional committee questions

        Thank you, Mr. Secretary, Mr. Chief of Staff. We appreciate
    very much your cooperation with our committee and your
    responsiveness to our questions.
        Mr. Peters. Thank you.
        General Ryan. Thank you, sir.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
                 Questions Submitted to Hon. F. Whitten Peters
                   Questions Submitted by Senator Ted Stevens
                      f-22 block 3.0 software development
        Question. Are we adding excessive risk and cost to the F-22 program
    by trying to accelerate the first flight of the Block 3.0 software?
        Answer. The delivery date of Block 3.0 software was accelerated
    from December 2000 to October 2000 to ensure enough schedule margin to
    meet the Defense Acquisition Board (DAB) criteria of Block 3.0 first
    flight prior to Low Rate Initial Production (LRIP) contract award in
    December 2000. Once Block 3.0 has been loaded, flight testing of unique
    Block 3 functionality will commence and continue until Block 3.1 is
    delivered. Accelerating the Block 3.0 delivery date does increase risk,
    but we do not believe the risk is excessive. The acceleration should
    not increase cost, because the program has been restructured.
        Flight testing of the Block 3.0 software remains one of the most
    challenging of this year's F-22 program criteria. The recent 38-day
    strike by the software engineers and technicians at Boeing and Lockheed
    only made this challenge more significant. As schedule risk mitigation,
    the Air Force recently decided not to certify Block 3S for flight in an
    actual F-22, although Block 3S will still be extensively tested in the
    Avionics Integration Laboratory (AIL) and on the Flying Test Bed (FTB).
    This rescission mitigates some of the schedule risk incurred during the
    Boeing strike and enables us to start Block 3.0 integration in the AIL
    on 15 May as previously planned. Block 3.0 software encompasses all of
    the capabilities of Block 3S, as well as adding additional
    capabilities.
        Currently, the program does not foresee any technical or non-
    technical issues which would delay the start of Block 3.0 flight
    testing past December 2000. The F-22 avionics team will continue to
    take a disciplined development approach to deliver a mature Block 3.0
    software capability to the test aircraft without adding risk and/or
    cost to the F-22 program.
        Question. If there were problems with the Block 3.0 software, would
    we be likely to slow F-22 production or look to fix problems in the
    Block 3.1 software?
        Answer. A specific solution to any software problem would be
    dependent on the magnitude of the potential impacts. For most problems,
    the production programs would continue as planned, and the problem(s)
    would be fixed in a subsequent software release. With all development
    programs, the possibility does exist for a solution that would involve
    both software and hardware changes which could impact the production
    program. However, any problem/solution will be addressed when it is
    discovered. The F-22 team does not know of, or anticipate problems with
    the software performance or schedule which would impact the current
    production schedule.
                       f-22-strike impact and cost growth
        Question. What other Air Force programs were affected by the Boeing
    strike and what the consequences are?
        Answer. Boeing and the Society of Professional Engineering
    Employees in America (SPEEA) settled the strike after 38 days. The
    strike had an impact on numerous Air Force Programs which include the
    Joint Strike Fighter (JSF), Airborne Laser (ABL), B-1, B-2,
    Conventional Air-Launched Cruise Missile (CALCM), C-17, USAF AWACS,
    NATO AWACS, and the E-4B, NAOC Aircraft programs.
    JSF:
        The strike will have some impact to the JSF program. Specific
    program impacts are currently being assessed. There may be some impact
    to the first flight of the CTOL variant scheduled for late Spring 2000.
    However, source selection is still scheduled for March 2001 and at this
    time there has been no impact to the overall program schedule.
    ABL:
        The ABL program experienced only a minor impact in the area of
    software development, but will recover schedule by the end of the year.
    No major milestones were impacted, and the system Critical Design
    Review (CDR) is still scheduled for 25-27 April 2000.
    B-1:
        The strike delayed the B-1 Conventional Mission Upgrade Program;
    both Block E (Computer upgrade) and Block F (Defensive System Upgrade
    Program) slipped approximately two months.
    B-2:
        Northrop Grumman and Boeing are evaluating the strike's impact on
    the B-2 program. The B-2 Program Office is anticipating the following
    impacts: potential reduction in the number of Boeing software fixes
    that can be incorporated in the next developmental software version;
    late delivery of the Long Term Software Support (LTSS) Avionics
    Simulator by up to 12 weeks; late development of an improved JSOW
    Launch Acceptability Region (LAR) capability; and late delivery of the
    JASSM Mission Independent Data (MID) file. The late delivery of the
    JASSM MID file is not anticipated to impact the JASSM integration
    schedule. A Northrop Grumman-Boeing team will convene at the end of
    April 2000 to definitize these schedule impacts, as well as assess any
    associated cost increases.
    Conventional Air-Launched Cruise Missile (CALCM):
        The CALCM program has been affected by the strike. There is no
    affect on the replenishment of the AGM-86C Block 1 missiles. However,
    the AGM-86C Block 1A ALCM to CALCM conversion is estimated to be one
    month behind the original contract schedule and the AGM-86D Penetrator
    program is estimated to be two months behind.
    C-17:
        The C-17 program experienced two minor impacts as a result of the
    Boeing engineer's strike. One was a delay in a current Material
    Improvement Program investigation on avionics cooling fans. The other
    was a delay in lightning testing and subsequent test reports on
    component parts. At this time, the Air Force believes that these delays
    will not financially impact the C-17 program.
    USAF AWACS:
        Even though the Boeing engineering strike has caused some interim
    delays, there will be no impact to any fielding of capability. AWACS
    production and install support efforts were unaffected by the strike.
    The major RSIP follow-on production effort was not yet on contract.
        An example of interim delays is the loss of specific software
    personnel on the Data Link Infrastructure (DLI) team. Boeing plans to
    move people with the necessary skills from elsewhere in the company or
    hire additional people. No long-term impact is projected.
    NATO AWACS:
        The one substantial full-up EMD AWACS program is NATO Mid-Term
    (NMT). The Boeing engineering strike played a role in the 8-month slip
    in this program. Additional manpower is being added to overcome delays
    in the program. NMT had been encountering schedule problems prior to
    the strike due to software progress and vendor deliveries. Current year
    budgetary impact is minimal since this EMD effort is a Firm Fixed Price
    Contract.
    E-4B, NAOC Aircraft:
        The E-4B program was minimally affected by the Boeing engineering
    strike. The affect was to delay E-4B work related to commercial
    aircraft issues, such as deviations to standard aircraft repairs. These
    instances arose during Programmed Depot Maintenance (PDM) activity on
    the one E-4B, # -677, but did not result in a delay of the PDM
    completion date.
                         c-17 requirements and pricing
        Question. Starting in 2003, the Air Force rate for C-17's changes
    to 9, then 5, and finally 8 aircraft in 2005. How can the C-17
    production line remain efficient under such a plan?
        Answer. The outyear C-17 buy profile is currently not structured
    for production efficiency. These additional 14 aircraft (1 in fiscal
    year 2003, 5 in fiscal year 2004 and 8 in fiscal year 2005) were added
    into the fiscal year 2000 President's Budget subject to fiscal
    constraints, and assume a procurement rate of 15 aircraft per year. The
    Air Force plans to adjust production rate and funding after the total
    C-17 follow-on requirement is determined, and the possibility of
    foreign or commercial sales is better understood. The Air Force expects
    a firm follow-on requirement after the results of the Mobility
    Requirements Study 2005 and the Outsize and Oversize Analysis of
    Alternatives are released this Fall. In addition, the Air Force will
    consider potential commercial and foreign military sales with Air Force
    buys to smooth the production rate and gain production line
    efficiencies.
        Question. What rationale supports the Air Force's pricing of the
    outyear C-17's at a 15 aircraft per year price?
        Answer. Currently, the Air Force is reexamining the C-17
    requirements. Mobility study results (Mobility Requirements Study 2005
    (MRS-05) and Oversize and Outsize Analysis of Alternatives) are due to
    be published in Fall 2000. Based on our expected force structure and
    basing in 2005, we believe MRS-05 will show that the requirement for
    strategic lift and the C-17 is growing. Additionally, the Air Force is
    considering potential direct commercial and foreign military sales with
    Air Force buys to smooth the production rate and gain production line
    efficiencies. To accommodate these emerging requirements, the Air Force
    is examining the contractual, programmatic and budgeting issues
    associated with purchasing additional C-17s in the outyears. Once the
    total C-17 follow-on requirement is determined, the Air Force plans to
    adjust production rate and funding.
                joint strike fighter (jsf) acquisition strategy
        Question. Would you agree that taking an industrial base approach
    to JSF acquisition will add cost to the program?
        Answer. A cost increase is possible should there be a change in the
    acquisition strategy. The Office of the Secretary of Defense (OSD) is
    reviewing all options. Short term cost increases due to split
    production would be weighed against potential long term procurement
    savings.
        As a part of acquisition reform,the Under Secretary of Defense
    Acquisition, Technology, and Logistics has commissioned a review of the
    Joint Strike Fighter (JSF) acquisition strategy to include looking at
    potential alternatives. The review is not limited to specific options;
    rather, any potential option with merit will be considered. The review
    is not related to the source selection process and will not make
    specific recommendations. It will only present options for
    consideration; the current acquisition strategy has not changed.
    Currently, the winning contractor will be free to subcontract any work
    under his control as necessary to provide the best value.
        Dr. Gansler directed that three industry consultants offer a set of
    top level, potential acquisition strategy options. A senior government
    team is reviewing the options and will provide recommendations to him.
    One of the options will be maintaining the current winner-take-all
    strategy. Very importantly, the options should have virtually no impact
    on international industry participation. There are no new factors
    driving the decision to examine potential alternatives. This is a
    proper and responsible action to take at this time in light of the fact
    the program is approaching the down-select to the engineering and
    manufacturing development (EMD) phase in Spring 2001.
        The senior government team is reviewing the implications of these
    alternatives on the supporting industries to understand the long-term
    industrial base implications. Maintaining at least two industrial
    sources for sophisticated weapons systems and subsystems has become a
    priority in recent years after the defense-industry consolidation of
    the 1990s. Ensuring future competition and maintaining the military
    aircraft industrial base is in the best interests of the United States.
    Dr. Gansler has stated: ``We believe special efforts are required to
    ensure both firms remain healthy and competitive after'' the contract
    is awarded, ``and yet we have to declare a sure winner.''
        The senior government team's outbrief is due within a month. DOD's
    decision on the JSF acquisition strategy should be made to support the
    release of the draft solicitation to the JSF prime contractors in June.
                      uae f-16/air force f-16 derivatives
        Question. Has the Air Force looked at whether a ``Block 70'' F-16
    would provide an affordable option for replacing aging F-16's?
        Answer. Response below refers to F-16 Block 60; there is no Block
    70.
        The USAF remains committed to procuring F-16 Block 50 aircraft to
    build force structure required for the Expeditionary Aerospace Force
    and for the attrition reserve. The Air Force will also modernize
    existing F-16s.
        F-16 Block 60 aircraft are very capable but very expensive. These
    aircraft are an improved version of the current F-16 and are equipped
    with the following upgraded systems: Agile Beam Radar, Enhanced
    Improved Performance Engine, Conformal Fuel Tanks, Advanced
    Architecture Avionics, and 57 Color Displays.
        Recent briefings to the SECAF and CSAF presented ROM costs of
    between $44 million and $48 million per copy, in fiscal year 1999
    dollars. These prices include Non-Recurring Engineering (NRE) and
    Support (ILS) costs. The ``Basic'' Block 60 could be procured for
    approximately $44.4 million; the more advanced F-16X (U.S. version of
    UAE F-16) would cost approximately $48.5 million. At these price
    levels, we believe it would be more advantageous to buy the Joint
    Strike Fighter (JSF), which provides many more capabilities than the
    Block 60.
        Current USAF F-16 inventory are selectively scheduled to undergo
    the Falcon STAR (Structural Augmentation Roadmap) modification. This
    program increases service life to 8,000 hours for all F-16 C/D models
    and is considerably less expensive overall than ``wholesale''
    replacement of airframes. A subsequent upgrade program might use some
    Block 60 components to upgrade earlier F-16s.
        In summary, ongoing structural and capabilities modifications will
    enhance the current F-16 fleet until the JSF enters the inventory.
                   air force exercises and readiness training
        Question. Can you explain the Air Force decision to absorb
    contingency costs for 2001 from within your fiscal year 2001 O&M
    program budget? I understand that this will allow you to execute all of
    the flying hour resources requested in this budget.
        Answer. In the past, the active Air Force requested additional
    funding for incremental flying hours to support contingency operations.
    The decision to absorb flying hour contingency costs within the fiscal
    year 2001 O&M budget was based on previous years' experience. That
    experience indicated that, at current operation levels, flying hours
    required to support contingency operation taskings could be
    accomplished within the O&M budgeted flying hours and related funding.
    This policy change promotes full execution of the requested President's
    Budget resources.
                            sbirs high cost increase
        Question. So you believe that gapping the SBIRS High production
    line for a year and completing limited additional testing is worth the
    program cost increase of $130 million?
        Answer. The fiscal year 2000 Appropriations Conference restricted
    obligation of program funds until ``program concurrency risk has been
    reduced relative to the acquisition strategy proposed by the Joint
    Estimating Team (JET).'' In response to this, the Air Force delayed the
    Geosynchronous (GEO) 3-5 advanced procurement by one year to fiscal
    year 2002 and the full-funding to fiscal year 2003. The government
    estimates this delay will cost an additional $98 million over the JET,
    but allows for some additional risk reduction before GEO 3-5 advanced
    procurement. The selected approach minimized production gap costs by
    maintaining the production schedules at the payload and satellite
    integration levels, but could not avoid gapping the subcontractor and
    vendor production lines at the lower piece-part and component levels.
    During a 13 January 2000 meeting in Sunnyvale, the contractor briefed
    you that this revised strategy would cost an additional $127 million
    above the JET. The final price will be known when negotiations are
    completed this May.
        The Air Force did not recommend the revised strategy, but accepted
    it as a reasonable balance between reduced concurrency risk and
    increased cost. We participated in the strategy reviews with the Under
    Secretary of Defense (Acquisition, Technology, and Logistics) and
    agreed that the additional testing had merit. Although we concurred in
    the revised strategy for SBIRS High, we acknowledge that many
    successful space programs have levels of concurrency as great as the
    original JET program. Therefore, we do not believe that the reduced
    concurrency decisions on SBIRS High should have a general application
    to future space programs.
                                     ______

                Questions Submitted by Senator Pete V. Domenici
                       joint strike fighter--open systems
        Question. What is JSF doing to achieve a truly open system that
    delivers on the promise of lower cost, better supportability, and being
    able to cope with rapidly changing technology?
        Answer. Beginning in 1994, the Joint Strike Fighter (JSF) program
    has evolved a definition of open systems architecture, and open
    architecture attributes, with our weapon system contractors (WSCs) and
    the involvement of the DOD Open System Joint Task Force (OS-JTF).
    Additionally, we have consulted with numerous industry and academic
    representatives in this area. We have documented this evolving
    definition of open systems in the JSF Avionics Architecture Definition
    Document (JAAD), to which each of our WSCs have responded with a JAAD
    Annex during the Concept Demonstration Phase (CDP) that depicts their
    detailed response to the JAAD precepts. Both WSCs are currently in the
    process of transferring their open architecture design into their
    specification hierarchy.
        Fundamentally, the JAAD is consistent with the Command, Control,
    Communications, Computers, Intelligence, Surveillance, and
    Reconnaissance (C\4\ISR) Architecture Framework (CAF) and defines a
    complete representation of an open architecture as a series of views:
    operational, system and technical. Critically, the system view is
    comprised of five models: hardware, software, functional, information
    and dynamic. In total, the views and models define a complete,
    internally consistent architecture that employs a layered software
    architecture, modular hardware and software, commercially-based
    hardware and software products that meet the tactical timeline
    requirements of the JSF missions. Layered, modular software and
    modular, commercial-off-the-shelf based hardware are key to functional
    growth, tailorability for foreign military sales (FMS) customers and
    international partners, achieving and sustaining an interoperable
    platform, and mitigation of diminishing manufacturing source (DMS)
    issues throughout the system lifecycle.
        Question. What lessons has JSF learned from earlier programs like
    F-22 and Commanche that use integrated avionics, and what are you doing
    to benefit from their experience?
        Answer. The JSF program has remained involved with many previous
    programs in order to understand and incorporate lessons learned. For
    JSF, the key lessons learned regarding open systems are as follows:
      --Open systems design without requisite business practices will not
            work.
      --Technical standards alone define neither open-ness nor architecture
            and do not guarantee interoperability.
      --Architecture is about systems engineering process and organizing
            system structure; functional block diagrams do not define
            architecture.
      --Selection of implementing technologies (e.g., a specific processor
            type) can occur, and must occur, just prior to production.
      --Subcontractors must be completely involved up front and early in
            Concept Demonstration Phase (CDP); evidence to the contrary is
            a key indicator that the architecture is undefined.
      --Open systems architecture is critical to technology obsolescence
            mitigation, interoperability, and minimization of regression
            test requirements.
      --Benchmarking of implementing technologies (e.g., installed
            processor and network performance) prior to Engineering and
            Manufacturing Development (EMD) is critical.
      --Attributes of an open architecture must be viewed as a legitimate
            system requirement in a performance-based specification.
                      air force plans for directed energy
        Question. What aspects of the High Energy Laser Master Plan would
    the Air Force underscore in particular?
        Answer. The Air Force sees the Department of Defense Laser Maser
    Plan as a positive step. For many years, the Air Force has been the
    only Service funding a significant laser program in its budget. The Air
    Force has supported the Airborne Laser program since 1994, plus a
    strong Science and Technology program in this area since the 1960s,
    with its unique major facility at Kirtland Air Force Base, New Mexico.
    In addition, the Air Force and the Ballistic Missile Defense
    Organization have jointly funded the Space Based Laser technology
    program. This master plan will bring the other Services and Defense
    Agencies into this key area.
        The Air Force will work with the Deputy Under Secretary of Defense
    for Science and Technology in implementing this plan. Implementation
    details are currently being worked and have not yet been provided to
    the Air Force, however, we have been assured the new four-level
    organization outlined in the plan will deal only with new funding and
    will not make unilateral changes to the Air Force's strong laser
    program. The Air Force laser program is designed to meet specific Air
    Force needs and is a key part of the Air Force's Directed Energy Master
    Plan currently in final coordination within the Air Force.
        The Air Force agrees funding increases in this area will be
    beneficial and should be aligned with the Department's priorities.
    Thus, we strongly support the development of Departmental laser
    roadmaps. We also strongly agree the industrial base in this area needs
    to be strengthened, but caution that the Science and Technology Program
    is not the best way to build and maintain a strong industrial base in
    any area. Our master plan also calls for increased interactions with
    the national laboratories and we agree with the recommendation that
    these interactions be based on a cost-sharing arrangement.
        Question. What sort of synergies could be leveraged or advantages
    could be derived for directed energy programs through the recommended
    type of defense-wide administration and decision-making structure?
        Answer. Since the details of the implementation of this decision-
    making structure have not yet been provided to the Air Force, it is
    difficult to predict exactly what advantages will be realized from the
    planned four-level management structure within the Office of the Deputy
    Under Secretary of Defense for Science and Technology. Since almost all
    of the laser funding requested in the current President's Budget is in
    support of Air Force programs, synergies will depend on new sources of
    funding for laser technology being made available. With new funding, we
    should see both existing technologies and new technologies being made
    available for a much wider range of defense applications. This
    management structure should be able to ensure any new programs will
    make maximum use of existing resources such as the world-class
    laboratory at Kirtland Air Force Base, New Mexico.
                     kirtland's space vehicles directorate
        Question. There have been some rumors circulating regarding the
    Space Vehicles Directorate at Kirtland AFB being dissolved and these
    functions being relocated to Wright Patterson Air Force Base. I have no
    official confirmation of any such plans on the part of the Air Force.
        Can you verify for me that these are nothing but rumors? Does the
    Air Force have any short- or long-term plans to radically change the
    operations of the Space Vehicles Directorate at Kirtland Air Force
    Base?
        Answer. The Air Force has no information regarding any potential
    relocation of Space Vehicles Directorate functions from Kirtland Air
    Force Base, New Mexico.
                                     ______

               Questions Submitted by Senator Christopher S. Bond
                                      c-17
        Question. Regarding our airlift capability, as we pull back from
    overseas bases and expect our military forces to respond quickly to any
    situation anywhere in the world we have seen the C-17 used over and
    over again with great success. It appears to me we should be talking
    about increasing C-17 production and not decreasing it. Will you please
    confirm for us that next year's budget submission will restore funding
    to 15 aircraft per year?
        Answer. The current multi-year procurement contract remains in
    place with the procurement of the remaining 35 aircraft complete by
    fiscal year 2003 (12 aircraft in fiscal year 2001, 15 aircraft in
    fiscal year 2002 and 8 aircraft in fiscal year 2003). Additionally, the
    original delivery schedule remains intact ensuring no loss of planned
    airlift capability.
        For future buys, the Air Force is reexamining the C-17
    requirements. Mobility study results (Mobility Requirements Study 2005
    (MRS-05) and Oversize and Outsize Analysis of Alternatives) are due for
    publication in Fall 2000. Based on our expected force structure and
    basing in 2005, we believe MRS-05 will show the requirement for
    strategic lift and the C-17 is growing. To accommodate these emerging
    requirements, the Air Force is examining the contractual, programmatic
    and budgeting issues associated with purchasing additional C-17s in the
    outyears.
                       f-15 foreign military sales (fms)
        Question. The Administration is supportive of our Foreign Military
    Sales programs, including such programs as the F-16 and F-15 which help
    support our critical and dwindling tactical aircraft manufacturing
    base, am I correct? That is why I am looking for continued support for
    F-15 FMS to Saudi Arabia and South Korea to ensure we clearly
    communicate to both these countries the need to make a substantive
    decision as soon as possible.
        Let me update you then on my most recent efforts. I have asked
    General Zinni, Commander-in-Chief, Central Command, to assist me in
    determining the status of potential F-15 Foreign Military Sales to
    Saudi Arabia. His staff told us that Monday morning (27 MAR) the CINC
    had a conversation with our U.S. Chief of Training in Saudi Arabia. The
    feedback is that although Saudi Arabia has made no commitment, they are
    considering the offer of a package of six to 12 F-15s made by Boeing.
        I have also asked Admiral Blair and General Gamble to assist me in
    F-15 Foreign Military Sales to South Korea and I hope to meet with
    General Gamble next week when he is here in Washington. On April 6,
    Senator Ashcroft will meet with Lee Hong-Koo, Ambassador of South Korea
    to discuss F-15 FMS, and he plans to meet with the Saudi Ambassador as
    soon as the Ambassador is back in country. While our efforts to secure
    FMS continue, I look forward to working with you and your staff and ask
    that you be available to assist General Zinni, Admiral Blair, and
    General Gamble as they work with us in securing FMS for the F-15.
        Answer. The Air Force is working closely with the Chief, United
    States Military Training Mission (USMTM) and the Boeing company to
    develop a proposal to transfer up to 24 F-15 aircraft through an
    Foreign Military Sales (FMS) letter of acceptance (LOA), with initial
    deliveries beginning in October 2003. The LOA is part of a
    comprehensive Boeing proposal to assist the Saudis in developing an
    aerospace support industry. A key facet of this assistance will be
    provision of tooling and training, through the FMS LOA, to perform
    final assembly of kits in kingdom. This initial training will support
    other offset programs with Boeing's current joint venture partners.
        The proposal is being evaluated by senior levels of both our
    governments, primarily from the standpoint of affordability. As this
    assessment continues, we are working closely with USMTM and the Royal
    Saudi Air Force (RSAF) to encourage the Saudi government to submit a
    formal letter of request for this program soon enough to allow us to
    notify the sale to Congress and have the Saudi government accept the
    LOA before 31 December 2000. These milestones protect the current price
    and delivery schedule, based on the U.S. Air Force buy of F-15 aircraft
    this year.
        Answer. (South Korea Interest in F-15E): On 8 April 2000, the
    Republic of Korea Ministry of National Defense (ROK MND) issued a
    Request for Proposal (RFP) to foreign competitors for the Future
    Fighter (F-X) program. The Republic of Korea Government (ROKG) selected
    competitors are the Boeing F-15E, French Rafael, Spain's Eurofighter
    2000, and the Russian SU-35. At this time, the ROK MND is pursuing the
    procurement of forty (40) F-X aircraft via Direct Commercial Sale (DCS)
    channels. The RFP requests the contractors submit proposals for both
    direct purchase and in-country licensed production by 30 June 2000. The
    ROKG expects the final weapon system selection to occur in July 2001
    and to be on contract by December 2001. The ROKG requires delivery of
    the jets in increments of ten (10) from CY 2004-2007. Boeing has
    requested the U.S. Air Force (USAF) support the upcoming Test and
    Evaluation (T&E) phase of the F-X program and to expedite release of
    classified portions of the proposal. The ROKG requested the F-15E T&E
    segment occur during the 17 September-13 October 2000 timeframe. USAF
    support will be needed in October 2000 to satisfy the requirement for
    approximately twenty flight sorties; site is TBD. Other parts of the
    T&E include detailed briefings and simulator time at Boeing/St. Louis
    and tours of USAF depot maintenance facilities and flight-line
    operations.
        The Air Force International Affairs Office will continue to work
    closely with Gen. Gamble's office (Headquarters Pacific Air Forces),
    Boeing, and the U.S. security assistance representatives in Korea to
    support the potential future sale of F-15Es to the Republic of Korea.
                      f-15e fiscal year 2000 appropriation
        Question. Fiscal year 2000 Appropriations for F-15E production
    originally called for procurement of 5 aircraft. It is my understanding
    a tentative agreement between Air Force and Boeing would allow for
    procurement of 4 aircraft by using both fiscal year 2000 Appropriations
    and Advance Procurement F-15E funds for fiscal year 2001. While I
    understand there is some concern about reprogramming fiscal year 2001
    Advance Procurement funds, are you prepared to do all you can to get a
    contract signed between Boeing and Air Force so that we can obligate
    fiscal year 2000 Appropriations and get our skilled Boeing workforce
    back to work while we continue to pursue Foreign Military Sales?
        Answer. The Air Force awarded a contract on 3 May 2000 to the
    Boeing Company for three F-15Es with options for a fourth and a fifth
    aircraft. This action allows the Service to avoid the immediate effects
    of contractor-identified cost growth associated with the existing
    production line break at the Boeing St Louis facility.
                                     ______

                Questions Submitted by Senator Richard C. Shelby
                      global command support system (gcss)
        Question. Mr. Secretary, could you please reiterate to the
    Committee, the overall importance of GCSS to the Air Force's future
    ability to maintain its warfighting logistics chain and to efficiently
    operate its bases.
        Answer. I would like to recount the words published in the USAF's
    2000 Posture Statement: ``Global Combat Support System--Air Force
    (GCSS-AF) is a key enabler of Agile Combat Support (ACS) and provides a
    framework for integrating our critical combat support information
    systems and process across functional areas. It will provide the
    warfighter and supporting elements with timely, accurate, and trusted
    ACS information to execute the full spectrum of military operations.''
        GCSS-AF is the means by which ACS Automated Information Systems
    (AISs) will be modernized and integrated to improve business processes.
    This will allow Joint Commanders, their staffs, and ACS functional
    personnel at all ranks and echelons to successfully carry out their
    assigned missions with the greatest effectiveness and efficiency with
    the least amount of exposure of our forces to enemy action.
        The Air Force has made several specific financial and
    organizational changes that demonstrate the importance the AF puts on
    GCSS-AF:
        First, the Air Force provided additional funding ($21 million) in
    the GCSS-AF fiscal year 2001 budget request, more than doubling the
    fiscal year 2000 funding level. For fiscal year 2002-fiscal year 2007,
    additional funding of $25 million/year plus inflation has been approved
    by the Secretary of the Air Force.
        Second, a separate Directorate for GCSS-AF was created on 1
    November 1999 under the leadership of Brig. Gen. Anthony Bell reporting
    directly to the AF Chief Information Officer, Dr. Delaney. Also, the
    Director for Information Dominance Programs under Dr. Delaney has
    established a Global Combat Support Division to provide acquisition
    staff support to the GCSS-AF effort.
        Third, within the Department of Defense, we have partnered with the
    Defense Information System Agency to ensure our Air Force initiative is
    consistent with the technical architecture being developed for the DOD.
                               officer shortages
        Question. Would you agree that an additional way to combat the
    officer shortage is to provide officer candidates with the best and
    most efficient training facilities available?
        Answer. An efficient, safe, and professional training environment
    is indeed a major factor in motivation and retention for new USAF
    officer trainees and cadets. These accessions and newly commissioned
    lieutenants draw their first impression of the world's finest Air Force
    from their training facilities. Therefore, these training facilities,
    the first stop on their service path, should be at their finest--first
    class and top-notch. We believe a quality training installation is an
    investment in the future that will pay intangible dividends in improved
    retention of Air Force officers. By building and maintaining high
    quality training facilities, supporting technology readiness
    initiatives and infrastructure (including furniture), the Air Force:
    (1) invests early in talented people by strengthening their service
    commitment and pride and (2) achieves excellence in training mission
    capability and accomplishment. We appreciate the $42.1 million in
    appropriation dollars we have already received to begin building an
    Officer Training School (OTS) campus. We need your continued support to
    meet our expanded officer production requirement of 3,700 officer
    accessions per year through OTS and Air Force Reserve Officer Training
    Corps (AFROTC). Your support will further emphasize that providing
    officer candidates with the best and most efficient training facilities
    available is a very good way to combat our officer shortages.
                                officer training
        Question. Mr. Secretary, I have been told that the number of
    officer candidates scheduled to train at Maxwell Air Force Base will
    continue to rise. In light of that fact, would you agree that the Air
    Force should continue to place a priority on the completion of the
    Officer Training School's campus?
        Answer. In fiscal year 2000, we will commission approximately 1,200
    officers through Officer Training School (OTS). We hope to increase
    this number to a minimum of 1,700 officers per year beginning in fiscal
    year 2001. Many of the OTS construction projects are either complete or
    under construction including: new academic facilities, a fitness
    center, dining facility, and dormitories. These projects have been
    added at a cost of $46 million. We believe a quality training
    installation is an investment in the future that will pay tangible
    dividends in improved retention of Air Force officers. By building and
    maintaining high quality training facilities, supporting technology
    readiness initiatives and infrastructure (including furniture), the Air
    Force: (1) invests early in talented people by strengthening their
    service commitment and pride and (2) achieves excellence in training
    mission capability and accomplishment. We need your continued support
    to meet our expanded officer production requirement of 3,700 officer
    accessions per year through OTS and Air Force Reserve Officer Training
    Corps (AFROTC). Your support will further emphasize that providing
    officer candidates with the best and most efficient training facilities
    available is critical to combat our officer shortages.
                                     ______

                Questions Submitted by Senator Daniel K. Inouye
                              recruiting concerns
        Question. Mr. Secretary, I understand the Air Force failed to meet
    its recruiting goals last year and in the first quarter of this fiscal
    year as well. Can you tell us how you are addressing this problem, and
    whether you are seeing any improvement?
        Answer. The Air Force entered fiscal year 2000 with only 32 percent
    of our accession goal in the bank, compared to the target of 43
    percent. Therefore, we started the year behind the power curve in an
    already demanding environment. As of 30 April 2000, we are 3,366
    accessions behind for the fiscal year; however, we are committed to
    achieving our fiscal year 2000 accession goal of 34,000. Through our
    newly formed Recruiting and Retention Task Force, we are evaluating and
    have started implementing 120 initiatives to help meet the fiscal year
    2000 goal. We have aggressively worked to increase the number of Air
    Force recruiters in the field; we began the year at 1,085 total
    production recruiters, are currently at 1,199, will have 1,450 in the
    field by September 2000, and 2,000 by the end of calendar year 2001. In
    the meantime, we deployed 169 former recruiters and 101 recruiters
    serving on the recruiting staff to the field for 120 days of temporary
    duty during April, May, June, and July.
        We are also increasing our advertising efforts. The recruiting
    advertising budget in fiscal year 1999 was $76 million, which included
    $54 million to launch our paid TV campaign--$17 million for the fiscal
    year 1999 campaign and $37 million to pre-buy fiscal year 2000
    advertising spots. The fiscal year 2000 recruiting advertising budget
    is $65 million. This includes a steady state funding line of
    approximately $37 million for television advertising (including the Air
    Force Identity Program) and approximately $28 million for other
    advertising programs. The recruiting advertising budget remains
    constant, without reduction, near the $60 million level through fiscal
    year 2001.
        Additionally, we increased the number of career fields eligible for
    an enlistment bonus, as well as raised the maximum potential bonus to
    $12,000. For the period of 13 April through 31 May 2000, we added a
    $5,000 ``kicker'' to anyone leaving for Basic Military Training during
    this time frame (these are two of our most difficult months).
        Another way we are aggressively addressing this issue is through
    college loan repayments. For the first time in our history, we are
    offering eligible new recruits up to $10,000 toward repaying their
    college loans. We will continue our full court press toward doing
    everything we can to make our recruiting goal this year.
        Question. Mr. Peters, is the Air Force anticipating a decline in
    quality as it struggles to meet its recruiting goals, and, if so, what
    will be the expected impact?
        Answer. The Air Force is committed to maintaining quality accession
    standards. Our standard is 99 percent high school graduates and we have
    not fallen below this standard since fiscal year 1984. In the past 10
    years, high school graduates attrit from Basic Military Training at 8.2
    percent versus non-high school graduated attrition of 16.1 percent.
    Also, 54.37 percent of high school graduates complete initial
    enlistment compared to 37.18 percent of non-high school graduates. So,
    it makes good economic sense to keep our standards up.
        The Air Force recruiting challenges stem from declining retention
    rates; we must continue to maintain high entrance standards in order to
    sustain a high quality force. Therefore, we are not anticipating a
    decline in the quality of our recruits. The Air Force goal of
    recruiting 99 percent high school graduates remains unchanged.
                                     jstars
        Question. Mister Secretary, I know we are in agreement that we
    believe the JSTARS is a wonderful system. Can you tell us what your
    plans are for future production of this program?
        Answer. The JROC-validated Joint STARS requirement of 19 aircraft
    to support the two nearly simultanious Major Theater War (MTW) scenario
    has not changed. However, due to fiscal constraints the Air Force
    supports the fiscal year 2001 President's Budget for fifteen aircraft.
    The Air Force is also presently evaluating other Ground Moving Target
    Indicator platforms to augment the JSTARS capability and meet our goal
    of dominant awareness of the battlefield.
        Question. Mr. Secretary, what is your priority for the purchase of
    more JSTARS aircraft?
        Answer. Theater CINCs agree that Joint Surveillance Target Attack
    Radar System (JSTARS) plays a crucial role in both peacetime and
    wartime military operations and most recently the platform proved its
    worth during Operation Allied Force. JSTARS is also considered a low
    density/high demand asset as its small fleet size is heavily tasked.
    The Air Force continues to support additional funding and additional
    aircraft, and supports the fiscal year 2001 President's Budget request
    for a 15th aircraft. In addition, the Air Force is reviewing other
    platforms to augment the JSTARS Moving Target Indicator (MTI)
    capability. Specifically, the Air Force is interested in migrating
    Ground MTI capability to the Global Hawk High Altitude UAV.
                                   b-2 bomber
        Question. Mr. Secretary, if it were affordable would you advocate
    restarting B-2 production?
        Answer. Renewed B-2 production would be less cost-effective than
    improving the capabilities of the existing bombers. The Air Force
    provided the White Paper on Long-Range Bombers to Congress in March
    1999. This White Paper, or Bomber Roadmap, outlines the Air Force plan
    for improving the combat capability of the existing bomber force
    structure. The plan includes upgrades to the avionics and
    communications subsystems and integration of precision gravity and
    standoff munitions. The Bomber Roadmap modernization plan is supported
    by the recommendations of the Congressionally directed Report of the
    Panel to Review Long-Range Air Power, LRAP. The LRAP report made the
    following recommendations: (1) Use the additional funding for B-2s to
    improve its deployability, survivability, and maintainability; (2)
    Fully exploit the potential of the current B-1, B-2, and B-52 bomber
    force through more operational attention and additional investment in
    support and upgrades; (3) Develop a plan to upgrade and sustain the
    bomber force structure for the longer term to include eventual
    replacement aircraft. Affordability constraints have precluded full
    implementation of the Bomber Roadmap in the President's Budget for
    fiscal years 2001 through 2005. The upgrades outlined in the Bomber
    Roadmap and the LRAP report will be reconsidered during the process for
    building the President's Budget for fiscal years 2002 through 2007.
                                      f-22
        Question. Mr. Secretary, there have been some hiccoughs in the
    testing phase on this program including stress tests on the wings. Can
    you give us a status update on the testing program?
        Answer. The F-22 continues to pursue a disciplined testing approach
    to validate the capabilities of the weapon system. Technical results to
    date have been exceptional and matched or exceeded model predictions in
    many areas. Key elements of the test program and their status are:
        Flight testing.--Testing at Edwards AFB continues to progress with
    more than 600 total flight test hours on 3 test aircraft. Capabilities
    demonstrated thus far include supercruise, high angle of attack flight,
    and flight testing with both weapons bays open.
        Avionics Testing.--In calendar year 2000 the avionics test program
    moves from the laboratory to flight-testing. Block 1 software, which
    has been flying on the F-22 Flying Test Bed (FTB) since November 1998,
    is installed in aircraft 4004 and is being prepared for first flight in
    June 2000. Block 2 software began flying in the FTB in October 1999.
    Block 3S software began testing in the FTB in April 2000. Block 3.0
    software is currently being tested in the Avionics Integration
    Laboratory, Boeing, Seattle WA. Block 3.0 software encompasses all of
    the capabilities of Block 3S as well as adding additional capabilities.
    Block 3.0 testing in the FTB begins August 2000, and on an F-22 in
    November 2000.
        Static Testing.--Post-test evaluation from static testing of F-22
    test article 3999 revealed a failure in Rib #4 of the left hand
    Flaperon following the 150 percent load testing of the adjacent
    aileron. Further investigation revealed a delamination of an internal
    composite structure member. Analysis determined that the failed part
    lacked sufficient strength for the predicted load. The composite part
    was replaced with a titanium part with sufficient strength. This fix
    has since been incorporated into all of the test aircraft and will be
    part of the production design. Testing resumed on 11 April 2000 and
    should complete by early November 2000.
        Fatigue Testing.--Full-scale fatigue test planning is continuing in
    preparation for a late August 2000 initiation in fulfillment of the
    Defense Acquisition Board (DAB) criteria. This planning effort is
    subject to the same rigorous methodology employed in defining and
    executing the static test program. The test article (A/C 4000) was
    moved to the test facility on 1 April 2000 and is currently being
    equipped with test fixtures. The Durability and Damage Tolerance
    Analysis (DaDTA) of the Block II design configuration is on-going with
    an estimated completion date of mid-July 2000.
        Question. Secretary Peters, what is the impact of the recently
    ended strike at Boeing on the F-22, specifically on avionics
    development?
        Answer. The 38 day strike by the Boeing engineering and technical
    staff was predicted to impact four of the ten program criteria for the
    low-rate initial production decision. The affected criteria are first
    flight with block 3.0 software, completion of critical design review of
    block 3.1 software, completion of static structural testing, and
    completion of 40 percent first fatigue life test. The following are the
    status of each of these criteria and our latest assessment of
    completion this year.
        First flight with Block 3.0 Software.--The current program plan is
    to fly Block 3.0 on aircraft 4004 by December 2000. Flight testing of
    the Block 3.0 software remains one of the most challenging of the
    calendar year 2000 program criteria. The recent strike only made this
    challenge more significant. As schedule risk mitigation, the Air Force
    recently decided not to certify Block 3S for flight in an actual F-22,
    although Block 3S will still be extensively tested in the Avionics
    Integration Laboratory (AIL) and on the Flying Test Bed (FTB). This
    rescission mitigates some of the schedule risk incurred during the
    strike and enables us to start Block 3.0 integration in the AIL on 15
    May as previously planned.
        Completion of Block 3.1 CDR.--The completion of the Block 3.1 CDR
    is no longer at risk with the settlement of the strike. The Block 3.1
    Mission Software (MSW) Critical Design Review (CDR) was originally
    scheduled for 18 April 2000. Due to the strike, development work was
    delayed and the Avionics Team is currently working to select a new CDR
    date. Boeing has done a preliminary review of remaining work to go and
    has estimated that CDR will occur in late June 2000 or early July 2000.
        Static Structural Testing.--The best available planning data for
    static test execution indicates that calendar year 2000 DAB criteria
    for static test remains achievable; however, static testing is the most
    challenging of the calendar year 2000 program criteria. Five ultimate
    test conditions have been approved for execution subject to pre-test
    readiness reviews. Another 10-12 conditions are being evaluated for
    sequencing and content. Testing resumed on 11 April 2000 and two
    criteria have already been completed. To ensure that the testing
    remains on schedule we have directed the contractor to apply increased
    manpower and use available overtime for test conduct, data analysis,
    and issue resolution.
        Completion of 40 percent first fatigue life test.--The best
    available planning data for fatigue test execution indicates the
    calendar year 2000 DAB criteria to initiate fatigue tests, and the goal
    of 40 percent of the first life cycle testing remains achievable. Full-
    scale fatigue test planning is continuing in preparation for a late
    August 2000 initiation in fulfillment of the DAB criteria. This
    planning effort is subject to the same rigorous methodology employed in
    defining and executing the static test program. The test article (A/C
    4000) was moved to the test facility on 1 April 2000 and is currently
    being equipped with test fixtures. The Durability and Damage Tolerance
    Analysis (DaDTA) of the Block II design configuration is on-going with
    an estimated completion date of mid-July 2000. The status of the
    analytical effort supporting start of fatigue testing is being
    monitored on a daily basis (completion of key static test analysis is a
    precursor to the start of fatigue testing). A series of test readiness
    reviews to be held over the next two months will also definitize the
    test execution criteria, planning and culminate in an evaluation of
    analysis results.
                           supplemental requirements
        Question. Secretary Peters, the supplemental bill would provide
    funding for your forward operating locations in support of drug
    interdiction. What would be the impact if you failed to get this
    funding prior to fiscal year 2001?
        Answer. Forward Operating Locations (FOLs) in support of drug
    interdiction are not included in the Air Force's supplemental request,
    nor are they included in the Air Force's program. As FOL Executive
    Agent, the Air Force is responsible for administering the operation and
    maintenance of the sites for the Department of Defense and U.S. law
    enforcement agencies. However, all counterdrug funding and policy
    coordination is provided by the Department of Defense Coordinator for
    Drug Enforcement Policy and Support (OSD/DEP&S).
        The impact of delaying the fiscal year 2001 supplemental request on
    continued drug interdiction operations in the southern hemisphere can
    be addressed more appropriately by OSD/DEP&S and U.S. Southern Command
    (USSOUTHCOM), through the Office of the Secretary of Defense.
                                     ______

                 Questions Submitted by Senator Byron L. Dorgan
                              b-52 force structure
        Question. Last year, Section 8107 of the Fiscal Year 2000 Defense
    Appropriations Act instructed the Air Force to provide funding for 94
    B-52 bombers in the fiscal year 2001 budget. Why aren't you following
    these instructions?
        Answer. The Air Force is complying with Congressional language and
    maintaining the fiscal year 2000 B-52 inventory at 94 fully funded
    aircraft. We are operating and maintaining a force of 44 primary
    mission, 12 primary training, 6 back-up, 31 attrition reserve and 1
    test aircraft. The Congressionally added funds allow us to operate,
    maintain and modify the 18 excess attrition aircraft throughout fiscal
    year 2000.
        These 18 B-52 aircraft are excess to our need. The Air Force
    requires 76 B-52 aircraft to support the full range of mission
    taskings. This requirement is documented in the U.S. Air Force White
    Paper on Long Range Bombers, dated 1 March 1999, and is based on the
    May 1997 Quadrennial Defense Review and the 1998 Report of the Panel to
    Review Long Range Air Power. In light of today's tight fiscal
    constraints and potential START III force structure changes, we must
    ensure the required force is capable and prepared to support all
    wartime taskings. In fiscal year 2001, the Air Force plans to fund 76
    aircraft based on operational requirements and place 18 attrition
    reserve aircraft in inviolate storage at Davis Monthan AFB, AZ.
                                 airborne laser
        Question. Please give me your thoughts on the capability of the ABL
    system to provide ballistic missile defense against the long range
    missiles that North Korea may be developing. Would such a capability be
    compliant with the ABM Treaty?
        Answer. ABL is a theater missile defense system. Thus, ABL is not
    being designed to counter strategic ballistic missiles, either from
    North Korea or any other state, nor will it be tested against strategic
    ballistic missiles. The Air Force believes that ABL will be compliant
    with U.S. arms control obligations, but the program is not yet
    sufficiently mature for an ABM treaty compliance certification.
              military construction and real property maintenance
        Question. Your unfunded priorities list includes $437 million in
    fiscal year 2001 to help relieve Air Force's real property maintenance
    backlog and $378 million for military construction in fiscal year 2001
    to reduce the facilities recapitalization rate from over 200 years to
    150 years. The unfunded five-year bill for these efforts totals almost
    $3.4 billion.
        I would like your thoughts on why you seem to consider the
    maintenance of your infrastructure unaffordable. Aren't you creating an
    unfunded infrastructure ``bow wave'' that will cost tens of billions of
    dollars to fix in the future?
        Answer. Military construction, real property maintenance, other
    base support and family housing are very important to the Air Force.
    However, due to fiscal constraints and affordability, the Air Force's
    fiscal year 2001 budget request demonstrates that we have assumed risk
    in our infrastructure accounts. We are prepared to meet our security
    commitments and execute national military strategy but are funding our
    infrastructure accounts at less than optimal rates. Unfortunately we
    are, in fact, driving a bow-wave of infrastructure requirements to the
    future.
        The Air Force's fiscal year 2001 budget is our best balance of
    funding people, readiness, modernization, and infrastructure programs
    within fiscal constraints. However, when focusing on our real property
    and military construction accounts, our budget request is about $3.5
    billion short of what is needed to sufficiently fund the required
    maintenance and modernization of our physical plant. Across the Future
    Years Defense Program, this shortfall is $11.7 billion. Bottom line, we
    have had to assume some risk in our infrastructure in order to fund
    higher priority modernization and people programs.
                                     ______

                   Question Submitted by Senator Larry Craig
                        bed down priorities of the f-22
        Question. What factors will the Air Force use in determining bed
    down priorities of the F-22?
        Answer. In 1995, Commander Air Combat Command (COMACC) directed an
    F-22 Process Action Team (PAT) to study basing options for the
    operational F-22s. Representatives from HQ USAF, F-22 Systems Program
    Office (SPO), and Air Combat Command (ACC) evaluated bases for their
    suitability in hosting the F-22 mission and local training. The
    analysis concentrated on quality and availability of training airspace.
        In 1997, the Air Force focused on factors beyond the earlier study
    to narrow the list of potential bases into a non-ordered basing
    candidate plan. The factors used in this determination focused on the
    mission and infrastructure of hosting the F-22 squadrons. Central to
    the issue is the similarity of the F-15's and F-22's primary mission.
    The F-22 will replace three of the four Fighter Wing Equivalents (FWEs)
    of F-15s on a one-for-one basis. To preclude displacing existing force
    structure, capitalize on existing infrastructure, and minimize costs,
    existing F-15 bases were considered the most likely candidates.
        Working toward F-22 Initial Operational Capability (IOC) in fiscal
    year 2005, ACC began work on the Description of Proposed Action and
    Alternatives (DOPAA) required under the National Environmental Policy
    Act (NEPA). Langley AFB, VA, was identified as the preferred
    alternative for the first operational F-22 wing. However, the final
    basing decision will be contingent upon completion of the Environmental
    Impact Analysis Process actions. This analysis will include a look at
    reasonable alternatives to Langley. These include: Eglin AFB, FL;
    Tyndall AFB, FL; Elmendorf AFB, AK; Mountain Home AFB, ID; and the
    ``no-action'' alternative. Starting in 2000, and estimating two years
    to complete, the environmental impact analysis will examine issues such
    as land use, airspace and safety, air and water quality, noise,
    socioeconomic impacts, biological and cultural resources, quality of
    training, and cumulative impacts.
                                     ______

                  Questions Submitted to Gen. Michael E. Ryan
                   Questions Submitted by Senator Ted Stevens
                joint strike fighter (jsf) acquisition strategy
        Question. Are you concerned that the weight of requirements on JSF,
    such as vertical takeoff, will force design compromises in the Air
    Force JSF variant?
        Answer. The Air Force, Navy, and Marine Corps have coordinated to
    produce a set of operational requirements for a family of affordable
    and capable aircraft that will meet each individual user's needs. Each
    service brought individual desires to the program when it started.
    However, the services understood that the aircraft must be affordable
    if it was going to be produced. The Cost and Operational Performance
    Trade (COPT) process occurred in tandem with requirements development.
    The result was that with each successive cost and performance trade,
    the design trade space was reduced.
        While compromises were made by each service, the users have
    established Key Performance Parameters (KPP) in the JSF Joint
    Operational Requirements Document (JORD) that ensure the design will
    meet the warfighters' needs. The Joint Requirements Oversight Committee
    (JROC) approved the JORD on March 13, 2000, thereby fixing the
    requirements. This six-year process produced an achievable set of
    requirements for a family of highly common, affordable aircraft that
    meet the warfighters' needs for the 21st century.
                      uae f-16/air force f-16 derivatives
        Question. Can you outline for the Committee the capabilities of the
    F-16 being developed for sale to the United Arab Emirates?
        Answer. In comparison to current USAF F-16s:
        Radar.--The UAE Block 60 F-16 will use an active electronically
    scanned array (AESA) radar similar (but much less capable) than the F-
    22 radar. It replaces the older technology mechanically scanned radar
    in the USAF F-16. Radar detection range will be almost twice that of
    USAF F-16s but less than current USAF F-15s.
        Infra-red Detection/Targeting.--The Block 60 uses an internal focal
    plane array forward looking infra-red (FLIR) for night navigation that
    is similar in capability to the USAF external FLIR pod. The Block 60
    uses an external laser targeting pod similar to the USAF F-16s, with
    slightly better resolution.
        Electronic Warfare.--The Block 60 has an internal EW passive and
    active jamming system with a fiber optic towed decoy. Advanced digital
    processing enables this EW system to detect, characterize and
    accurately locate most radar frequency emmiters and employ advanced
    jamming techniques, if needed. The USAF F-16 has a less capable passive
    system (radar warning receiver), carries an external jamming pod, and
    uses a repeater towed decoy. The USAF F-16 carries the external high
    speed anti-radiation missile (HARM) targeting system (HTS) pod to
    locate radar emmiters.
        Engines.--The UAE Block 60 F-16 uses the new GE F110-132 engines
    that produce about 3,000 more pounds of thrust than the current USAF GE
    engines. With conformal fuel tanks, the block 60 is almost 5,000 pounds
    heavier than USAF F-16s at takeoff.
        Range.--The Block 60 can fly about 40 percent further than a USAF
    F-16 with the same bomb/missile load. Conformal above wing and 600
    gallon below wing fuel tanks plus a centerline 300 gallon tank
    (centerline used by USAF F-16s for EW pod) give the block 60 about
    9,000 more pounds of fuel.
        Cockpit.--Three Israeli built 5  7 inch color displays
    give the UAE pilot a better information display than the two 4
     4 inch displays in the USAF F-16.
        Weapons Capability.--The UAE F-16 has the capability to carry and
    deliver all current export USAF missiles and bombs.
        Question. Does the Air Force have any plans to modify Air Force
    inventory F-16's to add systems or capabilities being developed under
    the UAE program?
        Answer. There are no current plans to modify existing F-16's in the
    Active/Guard/Reserve fleet with capabilities developed for the UAE F-16
    Block 60. While the USAF recognizes the inherent value and combat-
    enhancing capabilities resident in the Block 60, the Air Force is
    committed to a modernization schedule that pre-dated the UAE/Lockheed
    agreement. However, ongoing modernization will not preclude the USAF
    from leveraging the F-16 Block 60 capabilities in the future if a need
    arises.
                   air force exercises and readiness training
        Question. The fiscal year 2001 budget makes great strides in
    focusing the Air Force on aircrew training. Have you completed the
    training backlog of air crews that resulted from the bombing campaign
    in Kosovo?
        Answer. Training backlogs were created in the Combat and Mobility
    Air Forces as a result of the Kosovo campaign due to the deployment of
    aircraft and aircrew to, and within, the United States Air Force in
    Europe (USAFE) area of responsibility. Reconstitution efforts have
    successfully eliminated the training backlog caused by the Kosovo
    campaign, with field training unit (FTU) and operational training now
    at normal (pre-Kosovo) levels.
                           air force pilot retention
        Question. Last year, Congress greatly expanded Aviation
    Continuation Pay, and added $100 million to retain Air Force pilots.
    This is a very generous bonus program. Have you seen the increase in
    pilot retention that you expected?
        Answer. The fiscal year 2000 Aviator Continuation Pay (ACP) Program
    is still ongoing; however, we now have enough returns to make initial
    projections. We are seeing a positive, upward swing in our pilot
    inventory. Given current bonus take rates and retention patterns, we
    can expect to reduce the pilot shortfall to manageable levels within
    three years. This will go a long way toward helping us ``hold the
    line'' until we benefit from the positive effects of the 10-year ADSC
    in fiscal year 2009 and beyond.
        However, we must temper this optimism with caution. First, these
    are initial projections and we will refine the fidelity as we gather
    additional data. Second, the current retention environment, especially
    the unprecedented and sustained airline hiring we are currently
    experiencing, has the Air Force concerned about the long-term health of
    our pilot force. The hiring influence is particularly evident in the
    take rates for our youngest eligible pilots--those just coming off
    their pilot training commitment. The rate among these pilots is the
    lowest of our bonus-eligible pilot populations. We are watching this
    very closely. Finally, ACP is not the only factor driving the decisions
    of pilots to leave the Air Force; we believe it is a combination of
    factors. As such, we developed and are pursuing a comprehensive and
    integrated plan to address pilot retention.
        One component of the Air Force's multi-faceted approach to
    arresting the pilot retention decline is the Expeditionary Aerospace
    Force (EAF) concept. We are working hard to give some relief to our
    pilots, as well as other specialties, who are deployed, spending a
    great deal of time away from home. The EAF kicked off in October 1999
    and thus far, input from the field has been positive. The EAF helps
    manage TEMPO through planning, stability, and predictability. The
    predictability of the EAF will allow better utilization of our Air
    Reserve Forces and may result in TEMPO relief for our Active Force.
    Personnel assigned to our Aerospace Expeditionary Forces (AEF) will
    know far in advance when their AEF is on call for deployment. We will
    also continue our postdeployment stand-down programs to ensure deployed
    members have time to get reacquainted with their families and take care
    of personal matters. And, whenever possible, we minimized our
    participation in exercises, and lowered the frequency of our
    operational readiness inspections so that personnel serve 15-20 percent
    fewer days in Joint and Air Force exercises.
        Additionally, in fiscal year 1998 we increased Aviation
    Continuation Pay (pilot bonus) rates from $12,000 to $22,000. Then in
    fiscal year 1999 we raised Aviation Career Incentive Pay (flight pay)
    for 14-year aviators from $650 to $840 per month. The Fiscal Year 2000
    National Defense Authorization Act allowed us to increase annual
    payments to $25,000 and expand eligibility for ACP, permitting payment
    through 25 years aviation service.
        We have taken other steps to help work through the pilot shortfall
    as well. We increased pilot production from 650 in fiscal year 1997 to
    1,100 in fiscal year 2000 and expanded production throughout the Total
    Force. We also increased the Specialized Undergraduate Pilot Training
    commitment to 10 years. The Air Force prioritized requirements,
    reviewed alternate staff manning, and, with your legislative relief
    from dual compensation limits in the fiscal year 2000 legislation, we
    now have vital incentive tools to draw valuable retired rated expertise
    back to augment our undermanned staffs with retired rated expertise. We
    are optimistic that the combination of all these efforts will have a
    significant impact on pilot retention.
        Question. Of course, much of pilot retention can't be solved by
    money alone. What else are you doing to improve pilot retention? How
    are you easing OPTEMPO for pilots? Are you increasing pilot production?
        Answer. The Air Force has developed a multi-faceted plan for
    dealing with the pilot shortage. The plan focuses on scrutinizing our
    pilot requirements; increasing pilot production and the commitment for
    pilot training; managing TEMPO; enhancing quality of life; and
    improving compensation and personnel programs.
        To better manage our TEMPO and improve quality of life for our
    members and their families, we have changed the way we organize and
    deploy our combat forces through the creation of the Expeditionary
    Aerospace Force (EAF) concept. Transitioning to the EAF will improve
    stability, predictability, and allow a more complete integration of our
    active, Guard, Reserve, and civilian members. We are also reducing
    Joint and Air Force exercises, including smaller and/or shorter
    deployments; restructuring our inspection system; and increasing some
    weapon system crew ratios.
        We have also increased our active duty pilot production from 650 in
    fiscal year 1997 to 1,100 in fiscal year 2000, which is the maximum
    sustainable level consistent with proven quality and safety standards.
    Also, on 1 October 1999, the Air Force pilot training active duty
    service commitment increased from eight to ten years. These measures
    should help us begin to close the gap on our pilot shortfall; however,
    it is still vitally important that we continue to address the retention
    of our more senior pilots. The increased production creates stresses on
    the training pipeline and reduces the experience level of units as they
    absorb more inexperienced pilots. We must maintain experienced pilots
    to provide the leadership and experience necessary to grow the new
    pilots into a combat ready force, while at the same time providing
    immediate operational capability.
                                     ______

                Questions Submitted by Senator Pete V. Domenici
             decreases in rdt&e and science and technology budgets
        Question. Does the Air Force have any official response regarding
    the findings and conclusions of that report?
        Answer. The Air Force has no official response with regard to the
    findings and conclusions of the Air Force Association (AFA) report on
    Air Force Science and Technology (S&T) entitled, ``Shortchanging the
    Future: Air Force Research and Development Demands Investment.''
    However, the Air Force recognizes the historical value of S&T to
    superior warfighting capabilities and shares some of the AFA's
    concerns. The Air Force has several ongoing activities that address
    concerns associated with the S&T Program. Most importantly, the fiscal
    year 2001 President's Budget (PB) submission represents an increased
    investment in Air Force S&T of $211 million across fiscal years 2001-
    2005 over the fiscal year 2000 PB request. The Air Force continues to
    assess the health of the S&T Program and recently held a ``summit'' of
    senior Air Force leaders that addressed future funding levels for the
    S&T Program. This provided an excellent forum to discuss the need to
    maintain an effective balance between Basic Research (6.1), Applied
    Research (6.2), and Advanced Technology Development (6.3), and to
    better understand the constraints on S&T funding flexibility imposed by
    Congressional language, Office of the Secretary of Defense direction,
    and prior program commitments.
        Question. Given the long-lead time to develop new weapons and
    information systems, how does the Air Force plan to maintain U.S.
    technological supremacy while reducing defense-wide RDT&E budgets?
        Answer. The Air Force has structured its budget to maintain a
    balance between the different investment accounts, with Research,
    Development, Test, and Evaluation (RDT&E), specifically Science and
    Technology (S&T), being only one of the many important investment
    areas. While the Air Force could wisely invest additional funding in
    all accounts if the topline budget were increased, the fiscal year 2001
    President's Budget (PB) represents optimal investment levels across all
    accounts and is balanced to meet both near-term operational capability
    needs and far-term technology needs. Although there may be the
    perception the Air Force S&T Program is underfunded, the Air Force
    fiscal year 2001 PB is structured to maintain the technological
    supremacy essential to supporting the Air Force vision of a 21st
    Century Expeditionary Aerospace Force.
        Question. Do you believe that you can maintain the scientists and
    infrastructure required for success at the present level of resources?
        Answer. The Air Force is investigating several initiatives that are
    focused on maintaining the scientists, engineers, and supporting
    infrastructure required for a successful Science and Technology (S&T)
    Program. In response to recommendations contained in the Science and
    Technology Workforce for the 21st Century (STW-21) study, the Air Force
    examined S&T personnel management with the vision to enhance/maintain
    the excellence and relevance of S&T into the 21st Century. One result
    was the decision to implement a Government-Owned, Collaborator-Assisted
    (GOCA) concept of personnel management within the Air Force Research
    Laboratory (AFRL). GOCA will provide an integrated team of permanent
    government civilian and military personnel, augmented by a more agile,
    non-permanent collaborator component. The goal is to provide
    synergistic benefits neither component can effectively provide alone.
    Another initiative pursued was high-grade relief to allow AFRL to
    manage grade/salary levels without artificial constraints. Fiscal year
    2000 legislation has already provided AFRL with this exemption and the
    Air Force thanks Congress for this relief. The Air Force is optimistic
    these and other potential initiatives will ensure the foundation
    necessary for the continued success of the S&T Program.
        Question. What criteria did the Air Force use to make decisions
    regarding its funding of specific research programs within its research
    laboratories?
        Answer. The Air Force fiscal year 2001 President's Budget request
    for Science and Technology (S&T) contains the technology development
    essential for the Air Force Vision of an Expeditionary Aerospace Force
    (EAF). In support of this vision, the Air Force committed to
    restructure/concentrate its S&T investment with a strong focus on
    aerospace efforts (i.e., integrating air with space) and this shaped
    the criteria used to make decisions regarding funding of specific
    efforts within the Air Force Research Laboratory (AFRL). The Air Force
    reoriented technology areas and eliminated areas that were not
    supportive of the long-range EAF vision. In fiscal year 2001, this Air
    Force shift in emphasis to Space S&T included efforts like small
    satellites and space control, while reductions were taken in non-space
    technology areas. The Air Force shifted away from S&T already being
    worked by others, such as weather, aircrew physiology, and
    environmental remediation. These actions have enabled AFRL to more
    effectively address future technology needs. The Air Force plans to
    maintain the core technology areas and technical expertise considered
    essential for future air and space operations.
                                     ______

               Questions Submitted by Senator Christopher S. Bond
                                      f-15
        Question. The Air National Guard Fleet consisting of 126 F-15
    aircraft is being tasked for increasingly sophisticated threat areas
    throughout the world as part of the Expeditionary Aerospace Force (EAF)
    employment concept. Lack of robust protection directly affects the
    combat capability and survivability of these aircraft. I believe it is
    important that this committee add funding to the fiscal year 2001
    budget for this very important upgrade. What are your personal thoughts
    on this?
        Answer. Certainly aircrew survivability is of the utmost priority,
    and the ANG F-15A/Bs are currently equipped with an electronic
    protection suite that includes the ALR-56A Pacer Turbo radar warning
    receiver (RWR), the ALQ-135 electronic jamming system, the ALQ-128
    Electronic Warfare Warning System, and the ALE-45 Countermeasures
    Dispenser (CMD). The ALE-45 CMD gives a ``reactive'' capability to
    dispense chaff and flares against radar and infrared (IR) threats.
    Active duty F-15C/D/Es are equipped with the same electronic suite,
    with the exception of the more capable ALR-56C RWR.
        We realize the unique capabilities the BOL countermeasures
    dispenser will give our F-15 crews. While our F-15s already possess an
    effective reactive countermeasures system against a majority of IR
    missiles; the BOL dispenser, with its associated IR flare, is a
    preemptive countermeasures system, and augments the ALE-45. It is
    capable of preventing the lock-on of advanced IR missiles. The
    synergistic effects of both systems significantly enhance our existing
    countermeasures capability and increases survivability during a hostile
    engagement. The testing of this system is ongoing and results have been
    favorable.
        We are continuing to explore long-term funding options among highly
    competitive modernization programs. Our fiscal year 2001 Unfunded
    Priority List includes a line item for BOL IR. If funded, it would add
    resources to expand current integration efforts to include ANG F-15A/Bs
    and Active AF F-15C/D/E aircraft.
                                      c-17
        Question. This committee has supported your C-17 requests in the
    past. Now more than ever, we think it's the best solution for airlift
    modernization, but I am concerned that slipping funding to fiscal year
    2003 portends some sort of down trend. Do you intend to complete the
    current multi-year program for 120 C-17s?
        Answer. Yes, the C-17 aircraft is critical to meeting our nation's
    strategic airlift requirements. As such, the Air Force is committed to
    purchasing the remaining aircraft of the original 120 planned C-17s
    with this multi-year contract. The current multi-year procurement
    contract remains in place with no change to production rate or delivery
    schedule. In addition, the Air Force has a requirement for 15
    additional C-17s to ensure our nation has sufficient strategic lift for
    a nearly simultaneous two major theater war scenario with concurrent
    special operations requirements. The Air Force intends to include these
    required aircraft, and any additional aircraft which may be identified
    in the emerging mobility studies, as part of the fiscal year 2003
    budget submission.
        Question. Are 120 aircraft enough for your requirements? The CINCs
    tell us of the real need for additional C-17s and this committee
    recommended an additional buy of 60 additional aircraft last year. What
    are your plans for additional C-17s?
        Answer. To ensure our nation has sufficient strategic lift capacity
    for a nearly simultaneous two major theater war, our existing
    requirement study dictated a need for 120 aircraft. We programmed an
    additional 14 of 15 C-17 aircraft for fiscal year 2003 through fiscal
    year 2005 to accommodate Special Operations missions concurrent with
    the nearly simultaneous two major theater war scenario. Thus, the
    current Air Force C-17 program is for 134 out of 135 required aircraft.
        We are currently re-examining C-17 requirements. Mobility
    Requirements Study 2005 (MRS-05) is underway and publication is due
    this fall. Based on expected force structure and basing in 2005, we
    believe MRS-05 will show a requirement for strategic lift, and
    specifically the C-17, is growing. To accommodate these emerging
    requirements, the Air Force is examining contractual, programmatic, and
    budgeting issues associated with additional C-17s in anticipation of
    the MRS-05 release.
            suppression and destruction of enemy air defenses (sead)
        Question. General Ryan, I am told that the Suppression and
    Destruction of Enemy Air Defense (SEAD) mission in the Air Force is one
    of the most overtaxed. Do you support an initiative to procure new F-
    16s for the Air Force which would then cascade some older F-16 aircraft
    into the Air National Guard and enable the Air Guard to help with the
    SEAD mission?
        Answer. The F-16 Suppression of Enemy Air Defense (SEAD)/
    Destruction of Enemy Air Defense (DEAD) units are indeed in high demand
    around the world and are one of the first units to be deployed in
    crisis situations. The current Air Expeditionary Force (AEF) construct
    identifies a requirement for 10 SEAD/DEAD capable squadrons. Presently,
    there are nine active duty F-16-CJ squadrons that are programmed for
    these AEF rotations, leaving a requirement for one additional squadron.
    In order to alleviate the high operation tempo (OPTEMPO) currently
    being experienced with these units, the Air Force has already budgeted
    for the procurement of additional F-16CJs allowing for a stand-up of a
    10th active duty SEAD/DEAD squadron. This would also cascade the older
    block 30 aircraft (currently in the Active Duty squadrons) to the Air
    National Guard. However, this 10th squadron will not be activated until
    fiscal year 2007 under current planning. The USAF fiscal year 2001
    Unfunded Priority List (UPL) identifies a requirement to accelerate the
    planned block 50 procurement and the stand up of a 10th SEAD/DEAD
    squadron which would cascade block 30s to the ANG.
        While the procurement of a 10th F-16CJ squadron will have an
    immediate effect on the OPTEMPO of the current SEAD/DEAD units, it will
    not be due to the fact that the Guard will receive ``cascaded''
    aircraft. F-16CJ block 50/52 aircraft are preferred for the SEAD/DEAD
    mission as opposed to older block 30 aircraft. The F-16C Block 30's
    they will replace, while able to provide some measure of SEAD support,
    are not sufficiently capable to completely replace the F-16CJ. The F-
    16C Block 30's will be able to reduce OPTEMPO in the Precision Attack
    AEF mission area. With the addition of the LITENING II targeting pod
    and Combat Upgrade Plan Integration Details (CUPID) modification, the
    Block 30 will achieve a dramatic increase in warfighting lethality.
                                     ______

                Questions Submitted by Senator Daniel K. Inouye
                              recruiting concerns
        Question. General Ryan, we have heard a lot about your pilot
    retention problem and the impact this is having on your recruiting
    difficulties as well. Can you tell us what is the current shortage, has
    it affected the flying units or simply headquarters activities, and are
    you seeing any improvement in the trend?
        Answer. Our end of fiscal year 2000 shortfall is projected to be
    1,190 out of a requirement of 13,570. This represents a 9 percent
    shortfall. In terms of the readiness of the force, we have made a
    conscious effort to fully man our operational cockpits at the expense
    of our pilot staff positions. Fully manning our cockpits minimizes the
    impact of the pilot shortage on the operational readiness of our
    warfighting units. Therefore, it is our warfighting staffs who are
    experiencing the tremendous pilot manning shortages. We are pursuing
    rated staff manning alternatives to relieve workload pressures caused
    by the pilot shortage. Your repeal of the dual compensation law has
    helped us to exercise options such as the hiring of civilians with
    aviation experience into rated staff positions. We also are permitting
    active duty recall of reserve and retired rated officer volunteers.
        We have instituted an aggressive and integrated set of initiatives
    to address pilot retention. In the compensation arena, in fiscal year
    1998 we increased Aviation Continuation Pay (ACP) rates from $12,000 to
    $22,000. Then in fiscal year 1999 we raised Aviation Career Incentive
    Pay (flight pay) for 14-year aviators from $650 to $840 per month. The
    Fiscal Year 2000 National Defense Authorization Act allowed us to
    expand eligibility for the ACP and increase annual payments to $25,000,
    permitting payment through 25 years aviation service. We plan to
    continue utilizing the full ACP authority and have $157 million
    budgeted for this program in 2001. As a result of these and other
    initiatives, we project the pilot shortage to fall to within manageable
    levels by 2003. From that point on, shortfalls will be approximately 5
    percent or less of requirements. We do not expect to meet aggregate
    pilot requirements until approximately 2010.
                                   readiness
        Question. General Ryan, I understand approximately $2 billion was
    added to your readiness budget for fiscal year 2001, including an
    increase of $500 million for fuel, spare parts and supplies. Is this
    enough?
        Answer. With the help of Congress, the Air Force has made
    considerable progress in funding spare parts requirements. The fiscal
    year 2001 President's Budget (PB) fully funds the flying hour program
    for consumption based spare parts requirements; however, additional
    funds would further enhance spare parts support for contingency
    operations. The fiscal year 2001 Unfunded Priority List (UPL) addresses
    two Readiness Spares Packages (RSP) initiatives. The first requires $75
    million for RSP demand adjustments for fiscal year 2001. These changes
    occur each year in response to mission and inventory changes. The
    second requires $115.7 million to increase the fighter Direct Support
    Objective (DSO) from 63 percent to 83 percent availability and ``right-
    sizes'' RSP kits to better support the mobility airlift enroute
    structure. The DSO increase reflects lessons learned in Kosovo and will
    reduce aircraft cannibalization actions for deployed units during
    contingencies.
        Question. General Ryan, in previous testimony you have indicated
    that you are unable to fix serious infrastructure shortfalls in your
    budgets. What is the shortfall this year and how much would be required
    to turn this around?
        Answer. The Air Force fiscal year 2001 total force backlog of real
    property maintenance is $4.3 billion. In our Unfunded Priority List
    (UPL), we have asked for $437.7 million to fund the most critical of
    these real property maintenance requirements.
        We also have asked for $349.5 million to arrest the backlog of
    deferred housing maintenance and repair requirements and to improve or
    replace failing infrastructure systems and support facilities essential
    to maintaining viable housing communities.
        To address only the most serious infrastructure problems in the
    MILCON program, we must attain a 150-year recapitalization rate by
    funding MILCON at $974 million per year. The fiscal year 2001 request
    is $378 million short of that level, as identified in the UPL.
        Question. I understand you fully funded spares in order to turn the
    corner on aircraft and engine readiness. Is this accurate?
        Answer. Yes, we fully funded the validated requirement in the
    fiscal year 2001 President's Budget (PB). This action continued our
    earlier efforts, along with those of the Office of the Secretary of
    Defense (OSD) and Congress, to mitigate the impacts of constrained
    funding from earlier years. Funding fluctuated from fiscal year 1991 to
    fiscal year 1999; the low point was 70 percent, the high point was 94
    percent. Over the same period, mission capable rates declined from 83.4
    percent to 71.9 percent. However, fiscal year 1999 was a turning point,
    declining trends had to be reversed--Air Force funded the validated
    spare parts requirement at 95 percent, unfortunately a bow wave of $382
    million had accumulated over the lean years, with $279 million related
    to engine shortfalls. The bow wave was addressed with OSD, they
    approved obligation authority, and orders were placed to put spares on
    the shelves and arrest the decline in readiness. Acquisition lead time
    is 18-24 months, but anecdotal evidence indicates spares are slowly
    arriving and improvements are underway--total non-mission capable for
    supply (TNMCS) metric decreased (improved) from 16.1 percent in
    September 1999 to 13.5 percent in February. We're optimistic, however
    continue to watch engines closely as they have a history of pop-up
    technical surprises that can be expensive and difficult to support.
        Also, while Air Force fully funded the validated requirement in the
    fiscal year 2001 PB, we have since assessed our lessons learned from
    Kosovo and determined there are updates to Readiness Spares Kits that
    need to be funded. In the fiscal year 2001 unfunded priority list
    (UPL), we have included an unfunded requirement for RSP Kit Updates for
    $75 million. Air Force appreciates past and continued Congressional
    plus-ups to ensure the Readiness momentum for spare parts.
        Question. General, DOD and the Congress have both indicated that
    fixing readiness is required. What has been the impact on modernization
    and research with the emphasis on readiness?
        Answer. Overall, the Air Force is about $3.5 billion short in
    fiscal year 2001 of what we believe is a good mix between people,
    readiness, modernization and infrastructure. As we emphasize today's
    people and readiness requirements, we only fund the minimum
    infrastructure support and find ourselves modernizing at less than
    optimal rates. Without a sustained across-the-board increase in funding
    over the Future Years Defense Plan, we cannot substantially improve on
    the readiness gains made in last year's budget. This means that
    infrastructure and modernization will continue to suffer.
                                     jstars
        Question. General Ryan, what is your total requirement for JSTARS
    aircraft, and how many will you have purchased after fiscal year 2000?
        Answer. The Joint Requirements Oversight Council (JROC)-validated
    Joint STARS requirement of 19 aircraft to support a two Major Theater
    War (MTW) scenario has not changed. The Quadrennial Defense Review
    (QDR) reduced the programmed Joint STARS force structure from 19 to 13
    due to fiscal constraints. The Air Force supports the fiscal year 2001
    President's Budget (PB) for 15 aircraft. There are currently 7
    operational aircraft located at Robins, AFB, GA. The 8th aircraft is
    scheduled for delivery on 31 August 2000. After fiscal year 2000, the
    15th aircraft is in the fiscal year 2001 budget and is scheduled for
    delivery in fiscal year 2003.
                                   b-2 bomber
        Question. General Ryan, I have long advocated the B-2 bomber and
    would like to see a way that we could purchase more bombers. What is
    your view of the B-2 following its performance in Kosovo?
        Answer. The B-2 and the Air Force men and women who fly and
    maintain the aircraft performed superbly. The B-2 flew 49 combat
    missions, dropping 652 Joint Direct Attack Munitions (JDAM) with 83
    percent of targets hit. B-2 reliability and stealth maintainability
    were excellent throughout the operations with 100 percent on-time
    takeoffs. B-2 operations demonstrated a shift in operational thinking
    from ``number of sorties per target'' to ``number of targets per
    sortie.''
        Question. General Ryan what is your priority for enhancing the
    capability of the B-2 Bomber?
        Answer. The Air Force is committed to enhancing the capabilities of
    the B-2 bomber as outlined in the Bomber Roadmap. This plan, also known
    as the USAF White paper on Long-Range Bombers, includes upgrades to B-2
    avionics and communications subsystems and integration of precision
    gravity and standoff munitions. In addition to budgeted upgrades, the
    Air Force has placed Mk-82 JDAM, EGBU-28, LINK 16/Center Instrument
    Display and EHF connectivity risk reduction upgrades on the Unfunded
    Priority List (UPL) due to limited Air Force Total Obligation
    Authority.
                                      f-22
        Question. General Ryan, last year there was some strong
    disagreement within the Congress regarding the advisability of
    proceeding with the purchase of the F-22 program. In your opinion, is
    the F-22 ready for production?
        Answer. Yes, the F-22 will be ready for a production decision in
    December 2000. Its development continues to meet my expectations. The
    F-22 weapons system meets or exceeds each of its Key Performance
    Parameters. The F-22 test program continues to demonstrate increased
    levels of technical performance and the required operational
    capabilities. Following the completion of the calendar year 2000
    program criteria, the F-22 will have demonstrated the maturity required
    for a low rate initial production (LRIP) decision. In fact, by the
    December 2000 production decision, the F-22 test program will have
    flown more test hours than any other fighter development program prior
    to an LRIP decision.
                           supplemental requirements
        Question. General Ryan, I understand the Air Force has more than
    $200 million pending in the supplemental request. There are some who
    believe we don't need to take action on this until we enact the
    appropriations bills for fiscal year 2001. What is your view on this
    matter?
        Answer. ``Cash flowing'' contingency requirements does not place
    significant strain on readiness, training, infrastructure, and overall
    combat capability in the early parts of the fiscal year. Not having
    full supplemental funding in the third and fourth quarter of the year
    drives decisions to defer critical training and infrastructure
    programs. Deferring budgeted programs reduces readiness and exacerbates
    shortfalls within the Operations and Maintenance budget. Having
    supplemental funds by early June should minimize the impact to on-going
    Air Force activities.
                                     ______

                 Question Submitted by Senator Patrick J. Leahy
            suppression and destruction of enemy air defenses (sead)
        Question. With little likelihood that the Joint Strike Fighter will
    replace the F-16s in the Air National Guard for at least the next ten
    years, I would like to know what the Air Force is doing to deal with
    both the immediate need for Suppression of Enemy Air Defense assets for
    its Air Expeditionary Forces, and the longer-term possibility of the
    block obsolescence of the F-16 inventory.
        Answer. In order to ensure the fundamental combat task of
    Suppression of Enemy Air Defenses (SEAD) remains robust, the USAF is
    proactively pursuing various avenues in this mission area. The Air
    Force's primary weapon system in the fight against Enemy Integrated Air
    Defenses (IADs) is the F-16CJ Block 50/52 fighter. The aircraft is
    specifically designed to employ the AGM-88 High-Speed Anti-Radiation
    Missile (HARM). In the fiscal year 2000 Defense Budget the Air Force
    included 30 additional F-16CJ's. We plan to procure 10 in fiscal year
    2000 with delivery two years later in fiscal year 2002. The remaining
    20 aircraft will be procured on the following schedule: fiscal year
    2003--6; fiscal year 2004--7; fiscal year 2005--7 with delivery coming
    two years following each buy. The USAF has determined the next step in
    the battle against enemy IADs is a mission known as Destruction of
    Enemy Air Defenses (DEAD). In order to facilitate this, the USAF has
    begun a program to equip the F-16CJ with an Advanced Targeting Pod
    (ATP) that will further increase lethality with a broad range of
    precision weapons. Furthermore, the F-16CJ is undergoing a series of
    modifications known as the Common Configuration Implementation Program
    (CCIP) that will give the aircraft additional capabilities. CCIP
    includes the following individual modifications: Color Multi-Function
    Displays (CMFDs); Link-16 Digital Data Link; Modular Mission Computer
    (MMC); Joint Helmet Mounted Cueing System (JHMCS); APX-113 Air-to-Air
    Interrogator. The USAF is placing strong emphasis and positively
    enhancing the SEAD mission. Through a combination of extensive
    modifications and procurement of additional equipment, the Air Force
    has made its SEAD platforms much more lethal.

                              subcommittee recess

        Senator Cochran. As Senator Stevens stated earlier, the
    next hearing for the subcommittee will be next Wednesday at 10
    a.m.
        [Whereupon, at 12:04 p.m., Wednesday, March 29, the
    subcommittee was recessed, to reconvene at 10 a.m., Wednesday,
    April 12.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 2001

                                  ----------

                           WEDNESDAY, APRIL 12, 2000

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 9:55 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Ted Stevens (chairman) presiding.
        Present: Senators Stevens, Cochran, Domenici, Shelby,
    Inouye, and Byrd.

                             DEPARTMENT OF DEFENSE

                     Ballistic Missile Defense Organization

    STATEMENT OF LT. GEN. RONALD T. KADISH, USAF, DIRECTOR

                    OPENING STATEMENT OF Senator TED STEVENS

        Senator Stevens. General Kadish, it is nice to see you here
    this morning. We are actually getting started a little early,
    which is nice. We welcome you to your first appearance here in
    this new role, and we will welcome your assessment of the
    status of tactical theater and national missile defense
    programs.
        As you know, Senator Inouye and I recently went out to the
    Pacific missile range. We look forward to other members joining
    us here very soon.
        Under your leadership and that of General Lyles, the past
    year has demonstrated outstanding success, in my judgment, for
    the Ballistic Missile Defense Organization (BMDO). The record
    speaks for itself. The first intercept of a national missile
    defense (NMD) target, two successful theater high altitude area
    defense (THAAD) interceptions, and three successful Patriot
    advanced capability-3 (PAC-3) intercepts.
        I will not read my whole statement, because we want to
    listen to you, but I do think that the Department, the key
    industry partners, Lockheed Martin, Boeing, Raytheon and TRW,
    have demonstrated how the science and technology of national
    missile defense works, and I believe that we must continue on
    the course that whatever system we perfect will be able to
    defend all 50 States as effectively as we protect our deployed
    forces overseas.
        I know that you realize we look forward to working with
    you, and your complete statement will be made part of the
    record. I will ask Senator Inouye if he has any opening remarks
    to make before we start.

                     STATEMENT OF Senator DANIEL K. INOUYE

        Senator Inouye. I thank you very much, Mr. Chairman. I want
    to join you in welcoming General Kadish to discuss this very
    important topic.
        We all know that our military forces in the field are
    increasingly within the range of adversarial ballistic
    missiles. It is also likely that rogue nations may soon be
    capable of targeting the United States with these missiles. As
    of this moment, none of the systems sponsored by the
    Organization are in the field, but I hope that they will be in
    the field soon, so a lot of things that have to be done, and as
    the chairman indicated to you, we are with you. We want to see
    you succeed. After all, the best interest of our Nation is at
    stake.
        So with that, Mr. Chairman, I join you in your statement,
    and welcome the witness.
        [The statement follows:]

                 Prepared Statement of Senator Daniel K. Inouye

        Mr. Chairman, I want to join you in welcoming our witness,
    General Kadish, here today to discuss this very important
    topic.
        We know that our forces in the field are increasingly in
    range of ballistic missiles held by adversaries.
        It is also likely that rogue nations may soon be capable of
    targeting the United States with ballistic missiles.
        As of today, none of the systems sponsored by the Ballistic
    Missile Defense Organization--THAAD, PAC-3, ME-ADS, and Navy
    ballistic missile defense programs--are in the field.
        Today we are likely to hear about problems with the Patriot
    program and the latest failure in national missile defense
    testing.
        General, I know you are doing everything you can to get
    these programs under control.
        And, we sincerely appreciate your efforts.
        However, it is hard not to get frustrated by the continued
    delays and failures.
        General, in light of these facts, and the billions of
    dollars annually invested in missile defense, we really need to
    hear your candid views today on the status of our nation's
    missile defense programs.
        We need to know what we can do to help improve the
    situation to ensure that our defense dollars are being spent
    wisely and to assist in whatever way we can in getting these
    new capabilities fielded.
        I look forward to hearing your responses to these critical
    issues.

        Senator Stevens. Thank you very much. We will be pleased to
    have your statement, General.
        General Kadish. I am absolutely delighted to come here this
    morning, Mr. Chairman, and explain the ballistic missile
    defense program and its status, and if I might I would like to
    summarize my prepared statement and request that it be entered
    into the record.
        Senator Stevens. It has been, yes, sir.
        General Kadish. Mr. Chairman, it is helpful to view the
    ballistic missile defense as one program made up of several
    interdependent elements. As you will see, this interdependence
    is essential to our success, and one of my most important
    challenges.
        First, let me describe the whole program that is ballistic
    missile defense. First, national missile defense for our
    homeland, upper tier systems for theater and regional defense,
    and those are THAAD and Navy theater-wide, lower tier systems
    for the local or area defense, and those are PAC-3 and Navy
    area, our international programs to share the burden, programs
    to achieve interoperability for layered defense effectiveness,
    and the technology investment for the future-evolving threats.

                                Layered defense

        This BMDO program structure is built on the concept of a
    layered defense. A layered defense in depth is preferable to a
    simple perimeter defense wherever possible. The consequences of
    allowing a single weapon of mass destruction through a
    defensive system would be catastrophic. Let me explain.
        Two layers, for example, each with a theoretical 80-percent
    effectiveness would provide a 96 percent confidence of a
    successful defense. Three such layers would provide over 99
    percent confidence. I know that last month the Director of the
    Central Intelligence Agency (CIA) testified before Congress
    that, quote, over the next 15 years our cities will face
    ballistic missile threats from a variety of actors.
        As alarming as a long-range missile threat is, it should
    not overshadow the immediacy and the seriousness of the threats
    that U.S. forces, interests, and allies already face from short
    and medium-range missiles. You are well aware of the challenges
    we face in the development of ballistic missile defense systems
    to counter that growing threat in recent years.
        I am pleased to report, however, that last year was a good
    year. Since March 1999 we have had seven successful intercepts,
    with six of them using the hit-to-kill technology. One national
    missile defense intercept, two THAAD intercepts, three PAC-3
    intercepts, and one using focused warhead technology, the Arrow
    system that the Israelis produce.
        Our testing program has convinced me that the hit-to-kill
    technologies can work. We have made significant progress, but I
    do not wish to minimize the immense challenges that are before
    us. In the months ahead, there are several more tests scheduled
    in our national and theater missile defense programs that will
    involve increasing levels of system complexity and integration.
    Lots of hard work is ahead.
        Now I would like to briefly describe the budget request for
    our program. Our total request for ballistic missile defense
    over the future years defense program is $23.5 billion, up from
    $19.8 billion last year. We request $4.5 billion in fiscal year
    2001, an 18-percent increase over last year's $3.8 billion.
    This includes $3.9 billion for research, development, test, and
    evaluation (RDT&E), $444 million for procurement, and $103.5
    million for military construction activities. This increase
    reflects our heightened recognition of the growing threat and
    the considerable progress we have made in our test development
    efforts.

                            National missile defense

        Mr. Chairman, let me discuss our national missile defense
    program and the changes we have made. Initial operational
    capability, consisting of 20 interceptors, still occurs in
    fiscal year 2005. In light of the fact that we expect some
    States to acquire capability to launch more missiles with
    simple countermeasures in the 2005 timeframe, we will enhance
    the initial system to what we call an expanded C-1
    architecture, having 100 interceptors.
        The expanded C-1 deployment option builds on the revised
    program announced last year by the Secretary of Defense. The
    full 100 interceptors can be deployed by fiscal year 2007.
    Consequently, we have added $1.9 billion to the future years
    defense program to support this change.
        In addition, we added funds to our test program to reduce
    schedule risk. Last summer, we asked General Larry Welsh to
    conduct a second independent review of our program. He did so,
    and I found his recommendations to be most valuable, so we
    added some $285 million across the future years defense plan
    (FYDP) in response to those recommendations. I also might add
    that we have asked him to come back to the program and be
    involved in evaluating our progress as we speak.
        Now I would like to discuss how our national missile
    defense program is designed to reach the 2005 initial
    capability. Our greatest challenge continues to be to make sure
    that all the national missile defense elements work together as
    an integrated system so they can defeat the projected threat to
    our homeland. A successful test program and timely execution of
    the system element schedules will provide the answer to the
    question of greatest interest to us this year: are we
    technically ready to deploy a national missile defense program?

                       Deployment readiness review (DRR)

        We now plan to conduct a deployment readiness review, or
    DRR, in July of this year. We recently adjusted the schedule
    for the DRR, delaying this technology readiness assessment of
    NMD by approximately 1 month. We believe the delay is prudent,
    given our rescheduling of our next integrated flight test,
    number 5, for the 26th, or late June of this year. We do not
    believe that a July review will materially affect the time
    available to the President to make a decision later this summer
    or fall. We can still meet the current schedule to field an
    initial capability in fiscal year 2005.
        Although the DRR starts a key decision process, it is the
    first of at least three major decision milestones in the
    program over the next 5 years. Each decision will be based on
    the progress of the program at that time, and will give
    authority to proceed on key activities. This DRR will take
    place at the defense acquisition executive level, with full
    participation from all the DOD stakeholders.
        The DRR will not constitute the actual decision to deploy
    the NMD system. Rather, it will assess the technological
    progress to support a deployment decision. A deployment is a
    Presidential decision that may occur sometime this summer.
        The administration will assess the current state of the
    program, the threat, the affordability of the system, and take
    into account the implications for the overall strategic
    environment and our arms control objectives. If a decision is
    made to proceed, we will simultaneously seek approval of our
    recommended NMD site and the award of the construction
    contracts for those sites.
        In fiscal year 2001, we will conduct a Defense Acquisition
    Review Board to again assess the status of the program. Based
    on program performance, we would seek approval to initiate
    upgrades to the early warning radars, begin building the X-Band
    ground-based radar and missile site, and start integrating the
    battle management command and control and communications
    system.
        In fiscal year 2003, we will conduct a second Defense
    Acquisition Board review to seek approval to procure and deploy
    the ground-based interceptors as well as the necessary spares
    and test rounds. All of these decisions will depend on an
    assessment of our technical and programmatic progress.
        Although I continue to be optimistic about the system's
    eventual capabilities, we should guard against being either
    overly optimistic or unduly pessimistic about the deployment
    readiness of the NMD system. The NMD program is still a high-
    risk program. The schedule is so compressed that a significant
    setback in one element can delay the entire program. To date,
    however, we have been able to meet our commitments, but it
    requires aggressive management and constant attention. We
    recognize there is a long road ahead.

                             Intercept flight tests

        So far, we have had two intercept flight tests (IFT) to
    support the DRR decision process. The October 2, 1999 test
    demonstrated the ability of the kill vehicle to locate,
    discriminate, engage, and destroy a reentry vehicle above the
    atmosphere.
        As you know, IFT-3 had a remarkable finish, one which
    helped convey the technical complexity of colliding directly
    with a missile warhead traveling in space at a closing velocity
    of more than 15,000 miles per hour. The ability to do this
    becomes even more awe-inspiring when one considers a target
    warhead may be less than 5 feet long and surrounded by decoys
    and debris.
        We accomplished all of our test objectives in flight test
    3. The physical destruction of the target warhead speaks for
    itself. We now know our interceptor concept works. It worked
    the very first time we tried, a fact that has helped build our
    confidence that we can maintain our aggressive schedule.
        Much attention has been given to integrated flight test 4,
    which occurred on January 18 of this year. It was the second
    time we attempted an intercept, but IFT-4 is one in a long line
    of testing events we have planned through 2005. While many have
    called that flight test a failure, I take exception to that
    characterization of this very valuable test event.
        Viewed in a mission context, IFT-4 failed to hit the
    target. We missed the reentry vehicle, and the miss speaks for
    itself. However, in the context of testing, IFT-4 was a
    successful developmental test that proved under stressful
    conditions the X-Band radar, the upgraded early warning radar,
    and the battle management command and control and
    communications capability of our proposed system architecture
    worked.
        We wanted to have two successful intercepts early in the
    test program to support a Presidential deployment decision. To
    date, we have had one successful out of the first two flight
    attempts. One more integrated flight test, our third attempt at
    a successful intercept, is now scheduled for the end of June.
    We decided to delay this test by 2 months in order to deal
    satisfactorily with the problems we encountered with the
    krypton cooling system in our last flight test.
        In the 2 months that followed the flight test, we worked to
    understand why the failure occurred. In the end, we decided
    that our kill vehicle systems did not require design changes,
    but nevertheless we wanted to ensure that we thoroughly
    reviewed all the test hardware and processes prior to
    proceeding with IFT-5. A test delay at this point in our
    program is prudent from a technical standpoint.
        The NMD system is one of the most complex systems our
    country has ever attempted to develop and produce. The
    interception phase of the mission is clearly the most visible
    phase, and it is key to our success, yet we must not lose sight
    of the fact that successful integration of the highly
    interdependent elements is no less critical. The integration
    and support aspects of our testing events are transparent to
    most people but I assure you we could not do the job without
    them.
        We will continue to test our NMD system based upon strict,
    proven, and scientific methods learned over the last four
    decades of missile development, deployment, and operations. Our
    tests are designed to weed out flaws. While we strive for
    success on every test, we do not expect that we will always
    have it. Very often problems occur and elements of our tests
    fail, yet we learn a lot from our testing successes as well as
    failures before they go into deployed weapons systems. We must
    ensure that the NMD system we eventually deploy will work with
    a very high level of confidence, and our testing program is
    designed to do just that.

                              Upper tier programs

        Now let me turn to the upper tier programs that will
    provide us important theater defense capabilities. The Army
    THAAD and the Navy theater-wide systems are aggressively moving
    from demonstration to development phases. THAAD is now fully
    funded in the FYDP. The Navy theater-wide is fully funded
    through fiscal year 2002 with further funding to be reviewed
    after an important series of upcoming flight tests.
        Last year, many in Congress were dissatisfied with the
    proposed upper tier acquisition strategy. Indeed, 1 year ago we
    were in a very different position regarding our upper tier
    programs. THAAD had no intercepts, and the Navy theater-wide
    program was not well-defined. We were proceeding along a
    leader-follower path to choose one upper tier system over the
    other.
        Since then, THAAD has had two successful intercepts, which
    will allow us to move that program into the engineering and
    manufacturing development phase. Navy theater-wide is now
    progressing towards an important series of ground and sea-based
    flight tests. In light of these very positive results, we have
    followed congressional direction and put in place a strategy
    that takes advantage of this progress. Our goal today is to
    deliver both programs as soon as practical.

                              Lower tier programs

        The PAC-3 and the Navy area systems are the backbone of our
    lower tier systems, and will provide local and area defense. We
    request $2.9 billion across the FYDP for these systems, with
    three-quarters of this amount going to procurement. This plan
    reflects how much these systems have matured, and our
    commitment to move smartly from development into production.
    PAC-3 will initially be deployed in fiscal year 2001, and Navy
    area under fiscal year 2003 under current schedules.

                             International programs

        Our international programs will foster important missile
    defense cooperation, interoperability, and burdensharing. We
    have made significant commitments to these programs this year.
    Most of the funds we request were for the medium extended air
    defense system (MEADS) program, which we are developing
    cooperatively with Germany and Italy. MEADS has now been fully
    funded in the future years defense program by adding $714
    million from fiscal year 2001 to 2005. The program has been
    restructured beyond the 3-year risk reduction effort, with
    first unit equipped now planned for fiscal year 2012.
        The Arrow program with Israel has made much progress, a
    fact highlighted by last November's successful intercept. Our
    funding request for $124 million from fiscal year 2001 to 2005
    will allow Israel to procure components for a third Arrow
    battery and help us ensure that Arrow is interoperable with
    U.S. systems.
        Cooperation with Russia remains an important objective.
    Accordingly, we have fully funded the Russian American
    observational satellites (RAMOS) program in the future years
    defense program, and $317 million to support a revised two-
    satellite project should the United States and Russia agree to
    proceed.

                               Technology program

        We also signed a memorandum of understanding with Japan
    last August to help develop critical interceptor technologies
    that we expect will enhance our Navy theater-wide capabilities.
    A key element of our technology program is a spaced-based laser
    (SBL). This SBL program, which we share with the Air Force,
    currently is funded at $138 million in fiscal year 2001. BMDO
    assumes more than half of the total funding.
        In the near term, the SBL work will focus on ground-based
    efforts to demonstrate component and subsystem technologies. In
    full operation, we envision an interdependent system that works
    with ground, sea, and air-based missile defenses where boost-
    phase intercepts could thin out missile attacks and reduce the
    burden on midcourse and terminal phase defenses. As I reported
    earlier, the more layers of defense, the more likely we are to
    succeed.
        Our fiscal year 2001 request of $206 million for our
    technology program will go into applied research and advanced
    development. These programs will enhance the effectiveness of
    our current and future systems, and reduce the cost of our
    acquisition programs. Although we programmed $1 billion over
    the FYDP for this important area, it has become increasingly
    difficult to maintain an aggressive technology program in the
    face of the competing demands of our major BMDO programs.
        Most of our financial resources are focused on development,
    production, and deployment of our family of systems. We
    continue to examine ways to ensure we focus our future
    technology funding to pace the threat.
        I want to assure the committee that we are continuing to
    study ways to improve our management and stewardship of the
    ballistic missile defense (BMD) systems under our development.
    Therefore, I am taking action to restructure BMDO to face the
    challenges we have ahead of us.
        This budget has no requested transfer of research and
    development (R&D) or procurement funds to the services for
    execution of BMDO programs. My recent reorganization reflects
    our transition from an organization oriented towards early R&D
    technology and demonstrations to an acquisition-focused agency
    responsible for balancing early R&D management with introducing
    advanced technology and proven systems to our combat forces.
        As we look forward to the deployment readiness review, we
    have achieved several notable and reassuring successes in our
    NMD testing program, and we are making substantial progress in
    our upper tier systems, moving them from development towards
    production, and we are on the verge of achieving major
    milestones leading to the deployment of our lower tier systems.
    Our international commitments are adequately funded, and our
    technology program is focused with the resources we have
    available.

                               prepared statement

        Mr. Chairman, in my short tenure as Director of BMDO, I am
    more convinced than ever that an effective missile defense is
    crucial to the defense of this Nation and our Armed Forces. The
    missile threats facing our country, our Armed Forces, and our
    allies are immediate and growing and, while I expect
    significant conflicts, technical, and management challenges in
    our program, we are demonstrating increasing success. I am
    confident that we are aggressively addressing the right issues
    at the right time, and am funding our program accordingly, and
    I look forward to working with the committee and its members in
    this important mission area.
        Mr. Chairman, that concludes my remarks and I would be
    happy to answer questions.
        [The statement follows:]
                Prepared Statement of Lt. Gen. Ronald T. Kadish
        Good morning. Mr. Chairman and Members of the Committee, it is my
    pleasure to appear before you today to present the Department of
    Defense's fiscal year 2001 missile defense program and budget.
        The Ballistic Missile Defense Organization (BMDO) is chartered
    within the Department of Defense to manage, direct, and execute the BMD
    program in order to achieve the following objectives: develop options
    for, and deploy when directed, an anti-ballistic missile system to
    defend the United States; develop effective, rapidly relocatable
    Theater Missile Defenses to protect forward deployed and expeditionary
    U.S. armed forces as well as friends and allies; demonstrate advanced
    technologies to enhance missile defense systems; and continue basic and
    applied research to develop follow-on technologies.
        As the Director of the Ballistic Missile Defense Organization, I
    have identified five major priorities. My first priority is the
    National Missile Defense (NMD) Deployment Readiness Review (DRR), now
    scheduled for July of this year. This review will assess the technical
    progress on National Missile Defense in support of a subsequent
    Administration decision on whether and when to deploy the system. The
    DRR will assess whether enough technical progress has been made to
    enable the Administration to proceed with the deployment of the
    National Missile Defense system.
        The second priority is the development of the Theater Missile
    Defense (TMD) Upper-Tier Strategy. Working with the U.S. Army and U.S.
    Navy, we have restructured the Theater High Altitude Area Defense
    (THAAD) and the Navy Theater Wide (NTW) programs to posture them for
    deployment upon demonstrating continued success.
        Third, we must contain production costs of the Lower-Tier TMD
    systems. While PAC-3 is making significant progress, technical problems
    and weather conditions at the test range have contributed to delays and
    increased costs. Navy Area systems are approaching scheduled flight
    tests, but are experiencing technical problems. I remain committed to
    finding ways to reduce and contain the costs of delivering these
    systems.
        Fourth, our research and development is crucial to the continued
    health of our missile defense programs. I see the need to focus and
    intensify efforts in this area. Every scarce dollar in the technology
    budget must be optimized to meet future requirements of missile
    defense.
        Finally, I am focusing on the reduction of decision- and action-
    cycle times within BMDO. I want to ensure that we are organized in a
    way that minimizes the layers of communication and authority so we can
    focus on our core responsibilities. Toward that end, I have reorganized
    the Ballistic Missile Defense Organization by eliminating layers of
    management to flatten the organization.
        This past year we demonstrated considerable progress. Since March
    1999, missile defense has had seven successful intercepts, with six of
    them using hit-to-kill technology-one National Missile Defense
    intercept, two THAAD intercepts, three PAC-3 intercepts--and one using
    focused-warhead technology, the Israeli Arrow system. Based on these
    tests, we know that hit-to-kill technologies can work. We have,
    however, many more steps to take as we move towards fielding effective
    missile defense systems. In the months ahead, we have several more TMD
    and NMD tests scheduled that will involve increasing levels of system
    complexity and integration.
        Because of this progress in our test program in 1999, the
    Department of Defense has significantly increased funding for the
    missile defense program. As a result of this increase, we are better
    able to reduce program risk and take advantage of cost-reduction
    opportunities and move our programs to the next stage of development
    and production.
    Fiscal Year 2001 Program and Budget
        The total fiscal year 2001 budget request for the Ballistic Missile
    Defense Organization is $4.5 billion. This includes $3.9 billion for
    research, development, test, and evaluation (RDT&E), $444 million for
    procurement, and $103.5 million for military construction (MILCON)
    activities. Combining these three budget categories, National Missile
    Defense represents $1.92 billion, or 43 percent of the budget. Theater
    Air and Missile Defense programs account for $1.95 billion, also
    roughly 43 percent of the budget. We request $37.7 million for Applied
    Research and $93.2 million for Advanced Technologies, which together
    represent about 2.9 percent of the budget. BMD Technical Operations
    accounts for $272.6 million and is about 6 percent of the budget. We
    request $22.6 million for Threat and Countermeasures efforts and $117
    million for International Cooperative Programs, which together
    represent 3 percent of our overall budget. The following chart breaks
    out the fiscal year 2001 budget request by program element for BMDO-
    managed programs.

                            [In millions of dollars]
    ------------------------------------------------------------------------
                                                Fiscal year     Fiscal year
                    Then Year                      2000            2001
    ------------------------------------------------------------------------
    National Missile Defense:
        NMD Dem/Val \1\.....................         950.248       1,740.238
        NMD Procurement.....................  ..............          74.530
        NMD MILCON..........................          15.000         101.595
    Theater Air and Missile Defense:
        PAC-3 EMD...........................         179.139          81.016
        PAC-3 Procurement...................         343.773         365.457
        Navy Area EMD.......................         307.274         274.234
        Navy Area Procurement...............          18.143  ..............
        THAAD Dem/Val.......................         523.525  ..............
        THAAD EMD...........................          79.462         549.945
        Navy Theater Wide Dem/Val...........         375.764         382.671
        TMD BM/C\3\ Procurement.............  ..............           3.975
        Joint TAMD Dem/Val..................         196.566  ..............
        FoS E&I.............................         145.657         231.248
        MEADS Dem/Val.......................          48.594          63.175
    Support Technologies:
        Applied Research....................          88.365          37.747
        Advanced Technology Dev.............         212.837          93.249
        Boost-Phase Intercept...............           4.961  ..............
    Space Based Laser \2\...................  ..............          74.537
    BMD Technical Operations:
        BMD Tech Ops........................         214.445         270.718
        BMD Tech Ops MILCON.................           1.372           1.923
    International Coop Programs.............          81.560         116.992
    Threat & Countermeasures................          19.343          22.621
    Pentagon Reservation Maintenance Fund...  ..............           4.775
    ------------------------------------------------------------------------
    \1\ $590 million in fiscal year 1999 funding is being applied to fiscal
      year 2000 requirements.
    \2\ SBL (included under Advanced Tech Development in fiscal year 2000),
      which has a separate PE in the fiscal year 2001 PB, represents $74
      million or 1.7 percent of the budget and represents more than half of
      the total required funding in partnership with the U.S. Air Force.

    National Missile Defense
        Based on recent threat assessments, my program guidance is to be in
    a position, technologically, to support a decision later this year on
    whether to deploy a National Missile Defense (NMD) system capable of
    defending all 50 states against limited ballistic missile attack from
    states that threaten international peace and security. Recent
    intelligence estimates indicate that we must be concerned about the
    possibility that ballistic missile threats from states that threaten
    international peace and security will increase as they acquire a
    capability to launch more and longer range missiles with simple
    countermeasures in the 2005 to 2010 timeframe. As a result, we are
    enhancing the NMD program beyond the original Capability 1, or ``C1,''
    architecture by developing an ``Expanded C1'' architecture to meet this
    expanded threat. The Expanded C1 architecture will be capable of
    defending all 50 states against expected near-term threats larger than
    the initial C1 architecture was designed to handle.
        The Expanded C1 deployment option builds on revised program
    guidance announced last year by the Secretary of Defense. For planning
    purposes, the Expanded C1 system will incorporate 100 ground-based
    interceptors based in Alaska and an advanced X-Band radar based at
    Shemya Island, also in Alaska. Our NMD architecture plans incorporate
    upgrades to the existing ballistic missile early warning radars and,
    for the purposes of initial launch detection, use the Space Based
    Infrared System (SBIRS) High, which eventually will replace the
    existing Defense Support Program satellite constellation. Initial
    Operational Capability (IOC) for the C1 architecture, consisting of 20
    interceptors, still can take place in 2005. The full 100 can be
    deployed by fiscal year 2007. Since the President submitted the fiscal
    year 2000 budget to Congress, the NMD program has been increased by
    $2.3 billion over fiscal year 2001-05. Between fiscal years 2001
    through 2005, we have programmed $10.375 billion (in then year dollars)
    for the NMD program.
        In 1999, BMDO commissioned a second independent panel headed by
    retired General Larry Welch to review the National Missile Defense
    (NMD) program in light of the program's new structure. The panel's
    charter was to determine the effects of extending the NMD program by
    two years and to review the adequacy of the resulting test program. The
    panel concluded that, although the revised NMD program reduced program
    risk, it remains a high-risk program. The panel made 18 specific
    recommendations to reduce program risk further. I support the panel's
    recommendations and have added $285 million across fiscal year 2001-05
    to augment the NMD testing program. This funding will pay for
    additional hardware for the NMD Kill Vehicle, additional test equipment
    and testing.
        Our greatest challenge continues to be to make sure all NMD
    elements work together as an integrated system so that it can defeat
    the postulated threat to our homeland. A successful test program and
    the timely execution of system-element schedules will provide the
    answer to the question of greatest interest to us this year: Are we
    technically ready to deploy an NMD system?
                NMD Decision Time Line
        We plan to conduct a Deployment Readiness Review (DRR) in July of
    this year. We recently adjusted the schedule for the DRR, delaying this
    technology readiness assessment of the NMD program by approximately one
    month. The DRR is a review internal to the Defense Department that will
    be led by the Under Secretary of Defense for Acquisition, Technology &
    Logistics. We think the delay is prudent given our rescheduling of
    Integrated Flight Test 5 (IFT-5) to take place on June 26 of this year.
    We do not believe moving the DRR to July will materially affect the
    current schedule which supports fielding an initial capability in
    fiscal year 2005.
        Although the DRR starts a key decision process, it is the first of
    at least three decision milestones in the program over the next five
    years. The technological assessment of the NMD program will take place
    at the Defense acquisition executive level--with full participation
    from all Department of Defense stakeholders. The DRR will not
    constitute the actual decision to deploy the NMD system. Rather, it
    will assess the technological progress to support a deployment
    decision. The Administration's decision will be based on an assessment
    of four factors: (1) the nature of the threat; (2) the status of the
    technology based on an initial series of rigorous flight tests, and
    assessment of the proposed system's operational effectiveness; (3)
    system affordability; and (4) assessments of the impact of NMD
    deployment on the overall strategic environment and U.S. arms control
    objectives, including efforts to achieve further reductions in
    strategic nuclear arms under START II and START III.
        If a decision is made to deploy, we will simultaneously seek
    approval for our recommended NMD site and award of the construction
    contract for that site. A decision to deploy would lead us to conduct a
    Defense Acquisition Board review to assess the status of the program in
    late fiscal year 2001. Based on program performance, we would seek
    approval to initiate upgrades to the current early warning radars,
    begin building the missile site, and start integrating the Battle
    Management/Command, Control and Communications (BM/C\3\). In fiscal
    year 2003, we would conduct a second Defense Acquisition Board review
    to seek approval to procure and deploy the ground-based interceptors as
    well as the necessary spares and test rounds. All of these decisions
    will depend on an assessment of our technical and programmatic
    progress.
                NMD System Description
        I would like to take a moment to explain how we envision the
    individual NMD system elements will operate when combined as a fully
    operational and integrated system. Let us assume a hostile launch to
    begin the engagement process. Space-based sensors make the initial
    detection and report a threat launch. DSP, and eventually SBIRS-High,
    will alert the entire system of a potential ballistic missile attack,
    cue the radars to erect ``search fences'' to detect the incoming
    missile, and start evaluation of engagement options at battle-
    management centers. When the threat missile crosses into the range of
    ground-based early warning radars, these radars confirm target missile
    flight and tracking information. Upon data confirmation, the BM/C\3\
    center cues the X-Band Radar and directs the launch of a ground-based
    interceptor. The ground-based X-band radar provides high-resolution
    target tracking data to the BM/C\3\ system, which sends an update to
    the interceptor in flight through an In-Flight Interceptor
    Communications System. This data will be used by the interceptor to
    maneuver close enough to the target missile for the on-board kill
    vehicle sensor to discriminate the warheads from decoys and debris.
    Sensors on the kill vehicle provide final, precise course corrections
    to enable the kill vehicle to destroy the target. Multiple interceptors
    launched at each incoming reentry vehicle, either in salvo or in waves
    (a ``shoot-look-shoot'' scenario), are expected to increase
    dramatically the probability of a successful intercept.
                NMD Flight Testing
        In June 1997 and January 1998, we conducted two very successful
    seeker ``fly-by'' tests that allowed us to demonstrate key elements of
    the kill vehicle. Last October, we also successfully conducted the
    first of our interceptor tests--destroying a target vehicle in space
    over the Pacific Ocean. On January 18, 2000, we conducted a second
    intercept test. Though our Kill Vehicle did not intercept the target
    warhead, the test successfully demonstrated the compatibility of
    critical system elements. There are 17 developmental flight tests
    remaining, all of which will incorporate intercept attempts, in
    addition to other very important integrated system tests designed to
    unite the NMD elements into an operational ``system of systems.'' We
    also will conduct extensive ground testing of hardware and demonstrate
    the integration of system elements.
        The October 1999 integrated flight test, IFT-3, culminated in a
    remarkable finish. It conveyed to the public the technical complexity
    of colliding directly with a missile warhead traveling in space at more
    than 15,000 miles per hour. The ability to do this becomes even more
    awe-inspiring when one considers the target warhead may be less than
    five feet long and surrounded by decoys and debris. We accomplished all
    of our test objectives in IFT-3--the physical destruction of the target
    warhead speaks for itself. We now know our interceptor concept works
    technically, and that one test helped to build our confidence that we
    can maintain our schedule.
        A great deal of attention has been given to the integrated flight
    test that occurred on January 18 of this year. It was one in a long-
    line of testing events we have planned through 2005. While many have
    called IFT-4 a failed test, I take exception to this characterization
    of this very important and valuable test event.
        Viewed in a mission context, IFT-4 was a failure--we missed the RV.
    The miss speaks for itself. However, in the context of testing, IFT-4
    was a successful developmental test that proved under very stressful
    conditions the X-Band Radar, the Upgraded Early Warning Radar, and the
    BM/C\3\ capability of our proposed architecture. The NMD system is one
    of the most complex systems our country ever has attempted to develop
    and produce. The interception part of the NMD mission is clearly the
    most visible and highly regarded phase, yet we must not lose sight of
    the fact that the successful integration of the system elements is no
    less critical. The integration and support aspects of our testing
    events are transparent to most people, but I assure you that we could
    not do the job without them.
        We will continue to test our national missile defense system based
    upon strict, proven scientific methods learned over more than four
    decades of missile development, deployment, and operations. Our tests
    are designed to weed out flaws. While we strive for success on every
    test, we do not expect that we will always have it. Very often problems
    occur and elements of our tests fail. Indeed, we should expect failure
    from time to time, sometimes spectacular failure, as the price of
    ultimate success in this highly challenging endeavor. We learn a lot
    from our testing successes and failures. We gain knowledge and pick up
    important information from problems and mistakes discovered during
    testing and incorporate the necessary changes into our systems before
    they go into our deployed weapon systems. We must ensure that the NMD
    system we eventually deploy will work with a very high level of
    confidence--our testing program is designed to do just that.
        One more Integrated Flight Test, our third attempt at a successful
    intercept, is scheduled before the DRR in July. IFT-5, now scheduled
    for June 26, will meet the requirements of an integrated system test in
    which all the elements of the NMD system will participate together in
    the engagement and destruction of the target. We decided to delay this
    test by two months in order to deal satisfactorily with the problem we
    encountered with the krypton cooling system in IFT-4. In the two months
    that followed this anomaly, which caused the EKV to lose track of the
    target cluster six seconds prior to impact, we examined the failure
    options comprehensively. In the end, we decided that our EKV systems
    did not require design changes, but nevertheless we wanted to ensure
    that we thoroughly reviewed all test hardware and processes prior to
    proceeding with the IFT-5. A testing delay at this point in our program
    was prudent from a technical standpoint. We believe that we will have
    enough technical data from this test in order to move forward with the
    DRR in July.
        From fiscal year 2001 through fiscal year 2005, we will conduct
    three intercept flight tests each year. This will allow us to
    demonstrate the increasing sophistication of the kill vehicle and
    integrated system. Flight Test 7, scheduled to take place in fiscal
    year 2001, will be the first flight test to incorporate both the exo-
    atmospheric kill vehicle and the proposed operational booster. Flight
    Test 13, scheduled for fiscal year 2003, will fly the production-
    configuration ground-based interceptor--including the kill vehicle and
    booster.
        The NMD Flight Test Program follows a very specific path to allow
    an initial operational capability (IOC) in fiscal year 2005. This path
    includes a number of milestones that, in effect, postpone the need to
    freeze the interceptor design until the latest possible time dictated
    by lead-time to the 2005 deployment date. The interceptor remains the
    element with the highest risk within the NMD architecture. Therefore,
    by waiting to lock in the interceptor design until after we have tested
    the production-configuration ``round,'' we can be more confident in the
    system we will deploy.
        The NMD program has been executed along a high-risk schedule. High-
    risk has a very specific meaning--we are executing this program at such
    an accelerated pace, that significant failure in any of the program
    elements may well cause us to slip our development timelines. Our
    recommended approach, however, is designed to handle this schedule risk
    by phasing our decisions based on test and programmatic performance,
    allowing more time to develop, demonstrate and, ultimately, deploy the
    system elements in a prudent manner. We have a demanding challenge and
    we are managing aggressively to meet it.
    Deployment Planning Activities
        While we have been developing and testing the system elements, we
    also have been proceeding vigorously on deployment planning activities.
    We have conducted fact-finding and siting studies for two potential
    site locations--Alaska and North Dakota. We have initiated site designs
    for the X-band radar, weapon sites, and BM/C\3\ facilities. On October
    1, 1999, we published in the Federal Register a Notice of Availability
    of the NMD Program's Deployment Draft Environmental Impact Statement
    (EIS), inviting the public to review and comment on that document. The
    public comment period ended on January 19, 2000. In October and
    November of last year, over 650 people attended public hearings on the
    draft EIS in Alaska, North Dakota, and Washington, D.C. We are
    considering the input received as we prepare the Program's Final
    Environmental Impact Statement, which we have scheduled for completion
    later this spring. As required by law, the results of the EIS will
    represent one of many inputs into the deployment decision process.
        We initiated ground-based element facility planning and design in
    fiscal year 1999 and have completed the 65 percent design for the
    weapon system and X-band radar facilities. We will start the design of
    the BM/C\3\ facilities later this year. For fiscal year 2001, we are
    submitting a request for construction of the tactical and support
    facilities for an Expanded C1 capability. This will consist of an X-
    Band Radar Complex, a Ground-Based Interceptor Missile Launch Complex,
    and a series of dispersed facilities for Battle Management/Command,
    Control, and Communication. We request a fiscal year 2001 MILCON
    appropriation of $101.6 million to begin construction of the X-band
    radar, conduct site preparation of the interceptor site, and continue
    planning and design work.
        In accordance with budget guidance, we will further define the
    facility and systems requirements associated with potential deployment
    of 100 interceptors in an Expanded C1 architecture by fiscal year 2007,
    including the installation of 80 additional missile silos and non-
    tactical facilities. In order to remain on schedule for the deployment
    of the first 20 missiles in fiscal year 2005, we plan to issue a
    Request for Proposal this summer and award the contract(s) this fall,
    if approval for deployment is given.
        We have made important technical progress in many areas in the
    National Missile Defense program. Nevertheless, this is an extremely
    complex program and we still have many significant challenges ahead of
    us.
    Theater Missile Defense--the Family of Systems
        The Family of Systems (FoS) concept is a flexible configuration of
    highly interoperable theater missile defense systems capable of joint
    and combined operations that allows the joint force commander to tailor
    the right mix of systems and capabilities according to resources,
    situation, and threat. We request $231.2 million in fiscal year 2001 to
    enhance the effectiveness of our FoS. FoS seeks to link the TMD core
    programs so that they fight as one system and obtain a force multiplier
    advantage. The program builds interoperability by conducting
    assessments to identify weaknesses, define architectural and
    engineering solutions, and integrate and test those solutions. BMDO has
    a disciplined acquisition approach for addressing warfighter
    interoperability requirements that builds on a foundation of legacy and
    developmental systems acquired by the Services. The near-term FoS
    effort is more of a development and integration effort than a
    traditional acquisition program insofar as it is expected to define
    software and hardware changes to existing systems to enable them to
    interoperate effectively.
                Upper-Tier TMD Strategy
        The medium- and long-range theater ballistic missile threat is
    emerging very rapidly. More countries are acquiring ballistic missiles
    with ranges between 1,000 and 1,300 kilometers. North Korea has
    developed the No Dong-1 missile. In July 1998, Iran conducted a
    partially successful flight test of its Shahab-3 missile, which could
    significantly alter the military equation in the Middle East by giving
    Iran the capability to strike targets in Israel, Saudi Arabia, and most
    of Turkey.
        DOD studies have consistently validated the need for two Upper-Tier
    systems. The Theater High Altitude Area Defense (THAAD) program
    provides endo- and exo-atmospheric capabilities to engage a full
    spectrum of Theater Ballistic Missiles (TBMs). It is able to provide
    inland area defense for those scenarios where this is required. The
    Navy Theater Wide (NTW) program enhances these capabilities by
    providing early exo-atmospheric engagement opportunities in the ascent
    phase (i.e., the portion of the ballistic missile trajectory after
    boost and prior to apogee), which increases battle space and area
    covered, and negates weapons of mass destruction at greater distances
    from the intended target.
        Late in fiscal year 1999, the Department of Defense (DOD) embarked
    on an intensive review of the THAAD and NTW programs, two programs
    that, once deployed, are intended to defeat the growing medium- and
    long-range theater ballistic missile threat. The purpose of this review
    was to meet Congressional guidance and to reduce risks and costs.
        The Upper-Tier Strategy complies with the law. THAAD was fully
    funded in the FYDP based on the successful completion of the
    demonstration phase. NTW was fully funded through fiscal year 2002. The
    decision to provide full outyear funding for an fiscal year 2006
    contingency capability has not been made pending results of AEGIS LEAP
    Interceptor (ALI), flight-testing. The decision to fund, and at what
    level, will be made on performance. Embedded in the acquisition
    strategy for both programs are opportunities to add funding or
    accelerate the release of an early capability based on success.
        Based on two successful THAAD intercepts, we revised the Upper-Tier
    guidance during the summer of 1999 to cancel the remaining THAAD
    Program Definition/Risk Reduction (PD/RR) flight tests and shift
    emphasis from flight-test execution to missile redesign and planning
    for the Engineering, Manufacturing and Development (EMD) phase of the
    program. Additionally, we developed an alternative acquisition approach
    to provide a phased introduction of capability rather than initially
    fielding the objective system.
        Prior to this review, the THAAD program was pursuing a standard
    acquisition approach to field an objective capability by defining
    requirements, designing and fabricating hardware, conducting ground-
    and flight-testing and eventually fielding a capability to meet
    threshold operational requirements. In order to pace the threat and
    obtain early capability with reduced risk, an evolutionary approach was
    proposed in accordance with current DOD policy. This resulted in a
    First Unit Equipped (FUE) for an initial configuration (or C1) in
    fiscal year 2007. C1 will include the capability to defeat all Upper-
    Tier threats expected by 2007, and it will meet the key performance
    parameters outlined in the Operational Requirements Document (ORD).
    Sophisticated countermeasures and battalion operational software are
    deferred to the next configuration (termed C2) that is planned for
    fielding in 2011.
        We are reviewing options for reaching the objective NTW capability.
    NTW has consistently pursued a block upgrade approach to acquisition,
    meaning that a Block II objective system, which has yet to be fully
    defined, may follow a Block I initial capability. The Navy will
    continue this evolutionary approach, through an initial system flight
    test program (ALI), followed by three developmental increments of the
    Block I system. These increments, Block IA, 1B, and 1C, provide the
    warfighter with ascent-phase TBMD capability that evolves toward the
    Block II objective system using a ``block-within-a-block'' (BWB)
    methodology.
        Since the Standard Missile 3 (SM-3) missile will mature more
    quickly than the AEGIS Weapons System software, the NTW program can
    deliver a warfighting capability earlier through the use of a
    reconfigurable ship. Such a ship, which can shift computer programs to
    accomplish either the Upper-Tier TBMD mission or conventional missions
    in accordance with the tactical situation, will reduce the development
    complexity of the software. Under the revised Upper-Tier Strategy, we
    will be positioned to pursue an NTW contingency capability (Block IA)
    in the 2006 timeframe, with a Block I reconfigurable ship (Block IB)
    FUE in the 2008 timeframe. The Block IB capability is designed to pace
    the threat expected at that time. The FUE for the fully ORD-compliant
    Block IC multi-mission ship could occur in 2010. We are also
    considering going straight to Block II.
        Complementing this program is our cooperation with Japan on
    research aimed at improving four key components of the SM-3 missile.
    This cooperation was initiated when we signed a Memorandum of
    Understanding with Japan in August 1999 to govern the first phase of
    this collaborative activity. Preliminary planning is already underway
    for follow-on work with Japan to demonstrate and validate the products
    of the initial research. We will integrate this cooperative work into
    NTW program planning.
        Current NTW funding allows the program to complete ALI flight-
    testing through fiscal year 2002 that is key to determining whether the
    system works, continuing the U.S./Japan cooperative project noted
    above, and assuring an industrial capability throughout the FYDP that
    continues to advance key technologies required to field an NTW
    capability.
        When we initiated the review of its Upper-Tier Strategy, there were
    not sufficient funds to enable both programs to field a capability in
    2007. In a fiscally constrained environment, we had to balance
    requirements, benefits, and risks in order to provide a highly
    effective layered-defense against emerging threats. The revised Upper-
    Tier Strategy conforms to the three tenets of the Fiscal Year 2000
    Defense Authorization Act, Section 232. The current strategy also
    provides opportunities for accelerating each program later should the
    programs demonstrate success. This is a key feature of our strategy.
    Both Upper-Tier programs should proceed based on demonstrated success.
    Although we have funded THAAD adequately in the FYDP, outyear funding
    for the NTW baseline program will be reviewed on successful ALI flight-
    testing.
        Theater High Altitude Area Defense.--In June and August 1999, the
    THAAD system conducted two very successful intercepts. These successes
    were a welcome development after a series of disappointing failures.
    The THAAD and PATRIOT PAC-3 intercepts gave us very strong confirmation
    of the hit-to-kill technologies we have been pursuing. We reported last
    year that we were confident that the basic THAAD system and missile
    designs were sound, and that the failures resulted from poor quality
    control during production of the original Program Definition/Risk
    Reduction (PD/RR) missiles. Based on all THAAD testing, to include the
    success of those two hit-to-kill intercepts, the Under Secretary of
    Defense (Acquisition, Technology & Logistics) determined that the key
    exit criteria for the PD/RR phase were met and waived the requirement
    for three intercepts before entering EMD. As required by the Fiscal
    Year 2000 Defense Authorization Act, we are providing the Report to
    Congress on the rationale for waiving the third intercept.
        Consequently, we have shifted the THAAD program's emphasis from
    flight test execution in the demonstration phase, and we are now
    preparing to enter the EMD phase using lessons from PD/RR. The
    Milestone II decision to enter the EMD is currently planned for April
    of this year. As we prepare to enter EMD, we are making use of the
    lessons learned during the Program PD/RR phase, and expect to avoid
    problems encountered with the PD/RR missiles.
        The $549.94 million in fiscal year 2001 for the THAAD program will
    continue the design and development of the C1 hardware and software.
    System Preliminary Design and segment Critical Design Reviews will be
    conducted. Part of this development will include lethality studies and
    advanced algorithm development. Key test facilities such as the System
    Integration Laboratory will be prepared for system-level testing.
    Integration activities with the Air and Missile Defense Command and
    Control System will be continued. Finally, preparations begin for EMD
    flight-testing.
        Navy Theater Wide.--The NTW program has experienced several
    successes over the past year. In September 1999, the Navy Theater Wide
    program successfully demonstrated the first shipboard launch of a
    Control Test Vehicle. Follow-on flight tests are scheduled for later
    this year leading up to the first Navy Theater Wide intercept attempt
    during the first quarter of fiscal year 2001. Additionally, the Navy
    Theater Wide Program has successfully completed significant
    developmental ground-testing of the third stage rocket motor, full-
    scale and sub-scale lethality testing, and demonstration of significant
    interoperability potential through data exchange with THAAD and PAC-3
    during recent missile test events.
        Over the next few years, a significant amount of testing is
    planned. These tests will mitigate the higher risk in many areas and
    obtain valuable data to support system-engineering requirements. The
    $382.67 million in fiscal year 2001 for NTW will continue ALI flight-
    test activities as well as the Block I system engineering, program
    management, risk reduction, and test planning efforts. Lethality
    requirement definition and performance testing also continue. Funds are
    included to procure target assets to support flight-testing. Finally,
    funding will continue research, analysis and development efforts with
    the Government of Japan on selected NTW Block II technologies.
                Lower-Tier TMD Strategy
        The Lower-Tier strategy focuses on enhancing currently fielded
    systems (PATRIOT, AEGIS) to provide capability as soon as possible. The
    strategy also exploits emerging technologies to develop a highly mobile
    defense for maneuver forces under the Medium Extended Air Defense
    System (MEADS) program. The overarching goal of the near-term Lower-
    Tier systems is to deploy an effective and affordable TBM capability as
    soon as technically possible.
        Increasing costs, driven primarily by technical challenges, have
    been a problem for the Lower-Tier systems. The delivery dates for the
    PATRIOT Advanced Capability 3 (PAC-3) and Navy Area systems have moved
    to fiscal year 2001 and fiscal year 2003, respectively. The PAC-3 and
    Navy Area programs still require further development and testing, and
    still have challenges to face to meet the dates we have set for them.
        In order to optimize resources and coalition forces effectiveness,
    we are aggressively pursuing international cooperative participation in
    the Lower-Tier programs. This will include the MEADS program and the
    potential for extensive foreign military sales of PATRIOT and,
    possibly, Navy Area systems. We must, of course, balance the sharing of
    the systems and technical capability with safeguarding of critical
    technologies.
        Patriot Advanced Capability 3 (PAC-3).--This has been a busy and
    successful year of activity on the PAC-3 program. Every time the system
    has been tested, it has been successful--all five of the PAC-3 tests
    have met their goals, including intercepts on the last three: March 15,
    1999; September 16, 1999; and February 5, 2000.
        The majority of the flight test program still lies ahead. The
    remaining PAC-3 missions will consist of 14 PAC-3 missiles intercepting
    different classes of targets. Follow-on tests include developmental and
    operational tests, which are designed to test the incremental hardware
    and software upgrades to the PAC-3 system using increasingly complex
    scenarios.
        On October 12, 1999, we conducted a review and verified that all
    the exit criteria for entering low-rate initial production were met.
    The ensuing Acquisition Decision Memorandum officially authorized the
    award of a contract for the assembly of the first 20 PAC-3 missiles. On
    December 3, 1999, this contract was awarded to Lockheed-Martin. In
    parallel to this, a second contract to build three additional missiles
    for Air-Directed Surface-to-Air Missile (ADSAM) testing and conduct of
    an engagement against a long-range target was awarded on December 8,
    1999.
        I remain fully committed to reducing production costs of the PAC-3
    missile. My goals for the overall program are to reduce costs, procure
    as many missiles as possible, deliver an operational capability on
    time, and live within the current budget estimate.
        In October 1999, we established a joint government-industry
    missile-production cost-review team. This team focused on government
    and contractor costs related to missile production. The team
    established the baseline missile cost, developed a prioritized set of
    cost reduction initiatives, and produced an implementation plan to
    execute the cost reduction initiatives. The results of this work look
    promising. In the next few months, I will be adjusting our PAC-3
    strategy to incorporate the team recommendations, which have the
    potential to substantially increase missile quantity for the same
    funding. I have commitment from Lockheed-Martin to make it work, and I
    look forward to telling you more about our progress in coming months.
        The PAC-3 program request for fiscal year 2001 is $81 million in
    EMD and $365 million in procurement. This funding will complete the
    engineering, manufacturing, and development and testing of the PAC-3
    Configuration-3 system, including the PAC-3 missile. The procurement
    funding will buy up to 40 PAC-3 missiles and spares and upgrade six
    Configuration-3 ground systems.
        Navy Area.--The Navy Area sea-based missile defense capability
    consists of modifications to the AEGIS combat systems and the SPY-1
    radar to enable the ship to detect, track, and engage theater ballistic
    missiles using an updated version of the Navy's Standard Missile. The
    Navy Area program is currently in the EMD phase and is nearing the
    first series of 8 flight tests. These tests are scheduled to begin in
    May at the White Sands Missile Range (WSMR). The program recently
    completed a rebaselining effort to field the system within the
    available funding. First Unit Equipped will occur in December of 2002.
    This program still has challenges. I had an independent review group
    examine the program cost risk. We understand these risks better, but I
    will not feel confident until the technical risks are retired by
    successful intercepts.
        In the Fall of 1998, two AEGIS cruisers, the U.S.S. Port Royal, and
    the U.S.S. Lake Erie were augmented with TBM software and the ability
    to test-fire the new TBM missile using their new LINEBACKER User
    Operational Evaluation System. These ships are now providing critical
    feedback to influence the tactical design improvements and
    modifications to the AEGIS combat system. They will conduct a variety
    of at-sea tests, develop core doctrine and tactics, and support our
    flight-testing activities.
        The Navy Area program request for fiscal year 2001 is for $274.2
    million in EMD funding. This will permit completion of the White Sands
    Missile Range and Linebacker, at-sea, flight-test events. Successful
    WSMR flight intercepts provide the technical basis to begin low-rate
    initial production using the Navy's weapons procurement funding. This
    funding also pays for continued development of the Aegis ship systems,
    including software development.
        Medium Extended Air Defense System.--We recognize the need for
    maneuver force protection, added mobility, and the value of
    international cooperation. We previously had restructured the MEADS
    program to include a three-year Risk Reduction Effort for the design
    and development phase ending in 2002. We have now augmented the 3-year
    risk reduction effort and fully funded the MEADS program by adding $714
    million from fiscal year 2002 to fiscal year 2005. MEADS is currently
    scheduled to achieve FUE in fiscal year 2012.
        The MEADS request for fiscal year 2001 is for $63.2 million in Dem/
    Val funding. This funding, combined with funding from our international
    partners, Germany and Italy, will enable continued development of
    prototype launcher, mobile fire control radar, and BMC\4\I hardware and
    associated software and digital end-to-end simulation of the MEADS
    system.
    Integrated Technology Program
        Technology development has played a crucial role in the recent
    successful trials of the BMD systems. Today's missile defense systems
    rely heavily on technology matured and demonstrated by BMDO and the
    Services. Our Integrated Technology Program continues to focus on
    enhancing the effectiveness of our current major defense acquisition
    programs (MDAPs) and reducing associated costs while also strategically
    investing in advanced concepts and capabilities to defend our nation
    against future missile threats.
        Our spiral development strategy relies on an integrated technology
    program to demonstrate and mature technology for insertion into the
    MDAPs. We are accomplishing this integrated approach through increased
    communication between our technology developers and our MDAP program
    managers and the development of coordinated transition plans. These
    transition plans detail the development, transition, and insertion
    strategies for all component technologies supporting spiral
    development.
        While seeking to develop technologies to counter future threats,
    our Advanced Interceptor Technology program, along with our other
    technology programs, are developing cost-saving components for some of
    our acquisition programs. These near-term cost-saving technology
    programs should allow us to reduce per unit costs, thereby enabling us
    to procure increased numbers of interceptors and other ballistic
    missile defense system components within available fiscal resources.
        It has become increasingly difficult to maintain an aggressive
    technology program in the face of competing demands presented by the
    MDAPs. In the past, we were able to fund more robust technology
    programs, such as the Lightweight Exo-Atmospheric Projectile (LEAP),
    which is now the basis for the Navy Theater Wide and NMD interceptors.
    At current funding levels, we are able to fund far fewer programs for
    next-generation weapon systems. Since most of our financial resources
    are focused on development, production, and deployment of our family of
    systems, we need to invest in technology development if we are to keep
    pace with the emerging threat. We will continue to examine ways to
    insure technology funding in the future.
    Space-based Laser Project
        The key focus of our Advanced Technology directed energy program
    remains the chemical Space-Based Laser (SBL). The SBL project is
    designed to investigate whether, at some point, it would be possible to
    provide the United States with a highly effective, continuous boost-
    phase intercept capability for both theater and national missile
    defense missions. Working with ground-, sea-, and air-based missile
    defenses, boost-phase intercepts by the SBL could ``thin out'' missile
    attacks and reduce the burden on mid-course and terminal-phase
    defenses.
        In the near-term, the SBL project will focus on ground-based
    efforts to develop and demonstrate the component and subsystem
    technologies required for an operational space-based laser system and
    the design and development of an Integrated Flight Experiment (IFX)
    vehicle that could be tested in space in 2012.
        The SBL project is jointly managed by BMDO and the U.S. Air Force,
    and is executed by the U.S. Air Force on our behalf. Both BMDO and the
    Air Force request funds in the fiscal year 2001 budget for the SBL
    project. We are working jointly, pooling resources and ensuring the
    program is following a clear direction. The BMDO budget contains $74.5
    million and the Air Force budget has $63.2 million, for a combined
    request of $137.7 million.
    Ballistic Missile Defense Technical Operations
        The BMD Technical Operations program manages capabilities to assure
    the execution of the NMD, TMD and FoS, and Technology programs. This
    includes BMD systems architecture and engineering analysis, test
    resources and facilities, modeling and simulation, and phenomenology
    data collection and analysis. Although it provides this foundation for
    the entire missile defense program, Technical Operations represents
    only 6 percent of the budget.
    International Cooperative Programs
        I have touched on some of our international activities with allies.
    The Department fully funded the MEADS program and added $714 million
    from fiscal year 2002 to fiscal year 2005 towards the design and
    development of the system. Our collaborative work with Japan has been
    funded at $36 million through fiscal year 2001. Now let me look at two
    other International Cooperative Programs--one with Israel and the other
    with Russia.
                Cooperative Programs with Israel
        The U.S.-Israeli Arrow Program has made significant progress toward
    the deployment early this year of a contingency-capable Arrow Weapon
    System. On November 1, 1999, Israel successfully conducted a fully
    integrated system intercept test against a ballistic missile target.
    The Arrow II interceptor was controlled to a successful intercept by
    the other elements of the Arrow Weapon System--the surveillance/fire
    control radar (Green Pine), fire control center (Citron Tree), and
    launcher control center (Hazel Nut Tree). The successful test satisfied
    Israeli Air Force requirements for initial operational capability. Once
    training and equipment inventory requirements are met, I expect the
    Israeli Air Force to declare the system operational as a contingency
    capability. Additional funds were provided to allow Israel to complete
    the procurement of a third battery of the Arrow system.
        Bilateral activities continue toward development of an Arrow Weapon
    System that is interoperable with U.S. TMD systems. Interoperability
    initiatives will result in the Arrow Weapon System having a
    demonstrated capability to interoperate with U.S. PATRIOT and Navy Area
    TMD systems. We are continuing efforts to use the Israeli Test Bed
    (ITB) and the Israeli Systems Architecture and Integration (ISA&I)
    analysis capabilities to assist with the deployment and future upgrades
    of the Arrow Weapon System.
        The $81.2 million in fiscal year 2001 for the Israeli Cooperative
    Project continues the Arrow Deployability Program, which includes
    funding to adjust the U.S. cost share of development so that Israel can
    procure components for a third Arrow battery. On-going Arrow flight
    tests will continue to validate and expand the Arrow battlespace.
    Improved threat models and an Arrow II update are incorporated in the
    ITB that support U.S. and Israeli standard operating procedure
    development and CINC EUCOM exercise requirements. Finally, evaluation
    of Arrow performance continues in conjunction with future emerging
    threats.
                Cooperative Programs with Russia
        The Russian-American Observation Satellites (RAMOS) program
    currently is my agency's most significant cooperative effort with
    Russia. The program originated in 1992 to develop and test space-based
    surveillance technologies jointly. Early in 1999, the associated
    technology objectives were assessed to be lower in priority than other
    critical technologies needed to address future ballistic missile
    threats. We then proposed an alternative aircraft-based cooperative
    program, which the Russians did not accept as a substitute for the two-
    satellite concept.
        In 1999 we reviewed the program and determined that continuing the
    development of a space-based experiment would better support our
    proposed program of cooperation with Russia. Therefore, we are
    proposing a revised two-satellite project, similar to the original
    RAMOS concept. If the United States and Russia agree to proceed, we
    envision that the revised RAMOS program will cost about $347 million
    over fiscal years 2000-2006.
    Threat and Countermeasures
        Our threat and countermeasures program provides us with
    intelligence data on current and evolving foreign missile threats. This
    information is critical to the planning and execution of the TMD and
    NMD programs and serves as the basis for the threat specifications
    against which current and future defensive systems are designed. The
    program produces a series of carefully constructed illustrative missile
    attack scenarios reflecting adversaries' systems and operating
    concepts--including simulated flight trajectory information--for use in
    missile warfare engagement modeling and simulations. Wargames using
    this information are conducted at the Joint National Test Facility in
    Colorado Springs, Colorado. We request $22.6 million for this activity
    in fiscal year 2001.
    BMDO Charter and Reorganization
        While I am accountable for providing for the procurement and
    fielding of TMD, NMD, and other antiballistic missile systems as they
    may be assigned to me, I am also responsible for the transition of BMD
    systems to the Military Departments and ultimately to the Combatant
    Commands for operational use. Interest has been raised recently about
    how we are implementing guidelines in our charter provided by DOD to
    transfer procurement funds for major defense acquisition programs, in
    this instance our lower-tier systems, from BMDO to the military
    services. The challenge before me is to strike the right balance of
    oversight. We are continuing to study ways to determine the appropriate
    timeline for the transition of responsibilities for each system to the
    Services in light of my obligation to maintain a robust acquisition
    strategy within our Family of Systems architecture. There is no request
    to transfer these programs in this year's request.
        Recognizing that ballistic missile defense systems soon will enter
    limited production and be delivered to the operating forces, we are
    reorganizing to meet the challenge of managing both the R&D and the
    acquisition responsibilities spelled out in our charter. I share the
    concern of the Congress about technology management and have begun
    instituting significant changes in our technology programs. My
    reorganization initiative reflects a transition from an organization
    oriented towards early technology R&D and demonstrations to an
    acquisition-focused agency responsible for introducing advanced
    technology and complex proven weapon systems to combatant forces.
    Moreover, I have flattened the BMDO management structure in order to
    reduce decision and action cycle times, which I believe is necessary if
    I am going to achieve my goal of delivering what we promise.
    Summary
        As we look forward to the DRR, we have achieved several notable and
    reassuring successes in our NMD testing program. We are making
    substantial progress in our Upper-Tier systems, moving them towards
    development and production. And we are on the verge of achieving major
    milestones leading to deployment of our Lower-Tier systems. I believe
    our missile defense programs can and will contribute significantly in
    the very near future to our national security, and that we are funding
    them accordingly.
        Mr. Chairman, I am more convinced than ever that effective missile
    defense is crucial to the defense of the nation and its armed forces.
    The missile threats facing our nation, our armed forces, and our allies
    are immediate and growing. While I expect significant complex technical
    and management challenges in our program, it is demonstrating
    increasing success, and I am confident that we are aggressively
    addressing the right issues at the right time.
        Mr. Chairman, that concludes my remarks. I would be delighted to
    address the Committee's questions.

        Senator Stevens. Thank you very much. That is a very full
    statement.
        Gentlemen, Senator Inouye and I made short statements. I
    would like to see if anyone who has come in later would like
    to.
        Senator Cochran.
        Senator Cochran. Mr. Chairman, I appreciate the
    opportunity.

                       Ballistic missile defense programs

        I want to commend General Kadish and also General Nantce
    for the very strong efforts you are making to move forward on
    the development of our ballistic missile defense programs. I
    think in spite of the very slow start by this administration,
    dating back to 1993, when it returned completed proposals for
    the national missile defense ground-based interceptor, for
    example, to the contractors unopened, we are seeing at least a
    higher rate of funding being requested as reflected in this
    year's budget.
        But in the past the administration has been notoriously
    culpable in slowing down the progress that has been authorized
    by the Congress on these programs. Just look at the
    overwhelming support reflected in the passage of the National
    Missile Defense Act, for example. It shows that Congress wants
    to move forward with a robust effort to develop not only a
    national missile defense program, but theater missile systems
    as well.
        And it looks like every key program in this budget request
    is underfunded. If you look in the THAAD program, the
    deployment schedule has slowed down because of a lack of funds,
    same thing for Navy theater-wide and others. In the airborne
    laser (ABL) program, even though that is an Air Force funded
    program, there is not enough money. That has been cut by this
    administration's budget.
        But as you observed, the funding request is also low for
    the Ballistic Missile Defense Organization's work on future
    technology programs, so we have got our work cut out for us if
    we are going to keep on track and fulfill the goals that you
    just said you shared, and that is the development and
    deployment of these theater and national missile defense
    systems.
        Thanks, Mr. Chairman.
        Senator Stevens. Senator Domenici, do you have an opening
    statement?

                                      Cost

        Senator Domenici. Mr. Chairman, I just want to make sure
    that I am on record saying that I support this effort, but I
    remain rather skeptical as to whether you really know how much
    national missile defense is going to cost. I believe the costs
    are going to continue to escalate. I do not think we are going
    to be able to rely on the estimates that have been given so
    far.
        That has been the case for this program from the beginning,
    and I close with the hope that as we proceed, that you will
    still, even while moving ahead, have some stopover points when
    you take a real look at the technical parts of the system. See
    whether the system works, and honestly evaluate it for us. That
    way, we do not wait until we have spent a great sum of money,
    and then discover it is not going to work unless we double or
    triple the funding.
        Now, I may be the only one saying this, but I believe what
    I have just described is a real probability. Until we started
    this debate the American people assumed we had some defense
    against intercontinental ballistic missiles, and now as this
    debate becomes more public they are very shocked to discover we
    have none. America may be enthusiastic about building a
    national missile defense system, but it does not mean we know
    how to do it within a reasonable cost line.
        You are nodding. I hope you are nodding to indicate that
    you will keep us apprised of the costs on a regular basis and
    not wait until it is too late to tell us the system is not
    going to work.
        Thank you, Mr. Chairman.
        Senator Stevens. General, I have got a whole series of
    questions. I am going to wait and see if others have basic
    questions.

                        National missile defense testing

        I am concerned about one thing, and that is, if I
    understand what you have just told us, you believe that this
    next test scheduled for June 26, I believe, is really the
    keystone of whether we should proceed with the national missile
    defense as currently anticipated, is that right? If that test
    is a failure, are you saying we should do what Senator Domenici
    says, review the whole program before going further?
        General Kadish. Well, Senator, no one test should be that
    critical to a decision in my view, from a developmental
    standpoint, and IFT-5 gives us another opportunity early in the
    program to get more test data, and for those of us who develop
    systems, more test data is always better, but we have an awful
    lot already in our ground testing, and the flight tests we have
    already done, to do the initial assessments that we are going
    to be asked to do on this program.
        What IFT-5 gives us is another opportunity to add to that
    data base and give us as much confidence as we can have, given
    the early nature of this program. So I would caution against
    IFT-5 begin a binary event, if you will, either for or against.
        Senator Stevens. But would you disagree with the statement
    that we have the technology base? The problem is integrating
    the systems that are to be portions of this total national
    defense program.
        General Kadish. I would agree with that statement. Our
    challenge is the integration, to make it work.
        Senator Stevens. Senator Inouye.
        Senator Inouye. I would like to give you an opportunity to
    respond to some of the criticism that we have been receiving
    here, that first, your testing program is not realistic enough,
    and second, some have further suggested that testing may be
    rigged to improve the chances of success.
        I need not tell you, because we all know that testing data
    is very important, you will have to make a recommendation to
    the President this summer. Now, do you have any response to
    that?
        General Kadish. Yes, Senator. Let me take it one at a time,
    and if you bear with me, these become complicated in
    explanation. I will try to simplify it.

                               Realistic testing

        First, the idea that our testing is not realistic, let me
    say a few things about that. If you look at our program, where
    we are asked to deploy 20 missiles by 2005 and have this system
    effective by then, we laid out a test program that includes
    early testing to prove the elements of our system, and
    demonstrate the integration capability. That is happening now,
    and in the last year especially.
        We laid our operational testing as we understand it,
    against more realistic threats and combinations of those later
    in the program, and this is not unusual. This is what is done
    in most development programs.
        What is difficult for us now is that in the early phases of
    this program, were we are trying to demonstrate the
    fundamentals of the system, where we can only demonstrate the
    fundamentals, people are sometimes asking us to go a bridge too
    far, and ask us to test against an operational set of
    conditions that we are just not ready to test against, but what
    we are able to do is to demonstrate the functionality of the
    system early on in the maturity of the program.
        Let me give you an example of why we do that, and it comes
    from aircraft testing, if you will. Early on in a program, and
    for many decades now on aircraft testing, the first thing you
    do with a brand-new aircraft is, you do a high-speed taxi test.
    You do not even take off. The next thing you do, when you take
    off you do not even raise the landing gear, and the reasons why
    you do not do that is to go through a fundamental test program
    to prove the basics. Can it fly, and can it safely return to
    Earth, and that is the reason why you do not put out the
    landing gear.
        In the national missile defense program, early on what we
    are trying to do is to demonstrate basically two things. One
    is, can we hit a target going 15,000 miles per hour at closing
    speed, and do it in a circle about that big, on a 5-foot ice
    cream cone.

                                 Discrimination

        The second thing we are trying to prove is that the
    different radar elements and software command and control
    systems that allow us to do the hit to kill can discriminate
    generally what it ought to hit, out of a complex of debris and
    potentially some decoys.
        So the program is a stepping-stone, if you will, set of
    criteria on a test program to get increasingly complex over the
    years, and in the early stages we are walking before we run.

                                 Test scripting

        In response to the second issue that the tests are rigged
    in some way, shape, or form, the tests are scripted to get what
    we need to know, as I just described, walking before we run:
    the fundamentals of hitting the target, which has been very
    difficult to do, and major technological leap ahead, and the
    fundamentals of making sure we hit the right target out of a
    narrowly developmental set of target suites, and we script the
    test to do and come up with those kinds of test objectives.
        That does not mean to say that these things are arranged
    such that we can actually hit these targets because we have
    rigged the test, if you will.
        Now, when you put that all together, where we are in this
    program is that early on in our tests, we are walking before we
    run in our major technologies. The test results out of this
    part of the program will give us confidence that we can do the
    engineering later on in the program to make it work reliably,
    and be operationally effective, and our program is designed
    that way.
        And as we move from the early tests, where we have a few
    objects to go after in our threat constellations, to the latter
    phases, where we will have many, and threat representative, we
    believe we have the right test program put together to make it
    happen.
        I hope that helps, Senator.
        Senator Inouye. Are you satisfied that test data that you
    are acquiring now would be appropriate and sufficient to make
    recommendations to the President?
        General Kadish. Yes, Senator.
        Senator Inouye. Thank you.
        General Kadish. For the phase of the program we are in
    right now. Now, I cannot guarantee you operational
    effectiveness determinations to the degree we will have 4 or 5
    years from now. We are just not there, not with two or three
    flight tests, but as we gain more flight test data and move
    into the operational testing, at that point we will prove what
    we suspect to be the case now on the operational effectiveness.
        Senator Inouye. Thank you. Thank you, Mr. Chairman.
        Senator Stevens. Senator Shelby.
        Senator Shelby. General, I, too, would like to compliment
    you on your hard work on the national missile defense program.
    It is a difficult assignment, to say the least.
        We all know that there are people who question this
    program. There are a lot of nay-sayers in the media, in the
    Government, in this body, who pointed to the failed intercept
    that you mentioned as proof that this system is not a viable
    missile defense program. If you could talk to them, and you
    have the chance, what would you say to these people?
        General Kadish. Well, as I said earlier, no one test ought
    to be the keystone of judging whether a particular system ought
    to work, but what I would say to them is that the very first
    time we tried to do an intercept--and that is all we tried to
    do the very first time we put this weapons system up in an
    intercontinental challenge--we were able to successfully
    destroy the target.
        That does not happen very often, and it does not happen by
    accident. There is an awful lot of technology at work, and
    American capability that went into making that happen, and the
    point at which we are at right now is that we could--I guess
    the best way to say it is that we do not have to invent things
    at this point to make this system effective.
        What we have to do is engineer it, and we are in the very
    early stages of putting this system together, with just a few
    flight tests, an awful lot of data and technology work that has
    already gone into it and as we progress, on a very aggressive
    schedule, to do the engineering, we are getting increasingly
    confident that we are going to be able to make this work the
    way we designed it.
        Senator Shelby. But integration is the key to it, or the
    dynamic, is that correct?
        General Kadish. The integration is the key.

                     BMD acquisition management steamlining

        Senator Shelby. General, I understand that the Department
    of Defense (DOD) has directed that the service program managers
    and program executive officers who are responsible for the
    execution of BMDO acquisition programs will report directly to
    you. What prompted these changes, and how has the Army
    responded to that?
        General Kadish. Well, I think what we are looking at is
    this idea that we need to continuously improve how we do our
    management of these very important systems, and I think that
    across a broad front we have come to realize, especially in the
    last year or so with the test results that we have, that we are
    moving these programs into very different phases from
    demonstration, if you will, into development, and from
    development into production, and it requires us to relook at
    how we actually manage these programs on a day-to-day basis.
        And what we are trying to do now is to do streamline
    activities so that the people doing what I call real work in
    the field have less oversight, if you will, and are able to do
    their jobs more effectively by cutting down decision cycle
    times, and provide the proper amount of oversight rather than
    intrusive oversight, and what we are trying to do now is to
    cooperatively make the services and BMDO cut out duplicative
    efforts----
        Senator Shelby. Make it work better.
        General Kadish. Make it work better, streamline, and quite
    frankly make the program manager's life a lot better, and let
    them concentrate on managing the program as opposed to talking
    with us, and it has been very difficult to do this, because
    BMDO is a different kind of organization in the sense of
    bringing together a very disparate set of programs, so it does
    not fit the culture very well, and we are trying to make it
    better for the program, and I think we are making some pretty
    good progress.

                             Technology investment

        Senator Shelby. General, are we short-changing our future,
    as far as investment in technology development? Has it been
    underfunded?
        General Kadish. A lot of the success we have enjoyed in the
    last year results directly from the investments that have been
    made over the past 15 or 20 years. I think we can say that with
    great confidence.
        Where we are today, as I alluded to in my opening
    statement, is that in order to fund the programs into the
    development from technology and into production, we are
    spending less resources on our technology base, and so although
    it may not threaten us today in terms of discoveries in a
    technology sense, we will probably begin paying the price later
    on, many years downstream.
        Senator Shelby. I understand you are in the process of
    continuing your evaluation of sites for the space-based laser
    test facility. That is an ongoing deal, is it not, and where
    are you there?
        General Kadish. We have just completed our site visits. I
    went out personally to look at all the sites under
    consideration, and right now I am asking some fundamental
    questions that are driving the analysts basically crazy at this
    point.
        Senator Shelby. Good.
        General Kadish. But I want to make sure that we have a
    clear idea of how to proceed here, and I am not confident
    enough right now that we do, so we may be a little bit more
    delayed by a month or two, or even longer, to make sure I get
    the right answers to the questions.
        Senator Shelby. Thank you, General.
        Thank you, Mr. Chairman.
        Senator Stevens. Senator Byrd.

                                   NMD tests

        Senator Byrd. General, I voted for the National Missile
    Defense Act of 1999. I believe it may be a prudent necessity to
    deploy a national missile defense.
        I share the concerns that were ably expressed by the
    chairman of our Budget Committee, Senator Domenici. I am
    concerned about the cost increases, but before I get into that,
    I want to discuss the two interceptor tests. Only one missile
    has been a kill. The test in January was a miss. Another test
    is scheduled for June. What if the June test is a miss?
        General Kadish. Well, Senator, it depends on why it missed,
    and if I might, let me speculate for a minute. I do not often
    have the luxury of doing that in my business.
        But it could be a failure because the target did not show
    up, which would have nothing to do with the system. It could be
    a failure internal to the test apparatus that we use, because
    of the range restrictions, or it could be a fundamental failure
    in the design of the system, which we do not expect right now.
        So it depends on why we failed, and what effect that would
    have to our overall technological evaluation, and again, that
    is why I caution against having the flight test, any single
    flight test be the touchstone of whether we should proceed in
    any program, whether it is this program or others.
        Senator Byrd. Which of these failures would concern you
    most?
        General Kadish. What would concern me most is if we had a
    fundamental design failure.
        Senator Byrd. What if we have a fundamental design failure?
        General Kadish. If we have a fundamental design failure, we
    have to do basically what we did after the last failure of the
    flight test. We went in an intensive evaluation of the system
    to find out what the problem was.
        Once we concluded that effort, we would decide what to do
    about it, and that could range anywhere from a temporary design
    change that we could effect in our next flight test, to a
    longer term design change that we would have to stop and
    remanufacture some parts of the system.
        So there is a whole series of disciplined activities that
    we would have to undertake to fix the problem, and depending on
    how long it took, it may delay our test program, and if it
    delays our test program, we would have to evaluate whether or
    not we could meet the end date that we are asked to meet.
        Senator Byrd. There are 17 developmental flight tests
    remaining, all of which will incorporate intercept attempts.
    What is your view of making a decision to proceed or not
    proceed after only three intercept tests?
        General Kadish. Well, as I said earlier, Senator, the three
    tests--and by the way, we have done a lot of ground testing
    that is added to this. What we can tell you is whether or not
    the technology exists to take the risk of proceeding on our
    program requirements, but I cannot tell you that we are doing
    operational testing, as some would ask us to do.
        Since we are running what we call a concurrent program, and
    that is a program to do things simultaneously in order to meet
    an end date in 2005, we are constructing sites, we are building
    hardware, all at the same time that we are testing, I cannot
    design a program to get operational testing any time sooner
    than what we already have planned in the program, which is
    2003, 2004, 2005 timeframe.
        If the country wants to wait until we get that level of
    testing, after many more flight tests, then we would have to
    extend the deployment schedule accordingly from 5 to
    potentially 10 years, and that has to be judged in relationship
    to the threat.
        So early on in the testing, what we can tell you is whether
    or not there are any inventions that present such a high risk
    to the program that we cannot make it happen on schedule, and
    that is about all we can say.
        Senator Byrd. How early on would that be?
        General Kadish. We are able to do that this summer.

                               NMD cost estimate

        Senator Byrd. This summer. Does the official estimate of
    cost include the 100 interceptors planned for 2007, or does it
    stop at the 20 antimissile interceptors planned for 2005?
        General Kadish. We include the cost of 100 interceptors in
    our program selected acquisition reports to the Congress. Now,
    I have to say that we added the 100 interceptors late in the
    budget cycle last year, and the cost estimating process, if you
    will, is not as scientific as we would like it to be in the
    timeframes that we are talking about, so we are redoing the
    cost estimate for the summer's review process, and I would
    expect the numbers to change to reflect our better
    understanding of what we are delivering, but the cost of what
    we are submitting in the budget today, as well as in our
    reports, reflect the 100 missile program.
        Senator Byrd. Does the official estimate include the $4.6
    billion planned for 2005 through 2010?
        General Kadish. If I understand the question correctly,
    yes.
        Senator Byrd. Well, the question was, does the official
    estimate include the $4.6 billion planned for 2005 through
    2010?
        General Kadish. Oh, 2005-2010. Yes. We planned a life cycle
    estimate for this program for 20 years, to include the missiles
    that will be in the program from 2005 to 2007, the 100-missile
    program.
        If you have the cost of that 100-missile program for a 20-
    year cycle from, I believe, 2001 to 20 years later, the cost in
    our reports is for about $36 billion in then-year dollars, and
    that equates to a $30.2 billion program in constant year
    dollars, so the answer is yes.
        Senator Byrd. Does the statement of cost include the $3
    billion spent between 1991 and 1998?
        General Kadish. Yes, I believe it does.
        Senator Byrd. One final question. The same report, which
    was a news report, that put the cost at $20.2 billion, almost
    60 percent more than has been publicly stated, that same report
    indicates that the Pentagon has done nothing to dissuade the
    press from calling NMD a $12.7 billion system, even though that
    is just the cost between fiscal year 1999 and 2005. What about
    that?
        General Kadish. It is an unfortunate situation. It depends
    on whether you talk about what the cost parameters are.
        We could talk about it in the future years defense program
    sense, we could talk about it in acquisition dollars, or we
    could talk about it in life cycle dollars. Those numbers are
    all different, and then when we give you those numbers, we can
    either give them in then-year dollars with inflation, or with
    constant-year dollars.
        So my view is, it is not an attempt to misrepresent the
    cost of this program, but we have to be precise in what
    question is being asked, and we have all those numbers, and I
    would be more than happy to provide them in any format to the
    committee for the record.
        But the idea that the cost increase, because we went from
    20 to 100 missiles, is a factor of the fact that we changed the
    program to 100 missiles, and--we are not trying to attempt to
    misrepresent the cost, but we have to be precise, what we are
    asked to give in terms of numbers.
        [The information follows:]

        Data displayed is extracted from the Selected Acquisition
    Report to Congress, and arrayed in the various groupings of
    years, type costs, and dollars as described above.

                            [In millions of dollars]
    ------------------------------------------------------------------------
                                                                  Base Year
                                                     Then Year     (fiscal
                                                                  year 1999)
    ------------------------------------------------------------------------
    Future year's defense program (fiscal year
     2001-fiscal year 2005):
        RDT&E.....................................      4,751.7      4,465.1
        Procurement...............................      5,149.3      4,724.2
        Milcon....................................        473.7        438.1
        O&S.......................................  ...........  ...........
                                                   -------------------------
          Total FYDP..............................     10,374.7      9,627.4
                                                   =========================
    Program Costs (fiscal year 1991-2026):
        RDT&E.....................................     11,961.5     11,502.1
        Procurement...............................      7,792.3      6,770.4
        Milcon....................................        498.4        462.0
                                                   -------------------------
          Total Acquisition.......................     20,252.2     18,734.5
                                                   =========================
        O&S.......................................     15,993.0     11,492.0
                                                   -------------------------
          Total Life Cycle........................     36,245.2     30,226.5
    ------------------------------------------------------------------------

        Senator Byrd. Mr. Chairman, I have gone well beyond my
    time. I thank the chairman and the committee for its
    indulgence.
        Senator Stevens. Yes, sir. Thank you, Senator.
        Senator Cochran.
        Senator Cochran. General Kadish, in today's New York Times,
    Elizabeth Becker writes an article describing a group of
    scientists, some at the Massachusetts Institute of Technology
    (MIT), that call themselves the Union of Concerned Scientists,
    who criticize the national missile defense program. This is the
    same crowd that in October said that the intercept, the hit-to-
    kill was a lucky result that was achieved in the test of the
    program, the system under development.
        Do you agree that that intercept was lucky? They say it was
    lucky because it wouldn't have occurred if a balloon decoy had
    not alerted the kill vehicle to the target's location. Do you
    agree that this intercept was lucky?
        General Kadish. No, I do not, Senator.

                                Countermeasures

        Senator Cochran. Well, this same group in today's paper go
    on to say that any nation capable of fielding a long-range
    ballistic missile will also be able to equip it with
    countermeasures that will overcome the NMD system. Is that a
    valid argument against the system under development?
        General Kadish. If I might take a little bit of time to
    discuss this issue, I think it is important to frame the debate
    properly.
        I think it is fair to say that countermeasures concern us.
    They do. We have been working at it for many years. We have a
    lot of technology associated with it. But let me say three
    things about this. First, even though we are concerned about
    countermeasures, the idea that those that can do missile
    technology can--which is a fundamental assumption, those that
    can do missile technology can therefore do countermeasures, I
    would say on the surface is true.
        But you have to say, what is the rest of the story? Even
    though those technicians are capable of doing these types of
    things, you have to ask the question whether or not they will
    be effective once invented, and this country has much
    experience in developing countermeasures that I cannot go into
    here, and it is not a trivial exercise to make them effective,
    so from a scientific basis you can invent, using scientific
    principles, almost any kind of countermeasure you want to
    invent to defeat a particular system.
        The real question is, can they make them effective, and in
    order to make it effective, it brings me to my second point.
    You have to do a lot of testing. Recognize, there have been
    many questions this morning that, how much testing have we done
    to assure ourselves this system would work.
        We could ask that question about any system in our
    inventory, and those that ask us those types of questions ought
    to be asking whether or not the rogue nations, if you will, as
    capable as they might be, even if they are primitive, how
    effective will those countermeasures be, and that is the rest
    of the story from the second point.
        The third point is a more macro issue that I would point
    out, without getting into classified information. The
    challenges of the discrimination problem have been evident for
    many years, and from a technology standpoint there are
    basically three things that affect our countermeasure
    capability.
        One is the quality of our sensors to pick out different
    features of the countermeasure. The second is the size of our
    weapons, miniaturization, if you will, and the third, which is
    controlling in my view, is computers. We have made advances
    across a broad front in all of those efforts in this country,
    and American technology has given us computer systems today we
    only dreamed about 10 years ago, or even 5 years ago, and what
    happens in countermeasures in regard to these technologies is,
    if you have high numbers of incoming warheads, all of the
    Soviet Union, if you will, during the cold war, combined with
    countermeasures that are postulated by our critics, you can
    overwhelm our systems and eventually be defeated.
        We do not have that case, in my view, with national missile
    defense, because right now we are designing this against a
    limited threat, a few tens of warheads, and when accompanied by
    simple, or what we call complex countermeasures, the
    technologies that we have in these systems I believe is able to
    handle that problem very well.
        And so the rest of the story is that the issue is valid,
    but we have ways of getting into the counter-countermeasure
    activity that we believe will be very effective.

                          NMD technology demonstration

        Senator Cochran. Have you successfully demonstrated the
    technology necessary for an effective limited national missile
    defense system?
        General Kadish. Senator, that is what the deployment
    readiness review is designed to assess, and we are well on our
    way to putting that review together this summer, compiling all
    our flight test results, so I am confident that this summer we
    will be able to answer that question formally.
        Senator Cochran. Do you have any doubt about the
    technological feasibility of your approach to national missile
    defense?
        General Kadish. At this point we are gaining great
    confidence in our ability to assess this technology.
        Senator Cochran. Do you have any reason to believe that the
    testing program may yet show that building this system is not
    technologically, or technically possible?
        General Kadish. Our test program is proceeding very well to
    build the evidence.
        Senator Cochran. There is a part of the Welch panel--which
    the Department got to examine the national missile defense
    program, saying that this was a program that was hardware-poor
    and lacked sufficient spares and components for ground and
    laboratory testing. Do you have sufficient resources in this
    budget request to ensure adequate hardware for your test
    program?
        General Kadish. As a developer, more is always better, but
    we have a responsibility to balance out the cost of our
    programs, so the simple answer to your question is yes, because
    we added about $285 million to handle the Welch
    recommendations, and we took them in total.
        We are continuing to evaluate the needs for our test
    program as we learn more about our challenges, and I would
    expect that we would have to balance that out in the future
    budget request as well, but right now our current assessment is
    we have adequate resources in the present program to do what we
    are asked to do.
        Senator Cochran. Thanks, Mr. Chairman.
        Senator Stevens. Thank you, Senator.
        Senator Domenici.
        Senator Domenici. First let me say to you, General, I have
    seen a number of Generals that run technical programs and I
    believe you are one of the best managers that I have read about
    and listened to in my years in the U.S. Senate. Whenever there
    were big problems in managing a big program, they called on
    you. For example, there was the C-17. You do an admiral job.
        General Kadish. Thank you, sir.
        Senator Domenici. You are very skilled at taking a program
    that was kind of confused and not on target and fixing it. I
    think those in the Senate, led by Thad Cochran, who have pushed
    very hard for us to move expeditiously with this defense
    system, are on the right track, and I wholeheartedly support
    what they are trying to do.

                             NMD testing criticism

        I believe we have to utilize whatever resources we can to
    fairly analyze this program. We hear from you, but make sure
    that others who have science and technological knowledge in
    this field are listened to also. Along those lines, I want to
    talk for a little bit about what the Director of the
    Operational Test and Evaluation, Dr. Coyle, has written. He has
    been a critic of NMD in terms of the quickness of these tests,
    and last year he stated that the tests are too close together
    to learn from each one to the next.
        He stated that the proposed tests lacked realism. BMDO has
    been using targets that are not realistic, and there has been
    no use of multiple simultaneous targets.
        I guess I would first ask, am I correct in assuming you are
    familiar with the critique?
        General Kadish. Yes, Senator.
        Senator Domenici. It would seem to me that most of the
    criticism that is being levied by the Department of Defense's
    own Director of Operational Test and Evaluation is not being
    followed by you. Therefore, you must see another side to it,
    and believe that what Coyle is recommending should not control
    this program. Is that a fair statement, and if so, why?
        General Kadish. Well, if I could change the character of
    the statement a little bit for explanation, the issues that Mr.
    Coyle raises are legitimate issues. In any program that we
    monitor, operational effectiveness is key to our success in the
    long run, and they do a good job of holding our feet to the
    fire on that, and we should not ask that this program be exempt
    from the same type of intense testing and looking at it.
        The problem we have right now that you alluded to, the
    closeness of the testing, the realism issues, and the test
    geometries, are problems stated as if we could do something
    about them, and we are not doing it. The issue here is, that is
    not the case.
        As I explained earlier, when we set the date of 2005 there
    is no way we can physically construct a program to do
    operational testing in the first two tests, or three tests of
    the program. That comes later. So the issues that we bring up
    on multiple simultaneous launches, and those types of issues,
    are later in the program, in 2003, 2004, 2005 and beyond, as we
    have this program fielded.
        We cannot transport that forward in time to 2000, the year
    2000. We just do not have that capability. So if we wait to do
    those type of realistic tests that we would all want to do, and
    stretch our program to do that, then we miss the 2005 date. If
    that is the assessment against the threat, and acceptable, we
    can certainly do that. That is not what we are asked to do
    today.
        The other charges about the way we are doing our tests, the
    geometry, how the missiles come in, are a function of the fact
    that this problem is intercontinental in range. We have to
    launch our targets out of Vandenburg Air Force Base,
    California, over Hawaii, into the Kwajawlan Range, 4,300
    nautical miles away.
        We have range restrictions for safety issues. We have
    placement of our assets in the test geometry. They are very
    expensive to change, so to do the full-up operational testing
    of this that we would like to do at the system level, we run
    into some very real stops to do that, and we end up doing it by
    simulation.
        So I guess to summarize it is that the concerns that Mr.
    Coyle and the operational testers have are valid, and we will
    address those as the program progresses, but in the framework
    we are in today we cannot do those types of things that we are
    being asked to do in this area as if we were a mature program,
    ready to go into massive deployment and production tomorrow.

                             NMD system integration

        Senator Domenici. I have two questions, and I will tie them
    together. Would you explain briefly to us what it means when
    you say this is a matter of integrating systems and you are not
    having to start from scratch with a new series of technologies?
    Does that mean that we are now using some of the strategic
    defense initiative (SDI) expertise that was garnered over the
    years, or does it mean something different?
        And second, you just explained that you are motivated in
    your scheme of activities by a 2005 deadline. I am not one that
    wants to change the deadline, but I think I would like to ask
    you, if the deadline was not 2005, would you be doing some of
    the things that Dr. Coyle has suggested before you reach the
    decision points that are scheduled for a 2005 deployment?
        General Kadish. Let me take the integrating the system, and
    what does it mean, and it may be helpful to describe the tool
    kit that we are using to make this system work, and why we
    think it is up to the challenge.
        In order to do an effective missile defense, even the
    limited numbers we are talking about, you have to have a
    detection system that detects the launch, you have to have a
    radar or a sensor system that tracks this vehicle, and can tell
    the interceptor where it is, and you have to have a vehicle, an
    interceptor fast enough to go out and get it, and then you have
    to have a kill vehicle that can discriminate, using all that
    other data provided to it, to actually hit the thing without a
    nuclear explosion of some sort, and then you need a very
    complex set of software to do this almost automatically,
    because this war is over in 20 to 30 minutes, and so launching
    100 interceptors in 20 minutes against a broad range of reentry
    vehicles (RV's) measured in tens, to get our performance up is
    a very complex set of integrations.
        Now, when you put all these things together, where the
    Commander in Chief of Space Command out in Colorado says rules
    of engagement have been met, launch the missiles, it has to
    happen very rapidly, and the communications, the software
    decisions, the missile launches, the in-flight communications
    activity that is almost global in nature, have to work
    together, so our challenge, then, is to integrate these system
    elements so that they can work together in an operationally
    effective way, eventually, and not just in a scientific way.
        Now, having said that, we have demonstrated in many
    different forums pieces of these things, the radars, the X-Band
    radars, the ultra high frequency (UHF) radars, and specifically
    the kill vehicles that we are using, and in fact the kill
    vehicle that we are using that is 121 pounds and 54 inches
    long, that destroys these warheads just by the force of impact,
    has been under development for over 10 years, and we have taken
    these tools and put them together in a system that we believe,
    given that the elements have been tested individually, can be
    put together to work as a whole, and that is our challenge, and
    we are well on our way to showing that we can do that.

                               NMD 2005 deadline

        Now, in regard to being motivated by 2005, we intend, at
    least in our planning purposes, to do what Mr. Coyle wants to
    do even within the restriction of 2005 deployment. We will do
    operational testing later on in the program, in 2003, 2004,
    2005. If we should lengthen that schedule and take on less risk
    by doing so, that is less risk meeting our date, it gives us
    more time to do that, and as a developer, just like more
    resources is always better, more testing is always better for
    us, but that has to be balanced with what we are asked to do,
    and that is the art of program management.
        Senator Domenici. Thank you very much, General.
        Senator Stevens. General, my mind goes back to I think
    1996, when we were first presented--only Senator Inouye and I
    were here. We were presented with testimony concerning a new
    concept of national missile defense that would cover 48 States,
    the contiguous States. I do not want to repeat that
    conversation we had with one of your predecessors, but it was
    obvious, Senator Inouye from Hawaii and me from Alaska, that
    was not an acceptable proposal.
        We later had Dr. Perry come and tell us he had a new
    scheme, and that was the three-plus-three. It was 1997 then,
    and we were going to deploy in 2003. We have subsequently
    slipped that by 2 years to 2005. I think as we go into these
    questions we ought to keep that in mind. We have already
    adjusted this twice now, and the procedure and the timeframe
    has been lengthened.

                           NMD military construction

        I do have a question to ask you about the military
    construction aspect. Senator Byrd asked you about the billions
    of dollars involved. As I understand it, we have before us now
    for 2001 a request for $103.5 million for military
    construction, primarily to start with the X-Band radar at
    Shemya. I further understand from your previous answer to my
    question that even that is contingent upon the next test. That
    does not seem to me to be really very wise, because of
    construction time out on the Aleutian Chain and other things.
        Part of this system is going to be at Shemya and part of it
    probably at Fort Greeley. That is like starting in Baltimore--
    or let us put it around--a relay starting in Alameda with the
    X-Band and having the system located in Baltimore. Most people
    do not realize the distance between Greeley and Shemya.
        Why would we delay the military construction aspect of this
    relatively--I am not here saying $103.5 million is not a lot of
    money. It is a lot of money. But compared to the overall
    program, it is not a lot of money. But that one facility there
    is going to be essential no matter what you do, as I understand
    it, to the future planning for missile defense. Why would we
    delay Shemya based upon the test in June?
        General Kadish. Well, Senator, it may be helpful to explain
    why we have to do military construction next year. Given that
    we have 2005, and you correctly pointed out we went from 2003
    to 2005 in our current plan last year, I believe it was, if you
    back up the things we need to do because of construction
    seasons in Alaska and Shemya, or for that matter even North
    Dakota, it turns out that the first thing we need to do to
    build this system is not to build the boosters, it is not to
    build the communications systems, so much as it is to start
    construction of the X-Band radar in Shemya, Alaska, in the
    Aleutians.
        Senator Stevens. You do agree, then, we should proceed with
    the military construction aspect of this program as requested
    for 2001, without regard to the success of the June test?
        General Kadish. If we do not start the construction in the
    spring of next year, as currently planned, I cannot guarantee
    that we will meet the 2005 date.
        Now, the decision on whether to award those contracts for
    spring of next year, given the construction seasons and how we
    intend to build that very big radar at Shemya, is in the fall
    of this year, so given that there are treaty issues associated
    with the construction of that radar, and the legal community is
    trying to tell us what that definition really is of when we
    actually break the treaty legally, we have to have a decision
    to do that by the administration sometime this summer or fall
    to meet our time lines.
        If we do not meet our time lines, then we cannot guarantee
    that we can have this ready by 2005.
        Senator Stevens. I thought the decision to construct is one
    thing, the decision to make it operational in Shemya would be a
    violation of the treaty.
        General Kadish. We have been using for planning purposes on
    the treaty side the fact that when we do construction other
    than earthworks, which can be interpreted many different ways,
    from a planning standpoint when we actually dig a hole in
    Shemya it could be the earliest time we would break the treaty.
        There are other discussions on how that fits into the legal
    framework past that date, and that would happen next year under
    those conditions.
        Senator Stevens. Well, there is a radar at Shemya now. It
    is not an X-Band, but there is a radar there now. That never
    violated the Anti-Ballistic Missile (ABM) Treaty. I do not
    quite see dancing on that legal pin. I hope that we will
    proceed with that construction because of the timeframe and
    because of the delays that could be encountered in construction
    at Shemya of that new radar.
        General Kadish. Our current plan, Senator, is to press
    ahead aggressively on building that radar, but we do need
    authority to proceed to do it.
        Senator Stevens. Yes. Senator Inouye.

                   Navy testing of Pacific missile test range

        Senator Inouye. General, you are planning to conduct six
    tests of the Navy's missile defense program at the Navy's
    Pacific missile range. Is that achievable?
        General Kadish. To the best of my knowledge it is, yes,
    Senator. It is achievable to do it in the Pacific out there.
        Senator Inouye. So you will proceed late this year to begin
    the program?
        General Kadish. We have an important series of tests coming
    up on both the Navy area and the Navy theater-wide programs,
    and we are watching those extremely carefully, and they are
    really important to our ability to proceed on those programs. I
    am hopeful that the results will be successful later this year.

                                     THAAD

        Senator Inouye. The next question is one of those that came
    up as a result of criticisms that you have received about some
    of your testing programs. THAAD has had seven misses, and you
    have had two successes, and as a result of the two successes
    you have been approved to go to the next developmental step in
    engineering.
        Two years ago, General Lyles, your predecessor, warned this
    committee against random success. That is the word he used, and
    that is the possibility of approving a system that has a
    fundamental flaw because of one or two successful tests. With
    all the setbacks that THAAD has experienced, do you think that
    we should have more tests before you proceed to take the next
    step, or would the two successes be sufficient?
        General Kadish. We need to recognize where THAAD was in
    this test program, and rather than go into the lengthy history,
    let me oversimplify it by saying it was in a demonstration
    phase--that is, could we actually make it work--and then there
    was an excursion, if we could make it work, we would have an
    initial very limited capability we could deploy off of that.
        What these two successes out of the nine attempts I think
    we ended up having told us was that we did not need to invent
    anything any more, if you will, to make the demonstration work,
    and that provided us confidence, with those two successes, to
    move it into what we call the development phase. The
    engineering and the manufacturing development phases take out
    the flaws that we found in the demonstration phase, because it
    tended to be a scientific project as opposed to an engineering
    project at that time, and we intend to do that with the program
    we have structured coming up.
        So in the next few months it is my intention to take to the
    Department a decision to enter into that next phase, the
    development engineering manufacturing phase, based on the data
    we got out of the demonstration phase.
        Now, this phase that we go into, we will commit to an
    initial operational capability, what we call first unit
    equipped, in 2007, so we will have a redesign of many elements
    of that system to make them more reliable. We will do an
    extensive set of testing on the system in an operational sense,
    getting to Mr. Coyle's type of concerns, and then we will
    deploy it in 2007.
        It is disappointing to all of us that we cannot deploy a
    system of this nature like we intended to with THAAD on the
    demonstration phase, but we have a very rigorous program, now,
    that we have laid out to take care of those concerns and those
    two successes give us confidence that we are not inventing
    anything. We have made it now an engineering problem, so we can
    make it reliable and operationally effective and deploy it in
    the timeframe I talked about.
        Senator Inouye. So you move into the next phase with great
    confidence?
        General Kadish. Yes, sir, and that testing program we have
    laid out should prove that confidence, and bear the fruit of
    that confidence.
        Senator Inouye. General, I would like to submit for your
    responses questions on the Arrow system.
        Thank you very much, Mr. Chairman.
        Senator Stevens. Senator Cochran.
        Senator Cochran. Mr. Chairman.

                                 NATO concerns

        General Kadish, you mentioned in your testimony that the
    budget requests funding for the MEADS theater missile program
    that involves Germany and Italy. Some of our North Atlantic
    Treaty Organization (NATO) allies have expressed concern that
    our national missile defense program might make European
    countries more vulnerable because it would destabilize our
    relationship with Russia, and for other reasons.
        Would the construction of a ground-based interceptor site
    in Europe protect our NATO allies from missile threats and
    contribute to the defense of the United States from Middle
    Eastern threats?
        General Kadish. Senator, we do an awful lot of studies on
    how to protect both theater-and national-level requirements,
    and your question inherently indicates that we blur the
    distinction sometimes. What is national to us, or what is
    theater to us is national to other people, and especially our
    allies.
        We have done an awful lot of work in analysis to see what
    we could do to contribute to the defense of our allies, and
    have made a lot of strides in that area, and one of the
    excursions that we do is how we would be able to protect our
    allies in Europe, specifically NATO countries, from threats to
    themselves as well as use their facilities for our national
    side, and those are definitely feasible alternatives, given
    what we understand the technology to be today of what we are
    developing in both theater and national level, and I could take
    answers for the record, because some of it does get classified,
    and I would rather be precise in answering that question.
        [The information follows:]

        High speed, exo-atmospheric interceptors such as the
    Ground-Based Interceptor (GBI) design currently being developed
    under the National Missile Defense (NMD) program are inherently
    capable of defending very large geographic areas against long
    range ballistic missile threats. This broad area defensive
    coverage from a GBI site is central to our current NMD plans to
    provide defensive coverage for all of the United States,
    initially from one site and potentially expanding subsequently
    to a second site. Therefore, by analogy, one or two GBI-class
    interceptor sites with appropriate sensor support could
    theoretically provide some defensive coverage against long
    range missile threats over a geographic area the size of NATO
    Europe.

                             South Korea and Japan

        Senator Cochran. Thank you very much.
        On another theater missile defense subject, according to
    the unclassified summary of the current national intelligence
    estimate the North Korean No Dong missile has a range of about
    1,300 kilometers, sufficient to reach U.S. forces throughout
    South Korea and Japan, and it has been deployed for several
    years.
        Does the United States currently have any theater missile
    defense systems capable of reliably intercepting this missile?
        General Kadish. Those systems are currently in development,
    and we hope to have PAC-3 out in 2001, as I said, to deal with
    those types of threats coming up, but the answer at this point
    in time, with our lower and upper tier, they are still in
    development.
        Senator Cochran. What are the systems, can you tell us,
    that are in development now that will be capable of
    intercepting the No Dong?
        General Kadish. The THAAD and the Navy theater-wide
    systems.
        Senator Cochran. According to the Army, the first unit-
    equipped date for THAAD could be moved up from 2007 to 2005, if
    $400 million in additional funding were provided in fiscal year
    2001, 2002, and 2003, with $150 million of that in 2001. Do you
    agree with that assessment?
        General Kadish. I would agree that with additional dollars
    from a schedule standpoint, with the addition of about $150
    million in 2001, I would say that we could accelerate our first
    unit equipped (FUE) by 9 months or thereabouts.
        I would caution, however, that, given the answer I gave to
    Senator Inouye, that we need to be careful about making sure
    that we do the right types of things in developing this
    particular program and THAAD, and capitalize on our success but
    plan for difficulties in the program, and I think that is what
    we have done right now, and putting additional risk into the
    program by accelerating schedules, we have to take very good
    counsel of our previous experience here and make sure we do not
    repeat past mistakes.
        Senator Cochran. In the semantics of the word risk, to some
    that means risk of failure of the program, or risk that the
    program, once it is deployed, will not work. That is not what
    that means, though. You are talking about risk in meeting a
    predetermined target in the program schedule, are you not?
        General Kadish. That is correct.

                               Navy theater-wide

        Senator Cochran. What is the soonest the Navy theater-wide
    could reach the field, and what funding is required to
    accomplish that?
        General Kadish. Right now we have not fully funded, as you
    know, in our budget the Navy theater-wide program, primarily
    because we have an important series of tests coming up later
    this year and next year to prove the concepts properly. We have
    not fully funded that program.
        Our current projects are that we are going to have what we
    call capability, single mission capability on the Aegis vessels
    in 2008, and that is what we are planning, too, and if we want
    to accelerate that it would depend on the test successes that
    we have in what we call our Aegis leap integration (ALI) test
    program over the next year to 18 months, so to define that in
    any greater detail, I would like to take it for the record,
    because we would have to show you the excursions off of a
    successful test program that would give us confidence to
    proceed rapidly with that program.
        [The information follows:]

        Using an evolutionary acquisition approach, the Navy Wide
    (NTW) system capable against the full Block I threat set could
    be deployed using the spiral development (Block IA, IB, IC)
    process. Our spiral evolutionary strategy allows the sequential
    fielding of capability, with new capabilities being phased in
    over time. The intent would be to get an initial NTW capability
    to the fleet as soon as possible and then upgrade the system to
    pace the threat. The Block IB capability includes 50 SM-3
    missiles deployed in 2 AEGIS cruisers with an FUE in fiscal
    year 2008. The full multi-mission capability of 4 cruisers and
    80 missiles FUE is fiscal year 2010. Depending on the pace and
    success of initial flight tests, some contingency capability
    might be available before 2008. The objective NTW Block II
    system is not yet fully defined, but given full and stable
    funding, it would likely be available between fiscal year 2112
    and fiscal year 2114. Adopting a spiral evolution approach for
    NTW Block II could yield some increased capability (notionally
    NTW Block IIA) over Block I a few years earlier. Assuming
    successful completion of primary test objectives in the first
    two ALI intercept attempts (i.e. kinetic warhead hits the
    target), the current NTW program could be accelerated by one
    year given $160 million in fiscal year 2001, and fully funding
    the program in fiscal year 2002 and beyond.

        Senator Cochran. Does the administration's out-year budget
    contain sufficient funds to deploy Navy theater-wide?
        General Kadish. No, it does not Senator. It depends on the
    testing results that we expect over the next 18 months as to
    what we are going to do with that program.
        Senator Cochran. Thank you, Mr. Chairman.
        Senator Stevens. Senator Byrd.
        Senator Byrd. General, this is a question which is outside
    your direct responsibility, but I would like your views. I am
    very, very concerned about defending against other types of
    weapons of mass destruction. I think especially of biological
    weapons that could be targeted at U.S. agriculture, the largest
    agricultural market in the world.
        Attacks on U.S. agriculture would offer huge financial
    rewards to terrorists through international future markets
    manipulations. They would be risk-free as far as the terrorists
    are concerned. I am advised that Iraq had large stocks of
    biological weapons that cause severe disease in humans and
    animals and that these agents have been made into weapons by
    Iraq.
        Genetic engineering technologies allow creation of new
    pathogens with enhanced toxicity that may cause a biological
    weapons surprise to agriculture. I am concerned about our water
    supply, very concerned about it. I do not know what our
    Government is really doing about such weapons of mass
    destruction. There are great elements of surprise involved in
    these.
        I do not know what is being spent by our Government in this
    respect. I am concerned that as we concentrate on national
    missile defense--I am not implying that I am not concerned
    about that also--I wonder if we may be blinded to other,
    perhaps even greater, more imminent threats of sabotage, and we
    may be short-changing other necessary initiatives to protect
    our national security.
        As I say, that is outside your area, but do you have any
    thoughts on this?
        General Kadish. Well, Senator, to the broader issues, I
    think all of us in the national security business are concerned
    about those types of threats, but let me focus my response on
    NMD, and even our theater missile defenses.
        One of the great advantages of this hit-to-kill technology,
    this idea that we have kinetic energy destroying the warhead
    rather than explosive forces by chemical or even nuclear means
    such as the Russians use in their defensive systems, is that we
    are concerned about the chemical and biological warheads that
    are there.
        With hit-to-kill technology, especially in the
    exoatmosphere outside 100 kilometers and above, where we do
    these intercepts, or try to do these intercepts on the national
    side in outer space, we believe that these chemical and
    biological submunitions, should they be present, versus not
    only a nuclear warhead but a chemical or biological warhead,
    can be destroyed by the force of that impact, so we are not
    disregarding this threat from a ballistic missiles standpoint.
    Quite the contrary. It is part of our overall threat space, and
    challenging from a hit-to-kill standpoint, and the reason why
    it is challenging to us, and useful in hit-to-kill, is again we
    want to hit within this kind of a target space, mass on mass,
    if you will, to make sure that we destroy that chemical and
    biological agent, or render it useless in outer space, and that
    is one of the major objectives of this program. So we are not
    ignoring it at all.
        Senator Byrd. Thank you, General. Thank you, Mr. Chairman.

                                 Airborne laser

        Senator Stevens. Yes, sir. Senator Domenici.
        Senator Domenici. Mr. Chairman, I just have one question.
    General, the ABL measure is one of the very good examples of
    technology in a missile defense system. I wonder, is it not
    true that the ABL has been on-schedule and performing as it
    should, and if that is the case, why is that reduced by $92
    million this year and over 5 years by $900 million. I
    understand this is going to delay the shoot-down tests by 2
    full years. People around here thought that was a very exciting
    system and we voted for it. We have increased the President
    before to keep it on schedule. Can you explain why there is a
    $92 million reduction in this program.
        General Kadish. Senator, that is a little bit of an awkward
    question for me to answer, because that program is not within
    my purview.
        Senator Domenici. All right.
        General Kadish. It is an Air Force program. However, I will
    say this. The ABL has continued to be a part of our layered
    defense architecture, as I explained in my opening statement,
    and we have analyzed the goodness of that weapons contribution
    to our overall architecture, and very much support the ABL
    program from that standpoint, and let me tell you why. The ABL
    system, the airborne laser system, would be our only boost-
    phase-capable system in our architecture.
        If you look at our systems, they tend to be in what I call
    the catcher's mitt mode, where in the terminal or mid-course
    phases we are trying to stop the warheads. In the missile
    defense business, it is always better to get them as far
    forward as possible, but the problems become very difficult,
    even more difficult than the catcher's mitt approach to the
    problem.
        So the ABL, using the speed of light, if you will, laser
    activity, and being in boost phase, is very useful in our
    architecture of layered defense, and it is disappointing when
    any program is slipped, and we support the program, but they
    have their challenges, and the Air Force had to make trade-offs
    against other systems.
        Senator Domenici. Thank you, Mr. Chairman.
        Senator Stevens. General, I am going to submit--some of the
    questions that I have relate to materials we might need for the
    markup, but I do have two concepts. I want to congratulate you
    on articulating the layered concept of these systems we are
    working on.
        I know that there are some proponents of one as opposed to
    another that would like to hold up one and move the other
    forward. This committee has taken the point of view that we
    ought to try and move them all forward as they can make
    progress, but not to try and set one aside to accelerate the
    other.
        And I do share the feelings, however, of Senator Byrd about
    the chemical and biological warheads that we face. That is why
    we continue to support the hit-to-kill concept. Although on
    that last test, if you had an explosive type of contact rather
    than a hit-to-kill, that would have been a success, so I think
    people ought to keep that in mind.

                           Patriot II and Patriot Gem

        I do want to ask one thing, though, and that is, you know,
    we have had press reports about the problems of Patriot II and
    the Patriot Gem missiles. This subcommittee at one time urged
    the Department to utilize the Patriot as an antimissile rather
    than an antiair-breathing aircraft system. What would you do if
    we asked you now to accelerate PAC-3 so it could be an option
    in the arsenal to deal with not only air defense but
    antimissile requirements that might develop in this time before
    we can deploy any one of these layered systems? Is that
    possible, now, to accelerate and boot that up to another
    generation?
        General Kadish. Yes, Senator, it is. The PAC-3 missile
    primarily focused on the theater ballistic missile problem, and
    I think from the test results we have seen so far is doing that
    very well. It also has----
        Senator Stevens. Pardon me. Would you give us the funding
    requirement that would be necessary to put that on an
    accelerated course and pull it out? I do not think this is a
    system, part of the layered system. I think it may be an
    operational concept that could be brought into a new phase
    sooner than all these other systems we have been discussing
    today.
        General Kadish. Yes, Senator. We can give you those
    numbers. I would provide them for the record and make sure that
    we got it right.
        [The information follows:]

        As I understand your question, Senator Stevens--how much additional
    funding is required to accelerate fielding of PAC-3 missiles and to
    correct the PATRIOT reliability/GEM+ upgrade issue? I will address the
    PAC-3 acceleration requirement in detail, but the PATRIOT reliability/
    GEM+ conversion is an Army program that I will cover summarily but
    would be most appropriately be addressed in detail by the Army.
        A recent reliability discovery in some fielded PATRIOT missiles
    drastically reduces the quantity of available missiles well into the
    next decade. Under current procurement schedules there will be a window
    of vulnerability for a considerable time. The Army and the Ballistic
    Missile Defense Organization have worked together to develop an
    integrated solution through enhancements to both the PAC-2 and PAC-3
    missile programs. The solution fixes some of the older PAC-2 missiles,
    accelerates the upgrades of PAC-2s to the Guidance Enhanced Missile
    Plus (GEM+) configuration, and accelerates the PAC-3 procurement.
    Initial funding is required in fiscal year 2000/01 to jumpstart this
    solution. Since the PAC-2 issue surfaced after the publishing of the
    Defense Planning Guidance and Fiscal Guidance, the solution is not part
    of the Department's Program Objective Memorandum. BMDO is discussing
    options with OSD.
        To cover current program shortfalls and properly position the PAC-3
    program for accelerated missile fielding requires an increase of $156
    million in fiscal year 2001 to produce 32 missiles, or an increase of
    up to $341 million in fiscal year 2001 for 72 missiles. Such
    enhancements position the program to achieve the Initial Operational
    Capability of the first battalion up to one year earlier, given
    additional out-year funding.
        Production line enhancements to allow procuring more missiles per
    year in the future have a lead-time of a year and a half, so we cannot
    have an instant fix. An increased production rate capability is more
    cost efficient, so we should establish a higher production rate
    capability, of up to 20 missiles per month. We recognize that our
    allies using the PAC-2 missile are also affected by the recent
    developments, and thus have potential requirements. Foreign Military
    Sales (FMS) purchases concurrent with U.S. procurement provide economic
    benefits to both the U.S. and our allies through reduced unit costs
    during those years. This offers potential for allowing larger
    quantities to be procured, or a lower price for the baseline quantity.
    A limited production capacity will limit the U.S. fielding rate and FMS
    opportunities.
        The PATRIOT system provides an effective defense against Aircraft,
    Cruise Missiles and Theater Ballistic Missiles (TBM). To accomplish
    this mission, the PATRIOT force must have a combination of PAC-2
    missiles that provide robust anti-air and anti-cruise missile
    capability, and PAC-3 missiles that provide antiballistic missile and
    anti-cruise missile capability, especially against weapons of mass
    destruction and future threats.
        The Army has a variety of PATRIOT missiles to meet various threats.
    The older PAC-2 missile configurations counter the aircraft and basic
    cruise missile threats. But, these older PATRIOT missiles are well into
    their service life. While that life can be extended through the Service
    Life Extension Program, their age and reliability leave them less than
    pristine. The GEM and GEM+ provide an upgrade to the older PAC-2 design
    with increased capability against slower TBM threat and the cruise
    missile threat. These PAC-2 missiles all use blast fragmentation
    warheads--with associated limitations against certain TBM warheads. TBM
    warheads span from simple unitary high explosive warheads to
    submunition warheads with chemical or biological weapons. The TBM
    threats are best defeated with Hit-To-Kill warheads. The PAC-3 missile
    provides the best capability against TBMs, and sophisticated cruise
    missiles. PAC-3 provides a significant increase in the probability of
    warhead kill for TBMs over the GEM missile.
             short term (fiscal year 2000/01) proposed enhancements
    PAC-2 Component:
        To address the immediate capability shortfall, 724 PAC-2 missiles
    need to be immediately repaired. The remaining two-thirds of the PAC-2
    missile fleet will be demilitarized at the end of their life, or
    converted to the PAC-2 GEM+ configuration. To help alleviate the near-
    term capability shortfall, this GEM+ conversion should be accelerated
    one year. This acceleration will provide out-year savings that can help
    accelerate PAC-3 procurement. The PAC-2 family of missiles will remain
    the primary Anti-Air Breathing Threat missile. The fiscal year 2000/01
    requirement for the PAC-2 component of this solution is $134 million.

                                                     [TY$, Millions]
    ----------------------------------------------------------------------------------------------------------------
                                                                       Fiscal year--
                                              ---------------------------------------------------------------  Total
                                                2000   2001   2002   2003   2004   2005   2006   2007   2008
    ----------------------------------------------------------------------------------------------------------------
    PAC-2 retrofit...........................     50     40  .....  .....  .....  .....  .....  .....  .....     90
    Accelerate GEM+ Upgrade..................     16     28     14     21   (46)    (6)    (5)   (43)   (42)    (63)
    ----------------------------------------------------------------------------------------------------------------

    PAC-3 Component:
        To accelerate the PAC-3 procurement at the lowest risk, both the
    R&D and Procurement programs will require a series of enhancements,
    ranging between a minimum and maximum as shown in the table:

                                 [TY$, Millions]
    ------------------------------------------------------------------------
                                                              Min      Max
    ------------------------------------------------------------------------
    EMD...................................................       47       47
    Launcher Procurement..................................       35       35
    Facilitization........................................       30       85
    Missile Procurement...................................       44      174
                                                           -----------------
          Total...........................................      156      341
    ------------------------------------------------------------------------

        Complete the Engineering and Manufacturing Development (EMD)
    Expeditiously.--The EMD program will focus on the most critical
    capabilities of the system, maintain the fielding schedule, and defer
    future needs, if necessary, for later development and insertion into
    the PATRIOT system. The missile hardware is in its final design, but
    the software still requires some development. A significant aspect of
    the software still to be developed and tested is Electronic Counter-
    Counter Measures (ECCM) against future threats. This capability can be
    logically deferred into a future upgrade to the system. The EMD flight
    test program must be completed and should provide a demonstration of
    the warfighter's needs of Anti-TBM, Anti-Cruise Missile defense and
    Anti-Air capability. Expeditiously completing the EMD and flight test
    program at low risk will require an increase of $47 million RDT&E
    funding.
        Maintain launcher procurement.--In addition, $35 million ($11
    million in RDT&E plus $24 million procurement) is required to replace
    funds realigned within the program to maintain the launcher procurement
    in fiscal year 2000.
        Invest in Initial Production Facilitization.--A facilitization
    investment of $30 million is needed to provide a production capability
    of 12 missiles per month. But, the most effective and efficient way to
    accelerate production rates is to invest in production line at all
    production facilities. This provides the least recurring cost option
    and provides surge capacity for non-forecasted requirements. It is also
    important that we be able to respond to our Allies needs for a PAC-3
    missile. Investment of an additional $55 million of procurement funding
    will result in a production capability of 20 missiles per month. Thus,
    a sum of $85 million additional facilitization funding will result in
    an efficient high production capability sufficient to meet any foreseen
    needs.
        Increase missile procurement quantity.--The PAC-3 program is
    currently in Low Rate Initial Production for 52 missiles (fiscal year
    1998 and fiscal year 2000 buys). The current Baseline plan procures
    only sixteen PAC-3 missiles in fiscal year 2001. Fielding can be
    accelerated by providing an additional $44 million for 32 missiles,
    thus, maintaining the fiscal year 2000 production level. The fiscal
    year 2001 production could be increased to a level of 72 missiles for
    an increase of $174 million vice $44 million.
    Summary
        A minimum funding increase of $156 million ($58 million in RDT&E
    plus $98 million in procurement) in fiscal year 2001 results in a solid
    base program with accelerated PAC-3 production to 32 missiles. To
    maximize the first year accelerated production to a level of 72
    missiles, a funding increase of $341 million ($58 million in RDT&E plus
    $283 million in Procurement) is needed in fiscal year 2001.
                    long term (fiscal year 2002 and beyond)
        BMDO is pursuing out-year funding options as part of the
    Department's ongoing discussions.
        Summary of Near Term PATRIOT requirements:

                                 [TY$, Millions]
    ------------------------------------------------------------------------
                                                            Fiscal year--
                                                       ---------------------
                                                          2000       2001
    ------------------------------------------------------------------------
    PAC-2.............................................       66           68
    PAC-3.............................................  .......  156 to 34.1
    ------------------------------------------------------------------------

        Senator Stevens. We do not want to push you to do something
    you do not want to do. Would you agree with that strategy?
        General Kadish. Yes, Senator. In fact, we are ready to move
    PAC-3 into production, and we have constraints from facilities
    and other areas that if they were lifted we could move much
    more rapidly into production.
        Senator Stevens. It would be helpful to us if you could
    detail those restrictions, see if there is anything else we can
    do to accelerate that. I think particularly from the point of
    view of the increasing fear of the biological and chemical
    theater-type missiles, we probably could move into sort of a
    stop-gap system that might be rapidly deployable in an area of
    conflict, potential conflict. I think we would like to help you
    with that, if you would give us the information as to what do
    you need us to do to be able to achieve the goal.
        General Kadish. I would be happy to, Senator.
        [The information follows:]

        A facilitization investment of $30 million is needed to
    provide a production capability of 12 missiles per month. But,
    the most effective and efficient way to accelerate production
    rates is to invest in production line at all production
    facilities. This provides the least recurring cost option and
    provides surge capacity for non-forecasted requirements. It is
    also important that we be able to respond to our Allies needs
    for a PAC-3 missile. Investment of an additional $55 million of
    procurement funding will result in a production capability of
    20 missiles per month. Thus, a sum of $85 million additional
    facilitization funding will result in an efficient high
    production capability sufficient to meet any foreseen needs.

        Senator Stevens. Senator Inouye, do you have----

                          Space-based infrared system

        Senator Cochran. May I ask one more question? I know I have
    asked a lot of questions, and I will submit a few, if it is all
    right, Mr. Chairman, for the record. The other day we had
    before our committee the Air Force Secretary. He said he
    believed that management of the space-based infrared program
    should be transferred to the Ballistic Missile Defense
    Organization.
        Congress had suggested that a few years ago. The Air Force
    opposed it at that time. What is your view? Do you think this
    would be a wise move at this point, and are there advantages to
    moving the responsibility for the program to BMDO?
        General Kadish. Senator, the answer to that question is
    probably yes, but there is more work to do, and let me explain
    why things have changed in our thinking about the space-based
    infrared system (SBIRS) program, especially what we are talking
    about is SBIRS low, which is a low constellation of sites that
    help us with discrimination and tracking of our targets.
        The situation we have had in previous years is that SBIRS
    has always been an important part of what I call the tool kit
    of missile defense, just like our X-Band radars and other
    sensors. Up until the point at which we moved NMD from a
    technology effort into a real program effort that we have
    discussed today, having SBIRS managed by the Air Force, being
    requirements-based, made a lot of sense.
        Now that we are moving into actually constructing the
    architecture for our national missile defense program, SBIRS
    becomes a very real, programmatic element to our program,
    especially as we move beyond the expanded C-1 architecture, so
    having it totally requirements-based, that the Air Force would
    manage separately, presents us some integration problems with
    our other elements within the NMD system, and what we are
    trying to decide now is how best to manage that interface,
    because it becomes complicated to keep it a separate service
    management process, although we followed the direction of
    Congress and set up some management arrangements that bridge
    that gap, at least initially.
        So the idea now that we have changed the emphasis causes us
    to reevaluate the management of this particular program, and
    that is why the Secretary I believe said what he said.

                                 Airborne laser

        Senator Cochran. As a follow-on to Senator Domenici's
    question about the airborne laser, it is pretty clear that the
    laser would be capable of taking down a missile of any range
    launched from North Korea. Is that a correct assessment of the
    capability of that system?
        General Kadish. That is what our assessment is.
        Senator Cochran. Therefore, if we could keep that on track,
    on schedule, which means that it would be ready for testing by
    2003, given the fact that NMD is not going to be even
    programmed for deployment until 2005, there would at least be a
    contingency capability against a North Korean threat if we keep
    the ABL on schedule.
        In that connection, would you support that, or would you
    agree that it would be a good idea for this committee to be
    sure that we provide the funds necessary to accomplish that
    goal?
        General Kadish. If the program is executable that way, that
    would lend a lot to our architecture and keep that program
    stable. They have their challenges, however, technically.
        Senator Cochran. I know. I heard you say that a while ago.
        General Kadish. They have the same integration challenge on
    the aircraft that we do on some of our systems to get that
    laser pointed right, but everything is pointing in the right
    direction on that program.
        Senator Cochran. Thank you, Mr. Chairman.
        Senator Stevens. Well, thank you very much, General. We do
    appreciate your candid response to our questions. Coming from
    where I do, with the potential that is developing in North
    Korea, that is a very serious subject for us.
        I would not want to indicate any reluctance to state that
    if they ever fired a missile at us, that would be the last
    thing that North Korea would do, but I do not think that threat
    is really something that should drive a change in our program,
    but it is a substantial threat to us, and I think the threat of
    our instant retaliation ought to be reasserted again and again,
    if they ever fire one of those at our country.

                         Additional committee questions

        We do appreciate your cooperation and look forward to
    working with you, particularly on the PAC-3 initiative. We
    would like very much to help you on that. Thank you very much.
        General Kadish. Thank you, Senator.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
                   Questions Submitted by Senator Ted Stevens
                           patriot pac-3 capabilities
        Question. Can you outline for the committee the PAC-3 missiles'
    capability against aircraft and cruise missiles and any associated
    flight test plans?
        Answer. The performance charts (2) for the PATRIOT PAC-3 SYSTEM
    versus aircraft and cruise missiles are classified and will be provided
    as a separate attachment. The DOT&E approved Test and Evaluation Master
    Plan (TEMP) will demonstrate the capability of the interceptor against
    aircraft and cruise missiles as represented by the QF-4 and MQM-107,
    respectively. There are four flight tests planned against full-scale
    aircraft and cruise missiles targets. Two tests involve engaging low
    altitude cruise missiles in background clutter environments. Two flight
    tests are planned against aircraft in an electronic countermeasure
    environment. The cruise missile tests are scheduled for July 2000 and
    March 2001. The aircraft flight tests are scheduled for January and
    June 2001.
        Question. As we look to the future and the possibility of modifying
    and upgrading Patriot missiles, is the Defense Department considering
    procurement of greater quantities of PAC-3 missiles to meet its needs?
        Answer. Yes, recent reliability discoveries in some fielded PATRIOT
    missiles drastically reduces the quantity of available missiles well
    into the next decade. The Ballistic Missile Defense Organization has
    developed a missile acceleration option to augment the production
    program and build a capability as rapidly as possible. This option
    requires an investment in both facilities and hardware. To accelerate
    the PAC-3 procurement at the lowest risk, both the R&D and Procurement
    programs will require a series of enhancements:
      --Complete the Engineering and Manufacturing Development as
            expeditiously as possible (+$47 million RDT&E)
      --Maintain launcher procurement (+$11 million in RDT&E plus $24
            million in procurement)
      --Invest in Initial Production Facilitization (+$30 million to $85
            million in procurement)
      --Increase in missile procurement quantity (+$44 million to $174
            million in procurement).
        Implementing the production enhancements will enable not only a
    PAC-2 solution, but will also position the program to be more
    acceptable to Foreign Military Sales.
                           navy theater wide for nmd
        Question. Secretary Danzig has indicated that Navy Theater Wide is
    a long term development effort. Would you agree that Navy Theater Wide
    is not a near term NMD option?
        Answer. The Navy Theater Wide system is not a near term option for
    obtaining an NMD capability. A significant development effort remains
    to be accomplished in order to deploy a single mission system by 2008
    which can intercept theater ballistic missiles, with a multimission
    capability following in 2010. Given a significant increase in program
    funding, a more robust Navy Theater Wide Block II system could be
    fielded some time after that date, but significant upgrades would be
    required to the radar, missile and kinetic warhead to provide the
    system with the capability to intercept ICBMs. These upgrades are
    neither currently defined from a systems engineering point of view, nor
    currently funded.
        Question. What is your estimate of the time and funding required to
    develop and procure a sea-based NMD system?
        Answer. The Report to Congress delivered in June 1998 made a rough
    order of magnitude cost estimate of $16 billion to $19 billion (in
    fiscal year 1997 dollars) for a stand-alone (i.e., no land-based NMD
    interceptors) sea-based NMD architecture. Within that estimate, BMDO
    included the cost of procuring 3 to 6 additional AEGIS ships and the
    cost of the land-based radars (upgraded early warning radars and the X-
    band radars) and the battle management/command, control and
    communications systems (BM/C\3\). BMDO and the Navy are currently
    studying how a sea-based NMD system could complement, not replace, the
    planned land-based NMD architecture. Cost and development schedule
    estimates are going through a more detailed review in this study and
    are not yet available.
        Question. Would you agree that the cost to operate and maintain a
    sea-based NMD system would be substantially higher than the cost of a
    land-based NMD system? Does BMDO have an estimate of the O&M cost for a
    Navy Theater Wide NMD system?
        Answer. The cost to operate and maintain a sea-based NMD system is
    subject to a number of variables. The most critical cost driver is
    whether a sea-based NMD system would be employed in a full-time, 365
    days per year mode, or in a crisis surge mode. A second cost driver
    would be whether the sea-based NMD capability would be incorporated on
    a current multi-mission Naval combatant or on a new ship dedicated to
    the NMD mission.
        For an equivalent capability to the land-based NMD architecture,
    where a force of new dedicated NMD ships would be employed to a full-
    time NMD mission, one would expect the costs to be somewhat higher than
    the land-based NMD architecture. However, if an NMD capability were
    incorporated on a current multi-mission Naval combatant, and employed
    in a crisis surge mode, one would expect the operating and maintenance
    costs of the sea-based NMD force to be lower than the dedicated land-
    based NMD architecture operating and maintenance costs.
        BMDO does not currently have an estimate of the O&M costs of a sea-
    based NMD architecture.
                           navy area program options
        Question. Will the Navy Area program's interceptor be as effective
    against chemical and biological submunitions as the PAC-3 interceptor?
        Answer. There is not an absolute answer to this question since the
    answer depends on the engagement scenario and the requirements for each
    of the systems. PAC-3 has a higher effectiveness against these targets
    in its required area of protection than Navy Area for this same area of
    protection. The Navy Area provides a larger area of protection.
        Recent live-fire testing and performance analysis indicates that
    the Navy Area interceptor, SM-2 Block IVA, design will result in high
    percentage of direct hits and a very robust lethality with a
    fragmenting warhead in near hits, including good capability against
    submunitions.
        Question. Has BMDO evaluated the potential for the Navy to use the
    PAC-3 interceptor for the Navy Area Defense mission?
        Answer. Yes, DOD policy requires an Analysis of Alternatives (AOA)
    prior to entering Engineering and Manufacturing Development (EMD). For
    the Navy Area program, the AOA study evaluated the cost-performance-
    schedule benefits and risks of Navy Area SM-2 Block IVA missile against
    an Enhanced-Hit-Capability SM-2 Block IV missile and a marinized PAC-3
    missile. The analysis concluded that, when considering the entire
    mission requirement for the ship and missile, the SM-2 Block IVA
    missile is the preferred alternative as the Navy Area TBMD interceptor.
        Selection of a Navy Area TBMD interceptor design is driven by
    operational requirements. These requirements have driven the approach
    to continue with the evolution of STANDARD Missile to provide the
    earliest TBMD capability, while maintaining anti-ship cruise missile
    capability. This also required that the Navy Area interceptor design
    employ a blast fragmentation warhead.
        Question. In most scenarios, would the Navy Area program protection
    be augmented by the deployment of Patriot or THAAD as soon as those
    systems could be deployed?
        Answer. In most scenarios involving Navy Area program protection,
    the Navy Area TBMD system would be the only available protective system
    to defend critical assets against ballistic missiles as forces move
    ashore during the crucial first days of a forced entry operation or at
    an undeveloped point of entry. As the theater of operation matures,
    deployment of Patriot and THAAD would augment the Navy Area TBMD
    system, eventually taking over the protective mission. This
    augmentation supports a layered defense and would be beneficial in
    allowing for the Navy ships the flexibility to respond to other CINC
    requirements once the land based systems are in place.
                           nmd military construction
        Question. Assuming the President makes a deployment decision this
    summer, what is the largest concern regarding the military construction
    schedule for National Missile Defense?
        Answer. The largest concern regarding the military construction
    schedule for the National Missile Defense system is the X-Band Radar.
    The deployment construction schedule was developed based on achieving
    the NMD System Initial Operating Capability (IOC) of twenty Ground
    Based Interceptors (GBIs) by the end of fiscal year 2005. The X-Band
    Radar facility takes the longest to construct and test and therefore
    drives the construction schedule. The X-Band Radar construction
    timeline requires contract award in November 2000 with the Notice to
    Proceed (NTP) for construction start in April 2001 in order to achieve
    our directed initial NMD capability in fiscal year 2005.
                                     ______

                Questions Submitted by Senator Daniel K. Inouye
                                 arrow program
        Question. How would you assess the status of the Arrow program?
        Answer. The Arrow program is proceeding well. Integration of the
    cooperatively developed Arrow missile and launcher with the other,
    Israeli-developed components of the Arrow Weapon System (Green Pine
    fire control radar, Citron Tree battle management center, and Hazelnut
    Tree Launcher Control Center), is largely complete. The Arrow Weapon
    System has performed successfully in its last two flight tests. On
    November 1, 1999, Israel conducted a successful Arrow Weapon System
    intercept test in which, for the first time, the Arrow interceptor was
    launched, tracked, and controlled to a successful intercept by the
    other system elements of the Arrow Weapon System. A follow-on test is
    planned for summer 2000 and an initial operational capability is
    expected to be announced by Israel before the end of the year.
        Question. What do you see as the next steps in the program?
        Answer. Once the U.S./Israel cooperative Arrow Deployability
    Program is completed in fiscal year 2002, Israel is planning block
    upgrades to provide intercept capability at higher altitudes and
    against longer-range threats. In addition, approximately two flight
    tests per year will be conducted to verify and extend the current Arrow
    battle space.
        Question. Is the United States considering undertaking an Arrow
    Systems Improvement program with Israel?
        Answer. Israel has identified a requirement to upgrade the Arrow
    Weapon System in response to the potential emergence of longer-range
    threats and of countermeasures. At Israel's request, the United States
    has helped Israel evaluate some of the preliminary concepts and
    improvements that could be introduced into the Arrow missile to enhance
    its effectiveness against the emerging regional threats. There are
    areas of technical interest to the United States, but BMDO's other TMD
    programs are higher priority and no funds are available to support a
    follow-on effort with Israel.
        Question. Apart from our undertaking to help Israel procure a third
    Arrow battery, has the Defense Department included any funds for future
    missile defense cooperation in your future budget plans? If not, why?
        Answer. The Arrow Deployability Program will be completed in fiscal
    year 2002. The fiscal year 2002 program includes funding for completing
    our obligation under the Arrow Deployability Program agreement and
    completing funding the Israeli requirement for the third Arrow battery.
    At this point, the Department of Defense has not included any new
    funding other than funds to complete the Arrow Deployability Program
    and funding for the third Arrow Battery. Since the United States has no
    plans to deploy Arrow, or any of its components, we have chosen to fund
    systems planned for deployment with U.S. forces as a higher priority.
        Question. Hasn't Israel been a significant partner with the United
    States in pursuing missile defense cooperation for more than a decade?
        Answer. Israel has been and will continue to be a significant
    partner with the United States. We continue to conduct exercises with
    Israeli missile defense forces to work on concepts for combined missile
    defense operations. We will also continue to maintain an active
    technical dialog with the missile defense community in Israel.
        Question. Won't we get real value from further international
    cooperation?
        Answer. Israel has been and will continue to be a significant
    partner with the United States. We continue to conduct exercises with
    Israeli missile defense forces to work on concepts for combined missile
    defense operations. We will also continue to maintain an active
    technical dialog with the missile defense community in Israel.
        Question. In 1997, the United States and Israel negotiated an
    Enhanced Arrow Deployability Program which I am told is not funded in
    your budget request. This program was supposed to further
    interoperability between the United States and Israel. Do you believe
    it would be beneficial if the Congress were to add funds for this
    purpose?
        Answer. Work continues with Israel to insure theater missile
    defense interoperability between deploying U.S. forces and Israeli
    forces. Initial work concentrated on interoperability between PATRIOT
    systems employed by both nations. At this time, with the introduction
    of Arrow and the impending introduction of missile defense capability
    to U.S. Navy Forces, more needs to be done to ensure effective
    interoperability.
        Question. Israel has proposed undertaking a new cooperative program
    with the United States, the Boost Phase Launch Intercept program. I
    understand you will be reporting to us your views about this program
    this spring. Do you have any preliminary assessment at this time?
        Answer. We will present the details of our assessment in a report.
    We can say that from a technical and operational point of view, this
    Israeli concept appears to be feasible.
        Question. What are the prospects that the United States will be
    interested in undertaking this program?
        Answer. There is interest in several aspects of this program,
    however, at this time, other funding shortfalls preclude a DOD
    investment in this concept.
                                     ______

                   Questions Submitted by Senator Tom Harkin
                            national missile defense
        Question. In response to concerns about the lack of testing of the
    NMD system against realistic countermeasures before the decision on
    deployment, you stated that we have to walk before we run. I agree that
    it makes sense to determine if the system can hit a sitting duck before
    trying to hit an evasive target. However, the NMD deployment decision
    is scheduled to take place this fall, before the NMD system has really
    begun to crawl. Is it prudent to start pouring concrete and deploying a
    system before we know whether it can run, or even walk?
        Answer. Yes, it is prudent to start pouring concrete and deploying
    a system because the NMD system has proven its ability to ``crawl'' and
    is beginning to demonstrate the potential to ``walk.'' Earlier NMD
    system test results proved that we could acquire, distinguish, and
    intercept the right target from a set of our early development target
    sweeps. We plan to progress from earlier tests with few objects to more
    complicated tests with threat representative target sets. This ongoing
    and additive test feedback gives us confidence that we can do required
    engineering later on in the program to make the system work reliably
    and operationally effective.
        Question. The 1999 Annual Report of the Pentagon's Director of
    Operational Testing and Evaluation states, in reference to the October
    1999 flight test, IFT-3, ``The large balloon aided in acquisition of
    the target. It is uncertain whether the EKV could have achieved an
    intercept in the absence of the balloon.'' In light of the uncertainty
    whether the intercept would have been achieved had it not been helped
    by the proximity of the decoy balloon, on what basis do you call the
    test a success? Should we rely on a defense system that may need a
    large shiny object to guide it to its target?
        Answer. The EKV would have intercepted the target without the decoy
    balloon being present. When the EKV did not acquire the target complex
    after a preset amount of time had passed it automatically transitioned
    to a step stare operation to continue searching. The step stare
    sequence is a pre-programmed maneuver intended to enlarge the EKV's
    field of view if for some reason the target complex does not appear
    within it. The step stare examines a 22 grid around the
    original field of view, effectively quadrupling it. During the step
    stare operation in IFT-3, the EKV noted the balloon in the lower, left-
    hand image, established a track file on it, and used its discrimination
    algorithms to classify the balloon correctly. The EKV continued its
    search and observed the Multi Service Launch System (MSLS) target
    deployment front section, established a track file on it, and correctly
    classified it. The EKV then transitioned to track and intercepted the
    target. Had the balloon decoy not been there, the EKV would still have
    executed the step stare, acquired the MSLS target deployment front
    section and reentry vehicle, and completed the intercept. It did not
    rely on the decoy balloon for its success.
        Furthermore, the test was a success on many levels. The other test
    elements--the target vehicle, the surveillance sensors, the BMC\3\, and
    the payload launch vehicle--all functioned properly to form the
    framework for the EKV's intercept attempt. The EKV successfully
    performed every function needed to accomplish the intercept, despite an
    unexpected amount of error that accumulated during the planned star
    sightings. The step stare function overcame the error, exactly as
    intended by the software designers, enabling the EKV to acquire and
    track all of its targets. The discrimination algorithms correctly
    selected the reentry vehicle and discarded the decoy balloon and MSLS
    target deployment front section. The guidance and propulsion systems
    worked together correctly to home the EKV on the reentry vehicle. And
    the aimpoint selection algorithms worked correctly to guide the EKV to
    impact within the correct region of the reentry vehicle. The successful
    intercept was confirmed by various radars and airborne sensor
    platforms, as well as by loss of telemetry signals from the EKV and
    reentry vehicle.
        Question. I am concerned that the NMD system could be deployed
    based on tests against one kind of threat, but then have to face a very
    different threat with effective countermeasures once it is deployed.
    Given that the 1998 Rumsfeld Commission Report states that biological
    weapons delivered by submunitions are within the technological reach of
    emerging missile states, and the 1999 National Intelligence Estimate
    states that such states could develop countermeasures such as decoy
    balloons by the time they test flight their first long-range missiles,
    what is the basis for BMDO's assumption that the emerging missile
    threat will not include such countermeasures before 2005?
        Answer. [Deleted.] BMDO has not made a threat assessment. BMDO is
    designing NMD to meet the DIA-validated threat.
        Question. I would like to establish more clearly what threats the
    planned NMD system would effectively defeat. I am referring now to the
    final deployed system, what I think you call the C-3 system, with 250
    interceptors. Would the NMD system be effective against an attack with
    a few warheads and hundreds of decoys, if the warheads and decoys were
    disguised to present a range of temperatures, wobbles, and other
    characteristics such that the warheads could not be clearly
    distinguished?
        Answer. The NMD System has looked at a number of large
    countermeasure suites which are in the current Capability 3 Threat
    Scenarios and consistent with that described above. This C-3 capability
    does address a range of temperatures, wobbles and other threat
    characteristics consistent with what the Intelligence Community
    considers being plausible limits. These characterizations are provided
    in the NMD Threat Description Document.
        Question. Would the kill vehicle, guided by infrared sensors, be
    effective against a warhead that was cooled to liquid nitrogen
    temperatures?
        Answer. [Deleted.]
        Question. I understand that biological or chemical agents would be
    most effectively distributed not by a single warhead, but by dozens or
    hundreds of submunitions or bomblets. Would the NMD system be effective
    against a missile that subdivided into hundreds of bomblets?
        Answer. We don't believe that our initial system will face the
    threat of submunitions and thus the NMD C1 to C3 systems haven't been
    designed to counter them. Technology to support boost phase negation
    capability such as space-based lasers is currently being developed to
    support systems beyond C3 which would be capable of destroying boosters
    containing submunition payloads prior to submunition deployment.
        Question. Would the NMD system be effective against land or sea-
    launched cruise missiles?
        Answer. No, the National Missile Defense System is designed to
    intercept intercontinental ballistic missile (ICBM) warheads in space.
    Land and sea-launched cruise missiles fly slowly (relative to an ICBM
    warhead) at very low altitudes.
        Question. Would the NMD system be effective against a nuclear
    weapon hidden as cargo on a ship that sailed into a U.S. harbor?
        Answer. No, the National Missile Defense System is designed to
    track and intercept intercontinental ballistic missile (ICBM) warheads
    in space. As you already know, the United States maintains significant
    defenses against this scenario, such as you describe. The Central
    Intelligence Agency, the Federal Bureau of Investigation, the Coast
    Guard, and the Customs Service along with a number of other federal
    agencies constitute the United States' first line of defense from a
    nuclear weapon hidden aboard a cargo ship.
        Question. The Pentagon has recently estimated that the total life-
    cycle cost of a 100 interceptor system would be $30.2 billion in fiscal
    year 1999 dollars, an increase of $6.4 billion from the previous
    internal estimate of system cost, and more than twice the widely
    reported estimate of $12.7 billion. In your written testimony you point
    out that the program is on a ``high-risk schedule'' that may well slip.
    If deployment is delayed, would that raise the program cost?
        Answer. The NMD Program is a high-risk effort with a highly
    compressed schedule. Despite some minor delays in test flights, the
    overall developmental effort remains on track with capability to have
    20 interceptors fielded by the end of fiscal year 2005, and a 100
    interceptors fielded by the end of fiscal year 1907. The Deployment
    Readiness Review (DRR) scheduled for summer 2000 will take place at the
    Defense Acquisition Executive Level and with the full participation of
    all stakeholders. With the information presented at the DRR senior
    leadership will be able to assess technological progress to support a
    possible deployment decision later in 2000. No plans are in place to
    delay or slip the program. If the NMD Program was directed, in the near
    term, to delay events that hinge on a deployment decision for some
    period of time, e.g. for a year, the main impact on total life cycle
    costs would be extending the developmental (RDT&E) effort for that
    year, at approximately the fiscal year 2001 requested level of $1.7
    billion to $1.8 billion. Key procurement, deployment and construction
    events would slip to the right, and, as production and construction
    have not begun, these would, therefore, not substantially increase.
        Question. You also state that you very reasonably try to phase your
    decisions--I believe that means to delay final design decisions as long
    as possible. If some design elements change, would that be likely to
    increase the program cost?
        Answer. Design element changes could increase program cost.
    Reconfiguring hardware or software will very likely require testing,
    verification and validation. Any reconfiguring that increases
    complexity, requires higher performance parameters, adds redundancy,
    hardens the system or improves performance is likely to increase
    program cost. NMD remains a high-risk and highly concurrent program.
    Tremendous effort has been devoted to estimating the cost of the
    Expanded C1 and an effort is underway to develop an estimate for
    possible follow-on increments in preparation for the Deployment
    Readiness Review (DRR) in the summer of 2000. Program confidence in
    cost estimates has grown as the developmental effort has progressed,
    hardware has been fabricated, integrated test flights have been
    executed, and more aspects of the program have migrated and been
    definitized under the Lead System Integrator contract. If following a
    favorable technology assessment at DRR the program receives direction
    to proceed toward deployment, program testing, including lethality
    testing, will continue concurrently with production of a significant
    number of interceptors for initial fielding. Some changes in production
    and deployment are possible, and would in all probability impact system
    cost.
        Question. Do you have an estimate of the total life-cycle cost of
    the desired final 250 interceptor system?
        Answer. An estimate of the cost of the objective 250 interceptor
    system has not been made. To support a Deployment Readiness Review
    (DRR) in summer 2000, BMDO anticipates doing cost excursions on
    alternative architectures. The objective 250-interceptor system
    architecture will be one of the cost excursions.
        Question. The fiscal year 2001 budget includes some initial money
    for procurement. Given the phasing of decisions, do you think that,
    when procurement begins, we will have firm knowledge of the final cost
    of the system?
        Answer. NMD remains a high-risk and highly concurrent program.
    Tremendous effort has been devoted to estimating the cost of the
    Expanded C1 and an effort is underway to develop an estimate for
    possible follow-on increments in preparation for the Deployment
    Readiness Review (DRR) in the summer of 2000. Program confidence in
    cost estimates has grown as the developmental effort has progressed,
    hardware has been fabricated, integrated test flights have been
    executed, and more aspects of the program have migrated and been
    definitized under the Lead System Integrator contract. If following a
    favorable technology assessment at DRR the program receives direction
    to proceed toward deployment, program testing, including lethality
    testing, will continue concurrently with production of a significant
    number of interceptors for initial fielding. Some changes in production
    and deployment are possible, and would in all probability impact system
    cost.

                              subcommittee recess

        Senator Stevens. If there is nothing further, the
    subcommittee will stand in recess.
        [Whereupon, at 11:35 a.m., Wednesday, April 12, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 2001

                                  ----------

                            TUESDAY, APRIL 25, 2000

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:45 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Ted Stevens (chairman) presiding.
        Present: Senators Stevens, Cochran, Domenici, Hutchison,
    Inouye, Dorgan, and Durbin.

                             DEPARTMENT OF DEFENSE

                             Department of the Army

                            Office of the Secretary

    STATEMENTS OF:
            LOUIS CALDERA, SECRETARY
            GEN. ERIC K. SHINSEKI, CHIEF OF STAFF

                    OPENING STATEMENT OF Senator TED STEVENS

        Senator Stevens. Good morning. This morning our
    subcommittee will receive testimony from the Secretary of the
    Army and the Chief of Staff of the Army on the fiscal year 2001
    budget request.
        General Shinseki, we welcome you to your first time to
    testify before us as the Chief of Staff. I thank you very much
    for your visit to Alaska. I enjoyed traveling with you.
        General Shinseki. Thank you, Mr. Chairman.
        Senator Stevens. As you know, you were very well received
    in our State, and the comments you made were very appropriate
    for the night.
        There are many issues facing the Army. I think the most
    critical decision Congress will make this year will be on the
    direction we go on Army Transformation. The Transformation
    concept is not simply a new weapon system but a new doctrine
    and an organizational concept for the Army. I am going to put
    my full statement in the record at this point and ask Senator
    Inouye if he has a statement to make.
        [The statement follows:]

                   Prepared Statement of Senator Ted Stevens

        This morning the subcommittee will receive testimony from
    the Secretary of the Army and the Chief of Staff of the Army on
    their fiscal year 2001 budget request.
        General Shinseki, welcome to you. This is your first time
    testifying before the subcommittee.
        I want to thank you again for your visit to Alaska in
    February. It sent a very powerful signal to the Army in Alaska,
    and the residents of my state, of the direction you intend to
    lead the Army in the years ahead.
        While there are many important issues facing the Army, I
    believe the most critical decision Congress will make this year
    will be the direction we go on Army Transformation.
        The Transformation concept is not simply a new weapons
    system, but a new doctrine and organizational concept for the
    Army.
        Like any dramatic change, Transformation challenges
    entrenched interests, and those who prefer ``business as
    usual''.
        Unless significant steps are made this year, and during
    fiscal year 2001, it will be difficult to realize the full
    impact you have articulated for the Army.
        General Shinseki, in November of last year, in the final
    fiscal year 2000 appropriations bill, Sen. Inouye and I added
    $100 million in special funding to augment the fielding and
    equipping of the initial Transformation brigade combat team.
        You provided this subcommittee with a report detailing the
    manner which you will spend that money, and we appreciate your
    specific plan.
        We look forward to working with you to implement
    Transformation, and the opportunity to work with you during
    your tenure as Chief of Staff of the Army.
        In addition, I would welcome any comments you might have on
    current funding requirements for the Army for fiscal year 2000,
    and your views on the scope and timing of any needed
    supplemental appropriations for this fiscal year.
        Let me now turn to our mutual friend, and partner, the
    distinguished ranking member of the subcommittee, Sen. Inouye.

                     STATEMENT OF Senator DANIEL K. INOUYE

        Senator Inouye. Thank you very much. I would like to join
    you in welcoming Secretary Caldera and General Shinseki, and to
    publicly say that I am inspired by the ideas that are coming
    out of the Army on Transformation. And I, for one, support
    that. It is about time we began looking at changes in the
    military during peacetime. We are always somehow reacting to
    some adversary. And whenever we do that, we are never prepared.
        I am old enough to remember World War II and the Korean
    conflict. And I remember, in the Korean conflict, we had
    occupation forces to face the combat-seasoned troops of North
    Korea and the Chinese. And in World War I, I still remember the
    story of General Patton, when he was assigned to Fort Benning
    to begin the tank corps. He had 250 tanks, half of them then
    moved. And he went to Sears Roebuck to buy parts, because we
    could not afford it. I do not want to see this happen again. So
    I not only wish you the best, but you have my support, sir.
        Thank you very much. May I have my full statement made a
    part of the record.
        Senator Stevens. Yes, it will be.
        [The statement follows:]

                 Prepared Statement of Senator Daniel K. Inouye

        Mr. Chairman, it is indeed a pleasure for me to have the
    opportunity to join you today in hearing from our Army
    representatives.
        Secretary Caldera, General Shinseki we want to thank you
    for coming today.
        Mr. Chairman, as the Army enters the new millennium, it is
    a time of great challenges.
        I for one have been inspired by the ideas coming from the
    Army about transforming our land forces from a cold war force
    to a force for the 21st century.
        I can only say to our leaders here that you have my
    support.
        To those that believe we should slow down, I would say that
    we have never prepared for change in our Army during peacetime,
    but only when we were forced to do so by an adversary. We have
    the opportunity to do so now. Mr. Secretary, General Shinseki,
    I say to you don't slow down. The time to act is now, and you
    are the ones to achieve this goal.
        To retain our status as the world's only superpower, we
    must maintain our Army as a force second to none.
    Transformation will help us to accomplish that objective.
        Mr. Chairman, I look forward to hearing from our witnesses
    today how the Army's request for fiscal year 2001 will lead our
    Army into the future.

        Senator Stevens. Senator Hutchison.

                   STATEMENT OF Senator KAY BAILEY HUTCHISON

        Senator Hutchison. Thank you, Mr. Chairman.
        Mr. Chairman, in my opening statement, I just want to say
    that I spent Easter weekend in Kosovo and Bosnia. And I was so
    very proud of the troops that you have trained, General
    Shinseki. They are upbeat and they are very tough. But,
    definitely, in Kosovo, they have a tough job. And there is no
    question that they are on very high alert there. And I am
    really proud of the job they are doing and I am proud of the
    military construction that is supporting them.
        And from the first time I met you, which was on the runway
    in Tuzla, things have changed very much at that base--and for
    the better, I might say. As you know, the 49th Armored Division
    is now in charge of the Eagle Base in Tuzla. And they are doing
    a great job. And having the Easter sunrise service with them
    was probably the best Easter I will ever have in my life. And I
    wanted you to know that they are all very, very excited to be
    there and doing the job they are doing, and you should be proud
    to say that they are our U.S. Army.
        Thank you, Mr. Chairman. I will have questions later.
        Senator Stevens. Senator Dorgan.

                      STATEMENT OF Senator BYRON L. DORGAN

        Senator Dorgan. Mr. Chairman, thank you very much.
        Let me thank Secretary Caldera for his service. I have had
    the opportunity to work with him on a couple of issues, and I
    have appreciated very much his response. And, General Shinseki,
    thank you for your service to our country.
        I will not give an opening statement except to say that we
    are proud of the men and women who serve in the Army. And
    Senator Hutchison mentioned the construction that is going on
    in Kosovo. Some of that is by the 142nd Engineers of the North
    Dakota National Guard, who are over there doing a lot of
    construction work. Also, I join Senator Inouye in being
    intrigued by the Transformation that is going on and some of
    the plans that you are presenting today. I have to speak on the
    floor of the Senate at 11 o'clock, so I will not be able to be
    here for your entire testimony, but thank you very much for
    appearing.
        Senator Stevens. Thank you very much.
        Mr. Secretary, should we hear from you first?

                            Fiscal year 2001 funding

        Mr. Caldera. Thank you, Mr. Chairman. Mr. Chairman, I have
    a prepared statement that I would like to submit for the
    record. If I may, just to begin, I wanted to start by thanking
    you and this committee for your support of our soldiers in this
    past year, and in particular to thank you for what you did last
    year in providing us some critical support to enhance our
    readiness of our Army, including the package of pay increase,
    restoring retirement benefits, pay table reform, that you
    supported last year, that sent exactly the right message to our
    soldiers, that our Nation honors their service and their
    sacrifice.
        We had record reenlistment in the Army last year, I think
    in large part because soldiers were looking for that signal and
    got that signal. And we are continuing to work to enhance their
    quality of life and their training in order to be able to
    continue to recruit and retain the soldiers that we need.
        We also appreciate very much the $100 million that this
    committee provided to the Army to begin the Transformation
    process last year. General Shinseki will talk more specifically
    about the Transformation process, and I would like to say just
    a couple more things about that. But I do want to note that I
    know that this committee supports the Army's need to obtain the
    supplemental funding for the mission in Kosovo. That is
    reaching a critical point for us.
        We have already spent about $750 million of operation and
    maintenance (O&M) money that would have otherwise gone for Army
    training throughout the course of the rest of the year in
    supporting the mission in Kosovo. And we are at the point where
    we are beginning to, first of all, with support from the Office
    of the Secretary of Defense (OSD), we can continue to operate
    without changing our program for a couple of more weeks. But at
    some point we will begin to do some of the kinds of things that
    we need to do to husband resources, both to pay for the Kosovo
    mission and to ensure that we operate this year within our
    appropriations.
        The supplemental is important, not just in terms of full
    funding, but also in terms of its timeliness, so that we do not
    have to take action such as curtailing training, deferring
    personnel actions, like promotions, hiring, permanent change of
    station (PCS) moves. Those are some of the kinds of things that
    we will begin to do--cut back on procurement of spare parts,
    slow down depot missions. Those are some of the actions that we
    will begin to take. We understand that this committee
    appreciates the importance of that supplemental, and we urge
    that, at the earliest moment, that that could be provided. It
    would be of great benefit in order not to impact our training
    and our readiness.
        Mr. Chairman, in terms of Transformation, as General
    Shinseki was coming aboard last year, one of the challenges
    that Secretary Cohen laid before us was to better articulate
    the direction that the Army was going in the 21st century, the
    kind of Armed Forces that we would have that would be able to
    meet the threats and the challenges that our Nation will face
    in the 21st century. The need to have an Army that is more
    deployable, more responsive, capable of being dominant at every
    point on the spectrum, from high-intensity conflict through
    peacekeeping, peace enforcement, stability and support
    operations, right down to humanitarian assistance and
    engagement missions that we perform every single day all over
    the world.
        As a consequence of that challenge, General Shinseki and I
    articulated this vision for the Army, the Army Vision, Soldiers
    On Point for the Nation . . . Persuasive in Peace, Invincible
    in War, that lays out the tenets of Transformation. It is about
    more than changing our formations and our equipment.
        It is about investing in the preparation, training and
    leader development of our soldiers, maintaining high readiness,
    manning our units at 100 percent by grade and military
    occupation speciality, and about transforming the Army so that
    it would be a more deployable, responsive force, looking out
    and seeing that our heavy forces are too heavy and take too
    long to deploy and are difficult to operate in certain parts of
    the world, where the 70-ton tanks are too heavy for the
    bridges, too wide for narrow urban areas, too difficult to
    employ, that our light forces lack staying power, in terms of
    their ability, if they faced an armored threat at the time of
    arrival, of being able to survive and win in that kind of
    environment without quick reinforcement, and of the need to be
    able to get the right force to the hot spots faster in the
    world in order to be effective, and to give the Nation more
    capabilities.
        Transformation provides the Nation with increased
    capabilities immediately. Because the interim forces that we
    have begun to stand up, starting with the initial brigades at
    Fort Lewis, are forces that the Nation can begin to use today
    that are more deployable and have more lethality, more
    versatility in the kinds of missions that they will be sent to.
    It also, as we begin to procure the off-the-shelf interim
    armored vehicle that will be the weapon system that they will
    use, begins to take us down the road of driving our heavy
    forces and our lighter forces closer together, moving toward
    the concept of an Objective Force that has the deployability of
    our light forces, but the lethality of our heavy forces. And we
    begin to make today the science and technology investments that
    will give us the answer to the questions of whether we can
    technologically deliver that kind of force for the Nation.

                              Funding requirements

        In order to jump start Transformation, to make it more than
    just a program, but to make it a reality, we used the
    assistance that this committee provided to begin standing up
    those initial brigades, and to begin those investments. And we
    reprioritized about $1 billion within the Army budget in order
    to make the kinds of investments that are necessary to deliver
    on Transformation for the Nation and to be able to deliver,
    within the Army's own budget authority, one brigade per year
    for the next 6 years, and to give us a force that will also
    provide sufficient forces that it can be employed by the
    Nation, that it can be put into a rotation, that both allows
    you to learn as you are developing the operational concepts,
    the doctrine, but also gives the Nation that capability that
    our country can already begin to draw on.
        This Transformation is an exciting process for the Nation.
    We are very committed to what it can yield the country in terms
    of increased capabilities and where it will take us. The
    decisions we had to make in terms of reprioritizing within the
    Army budget were difficult decisions because there were valid
    requirements for some of the programs that we had to terminate
    in order to reprioritize, including the Grizzly and the
    Wolverine programs and the reduced buy for Crusader. But we
    thought those were the right tradeoffs to make in order to move
    Transformation forward within the Army's budget, and
    recapitalizing our equipment for the future, replacing our
    aging equipment. Being able to make those investments will
    continue to be a challenge for the Army if we are to deliver
    the benefits of technology for our soldiers so that they can
    have the best equipment that will be available to them not only
    today but going into the future.
        We thank you for your support. We stand ready to answer and
    work with this committee to make sure that we have a common
    picture of the kinds of increased capabilities that
    Transformation will provide for the Nation and that we are
    working together to deliver those benefits for the Nation.
        [The statement follows:]
                    Prepared Statement of Hon. Louis Caldera
        Mr. Chairman and Members of the Subcommittee: It is an honor and a
    pleasure to testify once again before you. I am very pleased to report
    to you on the state of the U.S. Army and to explain where we are trying
    to lead it for the future.
        Let me first express my great appreciation, however, to this
    Subcommittee for its role in developing and passing the fiscal year
    2000 budget for the Army. This funding, together with the fiscal year
    1999 Supplemental for Kosovo, is helping address many of the Army's
    most immediate needs, from training, to maintenance, to modernization.
        The military compensation and retirement improvements Congress
    enacted this past year are particularly noteworthy. Your adoption of
    the benefits package sent a strong message of support to our troops; it
    has had a positive impact in attracting new soldiers and retaining
    experienced ones. No doubt in large measure because of these
    initiatives, last year was one of the most successful years ever for
    Army retention.
        This year, I respectfully request your continued support for the
    Army's programs. Our budget carefully balances near-term readiness and
    quality of life with long-term modernization. It provides needed
    funding for contingency operations, training, base operations, housing
    and barracks initiatives, depot maintenance, research and development,
    and many other priorities.
        Most importantly, the budget includes jump-start funding for our
    Transformation initiative, the most important organizational
    development for the Army in a generation. This initiative will help the
    Army remain a strategically relevant force well into this new century.
        In Part I of my testimony, I will describe some of what the Army
    accomplished in the last year to meet the needs of our Nation's current
    security requirements and how, through the Transformation process, we
    will be better prepared to meet future requirements. In Part II, I will
    briefly describe how the budget request supports Army programs,
    including Transformation.
        As always, I welcome your comments on every aspect of how the Army
    is doing. I also respectfully urge this Committee to move expeditiously
    on our budget request for fiscal year 2001 as well as the fiscal year
    2000 supplemental for Kosovo. Expeditious adoption of the Kosovo
    measure will help us sustain the readiness investments that Congress
    approved in the fiscal year 2000 budget by reimbursing the Army for
    funds needed to execute our fourth quarter training and maintenance
    plans.
                                     part i
    The Army and the Current Environment
        Mr. Chairman, today's Army is a complex enterprise comprising some
    1.3 million people, including, in round numbers, 480,000 active duty
    soldiers, 565,000 Guard and Reserve personnel, and 225,000 civilians.
    The Army is the largest service component of the Nation's armed forces,
    with 40 percent of all Department of Defense personnel. In terms of
    force structure, we field no fewer than 10 active component divisions,
    with another 8 divisions and 18 separate brigades available in reserve.
        The Army is the most powerful conventional force on Earth. Trained
    to the most exacting standards and armed with lethal and efficient
    weapons, our soldiers are feared by our enemies and trusted by our
    allies--and respected by all. The Army is the decisive landpower
    element of our Nation's military, the only service able to conduct
    coordinated, sustained, offensive and defensive operations on land to
    seize and maintain control of territory, people, and resources for as
    long as our country's interests warrant.
        Men and women of the U.S. Army serve our Nation throughout the
    world, from Kosovo to Korea, Bangkok to Bahrain. More than 110,000
    soldiers are permanently forward stationed to deter aggression and to
    be on hand in the event of a crisis; approximately 30,000 are deployed
    in scores of contingency operations and training in 70 to 80 different
    countries on any given day. Hundreds of thousands more are stationed at
    posts around the Nation, training hard, developing and testing new
    weapons systems, and providing the administrative, planning, and
    logistical support necessary to prepare our soldiers for battle and
    maintain them in the field. And everywhere our soldiers serve, they do
    so with spirit, dedication and resolve, and in the best traditions of
    the Nation's most venerable military service.
        The Army supports our national interests by maintaining a force
    capable of responding to the full spectrum of operations, ranging from
    humanitarian missions on the low end to the capability to fight two
    nearly simultaneous major theater wars on the high end. Meeting this
    requirement entails a force of high quality people, with modern
    equipment, trained in the broad range of skills (more than 500
    specialties) demanded of modern military operations. The nature of this
    force, in turn, enables the Army to provide support for the three major
    pillars of our National Military Strategy--shaping the international
    environment, responding to the full spectrum of crises, and preparing
    for an uncertain future.
    Shaping the International Environment
        Throughout 1999, the Army conducted a wide range of shaping
    operations that enhanced regional stability and reassured our allies.
        In Bosnia, nearly 4,000 Army soldiers comprise a substantial part
    of the NATO force that supports implementation of the Dayton Peace
    Accords, monitors crossing points on the Bosnia-Herzogovina and
    Yugoslavia borders, and provides security for displaced persons and
    refugees. In Kosovo, the Army also assumed the principal responsibility
    for U.S. participation in the NATO peace implementation mission at the
    completion of Operation Allied Force in June 1999. Today, more than ten
    thousand soldiers overall are currently serving in the Balkans, doing
    the hard and dangerous work necessary to achieve our Nation's goals of
    bringing stability and progress to this troubled region.
        In Southwest Asia, the continuous presence of an Army task force
    that includes attack helicopters, Patriot missile units, and other
    forces helped deter aggression, reassured regional allies, and
    supported implementation of U.N. resolutions against Saddam Hussein.
    Forward positioning of Patriot missile units by Operations Desert
    Falcon and Desert Focus forces maintained our ability to respond to
    crises in the region. Army forces deployed in support of Operation
    Southern Watch worked with the other Services and allied forces to
    enforce U.N. sanctions against Iraq. In the Middle East, the Army also
    maintained an infantry battalion and headquarters group in the Sinai as
    part of the Multinational Force and Observers.
        In Korea, 25,000 soldiers served as a major bulwark of stability in
    this critical region, which includes some of our largest trading
    partners. Their presence underscored our commitment to the defense of
    South Korea, strengthened the United States/Republic of Korea position
    in talks with North Korea, and deterred adventurism by the North Korean
    regime. U.S. Army forces in Japan also contributed to regional
    stability and participated closely in combined exercises with Japan
    Self Defense Forces.
        In Colombia, the critical single-source nation for illicit
    narcotics entering the United States, the Army helped establish a
    counter narcotics battalion to fight drug criminals in the narcotics
    producing areas of the country. In my recent visit there, I observed
    first-hand how critical our aid has been in this effort. The military
    assistance proposed as part of the President's recently-announced $1.6
    billion Colombian aid package will significantly enhance Colombian
    security forces' ability to eradicate drugs over a wider area of
    cultivation by improving their intelligence capability, airlift
    mobility, and ability to plan and execute larger scale counterdrug
    operations, among other things. The aid will allow the U.S. Army to
    provide training for two new Colombian Army counter narcotics
    battalions. The improved operational capabilities of the Colombian
    military and police forces are key to reducing the massive increase in
    the acreage under coca and poppy cultivation that has occurred over the
    last three years. The Army is prepared to do its part in this stepped-
    up campaign to address the drug scourge at its source, once Congress
    passes this vital package.
        Training of foreign military personnel constituted a significant
    portion of U.S. military engagement activities. Special Operations
    Forces deployed to 22 nations to conduct humanitarian demining
    training. They also trained several African armies for peacekeeping
    operations and humanitarian response under the African Crisis Response
    Initiative. The Army Guard and Reserve, the Corps of Engineers, and the
    Army Surgeon General also participated in various endeavors in Africa
    designed to support democratic transition and to improve infrastructure
    and health.
        The International Military Education and Training (IMET) program
    served as an outstanding vehicle for promoting cooperation and
    democratic values by training over 7,600 students from 134 countries.
    Most of this training took place in the United States, fostering
    personal and professional ties between American sponsors and foreign
    students.
        An especially valuable IMET program is the U.S. Army School of the
    Americas, an institution that has trained tens of thousands of Latin
    American military personnel over the last 54 years. In addition to
    traditional military professional development courses, the School
    offers instruction in natural disaster response, peacekeeping, human
    rights, and the role of the military in a democracy. Several
    investigations by outside agencies have confirmed that the School's
    curriculum is consistent with U.S. human rights policy. Nevertheless,
    our goal is to have a training environment that permits us to
    accomplish our engagement mission while garnering the full support of
    Congress and the American people. I will recommend changes this year
    that will ensure all such professional development training for foreign
    officers and soldiers supports our national security goals in Latin
    America, promotes respect for human rights and the rule of law, and
    strengthens the development of democratic institutions and civil
    society.
        In addition to these activities, the Army helped shape the
    international environment in ways favorable to U.S. interests by
    combining training with civic assistance projects. For example, last
    year Army engineers fixed a hospital roof in Mongolia and repaired
    roads and schools in the Marshall Islands. In Ukraine, a medical
    brigade provided surplus Army medical equipment to civilian hospitals.
    These types of initiatives enhance American credibility and goodwill
    abroad and provide important training opportunities for selected Army
    units.
    Responding to the Full Spectrum of Crises
        While engagement and training activities prevent and deter wars,
    the Army's core function is to remain ready to fight and win our
    Nation's wars. The Army's ability to respond to the full spectrum of
    crises is evident in several recent operations the Army led or in which
    it played a significant role.
        The Army employed forces in support of the NATO bombing campaign
    against Serbia last spring. In addition to augmenting Joint Task Force
    Noble Anvil, the U.S. component of the NATO force that conducted the
    bombing campaign, the Army deployed the 5,000 strong Task Force Hawk to
    Albania to provide attack helicopter capabilities within striking range
    of Yugoslavia. This deployment reflected the Army's ability to send
    warfighting units anywhere in the world, in the most difficult weather
    and terrain conditions. Although never employed in the fighting, Task
    Force Hawk gave the national command authorities unique additional
    capabilities for prosecuting the war in Kosovo.
        Two other Army deployments provided critical support to U.S. policy
    in the Balkans. In Europe, Army personnel expanded the base camp that
    would later prove indispensable as a staging base for the U.S.
    contingent of the Kosovo Force or KFOR, the NATO force underwriting
    peace in Kosovo. Closer to home, a unit from Fort Bragg, North
    Carolina, formed the nucleus of a joint task force assisting in caring
    for more than 4,000 displaced Kosovars at Fort Dix, New Jersey.
        When U.S. forces crossed into Kosovo to begin the difficult task of
    bringing stability to that troubled region, elements of the Army's 1st
    Infantry Division led the way. This division has provided the bulk of
    the U.S. contingent (Task Force Falcon) since implementation of the
    treaty last June. On a daily basis, soldiers are working face to face
    with the people of Kosovo, conducting the dangerous work of disarming
    former combatants, resettling refugees, protecting minority populations
    from retribution, and establishing fertile conditions in which civil
    society can take root and thrive.
        In Central America, the Army led efforts to assist victims of
    Hurricanes Georges and Mitch throughout most of fiscal year 1999 via
    initiatives that entailed massive logistical assistance. In Asia,
    American soldiers performed critical medical, intelligence,
    communications, and civil affairs tasks as part of the U.S. contingent
    supporting Operation Stabilize in East Timor, in response to the
    violence that occurred after the people of East Timor voted
    overwhelmingly for independence from Indonesia. These and similar
    operations underscored the Army's continued responsiveness and utility
    to national policy.
    Preparing for an Uncertain Future
        The 21st century holds great promise, but also potential menace,
    for our Nation. The dream of information age prosperity will also see
    an array of potential dangers to our national security interests. These
    include regional challenges of the kind we see in the Balkans, in
    Southwest Asia, and on the Korean Peninsula; threats that cut across
    geographical and ideological boundaries, including the drug trade,
    ethnic, tribal, and religious strife, and organized crime; and
    ``asymmetric'' dangers, such as terrorism, the threatened use of
    weapons of mass destruction, and information warfare.
        The Army has prepared for this uncertain future by developing a
    bold new Vision for the 21st century. The Vision calls for our
    Transformation to a force that is more responsive, deployable, agile,
    versatile, lethal, survivable, and sustainable. The force will be more
    strategically dominant across the entire spectrum of operations, and
    will be capable of reversing the conditions of human suffering rapidly
    and resolving conflicts decisively. The Army's deployment is the surest
    sign of America's commitment to accomplishing any mission that occurs
    on land.
        The new force must be responsive to allow the Army to meet frequent
    contingency requirements with any element of the force. To be
    responsive requires the ability to put forces where needed on the
    ground, to affect directly the outcome of the situation or crisis at
    hand within hours of a decision. The forces must be prepared to
    accomplish their mission regardless of the environment, the nature or
    scope of the proposed operation, or other commitments. They should also
    have the ability to employ force from low to high intensity.
        To achieve this responsiveness, the force must be more deployable--
    capable of rapid strategic movement to create the opportunity to avert
    conflict through deterrence and confront potential adversaries before
    they can achieve their goals. The Vision calls for a capability to put
    a brigade on the ground within 96 hours after liftoff, a division
    within 120 hours, and five divisions in 30 days.
        The new force will be more mentally and physically agile, to move
    forces from stability and support operations to warfighting and back
    again. Our organizational structures will be redesigned, so that our
    force is more versatile--able to generate formations which can dominate
    at any point on the spectrum of operations, with minimal adjustment and
    minimum time. It will be lethal--every element in the warfighting
    formation will be capable of generating combat power and contributing
    decisively to the fight. We will retain today's light force
    deployability while providing it the lethality and mobility for
    decisive outcomes that our heavy forces currently enjoy. The force will
    be survivable, by employing technology that provides maximum protection
    to our forces at the individual soldier level, whether that soldier is
    dismounted or mounted.
        Finally, the force must be more sustainable. We will aggressively
    reduce our logistics footprint and replenishment demand. This will
    require us to control the numbers of vehicles we deploy, leverage reach
    back capabilities, invest in a systems approach to the weapons and
    equipment we design, and revolutionize the manner in which we transport
    and sustain our people and materiel.
        The Army's Transformation strategy envisions the development of
    initial and Interim Forces on the way to achieving the Objective Force
    capabilities that are called for in the Vision. The initial forces will
    include a brigade combat team whose purpose is to validate the
    operational and organizational model of future tactical units and to
    generate insights for further Transformation of the force. As I speak,
    this brigade is being formed at Fort Lewis, Washington. This initial
    brigade combat team will equip itself with surrogate and loaned
    hardware, even as we begin to identify the best ``off the shelf''
    platforms for the Interim Force. At the same time we are beginning to
    make, along with DARPA, the Science and Technology investments that
    will lead to development of the main Objective Force platform, known as
    the Future Combat System. This system will be delivered around 2012.
        The initial brigade combat team will serve as the lead-in to, and
    eventually comprise the first element of, an Interim Force that will
    seek the characteristics of the Objective Force within the constraints
    of available and emerging technology. The Interim Force will be
    organized as a rapidly-deployable, full-spectrum force that is highly
    mobile at the strategic and tactical levels. Current plans call for the
    Interim Force to be C-130-transportable and equipped with a family of
    Interim Armored Vehicles, lightweight artillery, and other available
    technology.
        Throughout the Initial and Interim Capability phases, the Army will
    revise key concepts, doctrine, and strategic plans as well as begin the
    Transformation of the Institutional Army. This Transformation will
    address the systems, organizations, and processes by which the Army
    supports training, leader development, infrastructure, management,
    combat and materiel development, and well-being.
        Even as we push the Transformation process to develop Objective
    Force capabilities, we must continue to recapitalize some of our legacy
    systems, such as the Abrams tank and Apache helicopter, and bring on-
    line new systems like the Comanche helicopter and Crusader howitzer
    that we are counting on to have as part of our warfighting capability
    through at least the year 2025. At each stage of the Transformation
    process, we have the right mix of weapons systems and force structure
    to be able to respond to the full spectrum of operations, including
    high-intensity conflict. Until the Objective Force is fielded
    throughout the Army, it is likely that we will need to maintain heavy,
    digitized divisions with the capacity to win against Soviet-era armor
    that may be employed against us in places like Korea or Southwest Asia.
        To improve responsiveness for the full spectrum of operations, the
    Army will also attempt to fill all operational and institutional
    organizations to 100 percent of authorizations, by grade and skill, by
    the end of fiscal year 2003. Matching skills with responsibilities will
    improve our readiness to respond during the Transformation period.
        Transformation is and will be the central activity of the Army for
    the foreseeable future. All our energies are directed to the task of
    fielding an Objective Force whose capabilities will give the Nation the
    land force options and responsiveness needed to meet the challenges of
    an uncertain era. But getting there, to the Objective Force, requires
    that we begin here, now, with our current Army. Transformation cannot
    occur, and the Nation cannot reap its benefits, if we do not continue
    to sustain and build on the Army of today.
                                    part ii
    Supporting Today's Army
        The fiscal year 2001 budget achieves three ends: it includes
    funding for programs that safeguard America and its allies, including
    selected smaller scale contingency operations; it advances
    Transformation of the Army into a more strategically responsive force;
    and it balances near-term readiness and quality of life with long-term
    modernization. A quick glance at some major areas of interest offers a
    broad sense of the Army's priorities.
                Smaller Scale Contingency Operations
        Our engagement abroad is a source of pride and valuable experience
    for our soldiers. The Army is proud of its work in shaping the
    international environment in the interests of peace and democracy. As
    previously described, approximately 30,000 soldiers are deployed every
    day around the world in support of America's interests. Our ability to
    respond quickly and effectively when these unforeseen crises develop
    depends on the continued timely support of Congress in funding such
    deployments.
        The fiscal year 2001 budget includes $1.0 billion to support
    operations in Bosnia. Operation Joint Forge not only continues to
    provide the security necessary to allow time for that country to become
    self sufficient, but it is also providing The Army with the opportunity
    to hone the skills of our active and reserve units. We have just
    deployed elements of a National Guard division, the 49th Infantry
    Division (Texas ARNG), for a six-month tour of duty. For the first
    time, this ARNG unit is providing the command and control for the U.S.-
    led Multinational Division North in Bosnia.
        We fully expect to achieve the same results in Operation Joint
    Guardian in Kosovo. At this point in the operation, we are still
    establishing the infrastructure and training base to support our
    presence. The timely passage of the fiscal year 2000 Emergency
    Supplemental Appropriations request for Kosovo, which includes $1.5
    billion for the Army, is critical not only to the success of that
    operation, but to ensuring the execution of planned training events
    throughout the rest of the Army. Early passage of the Supplemental will
    enable our commanders to confidently keep on track planned fourth
    quarter training.
        Our commanders and soldiers have demonstrated unprecedented
    flexibility and resourcefulness in preparing for unplanned operations
    while maintaining the fighting edge required for combat. During the
    past three years, the Overseas Contingency Transfer Account has been
    instrumental to our ability to conduct unplanned operations without
    interrupting funded training.
                Transformation
        This budget provides nearly $1 billion for the Army to pursue its
    Transformation initiative. The $100 million Congress provided for
    Transformation at the end of last year, together with the savings
    generated through the hard choices we made to cancel or cutback
    important programs in order to fund Transformation, will enable us to
    stand up the initial Brigade Combat Team. We will use loaned and leased
    equipment for this initial brigade while we begin acquisition of the
    off-the-shelf vehicles for the Interim Force brigades. A few weeks ago,
    we conducted a vehicle demonstration at Fort Knox, Kentucky, to
    evaluate these potential Interim Force vehicles.
        Additionally, the fiscal year 2001 appropriations will make it
    possible for us to make the initial science and technology investments
    in the Future Combat System as the weapons platform for the Objective
    Force around 2012. We intend to bring the new system on-line as soon as
    technology allows.
        Even as we fund the new bills created by the Transformation
    process, we must continue to recapitalize our aging equipment and
    modernize our forces through our investments in digitization and
    procurement of new platforms for warfighting. The Army will continue to
    find ways to help itself, as we have already demonstrated in the short
    months since we announced our Vision. However, a critical component of
    funding shortages in the out years is the savings that can be accrued
    by eliminating excess infrastructure. I strongly encourage another
    round of base closures as a means of supporting our Transformation
    efforts.
                Modernization
        As the Army implements its Transformation strategy, development and
    funding of an affordable, fully integrated modernization program is an
    essential element of that plan. Two key components of our modernization
    strategy are worthy of note here because of their impact on the budget:
    recapitalization and digitization.
        Recapitalization.--Recapitalizing our legacy systems is of equal
    importance with the development of the Future Combat System. We must
    increase the service life of key existing systems while we move to the
    Objective Force. Recapitalization also reduces maintenance requirements
    and streamlines logistics support.
        Recapitalization is one area in which we will need the continued
    assistance of Congress as we anticipate sustaining many of these legacy
    systems through 2025. This budget will help us make the critical
    investments in weapons systems necessary to sustain our ability to meet
    current security obligations, including fighting and winning major
    theater wars, even as we transform our force. A few examples will
    suffice to illustrate our programs.
        Critical to modernization of legacy forces are the upgrades for the
    Abrams Tank and Bradley Fighting Vehicle. We need to replace the
    Abrams' engine to reduce fuel consumption by about 30 percent, to make
    it easier to maintain and less costly to operate, as well as equip it
    with new electronics. We will modify our Bradley's to make them more
    lethal and survivable through digitization, night vision capabilities,
    and other improvements.
        Support for the continued development of the Comanche helicopter
    and Crusader howitzer are also critical to our modernization program.
    The Crusader program was restructured to gain vital improvements in
    indirect fire support capability and to reduce the weight of the system
    while maintaining key performance parameters. The Army generated $11.2
    billion for Transformation between fiscal year 2000 and fiscal year
    2014 by reducing the number of Crusaders from 1,138 to 480. The
    restructure strategy partially satisfied the Army howitzer requirement
    for warfighting by continuing the use of Paladin and incorporating the
    Lightweight 155 mm howitzer.
        The Comanche (RAH-66) helicopter will provide the Army with a new
    capability to conduct armed reconnaissance during both day and night
    and in adverse weather conditions. It will significantly expand the
    Army's capability to conduct operations in a wider range of scenarios.
    The fiscal year 2001 budget supports testing of two prototypes and the
    development of the advanced T801 engine, composite air vehicle, and
    mission equipment package.
        Digitization.--We have not slowed our efforts to digitize our
    forces; we remain committed to incorporating digital capabilities to
    support our soldiers, our units, and our ability to communicate
    securely. The process of applying information technologies to allow
    warfighters to share a constantly updated common view of the
    battlefield is an ongoing modernization priority that is separate from
    but related to Transformation. Digitization involves across-the-board
    software and hardware improvements to weapons and communications
    systems that will vastly improve the capabilities of our forces. We
    will incorporate digital features in the more responsive, lethal, and
    agile forces of the future; digital advances are already being used to
    modify the structure of selected divisions. This budget continues our
    commitment to digitize the first corps by the end of 2004.
        These modernization initiatives will require the long-term
    commitment of the Administration and Congress. Army modernization
    accounts for only $9.4 billion of the Department of Defense's $60
    billion modernization budget. Indeed, modernization funding has
    decreased more than 40 percent in the period fiscal year 1989 to fiscal
    year 1999. But even adjusting for decreases in the size of the Army, we
    will spend about $5,000 less per soldier for modernization this year
    than we did only a decade ago (in constant fiscal year 2000 dollars).
        We need to reverse this alarming trend, if the Army is to remain
    the premier force the Nation requires for influencing events and
    maintaining peace. The President's fiscal year 2001 budget makes the
    necessary investments in critical modernization initiatives that are
    central to the Army's modernization and Transformation initiatives.
                Readiness
        The fiscal year 2001 budget supports our most pressing readiness
    requirements. The budget protects critical areas including training,
    operations tempo (OPTEMPO), and infrastructure requirements. Resources
    have been maximized to ensure our forces are trained, equipped, and
    ready to fight.
        Training.--Training is the heartbeat of the Army and a major
    component of readiness. The Army's training management system allows
    units to conduct training on key tasks with enough frequency to sustain
    their ability to perform, in spite of personnel turnover. A function of
    this system is to identify the resources necessary to conduct live and
    simulated training on mission-essential tasks. Operations tempo
    (OPTEMPO) is one measure of these needed training resources.
        OPTEMPO.--The President's fiscal year 2001 budget request assumes
    funding to permit all active units and most reserve units to achieve
    100 percent of our OPTEMPO training standards. Force Package 1 through
    3 units are funded at 100 percent OPTEMPO and Force Package 4 units at
    100 percent for individual and crew training. We have also funded
    adequate Combat Training Center rotations, Battle Command Training
    Program rotations, and flying hours for both active and reserve
    component units. Passage of the Kosovo Supplemental is important to
    preserving the benefits of this funding.
        Infrastructure.--The Army is maintaining its base operations
    support at minimum essential levels this year. However, Real Property
    Maintenance (RPM) funding for the active Army is only 69 percent of
    known requirements and our aging infrastructure continues to
    deteriorate. The fiscal year 2001 budget assumes some risk to, yet
    sustains the real property inventory. We continue to reduce excess
    infrastructure by using RPM funds to resource the Facilities Reduction
    Program, while focusing Military Construction investments on specific
    priorities such as barracks and strategic mobility projects.
        The President's Military Construction request of $1 billion focuses
    on upgrading all permanent party barracks to the 1 plus 1 standard by
    fiscal year 2008. Using fiscal year 2001 funds, we will build barracks
    that will house 5,000 active duty soldiers at facilities in the U.S. as
    well as in Korea and Germany. The requested funds would also be used to
    improve rail yards and other facilities to enhance our strategic
    mobility program, another important building block in our
    Transformation architecture. If the Army is not able to mobilize our
    troops and supplies, we cannot respond to our designated missions as
    quickly or effectively as we would like.
        Finally, the budget will allow us to continue our efforts to
    provide high quality family housing, an element of military life that
    will certainly affect the morale and readiness of the future force. We
    do not have enough housing to meet current needs, and much of what we
    do have is in need of revitalization. The President's request of $1.1
    billion for family housing will give us some of the resources necessary
    to meet our shortfalls in this area.
        The Army is also continuing apace with efforts to privatize family
    housing, but at the direction of Congress, we are moving with prudence
    and deliberation. Reauthorization of the privatization program, which
    expires next February, is critical to meeting our housing needs.
                Quality of Life
        The fiscal year 2001 budget maintains historic funding levels for
    base operations support services. Our soldiers and their families
    continue to affirm the importance of this course of action. Frequent
    deployments and training exercises mandate that we provide the best
    services to sustain morale. Army installations continue to seek new
    efficiencies through A-76 studies, outsourcing, and adopting most
    efficient organization practices. Critical to maintaining high quality
    of life in the Army are fully manning the force through recruiting and
    retention and adequate health care. We especially appreciate the Office
    of the Secretary of Defense's and Congress' efforts to eliminate the
    basic allowance for housing differential, improve health care, and
    improve benefits.
        Recruiting and Retention.--The bedrock of the Army remains its
    people. Without quality people, it does not matter how lethal our
    weapons are or how strategically responsive our formations are. But
    today's growth economy and high employment market have challenged us to
    attract and keep individuals who possess the knowledge and skills to
    run the machinery of the modern Army, especially as we move toward
    Transformation.
        In fiscal year 1999, the Army essentially met (within a 1 percent
    tolerance factor) its required endstrength of 480,000, thanks to a
    vigorous retention effort that exceeded our goals by more than 6,100
    soldiers. This success can be attributed to an enhanced bonus program
    we recently implemented, as well as to the compensation and benefits
    improvements that Congress adopted last year.
        On the recruiting front, we are aggressively restructuring our
    operations, including reviewing our advertising strategy and improving
    recruiter training. We are also implementing two new innovative
    programs that hold great promise. The College First program offers
    college-bound candidates up-front education benefits in exchange for a
    promise to serve. The Army High School Completion program, which we
    launched last month, helps highly qualified young people who are
    interested in serving to obtain their GED, so that they can meet the
    Army's quality standards for entry.
        The Army will continue to develop and employ creative solutions
    like these to ensure that as Transformation takes place, our ranks are
    regularly replenished with qualified, motivated individuals. We hope
    that Congress will continue to support these efforts as well as the
    additional initiatives to improve compensation, benefits, and quality
    of life for our soldiers that are addressed in our budget and that are
    key to the Army's enlistment and reenlistment strategies.
        Health Care.--A key quality of life issue with our soldiers and
    family members is health care. TRICARE, the Department of Defense
    healthcare program, has been implemented worldwide. TRICARE was
    designed to make quality healthcare more accessible and easier to use,
    and to lower costs for those who use it. We have many dedicated people
    in our military treatment facilities across the globe who are working
    to make these objectives a daily reality. Most of our beneficiaries
    report satisfaction with the quality of care they receive.
        We are measuring the performance of various aspects of the TRICARE
    program to ensure it remains the health plan of choice. We are working
    collaboratively with the Department of Defense and the Joint Staff to
    address improvements in areas such as access, claims processing,
    portability, and the management of complex medical cases. Additionally,
    we are fully supportive of some key enhancements for our soldiers and
    family members, like the TRICARE Prime Remote Program for family
    members, throughout the continental United States. Accordingly, we
    encourage the necessary legislative changes needed to facilitate making
    these enhancements a reality.
                Chemical Demilitarization
        I would urge the Committee to provide the full funding for the
    Chemical Weapons Demilitarization program requested in the President's
    budget ($1.003 billion for the Chemical Agents and Munitions
    Destruction account in the Defense Appropriations bill and $175.4
    million in Army military construction funds). This program is a
    priority to the Army, the Department of Defense, and the
    Administration. We owe it to public safety of the military and civilian
    families living near the chemical weapons storage sites to ensure that
    these aging weapons are safely destroyed as quickly as possible. The
    United States has committed to meeting the 2007 deadline in the
    Chemical Weapons Convention for the destruction of these weapons.
    Failure to meet our international treaty obligations would damage U.S.
    credibility in fighting the proliferation of chemical weapons. The Army
    will do what it takes to meet the 2007 deadline if the Congress
    provides us the funds to do the job. Finally, these chemical weapons no
    longer have any military utility, but their continued storage consumes
    valuable Army resources that could be better utilized to improve
    readiness and modernize the Army. Therefore, I urge the Appropriations
    Committee to provide the funds requested in the President's budget so
    that we can complete this important national program.
    Conclusion
        The Army's Transformation will provide the National Command
    Authority increased capabilities to meet 21st century threats to our
    national interests. As we stated in our Vision, The Army will be
    responsive and dominant at every point on the spectrum of operations,
    from humanitarian assistance to major theater wars. We solicit your
    support of our Transformation efforts and look forward to working with
    you to ensure that we remain the world's finest land force for the next
    crisis, the next war, and an uncertain future.
        Thank you, Mr. Chairman and Members of the Subcommittee. I look
    forward to your questions.

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

                                  Army posture

        General Shinseki. Mr. Chairman, Senator Inouye and
    distinguished members of the committee, good morning. Thank you
    for this opportunity to discuss the Army's current posture and
    its Transformation initiative.
        Mr. Chairman, I would ask your consent to make a brief
    opening statement and then submit a written version for the
    record.
        Senator Stevens. All of our statements that have been
    mentioned will be printed in the record in full.
        General Shinseki. Thank you, Mr. Chairman.
        Senator Stevens. General, before you start, Senator
    Cochran, did you have a statement to make?
        Senator Cochran. No, Mr. Chairman. I will be glad to defer
    my comments until later.
        Senator Stevens. Thank you.
        Senator Domenici.
        Senator Domenici. I have nothing.
        Senator Stevens. General.
        General Shinseki. Thank you, Mr. Chairman.
        Let me assure you and all the members of the committee
    here, in follow-up to Senator Hutchison's recent visit, there
    is a magnificent Army out there, soldiers on point, doing heavy
    lifting for this Nation. Today there are 140,000 American
    soldiers overseas, 30,000 of them on deployment, away from
    their home stations. Since the end of the Cold War, the United
    States Army has deployed 35 times, in the last 10 years, to
    places like Panama and Saudi Arabia, Kuwait, Iraq, Haiti,
    Somalia, Bosnia, Kosovo, and even East Timor. And compared to
    the 40 years of the Cold War, when we deployed those forces
    only 10 times, you can appreciate the increase in operating
    tempo (OPTEMPO).
        All of these deployments do not change the Army's
    fundamental purpose. And that is to fight and win our Nation's
    wars. The Cold War Army performed magnificently this past
    decade, but it is challenged, much as the Secretary has
    outlined, challenging today to maintain that pace, especially
    as contingency missions stretch into long-term commitments:
    Kosovo, 10 months; Bosnia, going on 5 years; the Sinai, 18
    years; Korea, 40 years.
        The Army has begun transforming itself to better meet all
    of these requirements. To do this in the midst of such a
    demanding OPTEMPO does require a longer-term vision. And last
    October, as the Secretary has outlined, the Army laid out a
    vision that talked about three things. It talked first about
    people. The vision statement opened talking about soldiers and
    it closed talking about soldiers.
        Second, it talked about readiness. Third, it talked about
    the Army's need to transform itself. And while Transformation
    has received much of the attention, the vision did talk about
    people, about readiness and then Transformation. People,
    because the Army is people, and taking care of their concerns
    is fundamental. Readiness, because the Army has that
    nonnegotiable contract with the American people to fight and to
    win our Nation's war. We cannot neglect our people or our
    responsibilities for readiness.
        Let me now address the Army's Transformation. We are
    preparing to meet our future warfighting responsibilities
    technologically, materially, and professionally. We must
    possess force characteristics that will enable us to initiate
    combat on our terms--on our terms, not someone else's. On our
    terms means at a time, at a place, with the method of our
    choosing, not someone else's. And once we have done that, to
    seize and retain the initiative in that warfight, to build
    momentum quickly, and then to go for a decisive win as soon as
    possible. And that is the way we intend to continue the
    business that our profession is about. And that is decisiveness
    and warfighting.
        Unfortunately, our force does not have all of those
    characteristics today. Yet, we intend to take advantage of a
    window of opportunity--some say it is narrower than we think--
    to embark on the most significant and comprehensive effort to
    change this Army in a century. Our aim is to achieve strategic
    responsiveness and dominance at every point on the military
    spectrum of operations, from winning wars to deterring them,
    and winning them if deterrence fails, to stability operations.
        Our capabilities must complement those of our sister
    services, so that there is no loss in momentum as we transition
    from one point on that spectrum of operations to another. We
    must develop not only equipment but capabilities the Nation
    will need and our future Objective Force. We must give the
    National Command Authorities strategic options to deter crisis
    before it becomes armed conflict, and then to fight and win
    should that effort to deter fail.
        A force with these capabilities, which we call the
    Objective Force--if you will look at the chart that I have
    provided to you, the Objective Force is that force at the right
    side of the chart--a force with these capabilities will be able
    to place a combat-capable brigade anyplace in the world in 96
    hours, a division on the ground in 120 hours, five divisions in
    theater in 30 days.
        Now let me try to explain how we intend to get to that
    Objective Force. First, we must sustain our Legacy Force. And
    that is that top arrow. Sustain and recapitalize selected
    Legacy Forces, both active and reserve components, both ground
    and air formations. These Legacy Forces will be with us
    longest, and perhaps as long as two decades. And we cannot
    neglect warfighting readiness during this Transformation
    period.
        Now, let us look at the technological effort to get to the
    Objective Force. And that is the center axis. The President's
    budget requests $1.3 billion in science and technology for
    fiscal year 2001. These resources will build on your initiative
    last year to gain congressional support for $100 million in
    seed money for the Army's Transformation. The fiscal year 2001
    science and technology (S&T) budget will focus $500 million on
    developing future combat systems technologies. We expect the
    S&T community to come back to us in about the year 2003-2004,
    with options that will allow us to make decisions and begin
    research and development, as you can see along that center
    axis.
        Every dollar that we put into S&T, science and technology,
    today, will speed the scientific process and enhance the
    quality and the quantity of the solutions we eventually
    achieve. We must address today's operational demands. To do so,
    we will invest in an interim capability, the bottom axis, to do
    what we cannot do well today. This interim capability, a select
    number of brigades, employing off-the-shelf equipment, will
    allow us to respond to immediate operational challenges. We
    will begin at Fort Lewis this year with one brigade combat
    team, and we have set aside sufficient funding for an
    additional Interim Brigade Combat Team for the next 5 years.
        Many of you have urged us to change over the last 10 years.
    And the Army is changing. The Army has had to make some tough
    decisions, some not of our own choosing, to get to a delicately
    balanced funding structure, submitted to you in the President's
    budget. We know that there is more work to be done in the 2002-
    2007 program objective memorandum (POM) cycle, but for now, we
    need your help in the fiscal year 2001 budget to establish the
    science and technology effort, to sustain our legacy
    formations, to build an interim capability, and to begin
    movement toward realizing that Objective Force.
        When we accepted the responsibility for transforming the
    Army, we were cautioned that nay sayers would essentially try
    to slow us down. Well, there has been some of that. But I will
    report to you that we are resolute. We have developed the
    momentum needed to transform the Army. Your help and support in
    retaining maximum flexibility is crucial to maintaining that
    momentum over the long term. And with your advice and
    assistance, we will transform this Army into a land component
    with capabilities necessary to achieve strategic dominance in
    the decades to come.
        We are grateful for the 1999 budget that reversed a 13-year
    decline in real Army buying power. Last year's pay triad and
    your attention this year to the defense health bill has sent
    clear signals to our soldiers and their families that you value
    their service and their well-being. However, in reinforcement
    of what the Secretary has pointed out, we are rapidly spending
    this year our fourth quarter training dollars to fund our
    contingency missions.
        Your efforts, Mr. Chairman and Senator Inouye, your efforts
    in April to secure supplemental funding, and OSD's recent
    commitment of another $220 million to the Army to extend our
    buying power, give me assurance that we will have dollars on
    hand by late July to fund our operations in Kosovo. We look
    forward to quick approval of that funding to keep readiness
    from unravelling and undoing all the good work that Congress
    has helped us to accomplish last year. We appreciate your
    concerted efforts and ask for your continued support and
    vigilance in seeing these measures through as soon as possible.
        Today, proud soldiers around the world are on point for
    this Nation. Their dedication, teamwork and commitment
    guarantee the freedoms we enjoy. I thank them for their
    selfless service and unparalleled professionalism. And I thank
    this committee for your leadership initiatives which have
    demonstrated your support and commitment to our soldiers and
    their families.
        Mr. Chairman, this vision, this Army vision, is about an
    investment in future American leadership and security at home
    and abroad. Thank you for your invitation to appear before this
    distinguished committee, and I look forward to your questions.
        [The statement follows:]
                  Prepared Statement of Gen. Eric K. Shinseki
        Mr. Chairman and distinguished members of the Subcommittee, thank
    you for this opportunity to report to you today on the United States
    Army's Vision and its plan to transform itself into a force that is
    strategically responsive and dominant across the spectrum of
    operations.
        The support of the Administration and Congress has helped immensely
    over the past months, charting a new direction for the Armed Forces and
    for The Army, in particular. The fiscal year 1999 budget reversed a
    thirteen-year trend of declining Army buying power. And the support for
    increasing compensation and fixing military retirement in the fiscal
    year 2000 defense legislation sent a strong message to our soldiers and
    their families that their service is appreciated. In combination with
    the hard work of noncommissioned officers (NCOs) and officers across
    The Army, your support contributed to making fiscal year 1999 one of
    the most successful years ever for Army retention.
        But there is much work yet to be done. The number and scope of
    missions that The Army must perform has grown significantly since the
    end of the Cold War. The Army must minimize the vulnerabilities
    associated with frequent contingencies, long-term commitments, and
    global power projection. It must train soldiers and grow leaders to
    adapt readily to conditions across the spectrum of military operations
    and build organizations capable of attaining dominance at every point
    on that spectrum. The new Army Vision charts a course to better align
    the capabilities of the Army with the challenges it is likely to face
    in the years ahead. The Army has already begun to help itself, but we
    will need your sustained assistance to achieve our goals.
        I want to talk to you today about The Army's Vision for the future.
    In my testimony today, I will describe the magnificent work The Army
    has done in recent months and identify the challenges we still face. I
    will then discuss The Army Vision under three broad themes--People,
    Readiness, and Transformation--and request your continued support as we
    work together to keep The Army, Soldiers on Point for the Nation,
    persuasive in peace and invincible in war.
        Secretary Caldera and I unveiled The Army Vision here in Washington
    last October at the annual convention of the Association of the United
    States Army. This Vision is not just an investment in future readiness,
    but an investment in American security in broadest sense.
        Our Vision addresses three things: people, readiness, and
    Transformation. Let me touch on the first two briefly before turning to
    my main topic today, which is Transformation.
    People
        The Army is people, and the soldier remains the centerpiece of our
    formation. It is the soldier who enables America to meet its leadership
    responsibilities worldwide. Soldiers are our investment in America.
    Soldiers in our formations, from all components, are deploying overseas
    and showing America how real that investment is.
        We are also about leadership--it is our stock in trade. Every day
    in The Army is an immersion experience in leadership. Some of the
    finest leaders in our country, military and civilian, public sector and
    private, learned what they know about leadership in our ranks.
        The Army remains a values-based institution, where loyalty, duty,
    respect, selfless service, honor, integrity, and personal courage are
    the cornerstones of all that we do.
        American soldiers are busy and engaged around the world. As many of
    you who have visited them have seen, almost 5,500 American soldiers of
    Task Force Falcon remain in Kosovo, with another 670 in Macedonia, ten
    months after the air campaign ended and refugees began returning home.
    Soldiers of the 49th Armored Division, Texas Army National Guard, and
    the 3rd Armored Cavalry Regiment from Fort Carson, Colorado have
    assumed the Task Force Eagle mission in Bosnia, four years after the
    Dayton Peace Accords were signed. Nine years after the Gulf War ended,
    we routinely deploy battalion task forces on extended exercises in
    Kuwait and Saudi Arabia, with hundreds more soldiers permanently
    stationed there. Eighteen years into the Sinai mission, the 1st
    Battalion, 5th Infantry from Fort Lewis, Washington recently became the
    38th Multinational Force and Observers unit in that rotation. And we
    will soon mark the 50th anniversary of the beginning of the war in
    Korea, where the Eighth U.S. Army and 2d Infantry Division still remain
    on point for the Nation in that most dangerous theater. The Army's job
    is to fight and win the Nation's wars. But, our soldiers also maintain
    the peace--robust, ready, disciplined forces deployed around the world,
    and often long after the shooting has stopped.
        At the end of the day, I'll still be talking to you about American
    soldiers and how well we have done at equipping them and caring for
    their families. In taking care of our people last year we focused on
    pay and retirement. This year we must build on that successful effort
    by focusing on health care and the well-being of soldiers and their
    families.
    Readiness
        The Army has a non-negotiable contract with the American people to
    fight and win our Nation's wars. Warfighting is job #1. But in addition
    to the requirement to be trained and ready for the warfight, The Army
    is globally engaged, heavily committed to meeting the daily
    requirements of the National Security Strategy (NSS) and National
    Military Strategy (NMS). On any given day, more than 140,000 Army
    personnel are forward stationed or deployed around the world. Soldiers
    and civilians stationed in the United States perform other critical
    roles, from keeping warfighting organizations ready for worldwide
    employment today to building the tools necessary to maintain readiness
    tomorrow.
        The Army is the force the Nation relies on most heavily to perform
    the full spectrum of military operations. Since 1989, the average
    frequency of Army contingency deployments has increased from one every
    four years to one every fourteen weeks. Some of these operations have
    been brief; others have evolved into ongoing commitments for our
    forces. While executing these missions, The Army has remained ready at
    all times to meet the warfighting requirements of the NMS: to fight and
    win two nearly simultaneous major theater wars (MTWs). We are able
    today to meet the requirements of the NMS, but there is moderate risk
    associated with fighting the first MTW and higher levels of risk
    associated with the second MTW. In this context, risk does not mean
    that U.S. Forces would not prevail; however, achieving our objectives
    could require a larger expenditure of our national treasure.
        As Chief of Staff, Army, I provide forces to the unified combatant
    commands. Indeed, it could be said that I work for the geographical
    commanders-in-chief, the CINCs. When North Korean fishing boats are
    bumping into South Korean naval vessels, Tom Schwartz gives me a call.
    When Saddam rattles his saber, Tony Zinni expects The Army, on short
    notice, to provide robust, ready, disciplined formations with which he
    can fight and win a major theater war in his region. On days when
    concerns about a warfight are not quite so nagging, Charlie Wilhelm,
    Denny Blair, and Wes Clark expect Army forces to engage in partnership
    exercises and military-to-military contacts within their assigned areas
    of responsibility. Those two demands--on-call warfighting readiness and
    day-to-day engagement and leadership abroad--are in tension with each
    other; doing one well detracts from the other. To do both well requires
    a fully ready, C-1 kind of Army--in our readiness parlance. And we have
    traditionally been a C-1 Army, but we are not fully C-1 today. Our
    soldiers are working hard to be that C-1 Army, and measures we have
    implemented, such as increasing the manning of our warfighting
    organizations, will help those efforts. With the help of the
    Administration and Congress, the momentum we started last year to
    improve our readiness condition was important. That momentum needs to
    continue, and with your continued support and vigilance, it will.
        I have testified before various committees and subcommittees in
    recent months, stating that, as smaller-scale contingencies become
    long-term national commitments, The Army, like our sister services,
    becomes more and more of a rotational force. Our ``carrier groups,''
    the U.S.S. Korea, the U.S.S. Bosnia, and the U.S.S. Kosovo, are
    likewise teaching us the ``rule of threes'': for every formation on the
    ground, another is returning and recovering from the mission and a
    third is preparing to go.
        The fiscal year 2000 appropriation helps us to mitigate the risk
    associated with these missions and to meet our readiness obligations.
    But, we are spending 4th quarter training dollars to fund contingency
    missions. We look for quick approval of a non-offset Kosovo
    supplemental to keep us from unravelling readiness in the 4th quarter.
    Four Rules of Thumb
        Now, allow me to address the third part of The Army Vision,
    probably the most talked about aspect of vision, the Transformation.
        To begin, it is necessary to talk about the complex business of
    warfighting. The history of the military art, the principles of war,
    the tenets of AirLand Battle, and tactics, techniques, and procedures
    all boil down to four rules of thumb that are applicable at every level
    of war:
      --We want to initiate combat on our own terms--at a time and place
            and with a method of our choosing.
      --We want to gain the initiative and never surrender it.
      --We want to build momentum quickly.
      --And we want to win decisively.
        But military forces that would achieve those conditions must beware
    of the transitions in war that can sap operational momentum--
    transitions from peacekeeping to warfighting, from the defensive to the
    offensive, from the sea to the beachhead. Negotiating those transitions
    is key to fighting within those four rules of thumb.
        Military forces that can do so provide strategic flexibility to the
    national command authority, which must have flexibility in a crisis.
    The Army has historically provided those capabilities to its
    formations. For forty-five years of the Cold War, we followed those
    principles in preparing for war in central Europe against a formidable
    enemy--with well-trained and properly equipped forces, prepositioned
    equipment for follow-on troops, and infrastructure to support those
    formations. In Southwest Asia, we were fortunate during Desert Storm
    that our enemy afforded us a six-month delay that allowed repositioning
    that Cold War force and re-equipping it for a decisive win. A scenario
    absent that pause might have had other outcomes. And our adversaries
    have learned those lessons as well. In today's strategic environment,
    we must possess force characteristics that enable us to initiate combat
    on our terms, to retain the initiative, to build momentum quickly, and
    to win decisively. The Army must transform in order to develop and
    field a force that possesses these characteristics more fully today and
    into the future.
    Transformation
        That is why the third piece of The Army Vision addressed
    Transformation.
        The Army Vision is ``Soldiers on point for the Nation . . .
    Persuasive in Peace, Invincible in War.'' The Vision's goal is to
    ensure that The Army fulfills its Title 10 responsibilities,
    continuously meeting the requirements of the NMS. To do this will
    require The Army to transform itself into a full spectrum force capable
    of dominating at every point on the spectrum of operations. At present,
    in some instances, we face strategic deployment challenges that inhibit
    our ability to negotiate rapidly the transitions from peacetime
    operations in one part of the world to small-scale contingencies or
    warfights in another. We must provide more flexibility. We have heavy
    forces that have no peer in the world, but they are challenged to
    deploy rapidly. The Army has the world's finest light infantry, but it
    lacks adequate lethality, survivability, and mobility once in theater
    in some scenarios. We must change. The Army's Transformation Strategy
    will result in an Objective Force that is more responsive, deployable,
    agile, versatile, lethal, survivable, and sustainable than the present
    force. Thus, The Army has determined to transform itself to gain
    strategic flexibility and to become strategically dominant at every
    point on the spectrum of operations.
        A force with these characteristics will have the ability to place a
    combat capable brigade anywhere in the world, regardless of ports or
    airfields, in 96 hours. It will put a division on the ground in 120
    hours. And it will put 5 divisions in theater in 30 days.
        These are operational imperatives, and to accomplish them, we have
    embarked on a search for technologies that will give us answers in
    about 3 years that we will use to design a future objective force 8-10
    years down the road. Candidly, we don't have all the answers today; but
    we are asking the right technological questions, and we will go where
    the answers are. The Army has moved out.

    [GRAPHIC] [TIFF OMITTED] T02AP25.000

    The Transformation Strategy
        Throughout this Transformation The Army must maintain its non-
    negotiable contract with the American people to fight and win the
    Nation's wars. Thus, implementing these profound changes will require
    careful planning, sustained support, and periodic reassessments and
    adjustments. A Transformation Campaign Plan will enable The Army to
    complete its evolution into the Objective Force while remaining trained
    and ready to meet NMS requirements at all times. The strategy
    synchronizes the Transformation by establishing intermediate objectives
    and conditions that must be met before implementing subsequent changes.
    Changes to the operational forces will be the most visible aspects of
    the strategy. Less obvious will be the simultaneous Transformation of
    the Institutional Army, along with The Army's concepts and doctrine,
    which will be essential to developing and sustaining the requisite
    capabilities of the Objective Force. In general, The Army's
    Transformation strategy will go forward along three major paths, as
    depicted on the attached chart: the Legacy Force, the Interim Force,
    and the Objective Force.
    Interim Force
        The Army will begin fielding a Brigade Combat Team (BCT) at Fort
    Lewis, Washington this fiscal year. This initial BCT, the first step
    toward the Interim Force, will accomplish two goals. First, it will
    give The Army an enhanced capability for operational deployment to meet
    worldwide requirements. Second, the initial BCT will validate an
    organizational and operational model for the Interim Force. Based on
    this validation, The Army will field the Interim Force. As a follow-on
    to the initial BCT, we have set aside funding for an additional Interim
    BCT each fiscal year through the Five Year Defense Plan (FYDP). These
    Interim BCTs--including the Reserve Components--will employ an Interim
    Armored Vehicle (IAV)--a yet-to-be-selected, off-the-shelf system that
    The Army will begin procuring in fiscal year 2000. With the IAV and a
    new operational and organizational structure, the Interim Force will
    possess some Objective Force characteristics, those that are available
    within the constraints of current and emerging technology. The Interim
    Force will allow us to respond to the immediate operational
    requirements that currently challenge us. It will allow us to train
    soldiers and grow leaders in the doctrine and organization of these new
    formations. These Interim Brigades will be the vanguard of the future
    Objective Force.
    Legacy Force
        As we do this, we must sustain portions of The Army as we know it
    today--a Legacy Force--to guarantee our warfighting readiness in the
    event that an adversary miscalculates. We will recapitalize selected
    formations--from the active and reserve components--of key armored and
    aviation systems, as well as enhance light force lethality and
    survivability. We will continue to insert digital technologies with
    advanced systems such as Crusader and Comanche. Thus, the Legacy Force
    will maintain the capabilities we currently have and add others that
    are soon becoming available. We cannot neglect our ability to meet our
    non-negotiable contract as The Army begins its Transformation, and
    continues to transform over the decades to come.
    Institutional Army
        Not shown on the chart is the Transformation of the Institutional
    Army, which will begin immediately. This Transformation will address
    the systems, organizations, and processes by which the Institutional
    Army supports training, leader development, infrastructure management,
    sustainment, combat and materiel development, and well-being. The
    Transformation of the Institutional Army is essential to sustain
    readiness while developing and fielding the Objective Force.
    Interim Capability
        Taken together, the Interim Force, the Legacy Force, and the
    transforming Institutional Army will give us interim capabilities, more
    advanced than today's Army, especially in terms of greater
    responsiveness, agility, versatility, and deployability. These interim
    capabilities will enhance readiness as well as allowing us to develop
    doctrine, training, and organizational structures for the Objective
    Force.
    Objective Force
        The critical path of the Transformation leads to the Objective
    Force. Today, the science and technology community is working hard to
    develop answers to questions we have asked. How do we reduce armored
    volume in combat vehicles while increasing survivability? How do we
    increase deployability without sacrificing survivability and lethality?
    How do we reduce in-theater support needs, and thereby reduce strategic
    lift requirements? These and other questions guide a major science and
    technology (S&T) effort to develop technologies that will give the
    Objective Force its desired characteristics--responsiveness, agility,
    versatility, deployability, lethality, survivability, and
    sustainability. The President's Budget calls for $1.3 billion in fiscal
    year 2001 for this endeavor. $500 million of that will focus on
    developing future combat systems technologies. Our challenge to the
    science and technology community is to come back with a comprehensive
    set of technological recommendations and R&D plans by 2003. On that
    basis, The Army will make technology readiness decisions, and we
    anticipate eight to ten years of development before the new
    technologies are produced. When the technologies are mature and when
    the production lines are ready, we will begin to field the Objective
    Force in unit sets. Organizations will field complete suites of new
    equipment, thoroughly integrated systems; the whole designed to give us
    all of the capabilities outlined in The Army Vision. Transformation to
    the Objective Force will encompass the entire Army. The Legacy Force
    will transform directly to the Objective Force, and the Interim Force
    will follow. Over the course of ten to fifteen years The Army will
    transform itself into the Objective Force.
        The budget request provides sufficient funds to support
    continuation of The Army's Transformation in fiscal year 2001. Since
    the announcement of the Vision in October 1999, The Army has worked
    closely with OSD to resource this requirement. We have restructured the
    fiscal year 2001 budget to fund the Transformation. The $100 million
    provided by Congress to assist with our initial efforts is greatly
    appreciated. It provides The Army with important flexibility as we move
    forward with this critical endeavor. Fielding the Objective Force while
    sustaining decisive capabilities will require significant resources
    throughout this Transformation. Given current funding trends, we
    estimate that The Army has identified funding for approximately half of
    the additional costs associated with Transformation. We will continue
    to work with the Administration and Congress to request the necessary
    support.
    Historic Opportunity
        This is the most significant effort to change The Army in 100
    years. Our aim is not a single platform swapout, but a systemic change
    and full integration of multi-dimensional capabilities--space, air,
    sea, land.
        Not since the beginning of the last century has such a
    comprehensive Transformation been attempted. Then, the new weaponry--
    aircraft, machine guns, rapid-fire artillery, motorized vehicles--were
    all being developed and tested in relative isolation. There was no
    shortage of ideas, but no one was sure what warfare would look like
    when all the pieces came together. The potential for that
    Transformation failed due to lack of funding and a lack of support
    outside the Army. When the First World War came, we were not ready. We
    integrated all those systems into the Army of necessity under the
    stresses of imminent combat.
        Indeed, most opportunities for armies to change are forced by war.
    The major conflicts of this century--World War I, World War II, Korea,
    Vietnam, and even Desert Storm--provide myriad examples of military
    innovation under the pressure of combat. This effort is almost
    historically unprecedented--to change in time of peace because we know
    our condition, we are informed about our future environment, and we
    know what capabilities we will need.
        Our Nation is at peace. Our economy is prosperous. We have
    strategic perspective and technological potential. This time is a
    window of historic opportunity that will grow narrower with each
    passing day.
        We can transform today in a time of peace and prosperity. Or we can
    try to change tomorrow on the eve of the next war, when the window has
    closed, our perspective has narrowed, and our potential is limited by
    the press of time and the constraints of resources.
        The Army is building support for this Transformation. We have been
    talking to the defense industry. We know that this Vision entails risk,
    but it promises great reward for our national security. We need to
    continue our long tradition of partnership between the Army and
    Industry.
        The Army is transforming. The Army Reserve and Army National Guard
    are seamlessly integrated in this process, from the development of the
    Army Vision to the final fielding of the last Objective Force unit.
        We're gaining support in Congress. For years, Members of Congress
    have counseled The Army to change--we're changing. Now, we need your
    help, but more than that we need your ideas, your criticism, your
    energy, and your enthusiasm. We need your approval and fiscal support.
        Mr. Chairman and distinguished members of the Subcommittee, your
    Army is on the move. The Nation can't afford to miss this opportunity.
    Thank you once again for this opportunity to report to you today on the
    Transformation of your Army. I look forward to discussing these issues
    with you.

                              Army Transformation

        Senator Stevens. Thank you very much, both of you. We
    appreciate your courtesy, and we are very pleased to see
    General Plewes behind you, representing the Reserves. We know
    that you have a great interest in this also, General.
        Let me ask you this, General Shinseki. And we will use the
    5-minute time clock if that is agreeable, so that everyone gets
    a chance to have some questions. What is the time line for this
    new armored brigade at Fort Lewis, Washington?
        General Shinseki. We will begin to stand up the first
    brigade in fiscal year 2001. It is our intent that by December
    2001-January 2002 we will see an operational capability in that
    first brigade. Again, that time line is driven by decisions yet
    to be made this summer on selecting the equipment platforms
    that will be acquired in order to stand up that brigade.
        Senator Stevens. That was my next question. What are those
    milestones, and what do you see for them in timing before you
    make that final decision about Transformation to Fort Lewis?
        General Shinseki. This decision on platforms will occur
    during the fourth quarter of this year, sometime in the July-
    August timeframe. We hope, by no later than September, to have
    contracted acquisition of the interim armored vehicle systems
    that will then go into production and, beginning in 2001, late
    spring, summer of 2001, we look to be arriving at Fort Lewis to
    begin to fill out that formation. Such that by December 2001,
    we will have had the chance to organize, to have done some
    training, and have gotten the leadership ready to operate that
    brigade.
        So December 2001 and January 2002, we look for that kind of
    operational capability, which we intend sometime thereafter to
    exercise and demonstrate its capabilities.
        Senator Stevens. Is there a hurdle out there with regard to
    tracked or wheeled vehicles? Has that decision been made?
        General Shinseki. No, sir, it has not. And frankly, there
    has been a good bit of debate about tracked versus wheels. And
    I will admit that I am probably partially guilty for having
    raised the issue. Frankly, for this interim capability, whether
    it is tracked, whether it is wheeled, whether it is a mixture
    of track and wheels, I do not think the Army has any
    preconceived decision on that. We just want whatever is best
    available on the shelf that we can take very quickly, fill out
    our formations, bring them up to an operational capability, so
    we can meet a shortfall that we currently have today in the
    force.
        Senator Stevens. I may show my ignorance, but I do not know
    of any light tracked vehicles that are on the shelf, General.
    The only thing I know of that is on the shelf really is wheeled
    vehicles. Is it your intent to try and see if we can procure
    some wheeled vehicles and some tracked vehicles and try them
    out in the same brigade, or are we going to try one wheeled
    brigade and one tracked brigade and see what happens? It is
    sort of confusing. Because as I understand it, you are only
    going to go forward with one, and then you are going to go
    forward with a second one each year as I understand it.
        General Shinseki. That is correct. The first brigade in
    2001, and then what we have laid aside is a brigade each year
    thereafter, 2002 to 2006. We would like to accelerate that
    process, one brigade in 2001 and hopefully go to two brigades
    in 2002. But this is the matter of building the POM for the
    2002-2007 timeframe.
        Senator Stevens. Does that depend upon money or upon the
    availability of the equipment that you are speaking about, or
    the decision as to tracked or wheeled vehicles?
        General Shinseki. It is primarily availability of money.
    But I will also tell you that we will not frankly know what the
    production schedule is until we make that decision on which
    systems we will get sometime later this summer. But our intent
    here is, whatever we select, for that system to be able to go
    into production and to see systems begin arriving in the field
    here early in 2001.
        Senator Stevens. I am still nebulous about the wheels and
    tracks, so I will be back to you on that.
        Senator Inouye.

                                Objective Force

        Senator Inouye. Thank you very much.
        In your statement, you said Transformation to the Objective
    Force will encompass the entire Army. Does that mean that you
    will eventually phase out your heavy divisions in favor of
    medium-weight units?
        General Shinseki. Eventually, Senator, that is correct. The
    long-term intent is that Objective Force will have systems that
    are not as heavy as our heavy forces today, not as heavy as the
    M-1 and the Bradley, which are magnificent warfighting systems,
    but our challenge is to be able to deploy them and then sustain
    them in all the places we are asked to go. But the intent is,
    in the long term, to have Objective Forces that have weapon
    systems in them that are deployable, but have the same
    lethality and the same survivability, if not better, than our
    heavy systems have today.
        And it is based on the recognition that we designed the M-1
    and the Bradley for the European environment, the Cold War
    European environment, which we understood what the environment
    demanded. It was a relatively shallow operational battle space.
    We expected to face a large Warsaw Pact initial attack. We
    understood that we had to survive that. We would take hits. And
    then we had to be capable of mounting a counterattack to
    reestablish the boundaries.
        To do that, you have to design equipment that is going to
    survive in that environment. And so we designed equipment that
    would take hits and continue to fight. Under those principles,
    we ended up with systems such as 70-ton tanks. They are
    magnificent tanks. Still the best tank in the world. But less
    capable in lots of other areas where we are asked to go today.
        If we were discussing a similar scenario like we had for
    the Cold War in Europe, I think we would end up with the same
    kind of solution. But, frankly, we need to move on and find
    systems that will fight as well, survive, and be as lethal, but
    are capable of being deployed to the places we are asked to go,
    and where the infrastructure does not necessarily support 70-
    ton systems--bridges, roads, the ability to distribute fuel and
    repair parts. And it is understanding our future environment
    that is causing the Army to embark on this Transformation.

                                  Legacy Force

        But the answer to your question is, ultimately, in the
    Objective Force, which we see in the 2008-2010 timeframe, where
    we will begin transforming to that future system, we do intend
    to transform all of our formations, that Legacy Force, that is
    described on the top arrow, to a more rapid and more capable
    formation.
        Senator Inouye. I gather, at this moment, you are not
    getting all the resources that are necessary to bring about
    this Transformation. If that is the case, where would you put
    your priorities, modernizing your Legacy Forces or fielding an
    interim brigade or investing in science and technology?
        General Shinseki. That is a good question, Senator, and it
    is a tough one. Our responsibilities to the Legacy Force is we
    have to sustain the force we have and do modest
    recapitalization to that force, because it is the force that we
    will go to war with in the next 10 years. If miscalculations
    occur and this Army is called upon again to fight a war for
    this Nation, that is the force that will go.
        Keeping that Legacy Force ready to fight allows us the
    opportunity to go and invest in the S&T work that will define a
    future warfighting formation with new systems. Even as we do
    those two things, there is a shortfall today in our formation.
    And the shortfall I can best describe to you as, in Desert
    Storm 10 years ago, as Saddam began to move south and overran
    Kuwait City and moved toward the Kuwaiti border, and this Army
    deployed what it had, and it was a brigade out of the 82nd
    Airborne Division. We flew them in there and put them astride a
    high-speed avenue of approach that moved south into Saudi
    Arabia.
        We got them in there and, frankly, all of us held our
    breath. Because if the movement south by Saddam's forces
    continued, we knew that the arrangement of warfighting was not
    one we would have chosen, heavy formations fighting light
    infantry. For reasons we do not know, Saddam stopped. He
    stopped at the border and he stayed there for 6 months. And
    that gave us time to reposition our heavy forces out of the
    continental United States and out of Europe, and the rest of it
    is history.
        My operational requirement in describing the need for the
    interim brigades is to fix the problem that occurred 10 years
    ago. Today, if we were to go anywhere else other than Kuwait,
    where we have prepositioned significant resources, or Korea,
    where we have also prepositioned significant resources, if we
    were called upon to go to a crisis anyplace else, we would be
    in the same situation in a breakaway crisis. And that is, we
    would fly the 82nd light infantry assets in, and then we would
    wait for the first heavies to arrive.
        These interim brigades are the bridge between the light
    infantry and the arrival of those heavy forces, to provide what
    the 82nd does not have today, mounted weapons platforms, the
    ability to move infantry tactically. One of our problems when
    we put the 82nd in, they were in. We could not move them in or
    out. And also to provide them a modest amount of assault
    weaponry, assault guns mounted on vehicles. And this interim
    brigade will provide to the 82nd Division, or any light
    division that goes in first, that added warfighting capability
    that fills the gap between the initial light infantry going in
    and the arrival about 30 days later of the first heavy
    elements. That is the pressure on getting an interim force
    stood up.
        Senator Inouye. Thank you, Mr. Chairman. I have a few other
    questions, but I will wait.
        Senator Stevens. Yes, sir.
        Senator Hutchison.

                               OPTEMPO/retention

        Senator Hutchison. Thank you, Mr. Chairman.
        General Shinseki and Secretary Caldera, one of the areas
    that is making the biggest impact on retention problems is
    deployment and overdeployment. I certainly talked to people
    this week in Bosnia and Kosovo, but it is not isolated. I have
    talked to troops on the ground in many other foreign countries,
    and the OPTEMPO is clearly a problem.
        The Air Force and the Navy have been addressing this issue.
    The expeditionary Air Force is trying to give people the
    ability to plan ahead, know when they are subject to
    deployment. And this seems to give a good comfort level to the
    members of the Air Force with whom I have talked. And the Navy,
    secondarily, not as much so because there are other
    encroachments that have occurred in the Navy program.
        My question is this. What is the Army doing to try to
    address the overdeployment issue and as it affects retention?
        Mr. Caldera. Senator, we are trying to do some of the same
    kinds of things in terms of building in more predictability for
    soldiers, identifying units far out ahead of time, when they
    are going to rotate to one of these contingency missions. The
    initiative to man units at 100 percent means that you do not
    have to fill units as you are getting ready to deploy. Whenever
    you do that, it causes turbulence in other units and it is more
    likely that you are going to tap someone who may have already
    come back from an overseas tour or some kind of deployment when
    you end up moving them to the unit in order to be able to
    deploy them.
        We have tried to add to that predictability by also, as you
    have noted, tapping more of our Guard and Reserve units who
    today are helping us perform all the missions that we perform
    all over the world, but also working some of the Guard and
    Reserve units into the rotation picture to spread out the
    burdens of the contingency missions and add to the
    predictability, as well. And of course we are in uncharted
    territory there in terms of maintaining employer support for
    the Guard and Reserve and the goodwill among the men and women
    who are committed to being citizen soldiers.
        One of the benefits of Transformation is that if you move
    your heavy and light forces closer together, you can also build
    in more predictability. Today, all Army divisions are expected
    to be at the highest state of readiness, and so we do not have
    a built-in rotation where some are at the highest state of
    readiness and others in more of a stand-down phase with more
    family time and attention to other kinds of efforts to
    regenerate the force. So all of those efforts will help.
        One challenge, of course, is when we set the glide path for
    the size of the military we would have, at the end of the Cold
    War, we did not anticipate that our Army would be as busy as it
    is today. And so we set the end strength goals for the Army
    based on predictions about how busy we would be. And if we are
    going to continue to be as busy as we are, performing the
    engagement missions that the Commander in Chiefs (CINC's) look
    to the Army to perform all over the world and the contingency
    missions that we are involved in, then I think it may be
    appropriate to look at what the end strength of the Army is.
        Clearly, if we had additional soldiers it would be easier
    to do all of the things we need to do in terms of the
    schoolhouse and the sustainment piece of what the Army has to
    do in theater operations in wartime, as well as be able to
    support these contingency missions.
        Senator Hutchison. Let me follow up with two questions.
    General Shinseki, did you want to speak to that?
        General Shinseki. I was just going to add, Senator, I think
    you got to experience what our great youngsters on deployment
    think about their contributions. They think that they are
    making a difference. They think that they are appreciated.
    Frankly, they are charged up by these missions. So this is the
    great dilemma for us, that morale is pretty good on deployment,
    and yet we understand that this also places pressures on
    families and places pressure on us to take better care of them
    when they do come home from those operations.
        The Secretary and I, in order to address some of these
    other issues, even as we were creating the study effort to
    undertake Transformation, looked at the Army War College, up at
    Carlisle, Pennsylvania, as a repository of talent for helping
    us understand some of these other issues. And we asked that the
    War College create a student study group to do a couple of
    things. One was to look at turbulence. What were the causes?
    What could we do about it. Understanding we could not
    necessarily take it to zero, but then how do we get
    predictability into this? If you have turbulence,
    predictability becomes more important.
        The second study group was designed to look at well-being
    in the Army, to look at all the kinds of support that we
    provide soldiers, families, civilians, veterans, retirees, and
    try to help us better understand how to quantify the importance
    of these programs so we can make a better case when we bring
    them here for articulation.
        Senator Hutchison. Mr. Chairman, let me just throw out the
    other two questions. My red light is on, so if you want to move
    on, that is fine. But I just want to make the point that an 8-
    month time for a Reserve and Guard unit is a whale of a
    request. And I hope that you are talking to employers very
    realistically about how long these deployments are. And if it
    is in your mission, Mr. Secretary, that you are going to use
    Guard units routinely to fill in, I think you better look at
    the length of time very carefully. I know you have gone back to
    6 months; I still think that is unrealistic, especially if you
    are talking about small business people. You just cannot overdo
    your Guard unit, or you really are going to be fraying at the
    edges.
        Second, I just would ask, perhaps for the written record,
    what is your timetable for looking at your force strength?
    Because it seems to me that you are due an increase in force
    strength. And talking about it as if you are going to think
    about it in the future I think is probably not very realistic.
    I think it should be sooner rather than later.
        Senator Stevens. Gentlemen, we will take that as a comment
    and a question for the record.
        [The information follows:]

                                 Force Strength

        The 2001 Quadrennial Defense Review (QDR) and the
    Transformation are the vehicles that we will use to review our
    force strength and make force-sizing recommendations. Based on
    the geopolitical strategic environment, the 480,000 active Army
    force may not be adequate to meet the demands of the current
    National Military Strategy. The QDR will confirm or deny this.
        The multiple, simultaneous, and long-term contingency
    operations in which we are involved stress our operational
    tempo (OPTEMPO) and deployment tempo (DEPTEMPO). The worldwide
    challenges to the Nation's security means ensuring geographic
    commander-in-chief (CINC) warfight requirements are satisfied
    and we maintain constant unit readiness. The Transformation
    will address this. Increasing Army end strength would help
    mitigate OPTEMPO and DEPTEMPO challenges, address high-demand,
    low-density military occupational specialty shortfalls, meet
    early deployment CINC warfight requirements, improve unit
    readiness, and better support the Transformation vision. We
    will review alternative force-sizing constructs and be fully
    prepared to respond to the questions posed in the QDR 2001
    legislation.
        We have been challenged in meeting our manpower goals over
    the past several years as the Army concluded its drawdown.
    Despite these challenges, we have met our end strength targets.
    The Army has made significant progress over the past several
    years in the three critical manning areas: retention,
    attrition, and recruiting. Continued success in the retention
    program, combined with improved attrition, has reduced future
    recruiting requirements. Recruiting in a tight labor market
    remains a challenge. However, we have significantly improved
    recruiting production over last fiscal year, and we will again
    meet our end strength target in fiscal year 2000. Anticipated
    success in these areas over the next two years will position
    the Army to continue to meet end strength targets and fully
    meet near-term Transformation and manning goals.

                               High energy lasers

        Senator Stevens. Senator Domenici.
        Senator Domenici. Mr. Chairman, I do not want to take very
    much time. I am late myself for another appointment. I am going
    to submit a number of questions for the record. If you would
    just permit me to indicate to the two witnesses what they are,
    as well as my genuine interest.
        Secretary Caldera, I have a brief statement with reference
    to the United States military, particularly the Army, working
    on tactical high energy lasers and airborne lasers. I ask for
    some of your observations regarding centralizing that and where
    that centralization might be, considering that General Costello
    is very, very interested in this area. I would like for you to
    comment in the record on that if you would.
        To both of you, on this same issue, I have five questions
    regarding White Sands Missile Range and high-energy laser
    weapons for each of you. These questions are in reference to
    developing and fielding laser weapon systems and what each of
    you see as the short-term future as to where we go.
        My next question has to do with information operations
    vulnerability. I understand that the vulnerability analysis at
    the Army research laboratories is underfunded. And I have two
    or three questions to ask you about that underfunding. It is
    not a lot of money, but if it is important to getting to where
    the United States ought to be in this vulnerability assessment,
    with recommendations on how America can minimize it, I think it
    would be important that we know.
        And the same with reference to tests and evaluation. I am
    going to ask you to discuss the Army's current state of testing
    and evaluation programs, and that you elaborate on major needs.
    If you would do that at your convenience, I would appreciate
    it.

                                  Food stamps

        I want to close up by submitting a question with reference
    to food stamps. We have been on this issue so long and it
    continues to be in the limelight today. I have some specific
    questions about food stamps and the military. But first, I
    would just ask both of you, there is not an Army policy with
    reference to trying to limit the size of families in order to
    minimize the food stamp problem, is there?
        Mr. Caldera. None whatsoever.
        General Shinseki. No, sir.
        Senator Domenici. I note that both of them say there is
    not. I have heard rumors of this started by someone in the
    military. But there was never put a name alongside of it. I
    would not think the Congress would be very interested in saying
    to our military: You are going to have to be on food stamps
    because you have five kids; you would be better off if you only
    had two. We are trying to retain our military personnel for a
    long time. And it is not our job, nor in our best interest, to
    family plan for these military people. Are we in concurrence on
    that?
        Mr. Caldera. There is none of that whatsoever, Senator. At
    the time that you enlist a soldier, as they go through basic
    training, they are not supposed to have responsibility for
    other family members. But sometimes what they do is they just
    leave the kid with mom or dad or grandma or somewhere, and
    then, after they go to their unit, children rejoin them. And as
    long as they have a family plan for, if they get deployed, who
    is going to be responsible for that child, then they are
    soldiers in good standing.

                               Leader development

        Senator Domenici. My last observation, and it may be the
    only one I would ask you to answer today. It has to do with The
    Washington Post story which reported the results of a survey of
    junior officers. I think, General Shinseki, you are aware of
    the results and are trying to do something about the concerns
    raised. Are you going to consider the survey criticism
    seriously, and what do you plan to do about it?
        General Shinseki. Without responding to that particular
    article, because there were several and I am not quite familiar
    with what that article measured as the bottom line, let me just
    explain that as we began this Transformation initiative in the
    Army, and much as described by Senator Hutchison, both the
    Secretary and I walk the terrain and talk to youngsters. And
    besides turbulence and employee concerns, we hear other things
    from our young officers. There were some issues regarding
    leadership and focus on training. And so the Army began
    planning to stand up two, what we would call for lack of a
    better description, blue ribbon panels to look at how we train
    in the Army and think about how we might want to change that in
    the future.
        The second panel had to do with leadership and leader
    development. And we thought these were both appropriate panels,
    because it is the business of the Army every day to do those
    two things. We train soldiers every day and we grow them into
    leaders. Our leaders of tomorrow are today's soldiers. We do
    not hire out 20 years from now. Whatever inventory we have 10
    to 15 to 20 years down the road from which to select our
    leaders comes out of our inventory today of youngsters. And so
    we thought that training and leadership was an appropriate
    focus for the Army at large.
        In response to these panels that had been described out at
    Leavenworth, where we have some of our brightest young officers
    in attendance for a year of schooling, some preliminary work
    was anticipated, where youngsters were called in and asked, the
    Army is standing up these two panels, if you had something to
    contribute, what would you say is wrong, what should be fixed?
    And those questions are unfortunately focused on the negative.
        If the question had been, what do you think is going right
    and what do you think is going wrong, I think you would have
    had a different outcome. But the focus of the question was, if
    you are going to help the panels out, where would you like to
    focus the Chief and the Secretary? So, as a result, with non-
    attribution, these questions were answered. And unfortunately,
    and somewhat to the disappointment of those students, it ended
    up being on the front page of The Washington Post.
        These are great youngsters. Some of our future leaders are
    there. And we are going to stand up these panels and we are
    going to go take a look at what they have asked us to focus on.
        Senator Domenici. Thank you, Mr. Chairman.
        Senator Stevens. Senator Cochran.

                          Reserve component deployment

        Senator Cochran. Already there has been some discussion
    about the deployment experiences of the Army in recent years.
    That has obviously become more extensive and more expensive.
    The fact that we have National Guard and Reserve units now
    making up part of the rotation in Bosnia is a matter of some
    concern. Because, if what I am hearing is true--it may be
    anecdotal or there may be other evidence--there are some
    members of the Guard and Reserve units who are resigning or
    dropping out because of these deployment orders that are coming
    down and the fear that there will be more of the same.
        What are the statistics on this? Do you have any
    information you can share with the committee, Mr. Secretary or
    General Shinseki, on this issue?
        General Shinseki. I am not aware of any statistics that I
    could provide. I will try to see what we have in terms of how
    these deployments are specifically affecting retention. In the
    Reserve component units, retention in Reserve component units
    has a certain level of turbulence. To say that we have been
    able to measure what the deployments have done above and beyond
    that normal retention factor, I do not know that we have the
    analytics quite yet.
        This deployment of a major unit to Bosnia, the 49th Armored
    Division, Texas National Guard, is the first large deployment
    like this. We have had other smaller deployments of individuals
    and detachments. Let me see what we have, and I will try to
    provide a better answer.
        [The information follows:]

                   Reserve Component Deployment and Retention

        From December 1995 to February 2000, the ARNG has deployed
    more than 5,400 soldiers in support of operations in Bosnia.
    The post-deployment attrition rate for returning soldiers from
    September 1996 to March 1999 is averaging 20 percent. The
    average attrition rate for the ARNG during this period is 18.1
    percent to 19.4 percent. ARNG soldiers are leaving primarily
    because of completion of their service obligation, followed
    next by completion 20 years of service. The attrition rate for
    ARNG soldiers who demobilized from the first two Bosnia
    rotations, from September 1996 to July 1997, was 15.9 percent.
    The corresponding ARNG attrition rate was 18.6 percent.
        We have mobilized USAR soldiers to support Bosnia
    operations for a fifth year. Additionally, we have deployed
    USAR soldiers and units, not as part of that Presidential call-
    up, for support missions to 63 other countries. During this
    period of increased deployments, the USAR, using expanded
    entitlement programs and improved management processes, has
    achieved great success in reducing enlisted attrition to 26.6
    percent in fiscal year 1999. For fiscal year 2000, we expect
    attrition rates to continue to improve and have projected a
    year-end attrition rate of 27.4 percent.
        A more in-depth study of attrition losses is required to
    determine if the duration or frequency of deployments has
    influenced reserve component retention. We are concerned about
    the environment created as increasing numbers of reservists
    have to serve more than the traditional one weekend per month
    and two weeks per year training. We believe the frequent
    deployments and escalating competition from employers and
    educational institutions, intensified by a robust economy, will
    continue to challenge our best retention and recruiting efforts
    and may require more resources to counter.

                             Science and technology

        Senator Cochran. Thank you very much.
        In your Transformation plans, I noticed that science and
    technology is highlighted as an important asset. I know that
    composite materials research provides lighter and more
    durability possibilities for equipment and weapons. Is research
    and development (R&D) funding included in this budget at a
    level that meets the needs of the Army for such composite
    materials research and specific development programs such as
    the Advanced Army Medium Brigade Bridge?
        General Shinseki. I would have to go and consult what the
    level of funding is, but I would say, Senator, probably not.
    The fact is that the amount of money we have been able to
    invest for 2001, put in the budget, for S&T investments is $500
    million a year each year for the next 5 years. And I would say
    that more investments need to be made there in order to get the
    momentum in technologies up, so that in about 2003-2004, we get
    back real answers, quality and quantity real answers, on future
    technologies that allow us to then design those future
    platforms 8 to 10 years out.
        Specifically, things we are looking for are low-observable
    technology, better armor protection, long-range acquisition. We
    want the range overmatch. We want to shoot first every time.
    And we want to kill every time we pull the trigger. So
    precision counts here. And we want to do it at smaller
    calibers. Off the top of my head, those kinds of technologies,
    along with microtechnology, fuel efficiency to drive down the
    cost of operating our systems, are the kinds of technologies we
    are looking at.
        Senator Cochran. One of the things I noticed in your plan
    for the future is to have a more digitized Army, that you have
    a network of data, information, integrated command and control
    to commanders at all echelon levels. You are planning to have
    the first digitized corps in fiscal year 2000, but the funds
    are not here in this budget to make that come true. At least
    that is my impression. Will the currently planned procurement
    of such systems as enhanced position location and reporting
    system provide the first digitized corps with its radios in
    time to meet operational requirements?
        General Shinseki. That is a level of specificity on time
    line I would like to comment for the record, Senator.
        Senator Cochran. I have some other specific questions about
    these systems, and I would be glad to submit them and give you
    an opportunity to review them and give us answers for the
    record.
        General Shinseki. Thank you, Senator. I would like to be
    precise here and I would like to provide it to you for the
    record.
        [The information follows:]

                            Digitized Corps Fielding

        The digitization strategy is on track to equip the 4th
    Infantry Division--the first digitized division--by the end of
    2000 and the III Corps--the first digitized corps--by the end
    of 2004. Both are adequately funded for procurement of required
    systems to achieve operational requirements on time.
    Digitization remains a critical enabler in the new Army Vision
    by significantly enhancing our warfighting capabilities of the
    Transformation forces. Digitization exploits advances in
    information technology to achieve full spectrum dominance and
    improve battlefield organizational effectiveness by allowing
    systems to operate synergistically. The Army will not slow
    efforts to digitize the force and remains committed to fielding
    digital capabilities to support our soldiers, our units, and
    our ability to communicate securely.

        Senator Cochran. Thank you, Mr. Chairman.
        Senator Stevens. Thank you.
        Senator Durbin.

                             School of the Americas

        Senator Durbin. Thank you, Mr. Chairman.
        For Secretary Caldera and General Shinseki and all of the
    staff that have joined you, let me express my gratitude for
    your service to our country. And I think it goes without saying
    that every member of this subcommittee and every Member of
    Congress appreciates the sacrifices you have made for our
    country and continue to make. Though I may raise some questions
    here that may be critical in nature, they do not in any way
    reflect on my lack of respect for all that you have given to
    this country and continue to give.
        First, I would like to ask the Secretary, on a very
    contentious and hot issue about the School of the Americas.
    This is an institution which has been in place for a long time
    now. It has been swirling in controversy certainly on Capitol
    Hill, with contentious votes on a regular basis in the House of
    Representatives and a lot of debate as to the history of this
    institution and its future.
        I think it is well documented that in the past the School
    of the Americas has included among its graduates some army
    personnel who have gone back to Central and South America and
    been engaged in some of the most outrageous conduct; certainly
    conduct which none of us would want to be associated with--
    human rights abuses, torture, murder of innocents civilians,
    and the like.
        Mr. Secretary, there are two questions I would like to ask
    of you. I believe that you have made a personal commitment to
    changing the climate around the School of the Americas and have
    really sought out ways to change the image of this institution.
    There are two things that still concern me. That is the
    unwillingness of the Army at any point to acknowledge what were
    clearly abuses in the past associated with the School of the
    Americas. I think an honest acknowledgement of those abuses
    would go a long way to at least beginning a dialogue to
    reassure us that the School of the Americas or some successor
    institution in the future would really have a much different
    philosophy and a much different approach.
        My first question of you then is, why will not the Army
    just flat out acknowledge the fact that there have been men and
    women graduated from that institution who have done things that
    are a great embarrassment to the United States and that some of
    the practices and policies of the School of the Americas were
    just plain wrong?
        Second, in a more topical context, we are being asked to
    appropriate massive sums of money for the efforts in Colombia
    to deal with the drug problem. It is a drug problem of great
    concern to every American. And it should be, when we find that
    the country has now become a major source of cocaine and heroin
    exported to the United States, causing untold damage in our
    society.
        We know that the military in Colombia is dreadfully
    unprepared to deal with the situation. Press accounts suggest
    that they are only one-third operational at this moment. We
    also know that concessions have been made to paramilitaries and
    other groups in the country, which have surrendered almost 48
    percent of the geography of that country to groups not under
    the control of the government.
        I have now learned that the School of the Americas
    continues to train the Colombian military. I am concerned about
    what appears to be a cross-pollination of civilian paramilitary
    and military groups, human rights abuses in Colombia, and the
    fact that we are talking about a massive commitment of military
    resources into a country that is rife with civil war and
    discord. I am concerned about whether or not we have a clear
    and specific strategy and whether the curriculum at the School
    of the Americas is consistent with a strategy that we can
    defend to the American people.
        Those are my two initial questions.
        Mr. Caldera. Thank you, Senator. First of all, Senator, I
    looked at the debate that occurred in the House last year on
    the School of the Americas, and we have put together a
    legislative proposal that I think furthers our ability to
    provide the kind of training and engagement that we want our
    Nation to do with the militaries in Latin America.
        What I heard a lot of the members saying is they wanted a
    school that strengthens democracy, that teaches protection of
    human rights, that works on the fundamental challenges that the
    countries in Latin America are facing today in the 21st
    century, not the Cold War challenges that they faced when
    threatened by communists and Marxists and insurgencies in the
    eighties as the Cold War played itself out. And this
    legislative proposal I believe will do that, because it will
    put into place those goals--disaster assistance, counterdrug
    operations, strengthening democracy, the appropriate role of a
    military in a democratic society as subordinate to the civilian
    elected officials.
        I hope you will take a close look at that proposal, because
    I think it is a way for us to continue to provide a training
    that I think we want Americans training the militaries of Latin
    America, helping them become more professional military bodies
    and more responsive to societies we serve. And we do not want
    anyone else doing that kind of training and having that kind of
    influence here in our own hemisphere.
        Senator, the question of willingness to acknowledge, that
    very specifically you asked, wrongdoing, I think there is a
    fundamental difference about whether violations of human rights
    were because of training at the School of the Americas or in
    spite of training at the School of the Americas. We do not
    teach American soldiers to torture or rape or murder or be
    human rights violators. And we do not teach that to other
    countries. And those who have done that, there is a little bit
    of causation being attributed here that I think is not there.
    That because they went to the School of the Americas, they were
    human rights violators.
        For some, their association was ages ago, in very tenuous
    capacities, in courses that lasted but a few days or weeks. For
    others, more recently. So that whole causation, about whether
    the School of the Americas or the United States Army should be
    fingered as having responsibility, when we do not teach those
    things, and in fact when what we teach is exactly the opposite,
    I think that there is a fundamental fairness to that issue.
        I think a lot of the concerns that people have raised about
    the School of the Americas they could substitute the United
    States Army or the United States military, the United States
    Armed Forces, or the United States as easily in many of the
    kinds of charges that have been levelled about whether our
    country was right in terms of its involvement in Latin America
    during those critical years in the eighties as the Cold War
    played itself out there.
        As you know, President Clinton last year went down there
    and said he felt sometimes our involvement went too far. But
    even throughout the eighties, we took our support away from
    nations that had bad human rights records, of countries that we
    supported. And then, when they cleaned up their records, we
    would support them again. Today at the School of the Americas,
    we vet soldiers and we vet units that come to the school there
    so that they are not known human rights violators, including
    soldiers from Colombia.
        I went down to Colombia. I spoke to their war college
    specifically about the importance of human rights, and not just
    with respect to the Revolutionary Armed Forces of Colombia
    (FARC), which they are human rights violators, but with respect
    to the paramilitaries as well. I believe the Colombian military
    is as focused on opposing paramilitaries as they are the
    guerrillas, both of whom are human rights violators, both of
    whom are involved in drug trafficking, both of whom enslave
    that population that they turn into either producers of drugs
    or guerrillas defending the drug cultivation.
        This plan in Colombia has an ability to stem the acreage
    that is being dedicated to cultivation of the drug, because
    they do not control, as you said, many large segments of the
    country, and they cannot control it, just by presence. That is
    how they get overrun, and that is how the guerrillas appear to
    be defeating the government.
        They will operate out of a base camp where they will use
    the airlift that the Blackhawks provide to go out into the
    area, to take down the areas where the drug is being produced,
    to eliminate the precursor chemicals that are really wreaking
    environmental damage, to arrest the individuals who are there,
    and then go back to their base camp. And from that base camp,
    they can operate and control larger areas and begin to reduce
    the amount of acreage that is being devoted to drug
    cultivation. I think that will work.
        Senator Durbin. Mr. Secretary, I am sorry to interrupt you,
    because my time has expired. I will wait until the second round
    for a follow-up question, but I will just close by saying that
    if we are ever going to have a constructive conversation
    about----
        Senator Stevens. Senator, we have gone 12 minutes into this
    right now.

                               Armored gun system

        General Shinseki, I forgot to ask you about the armored gun
    system and how that fits into this Transformation. We have
    spent a lot of money developing that system. Are you going to
    utilize it now as we go into this new concept in
    Transformation?
        General Shinseki. Senator, the armored gun system is one of
    those platforms that showed up in December for the side-by-side
    demonstration. And I expect it will be one of the candidate
    models that will show up in the July timeframe for this final
    decision to downselect. And if it meets the requirements best,
    it has a very good chance of being contracted for production.

                                 Infrastructure

        Senator Stevens. I note that Transformation is a very
    important subject as far as you are both concerned, but some of
    us are concerned about the infrastructure needs at existing
    bases and whether or not this process we are going into now is
    going to postpone further some of the modernization and upkeep,
    the deferred maintenance on the bases. I am particularly
    concerned of course with those in my State, and I think Senator
    Inouye and others, those in their own States. But what are we
    going to do about the requirements of existing bases during
    this period of time and catching up on some of the funding that
    is necessary?
        I am concerned about the quality of life issues that are
    being affected by the failure to maintain some of our bases.
    What is going to happen during this Transformation in regard to
    those concerns?
        General Shinseki. For the interim brigades specifically,
    which is what you have asked about, let me just say that in the
    larger budget, base ops is, as I recall, being funded at about
    the 96 percent mark. In terms of real property maintenance
    (RPM), where we have been challenged, we are around the 80
    percent mark.
        Mr. Caldera. Sixty-nine percent.
        General Shinseki. Sixty-nine percent. And it is always an
    effort on our part to get more dollars into this.
        When we talk about the cost of fielding an Interim Brigade
    Combat Team, part of that cost does look at the requirement to
    have a location into which that brigade can move and have the
    kinds of support requirements that go along with it--motor
    pools, ranges, training areas.
        Senator Stevens. Let me get just a little more specific if
    I can. The two of us, Senator Inouye and I, live offshore. And
    people in our State are semi-forward deployed. We have the
    forward deployed in Korea when we have the OCONUS operations.
    It just seems to us that those of us that are in between
    neither get the priority for forward deployment or the priority
    now for modernization for Transformation. What is going to
    happen to our facilities in Alaska and Hawaii as far as the
    Army is concerned?
        General Shinseki. Senator, we are in the process of now
    identifying where these future brigade combat teams, beyond the
    first two that we have identified to go into Fort Lewis, where
    likely sites might also accommodate those remaining brigades
    that follow on. And I would just say that both Hawaii and
    Alaska are being looked at as potential sites. And I think this
    would also acknowledge that there is a requirement to do some
    preparation work in both those locations.
        Senator Stevens. I would hope so. We sort of feel left out
    right now. And I do not know what is going to happen to our
    facilities. If we do not get selected and our people are not
    selected to be the next two, then that means that we are going
    to be 4 or 5 years behind before we are through.
        I do believe that the semi-forward deployment that our two
    areas offer the military is very strategic. But we will talk to
    you about that later. I do not want to go over the time here.
        Senator Hutchison, you had some questions. Do you want them
    answered now or do you want to ask more questions?
        Senator Hutchison. I just want to ask one other question. I
    do think, Mr. Chairman, I cannot emphasize enough the impact of
    overdeployment on retention. And I do hope that you are going
    to address that by really talking to employers of Reserve units
    and listening to their answers. Because there is a disconnect
    that I am seeing between what I hear and what I hear many of
    the Army personnel saying. So that is very important.

                                Military housing

        I wanted to ask you one other question on the budget. And
    that is that your budget has an overall increase of
    approximately $800 million. And I understand and agree with
    your priorities for the kind of Army that you are trying to
    produce. However, what you have had to cut back on is military
    construction and family housing. My question is, are those cuts
    of muscle and bone or are they areas where you feel that our
    housing is now up to what it ought to be? I am concerned about
    that, as we are talking about retention and quality of life,
    that this is an area that you are having to cut back on.
        Mr. Caldera. Senator, as we try to put together the Army
    budget, of course we are trying to balance a lot of priorities
    in terms of maintaining the readiness that our country is
    counting on: quality of life, the needs of soldiers, as well as
    modernization and investment for the future. And we are not
    able to do all of the things that we would like to do, neither
    for the active forces nor for our Reserve components.
        Our housing is not where we would like it to be. We have
    been working with the Congress in terms of implementing the
    residential communities initiative, to leverage private capital
    to invest in family housing. We have three projects that we are
    working on at Fort Hood, Fort Meade, and Fort Lewis that I
    think have great potential in terms of getting out of a
    business that is not really a core business for the military,
    building and managing housing. We are privatizing it, giving it
    to the private sector who can do a much better job of providing
    the kind of housing with the amenities that we want our
    soldiers to have and can use their capital and their expertise
    as homebuilders. And we think that that has great potential.
        There are many other things in the military construction
    that we should do. Much as Senator Stevens pointed out,
    technology gives you a chance to upgrade your ranges, with much
    better instrumentation that can give you much better feedback
    in terms of the exercises that you perform, of how the leaders
    are doing, how the units are fighting and how effective and
    accurate they are in their maneuver, their rates of fire. And
    we want to be able to make those kinds of investments to use
    technology in that kind of way.
        So there is modernization that ought to occur at all Army
    installations that we will program through future POM's and get
    to it as quickly as we can and certainly at those early
    deploying, high priority installations, places where we are
    doing Transformation, perhaps earlier than other places.

                             Unfunded requirements

        Senator Hutchison. If we were to restore some of the cuts
    that you have made in order to address your other priorities,
    would it go into family housing, or barracks housing for that
    matter, improvement or are there other priorities that you have
    cut that you think are even more urgent?
        Mr. Caldera. Our top unfunded requirements are restoring
    some of the readiness plus-up that we were not able to get to
    because we did not get all of the readiness plus-up for other
    Department of Defense priorities. And some of those did include
    our real property maintenance. And our top unfunded priorities
    programmatically are the Grizzly and Wolverine systems that we
    had to kill to fund Transformation, but which we continue to
    have valid requirements for.
        General, did you want to add to that?
        General Shinseki. I would say that the three areas that we
    are looking for help on is to improve or increase the S&T
    investments. As I indicated, if we are going to get quality and
    quantity answers in 3 to 4 years, we have put as much energy as
    the Army can afford right now--$500 million into S&T--
    additional resources would go there.
        The second priority here is the Wolverine and Grizzly
    investments. And third is the readiness issues, the shortfalls
    that we have had for years now, and it is a compendium of
    requirements.
        Senator Hutchison. Thank you, Mr. Chairman.
        Senator Stevens. Thank you.
        Senator Inouye.

                         fiscal year 2000 Supplemental

        Senator Inouye. I believe that the greatest risk among all
    the Department of Defense (DOD) activities in regards to the
    fiscal year 2000 supplemental is the Army. In fact, you are
    spending about $1.5 billion out of your existing funds to
    support Kosovo. The Secretary of Defense just set aside $200
    million. And as a result, you will be able to keep the National
    Training Center (NTC) going.
        Now, many of us here are quite concerned as to what is
    going to happen to the supplemental in fiscal year 2000? The
    question I would like to ask is, what impact will the delay on
    the supplemental currently is having on you and when will you
    have to take drastic actions if the funding is not forthcoming?
    And it would appear at this stage, unless we move within the
    next few weeks, it may not be timely.
        Mr. Caldera. Senator, both the issue of full reimbursement
    and timely reimbursement are critical. Because once you lose
    the training opportunities, you never get that time back for
    training, and it disrupts the training cycle that goes from
    individual squad level training to platoon/company level,
    higher echelon level, up to those National Training Center
    rotations. We of course do not want to do that.
        One concern is, even when you issue the guidance that says
    to begin to think about how to cut back on expenditures, many
    people will throttle back on their training plans, and the
    impacts will be felt even if the supplemental is passed shortly
    thereafter. The kind of things that we do early on is stop some
    of our capital fund expenditures, some of our payments to other
    defense agencies, start planning for things like cutting back
    on some of the civilian hiring, promotions, PCS moves, all ways
    of trying to conserve resources.
        We would begin to cut back at lower level echelon training
    at first rather than affecting the larger-scale NTC rotations,
    which are so critical to maintaining readiness. You start
    cutting back on the ordering of spare parts or on sending work
    to a depot, so as not to have to expend those resources. But if
    you start cutting back on ordering spare parts, it means, as
    you are pulling it off the shelf, that may be the last one. And
    so that is an impact that, even when the supplemental is passed
    later, will take months and months, if not 1 year or more, to
    catch up to the work that you should have been doing in terms
    of your maintenance at different levels.
        So those are some of the kinds of actions that we would
    need to begin to take in order to begin to both shift the
    dollars that we need to continue to pay for the Kosovo mission
    and then to start to husband those resources, both so that we
    can live within our appropriation and for supporting that
    mission.
        Senator Inouye. General Shinseki, if these supplemental
    funds are not available by Memorial Day, by the end of May,
    what impact would it have on your readiness?
        General Shinseki. Senator, what we would need to have is
    the assurance in May that the funds are coming. And if the
    assurance is provided, then we can make decisions about fourth
    quarter training. If that assurance is not provided, and it is
    possible that funds may not be coming or the question is left
    unanswered, then we would have to begin looking at fourth
    quarter training, because the long lead time that goes along
    with training in the fourth quarter requires us to order things
    in order for that training to happen. And once ordered, beyond
    a certain point we have to pay for it. And to ensure that we do
    not exceed our available funds in that fourth quarter, we may
    have to make decisions earlier--for example, in June.
        There is an indication in May that the funds will be
    provided and the funds physically arrive in July will allow us
    to stay on track. But the decision or the indication in May
    would be helpful about whether or not a supplemental is going
    to be provided. And that is why, in my opening comments, I did
    point out that the chairman's efforts to move on the
    supplemental and your support was an indication to the Army
    that it could count that it was going to get the funds. It is
    just a question of when. May, it would be helpful for us to
    know, in May. And that will put off having to make these
    decisions about cancelling long lead time requirements for
    fourth quarter training.
        Senator Inouye. Mr. Secretary, when would you have to take
    drastic actions, such as furloughing civilians or invoking feed
    and forage?
        Mr. Caldera. I think by July, if we do not have the
    supplemental, the money in hand.
        Senator Inouye. In other words, by the end of June, if you
    do not have it in your pocket, this is going to happen?
        Mr. Caldera. By the end of June, if the measure has been
    passed and it is really just getting through DOD to actually
    get money in hand and through the process that that has to go
    through, we could survive for a couple of more weeks. But if by
    the end of June it had not been passed, then we would have to
    start taking those kinds of measures. And of course, invoking
    feed and forage is one option that is an option where we will
    be living outside, beyond what our appropriated support is. And
    of course that is a drastic step that we would prefer not to
    have to take obviously.
        Senator Inouye. I have a few more questions, but my time is
    up.
        Senator Stevens. At some point we are going to go into the
    question of what is your authority to use the money we
    appropriated for specific purposes in Kosovo without it being
    specifically appropriated for Kosovo. That is background to
    what the Senator is asking, too.
        Senator Durbin.

                              ``Black Hawk Down''

        Senator Durbin. Thank you very much. I have two questions.
    I do not know if I can get them in this turn or if I will need
    another turn, but I will try to be very brief.
        General Shinseki, one of the most popular books in America
    today and one that I recently finished is a book entitled
    ``Black Hawk Down,'' which tells the story of Mogadishu and
    what happened in that tragic situation. The lessons that I have
    learned from that as a Member of the United States Senate were
    first the obvious and extraordinary heroism of the men who were
    involved in that mission. Second, the questions that really
    relate directly to the whole question of Transformation.
    Because I believe that what we were attempting to do there was
    to use this more flexible and mobile and lethal and survivable
    force to deal with the situation.
        I think you are on the right track, and the Army is on the
    right track in this Transformation. If you have read this book
    or if you were familiar with the circumstances there, the two
    things that struck me was, first, the vulnerability of the
    Blackhawk helicopter, which apparently was not appreciated
    until we actually saw the helicopter shot down. And, second,
    the breakdown in radio communications between the various
    resources available to the troops on the ground, the fact that
    they did not have direct communication. Those were the two
    things that jumped out at me as a civilian, making this
    analysis.
        If you have read the book or if you are familiar with this,
    reflecting on what it had to say and this whole Transformation,
    can you make some observations for the committee?
        General Shinseki. It has been a while since I went through
    the book, but I think, for me, what ``Black Hawk Down'' pointed
    out was the importance of understanding how we ought to think
    about organizing and equipping and training our military
    forces. What ``Black Hawk Down'' pointed out first for me was
    you can easily go into a situation thinking that you are in one
    kind of an environment and, in a matter of minutes, because
    someone else chose to raise the ante, that you are in a hot
    fire fight.
        And if you are going to be in that situation where the
    parameters can change very quickly beyond your control, then
    you better go in organized for the hot end of this, because
    that is where you will end up. And you need to have
    capabilities, you need to have the equipment, the
    communications gear, the training at that very high level of
    rigor and precision, because that is where all of those
    capabilities get called into focus.
        But I think what we experienced there was a quick change in
    environment. I think we understood there was a risk. It changed
    faster than any of us could have appreciated. And what we
    relied upon was the great valor of those soldiers to operate in
    that environment. And I think what you will see is, even though
    there were some significant losses, the soldiers who continued
    the mission and extracted themselves did magnificently.
        Senator Durbin. No question about that. Would you address
    the specific question of communications? I was stunned to learn
    that the planes overhead and the information overhead could not
    be directly communicated on the ground so that they could
    extricate themselves from this dangerous situation. Has that
    changed?
        General Shinseki. I would have to go back and see exactly
    what kind of communications gear they had available and what
    they were trying to link. I think there is a better answer than
    I could give you today. It did not capture my attention as it
    did yours, but I will give you a better answer.
        Senator Durbin. Perhaps if you would for the record, I
    would appreciate that very much.
        General Shinseki. I will do that.
        [The information follows:]

                              ``Black Hawk Down''

        Mark Bowden's book, Black Hawk Down, cited the inability of
    P-3 Orion Navy pilots to talk to Army ground commanders during
    the October 3, 1993, battle in Mogadishu. Mr. Bowden infers
    that had the pilots been able to talk directly to the
    commanders, they may have been able to provide information to
    facilitate the ground forces' extrication from a dangerous
    situation.
        The equipment on hand was capable of communication between
    the Navy aircraft and Army ground forces. However, pre-
    configured communications nets did not allow individual Navy
    aircraft to talk directly to Army commanders on the ground.
    Communications nets are developed for each mission based on
    anticipated requirements to distribute information, share
    reporting, and provide tactical direction. Normally, component
    commanders talk to other component commanders on command nets,
    and individual aircraft talk to their unit commanders on their
    internal unit command nets. The Navy component commander always
    has the ability of communicating with the Army component
    commander in any joint task force. Individual elements, like
    aircraft, would report to their commanders who, in turn, would
    pass the information.
        Current technology can provide real-time air-to-ground
    communications to commanders at most levels. However, the
    feasibility of doing this is carefully assessed before each
    mission. The necessity and usefulness of the information must
    be balanced with the adequacy of existing intelligence
    reporting and the ability of the commander to rapidly acquire
    and distribute the information. Having too many subscribers in
    one command net can seriously degrade the ability of commanders
    to command and control their units.
        The primary problem during the Mogadishu mission was that
    the events rapidly evolved into an unanticipated situation.
    Previous missions did not require extensive communications
    between airborne and ground force assets. Commanders opted for
    pre-configured communications nets that were not encumbered
    with all assets trying to talk to each other while commanders
    attempted to control the mission.

                              Arsenal utilization

        Senator Durbin. Mr. Secretary, one last question on the
    lightweight howitzer program. The General Accounting Office has
    come back with an interim report which suggests that Vickers
    has at least fallen 2 years behind in some of their contract
    requirements. This is a contract which is not moving as we had
    hoped. I do not believe the Army can be satisfied with the
    results. You know that my perspective is from the arsenal side,
    that believes it has been shortchanged in opportunities to
    provide, as they have traditionally, good equipment on a timely
    basis for the military to use.
        Is there a resistance within the Army to using our arsenal
    resources even in the face of what appears to be a breakdown on
    the private side in the lightweight howitzer program?
        Mr. Caldera. Senator, there is not a resistance to using
    the arsenal. There is a belief, and of course this is a Marine
    Corps program that the Army is helping to manage, that we ought
    to use the best and lowest cost way of producing this weapon
    and getting it into the hands of our soldiers and our marines
    and that we ought to let the benefit of competition determine
    who the contractors and who the subcontractors ought to be in
    that proposal.
        With respect to Rock Island Arsenal, our challenge with
    arsenals is frankly that we have not had enough work to go
    around to the arsenals in order to utilize the capabilities
    that exist there. And so we have been looking for the kind of
    work that we might be able to direct to the arsenals in order
    to use that capability. We have been looking at trying to right
    size the arsenals in terms of lowering the overhead in the
    unused capacity so that their labor rates are in line with
    something that would allow them to be competitive for work.
        And we are currently doing a study of that kind of capacity
    and what our need is for that kind of capacity both for
    sustainment and replenishment after wartime. And answering the
    question which I have posed to our folks, which is if we need
    this capability and this capacity, how will we fund it so that
    the only way of funding it is not just by forcing program
    managers to make uneconomic decisions within the context of
    programs in which they are measured by trying to stay within
    budget as a way of paying for it? Is there a better way for us
    to pay for the capabilities that we do in fact need as a
    Nation?
        Some of that may involve things like going to government
    owned or privately contracted or privately owned arsenals. That
    study will be completed some time this year. But I think it is
    an effort to try to look at how we look at this capability that
    the arsenals represent to make sure that we do have the
    capability that the Nation needs and that we are not always in
    this spiral of being unable to attract work because the labor
    rates are so high and then that just feeding into itself.
        Senator Durbin. If the Senator from Hawaii will allow me to
    make one closing comment.
        Thank you, Mr. Secretary, for that. I agree with the
    concept of competition. I certainly believe that the arsenals
    should compete. And if they can provide the best equipment at
    the best price, they should be given a chance to compete. I
    think the lightweight howitzer program shows what happens when
    there appears to be a bent toward the private side. We had a
    breakdown, where the original contractor, Textron, had to have
    the contract taken away from it. Vickers stepped in, and now
    they have fallen behind.
        It appears from the arsenal side that every excuse is being
    made when it comes to the private sector competition and no
    opportunity is being given to the arsenal to prove that it can
    do the job effectively at a low-cost option. I am heartened by
    your comments, and I hope that we can follow through on those.
        And the last comment I will make is just very brief. I
    support the effort, the acquired immune deficiency syndrome
    (AIDS) in Africa effort, which I believe is going to be
    included in this appropriation. I think it is a very thoughtful
    approach by our military to make certain that if we are ever
    called on to deal with the military forces in Africa, that we
    have done our level best to make sure that they are disease
    free and can be part of an effective combined force, including
    the United States.
        Thank you very much.
        Mr. Caldera. Thank you, Senator.
        Senator Inouye [presiding]. Thank you.

                                Power projection

        General Shinseki, your stated goal is to be able to deploy
    one brigade within 96 hours to anywhere on the planet.
        General Shinseki. That is correct.
        Senator Inouye. One division in 120 hours and five
    divisions in 30 days.
        General Shinseki. Those are stretched goals for the
    Objective Force, Senator.
        Senator Inouye. It would appear that if you are going to
    carry out this plan, you would need immediate air transport.
    Now we have two active bases at this time, one in South
    Carolina, the other in the State of Washington. There is a
    National Guard unit in Mississippi, a training unit in
    Oklahoma. Under your plan, it would appear that in order to
    carry out this threshold, as you say, units will have to
    gravitate to South Carolina and Washington.
        General Shinseki. Frankly, Senator, you are a little bit
    further in your analysis than I am. I am looking at it
    primarily right now, along with the Secretary, from the Army's
    perspective, where is it strategically that we can place this
    capability and then be able to employ it. And it then talks
    about deployment airfields, clearly, installations that can
    accept these brigade combat teams, and then have the physical
    space in terms of training land to be able to exercise and
    train and maintain their proficiencies.
        I had not looked at where aircraft are located, but
    certainly looking at airfields that could accommodate that kind
    of aircraft, was as far as our very cursory analysis had gone.
    We had started with looking at Army installations, and then
    ensuring--part of the reason that we are at Lewis is that
    Lewis, from an Army perspective, had training grounds, had the
    kinds of ranges that could support mounted training. It is
    adjacent to a deployment airfield, McCord Air Force Base, that
    has the capability to deploy.
        And then, from the Army's own perspective, there is a
    history of mounted units at Fort Lewis that would accommodate
    doing this at that location. And having one heavy and one light
    brigade at Lewis also gave us the opportunity to learn what it
    takes to do each kind of unit for our purposes.
        As we continue to look at other locations, we will be
    essentially following the same format. We had not looked at
    where aircraft were located, but I take your point that we
    should. And we will include that. But, ultimately, that will
    not be the decider. It will be the strategic requirements that
    the Army sees for itself.
        Mr. Caldera. Senator, if I could just add to that answer.
    One of our top priorities in the military construction has been
    the power projection improvements at many of our installations,
    not just those that are collocated near Air Force bases, but to
    improve the railheads in order to more rapidly move the weapons
    platforms to a seaport where they might deploy from or to
    improve the airstrips in order to take larger lift
    capabilities. And part of the goal of Transformation is also to
    reduce the logistical footprint of the forces when they move
    into the theater so you do not have to take as many things with
    you and you do not have to rely on as much airlift for the
    sorties that will get you there.
        So those improvements for power projection to rapidly
    deploy forces means that those forces could come from any one
    of our installations around the Nation.
        Senator Inouye. Well, if you want it to be rapid deployment
    or rapid response, then Alaska, for example, is closer to
    places like Bosnia than South Carolina is. And the same can be
    said about Hawaii as compared to other places. So I am very
    pleased, General Shinseki, that you are considering both Alaska
    and Hawaii as possible areas. Because they are the closest to
    the scene of the actions or the potential actions.

                         Additional committee questions

        Gentlemen, we have kept you here long enough. We would like
    to thank you very much for your testimony.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
                      Questions Submitted to Louis Caldera
                  Question Submitted by Senator Arlen Specter
                   wolverine and grizzly program cancellation
        Question. Secretary Caldera, the current Army budget restructures
    procurement in the fiscal year 2001-2005 timeframe by providing $4.5
    billion for selection and procurement of a medium armored vehicle to
    equip the Army's newly redesigned combat units. However, the cost of
    the Army's new initiatives has meant the termination of several major
    programs and the restructuring of others. The terminated programs
    include United Defense's Grizzly obstacle breaching system, General
    Dynamic's Wolverine heavy assault bridge, and others. Recently, Chief
    of Staff General Eric Shinseki has stated that he had sought to retain
    the Grizzly and Wolverine programs as part of the ongoing
    recapitalization effort for the service's heavy forces. Please comment
    on this situation and explain why the Army now wants to retain these
    important programs, but did not budget for them.
        Answer. The Army's heavy forces require responsive mobility support
    for commanders to conduct decisive operations and to fight and win our
    nation's wars. The Grizzly and Wolverine are designed to fix shortfalls
    in combat force mobility. These systems could fulfill the Army's gap
    crossing and obstacle breaching needs well into the 21st Century. By
    providing the ability to negotiate obstacles wherever and whenever
    encountered, the Grizzly breacher and Wolverine heavy assault bridge
    provide commanders the flexibility of maneuver to decisively engage
    threats. The Army budgeted for Grizzly and Wolverine by fully funding
    research, development, test, and evaluation, and included procurement
    funding to buy systems for a reinforced heavy armored corps. However,
    the Office of the Secretary of Defense directed termination of the
    Grizzly and Wolverine program in program budget decision 745. An
    overall increase to Army funding levels is necessary to ensure full
    funding of the Grizzly and Wolverine programs.
                 army heritage center and national army museum
        Question. Secretary Caldera, we spoke in March 1999 and again on
    April 4th of this year about the construction of the Army Heritage
    Center and Museum in Carlisle, Pennsylvania. On both of those
    occasions, you voiced the Army's full support for the project. However,
    recent Army statements regarding the construction of the national Army
    museum in the Washington area have raised serious concerns about the
    Army's commitment to the Carlisle site. Do you maintain your commitment
    to ensure the Carlisle site becomes ``the finest Army museum in
    existence in the world?'' To that end, what active steps has the Army
    taken in the last six months to provide assistance in planning and
    coordinating the project with the Military Heritage Foundation and
    others in Carlisle?
        Answer. We remain fully committed to building the best possible
    Army Heritage Center at Carlisle Barracks, to include the Military
    History Institute and the Army Heritage Museum, both intended to be
    world-class facilities. The President's budget for fiscal year 2001
    includes funding for the Academic Research Facility, the new home of
    the Military History Institute. This success represents a great effort
    on the behalf of the Army Staff during the last six months to identify,
    justify, and secure funding.
        The Department of the Army has provided more professional and
    technical support to the planning process for the Army Heritage Museum
    than has ever been provided to any museum in the Army museum system. To
    facilitate the best possible plan and design, the most senior curators
    in the Army, engineers from the Baltimore District, and members from
    several Army Staff directorates have teamed up with Army personnel from
    Carlisle Barracks, members of the Military Heritage Foundation,
    representatives of the local and commonwealth governments, and private
    contractors. Preliminary negotiations with respect to story lines seem
    promising. The Center of Military History (CMH), as it continues its
    ongoing program to fully catalog over 700,000 artifacts not yet on
    display, has agreed to apportion an impressive fraction of them to the
    Carlisle facility. During the last six months, CMH and the Army museum
    system have catalogued approximately 70,000 such artifacts. Detailed
    choices will be made as the museum design matures.
        The Army does not view the museum proposed for Carlisle and the
    museum proposed for the Washington area as competitors, but rather as
    members of the same team synergistically working together to tell the
    Army story to the American public. Each will have its themes
    independently developed, and each will play to a different audience,
    but they will both have the same goal: to foster a closer relationship
    between the U.S. Army and the public it serves.
                             biometrics initiative
        Question. Secretary Caldera, I am interested in the subject of
    biometrics and its application to ``information assurance'' in the
    Department of the Army and throughout the Department of Defense. I am
    advised that one of the lessons learned regarding the conflict in
    Kosovo is the need for increased ``information assurance.''
        Mr. Secretary, the Army has an important leading role in biometrics
    testing and evaluation. Last August, Army Under Secretary Dr. Bernard
    Rostker and Lieutenant General William Campbell, Chief Information
    Officer of the Army, accompanied me to West Virginia to visit the
    3,000-person FBI identification facility, which--I am told--is the
    largest biometrics facility in the world. Both have been enthusiastic
    supporters of my biometrics initiative. Do you share this enthusiasm?
    The fiscal year 2000 Defense appropriation included, at my request, $15
    million for fiscal year 2000 for the biometrics initiative. How much
    has been released and obligated? When will the remainder be released?
    In his latest report on the Army's biometrics initiative, General
    Campbell indicated that the Army plans to open a biometrics office soon
    somewhere in the Military District of Washington, and is also planning
    to open a test and evaluation facility in north central West Virginia
    within the next 90 days. How are these plans progressing?
        Answer. We are optimistic about integrating biometrics into all
    facets of our military operations. Our information assurance and
    technologists agree that biometrics will significantly enhance the
    security of access to our systems as well as play a significant role in
    protecting ourselves from viruses and other malicious code attacks. We
    are committed to the establishment of a biometrics fusion center test
    and evaluation facility, and we have appointed a director for Army
    biometrics. We look forward to your continued support of this
    technology for the Army.
        In regard to the fiscal year 2000 appropriation and the $15 million
    you provided, $5 million has been released and obligated. This money
    was used to conduct legal, sociological, and cultural assessments of
    biometrics. It was also used to execute a major feasibility study to
    develop biometrics technology into the Department of the Army with
    further integration of this technology DOD wide. The remaining $10
    million is expected to be released to the Army in the next few weeks.
        We are in the process of opening a local office in the Military
    District of Washington for biometrics. The Director for Army Biometrics
    recently approved the final design and specifications for an office in
    northern Virginia. The office will soon be ready for occupancy. The
    Army intends to acquire a 3,000 to 6,000 square foot facility to begin
    development of the Biometrics Fusion Center (test and evaluation
    facility). The Director for Army Biometrics also visited Clarksburg,
    West Virginia, on May 15 with a senior GSA representative to survey
    temporary office space for the housing of the Biometrics Fusion Center.
    However, of the five locations presented, none were deemed acceptable
    for either security or convenience reasons. Another trip to the
    Clarksburg/Bridgeport area is planned, and we will keep you informed on
    our accomplishments and status.
                                     ______

               Questions Submitted by Senator Christopher S. Bond
              armament retooling and manufacturing support program
        Question. Secretary Caldera, the Office of Army General Counsel and
    the Executive Advisory Committee of the Armament Retooling and
    Manufacturing Support (ARMS) Public-Private Task Force support
    clarification in the statute of a number of administrative procedures
    now permitted in regulation. An amendment to the original ARMS Act is
    currently pending before Congress that would accomplish this goal.
    These procedures, involving the program's innovative real estate and
    financial techniques, are vital if ARMS is to continue to realize its
    great potential. Without the amendment, the ARMS program could be
    terminated, along with over $38 million a year in supplemental revenue
    to the Army. Will you confirm for the Congress the Army's continuing
    support for the proposed ARMS amendment as well as your personal desire
    to see the amendment enacted this year?
        Answer. The Army continues to support the ARMS program as recently
    endorsed by a senior Defense and Army general officer level panel that
    reviewed the accomplishments and continuation of this program. In
    reference to proposed ARMS amendments, the Army reported to Congress on
    January 15, 2000, that after evaluating five areas, two areas required
    improvement. The reports asked for legislative clarification for other
    consideration and contract length as written in current the ARMS Act.
    Congress' proposed amendment provides clarification for these two
    areas, as the Army requested.
                                 plan colombia
        Question. Secretary Caldera, I was severely disappointed to hear
    that Colonel Hiett contributed to his wife's drug smuggling crimes
    through his money laundering activities. While I support counterdrug
    operations in theory, events like this call into question the
    appropriate level of U.S. military involvement. Does the Army support a
    cap on U.S. military involvement?
        Answer. The Army is working hard along with the entire Department
    of Defense (DOD) to support the efforts of the commander-in-chief,
    United States Southern Command (SOUTHCOM), to coordinate our military
    and counterdrug programs with Colombia. The Army shares the view of
    both SOUTHCOM and DOD that a troop cap would impair the flexibility of
    the operational commander to respond with adequate resources to the
    challenges as they develop in Colombia. However, if Congress determines
    that it is necessary to establish a cap, we would allow other non-
    counterdrug programs to continue. These exceptions should allow for
    non-combatant evacuation operations, assignment of military personnel
    for embassy duty, disaster relief operations, and non-operational
    transit of personnel such as port-calls, and other routine and
    recurring engagement activities.
                             school of the americas
        Question. Secretary Caldera, the School of the Americas continues
    to attract controversy over human rights abuses in South America. A
    recent report claims that, despite the efforts you mentioned to promote
    human rights and the role of the military in a democracy, this new
    curriculum exists on paper only. Of the 31 courses available at the
    school, only five are related to human rights, democracy, or
    humanitarian issues, and less than 18 percent of the students took
    these courses in 1999. Further, although the School of the Americas
    offers a ``Train the Trainer'' course on human rights, no students
    attended the course in 1997, 1998, or 1999. What is the Army doing to
    ensure participants get balanced training with sufficient focus on
    human rights, democracy, and humanitarian issues?
        Answer. First, let me reiterate that there is no evidence that
    supports a causal relationship between attending a course at the School
    of the Americas and subsequent criminal or illegal activity. What is
    taught at the School of the Americas is the same instruction and
    doctrine that are given to U.S. soldiers. We do not teach our soldiers
    criminal behavior, and we do not teach this to anyone else.
        I also want to stress that every student attending every course
    presented at the School will receive mandatory human rights instruction
    that covers international humanitarian law, ethics, rule of law, the
    role of a military in a democratic society, the just war theory, and a
    human rights case study. That is the price of admission to the School.
    Minimum instruction is eight hours for courses less than four weeks, 12
    hours for courses between four and 24 weeks, and 40 hours for courses
    longer than 24 weeks. This classroom instruction is reinforced by
    situational exercises in field training, which in the case of the 49-
    week command and general staff officer course totals more than 210
    hours. The human rights training curriculum is overseen by a special
    committee which meets quarterly and includes a prominent human rights
    lawyer and human rights experts from the Department of State. This is
    the most comprehensive human rights instruction in any Department of
    Defense institution.
        The widely circulated comment about the human rights train-the-
    trainer course is often used to imply that there is no human rights
    training at the School of the Americas. I hope my previous comments
    will put this myth to rest. In the case of the human rights train-the-
    trainer course, it was designed in 1997 at the request of the U.S.
    Southern Command. The class program of instruction was developed in
    1998, and it was placed into the 1998-1999 course catalogue. The normal
    security assistance resource cycle requires almost two years between
    course offering to initial attendance in order to advertise a new
    course and program students. In 1999, there were no students scheduled
    for the course at the School, so the School took the course to the
    students. Courses were conducted in Colombia, Venezuela, and Paraguay.
    The statistics used by critics do not reflect this fact. This year, 25
    students attended the course at the School of the Americas at Fort
    Benning, Georgia.
        Finally, the comment that only five of 31 courses are related to
    human rights, democracy, and humanitarian issues, and only 18 percent
    of students took these courses is incorrect. As stated above, every
    student in every course receives instruction in human rights and the
    role of a military in a democratic society. The quoted statistics do
    not reflect this key fact. Instruction related to humanitarian
    operations and counterdrug operations are embedded in the command and
    general staff officer course, officer basic courses, and Joint
    operations course, among others. All of the helicopter courses are
    closely related to our counterdrug programs. These courses are also
    conducted at a more senior level where we are training selected
    military, law enforcement, and civilian leaders. The School of the
    Americas remains a professional military training and education
    facility whose curriculum responds to the needs of the Commander-in-
    Chief, U.S. Southern Command, who reviews every course every year. He
    continues to ask the School to expand into new areas where he sees
    needs, and the growth will come in new courses in disaster relief
    operations, international operational law, counter-drug
    interoperability, and transnational security threats. These courses
    should be expanded international military education and training and
    will bring in greater numbers of civilian, law enforcement, as well as
    military personnel.
        Again, let me assure you that America's sons and daughters serving
    in uniform at this School are the examples we want teaching and
    instilling our nation's ethics and values to others. We believe that
    the U.S. Army is a valuable role model in teaching military
    professionalism as well as the role of a military in a democratic
    society to the militaries of Latin America and the Caribbean.
         management reforms regarding the u.s. army corps of engineers
        Question. Secretary Caldera, as I recently discussed with you and
    General Shinseki, the U.S. Army Corps of Engineers provides a vitally
    important role to Americans throughout the nation. We sincerely
    appreciate the noble efforts of the Corps and regret that this issue
    has become so politicized. One of my remaining concerns, however, is
    the damage to the reputations of our military leaders in the Corps of
    Engineers. These honorable soldiers made huge sacrifices in order to
    protection our nation, but their careers were severely damaged by the
    tremendously unfair attacks in the media. What is your view of the
    character and service of the Corps' leaders?
        Answer. I agree that the Corps of Engineers plays an invaluable
    role in the protection and development of our nation's critical water
    resources and am confident that the Corps' strong tradition of service
    to our nation in these areas will continue. You have expressed concern
    that the recent allegations concerning the Corps may have damaged the
    reputations of its military leaders. For the most part, the issues that
    have surfaced have not been directed at individual Corps leaders. To
    the extent that specific allegations of impropriety have been made
    against individuals, the Army Inspector General and other appropriate
    entities are analyzing those allegations. I am confident that these
    individuals will be fairly treated by these processes, which are
    designed to be objective and unbiased.
                                     ______

                 Questions Submitted by Senator Robert C. Byrd
         management reforms regarding the u.s. army corps of engineers
        Question. Mr. Secretary, I was very disappointed with your March 30
    memorandum in which you implemented management reforms in the civil
    works program of the Army Corps of Engineers, despite the strongly
    stated Congressional interest in any management changes of the Army
    Corps of Engineers and, specifically, a letter from Chairman Stevens,
    Senators Domenici, Reid, Cochran, Inouye, and me to Secretary of
    Defense William Cohen. I was also particularly surprised that the Army
    took such dramatic steps without the benefit of learning the outcome of
    any of the myriad investigations that are being conducted on the Corps
    and its activities.
        However, I was pleased to learn of your April 7 notification
    announcing that you, after consulting with the Office of the Secretary
    of Defense, have ``. . . decided to suspend the implementation of these
    reforms for a reasonable period of time in order to allow for a broader
    discussion with Members of Congress on the need for these reforms.''
        Would you please share with me the definition of ``a reasonable
    period of time'' in context of the April 7 notification? How and when
    will Members of Congress be given the opportunity to participate in a
    broader discussion of the need for these reforms?
        Answer. As you know, I announced these management clarifications in
    an effort to improve the Army Civil Works program. These clarifications
    are grounded in Title 10 of the U.S. Code and are intended to clarify
    responsibilities, improve communications, and strengthen accountability
    within the Civil Works program. These clarifications are in no way
    related to the inspector general's investigation regarding the Upper
    Mississippi River Study.
        At the request of Senators Stevens, Warner, and Smith, I agreed to
    suspend the reforms for a reasonable period of time pending further
    consultation. In making this decision, I did not envision that the
    reforms would be suspended for a specific period of time. I believed
    that, instead, through our discussions, we would agree on a path
    forward. As I continue these discussions, I remain optimistic that this
    will prove true because we all share a common goal of improving the
    Civil Works program.
        Question. The June 2000 retirement of General Joseph N. Ballard,
    Chief of Engineers, Corps of Engineers causes me some concern in view
    of the Army's reaction to the recent attention the Corps has been
    receiving. When will a new Chief of Engineers be put into place? What
    are the agency's plans for a smooth, seamless, and timely transition
    between Chiefs of Engineers?
        Answer. As with all major Army commands that rotate leadership, the
    Chief of Engineers will change command this summer. I am confident that
    this will be a timely and smooth transition. In addition, our strong
    civilian leadership of the Civil Works program will continue to provide
    executive and policy leadership over this important program.
                                     ______

                  Questions Submitted to Gen. Eric K. Shinseki
                   Question Submitted by Senator Ted Stevens
                                apache problems
        Question. Can you provide us with an update on the Apache fleets
    flying status and technical problems? A recent report suggested that
    there are 45 outstanding Apache safety issues. Can you identify some of
    these problems and give us a sense of what steps the Army is taking to
    correct the deficiencies? What are the Army's highest priorities for
    the Apache program as we begin work on the fiscal year 2001 defense
    spending bill?
        Answer. All Apache aircraft are operational today; however, the AH-
    64D Longbow Apache is operating on a flight limitation for night
    operations due to generator and electrical anomalies. The Longbow is
    cleared for day flight and limited to 100 feet above the highest
    obstacle at night until a qualified materiel solution is implemented.
    It is expected to take approximately two months to implement the fix.
        There are a total of 40 open system safety risk assessments on the
    Apache fleet. These assessments are rated from low to high, where high
    is the most risk we assume before grounding the fleet. The Longbow
    conversion eliminates the one high and 14 of the 25 medium risk
    assessments. We specifically looked at how to eliminate all of the
    medium and high-risk assessments from the Apache fleet. In the near
    term, we are looking at a reliability enhancement program to ensure the
    fleet is reliable and cost effective. Long term, we are looking to
    redesign the drive train and rotor system to meet the additional weight
    demands anticipated for this aircraft and reduce the operation and
    support costs for these subsystems.
        The highest priority for the Apache is to address readiness and
    sustainment issues. These readiness and sustainment fixes will be
    incorporated into all multiyear II AH-64D aircraft. We will also begin
    reliability improvements to the remaining AH-64A Apache fleet and the
    multiyear I Longbow aircraft beginning in fiscal year 2002.
                                     ______

                  Question Submitted by Senator Arlen Specter
                         transformation and biometrics
        Question. General Shinseki, I was pleased to have you visit my
    office on February 24, 2000, and to have received your briefing on the
    need to transform the Army. Please explain how the role of biometrics
    fits into plans for the Transformation and modernization of the U.S.
    Army.
        Answer. Information superiority remains a key enabler for the
    Army's Transformation. The Army's reliance on command, control,
    communications, computers, and information technology to achieve
    information superiority dictates that the Army have a robust
    information assurance program to secure its networks. Biometrics is a
    key element of our information assurance program. Biometrics is a
    readily available commercial technology that can ensure continuous user
    identification and authentication within our military information and
    information-based networks. The focus of the transformed Army is to be
    strategically responsive and dominant across the full spectrum of
    operations and not be burdened by cumbersome overhead requirements like
    conventional logons, user IDs, and passwords. Biometrics will allow
    soldiers to be validated as an authorized user by their mere presence,
    thereby reducing the insider threat and reducing unauthorized access
    and penetration. The enormous potential biometrics technology offers
    the transformed Army is a key reason why we are moving forward on
    biometrics initiatives.
                                     ______

                Questions Submitted by Senator Pete V. Domenici
                     white sands/high energy laser weapons
        Question. The DOD is now considering its plans to centralize and
    consolidate its directed energy programs. As you know, I am a strong
    proponent of lasers and directed energy weapons.
        General Flohr at White Sands is developing a plan to address the
    test and evaluation capabilities for laser weapons systems at the
    Range.
        General Costello approved the Army's Directed Energy Master Plan
    (DEMP) earlier this year. General Costello is a big supporter of laser
    technologies and foresees the Army playing an important role in
    developing and fielding laser weapons systems.
        Would each of you comment on the Army's plan and any future plans
    to commit Army funds to support laser weapons programs?
        Answer. The U.S. Army Space and Missile Defense Command (SMDC) DEMP
    provides the strategy for near-term and far-term directed energy
    technology development and integration into air and missile defense
    forces. The strategy is to pursue directed energy technologies, which
    offer the potential for leap-ahead capabilities for future warfighters.
    The DEMP summarizes potential directed energy threats and achievable
    technology development programs that could lead to fielded systems. As
    technology development programs contained within the DEMP are presented
    for resourcing consideration, they will compete within our normal
    program objective memorandum (POM) and budget development process, with
    priority given to those programs that directly support the Army
    Transformation and Objective Force.
        The Army recently reprogrammed $500,000 of its fiscal year 2000
    science and technology funds for SMDC to begin exploring technologies
    that are the key drivers for application of high-energy, solid-state
    lasers on the tactical battlefield. For fiscal year 2001, the Army has
    created a new applied research program element to investigate the
    applicability and utility of solid-state lasers to perform a counter-
    air munitions defense mission and to support the survivability of the
    Future Combat System. In fiscal year 2002 and beyond, the Army plans to
    fund a robust solid-state laser science and technology program. Initial
    efforts will focus on development of a prototype device, lethality
    studies, and evaluation of techniques to enhance laser beam
    propagation.
                           tactical high energy laser
        Question. General, could you give me an update on the progress of
    the testing of the Tactical High Energy Laser (THEL) program at White
    Sands Missile Range? What are the plans for the Army after completion
    of the current run of testing at White Sands? (THEL has a $5.7 million
    shortfall to complete testing in fiscal year 2000).
        Answer. Currently, the THEL demonstrator is undergoing field
    testing against live Katyusha rockets in flight at the high energy
    laser systems test facility (HELSTF) at White Sands. The system has
    already demonstrated the capability to detect, acquire, track, and
    point the high power laser against operational Katyusha rockets in
    flight. It is anticipated that the system will demonstrate the ability
    to shoot down a single rocket with its high power laser beam in June
    2000. After single rocket shoot down, the demonstration test and
    evaluation (DT&E) phase of the program begins at HELSTF to engage a
    series of salvo launches representative of the operational requirements
    for the system.
        After the completion of the THEL DT&E testing, the Army plans to
    evaluate the results as it applies to Army requirements to decide
    whether to participate in further development of the THEL system with
    Israel. Israel has expressed an interest in jointly developing a
    follow-on version of the THEL that is mobile, which would begin to
    address more of the operational issues of interest to the Army
    associated with fielding a high power laser based weapon system. With
    regard to the $5.7 million shortfall to complete the THEL testing, the
    Army has not been able to identify a funding source within the Army or
    the Office of the Secretary of Defense to cover the United States'
    share of the shortfall. However, Israel has committed to providing
    their share of the shortfall in fiscal year 2000, possibly allowing
    continuation of the DT&E phase at a reduced level until additional
    funding becomes available.
                               solid state laser
        Question. General, as you know, I have been interested for quite
    some time in the development of the solid state laser, a program which
    will deliver lethal kills, without the use of chemicals on the
    battlefield that could pose dangers to our soldiers and civilians. What
    is the current status of this program in the Army?
        Answer. The Army recently reprogrammed $500,000 of its fiscal year
    2000 science and technology funds for SMDC to begin exploring
    technologies that are the key drivers for application of high-energy,
    solid-state lasers on the tactical battlefield. For fiscal year 2001,
    the Army has created a new applied research program element to
    investigate the applicability and utility of solid-state lasers to
    perform a counter-air munitions defense mission and to support the
    survivability of the Future Combat System. In fiscal year 2002 and
    beyond, the Army plans to fund a robust solid-state laser science and
    technology program. Initial efforts will focus on development of a
    prototype device, lethality studies, and evaluation of techniques to
    enhance laser beam propagation.
                          directed energy master plan
        Question. General, what is the Army's position on the coordinated
    Directed Energy Master Plan (DEMP) and its funding requirements in
    future years?
        Answer. The U.S. Army Space and Missile Defense Command DEMP
    provides the strategy for near-term and far-term directed energy
    technology development and integration into air and missile defense
    forces. The strategy is to pursue directed energy technologies, which
    offer the potential for leap-ahead capabilities for future warfighters.
    The DEMP summarizes potential directed energy threats and achievable
    technology development programs that could lead to fielded systems. As
    technology development programs contained within the DEMP are presented
    for resourcing consideration, they will compete within our normal
    program objective memorandum (POM) and budget development process, with
    priority given to those programs that directly support the Army
    Transformation and Objective Force.
                                  food stamps
        Question. How many active duty Army personnel currently live in
    families that receive food stamps? How many in the Army Reserve? Army
    National Guard? How many of these families are in on-base housing? Off
    base housing? What is your estimate of the likely increase in Army food
    stamp recipients based on Secretary Cohen's recent announcement.
        Answer. We estimate that 3,590 active Army personnel receive food
    stamps. Sixty percent receive food stamps and live on post while the
    remaining 40 percent receive food stamps and live off post. The likely
    increase in Army food stamp recipients based on Secretary Cohen's
    recent announcement is estimated to be approximately 4,050. As you
    know, however, the Department of Agriculture determines eligibility
    criteria for the food stamp program.
        The Army Reserve and Army National Guard do not track food stamp
    data. However, based on military base pay, plus housing and subsistence
    allowances, no Active Guard/Reserve soldier would qualify for food
    stamps under today's eligibility guidelines. If eligibility were based
    on military base pay only, 828 Active Guard/Reserve soldiers would
    qualify for food stamps.
        Question. Do you believe that Army personnel being on food stamps
    is a problem? Why has it been acceptable up to this point? What actions
    do you recommend the Army take to eliminate the problem?
        Answer. Military pay is intended to be sufficient to meet the basic
    needs of all members--this is a fundamental premise of the all-
    volunteer force. To find some members eligible for the food stamp
    program is surprising to some and raises the question of the adequacy
    of military pay. Since we prefer that no soldier require food stamps,
    we applaud the Congress' aggressive approval of increasing military pay
    and ask that you continue to provide robust annual pay raises.
    Soldiering is an affair of the heart. However, soldiers must be able to
    afford to go where their hearts lead them.
                                   pay raise
        Question. Quite obviously, last year's pay raises and repeal of
    past pension reform did not solve the Army's retention problems. Do you
    believe that the gap between the compensation for senior leadership and
    enlisted personnel is a factor? By this I do not mean the basic pay
    level of enlisted personnel; I do mean the size of the gap between the
    bottom and the top.
        Answer. We believe the pay raise of this past year and the repeal
    of past pension reform had a positive impact on our retention program.
    Last year, the Army exceeded its retention mission by 7,147 soldiers.
    This year, we are on a path to again exceed our mission, which was
    increased over last year's, by nearly 2,000 soldiers. We have no
    evidence to suggest that the gap between the compensation for our
    senior leaders and the enlisted force has impacted our retention
    program. Pay is certainly a key factor to soldiers making long-term
    commitments to the Army, but not the only factor. Because of the great
    support from Congress, we also have a very robust retention bonus
    program that has been a major factor in retaining the types of soldiers
    we need to meet our future readiness needs. Quality of life programs
    and reducing operational tempo also play into the equation, and we
    continue to work those issues hard.
                      information operations vulnerability
        Question. The Army's Vision calls for Transformation to a force
    that is more responsive, agile, versatile, lethal, survivable, and
    sustainable. The survivability of the force is going to be accomplished
    by employing technology that provides maximum protection to forces at
    the individual soldier level.
        Many of these systems rely on the ability to transmit and receive
    digitized information. No matter how versatile and successful these
    weapons become, they could easily be rendered useless with the
    technology available today. Despite this, I understand that
    vulnerability analysis of the Army Research Laboratory (ARL) is
    underfunded.
        What effect will the shortfalls have on the Army's ability to
    provide field support for information operations vulnerability analyses
    of these tactical systems? Absent additional funding, can the Army
    address the funding issues raised by the GAO report which identified
    specific funding requirements to ensure implementation of the Army's
    information protection plan?
        Answer. In today's information intensive environment, the
    information warfare threat can come in many forms, from simple mischief
    makers, to sophisticated tactical countermeasures targeted at U.S.
    military weapons or command, control, and computer systems. As the pace
    of information technology (IT) has increased, so has the proliferation
    of threats to IT based Army tactical systems. Threats to Army tactical
    systems vary greatly in terms of intent, sophistication, technical
    means, and potential impact, yet they all must be considered.
    Traditionally, validated threat documents have been used to identify
    specific threats to tactical systems. These documents have proven
    inadequate because the information operations (IO) threat is dynamic--
    literally changing in real time.
        The ARL, when conducting IO vulnerability analyses, identifies
    current relevant threats, as well as their likelihood of occurrence by
    working with the intelligence community. ARL's IO analyses directly
    address vulnerabilities to IO threats. Their risk analysis studies
    concurrently support DOD certification and accreditation requirements
    that are mandatory for the operation of Army tactical systems while
    being a key component of the acquisition process for new tactical
    systems. For fiscal year 2001, the Army has programmed as much funding
    as affordable under the current budget. Continuous and rigorous IO
    threat definition cannot be maintained with current funding shortfalls,
    resulting in the Army not understanding or being able to mitigate a
    significant portion of the evolving threat.
        The findings of GAO Report Number NSIAD-99-166 ``Battlefield
    Automation: Opportunities to Improve the Army's Information Protection
    Effort,'' dated August 11, 1999, are consistent with the Army position
    that information operations vulnerability analysis (IOVA) is important
    to the protection of digitized forces. For fiscal year 2001, the Army
    has programmed as much funding as affordable under the current budget.
    However, IOVA remains underfunded. The Army has identified and
    prioritized this shortfall on the fiscal year 2001 unfunded
    requirements list. Additionally, the Army has taken steps to ensure
    IOVA is integrated into system development and fielding beyond fiscal
    year 2001. No system will proceed to a milestone III procurement
    decision without first having undergone a thorough information
    assurance vulnerability assessment and incorporating appropriate
    solutions.
                              test and evaluation
        Question. General, as you are well aware, I have been interested
    for quite some time in the Army's progress in making instrumentation
    upgrades at White Sands Missile Range--the Army's premier testing
    facility. A new state-of-the-art communications control center will
    open at White Sands late next month. This control center provides new
    communications and instrumentation for the day-to-day operations at the
    Range. With your help, and the Army's help, we were able to get this
    new facility completed within the last three years. Would you discuss
    for the Committee the Army's current state of testing and evaluation
    programs and elaborate on your major needs and unfunded requirements?
        Answer. The Army Test and Evaluation Command (ATEC) was established
    in October 1999 and is responsible for operational testing,
    developmental testing, live-fire testing, and all evaluation within the
    Army. The Army is required to adequately resource test and evaluation
    in the following areas:
        Acquisition Category (ACAT) II-IV Operational Testing.--Operational
    testing for ACAT II-IV systems is resourced by funds provided to ATEC.
    Acquisition program managers fund operational testing for ACAT I
    systems. The minimum acceptable level of funding for ACAT II-IV program
    testing is 65 percent of anticipated testing requirements. ATEC will be
    required to plan, execute, and report on over 80 operational tests of
    ACAT II-IV systems over the program objective memorandum (POM) period
    in support of acquisition program milestone decisions. This number will
    increase over time as program manager projections solidify. The purpose
    of operational testing is to ensure a unit equipped with a weapons
    system can accomplish assigned missions and that the weapons system is
    operationally effective, suitable, survivable, and lethal. Fiscal year
    2001 funding provides 46 percent of the funding necessary to conduct
    required operational testing of ACAT II-IV systems. Over 30 operational
    tests will not be funded by ATEC, and program fielding and production
    will be delayed, or the program manager will be required to pay
    unprogrammed costs for testing. The fiscal year 2001 bill is $8.9
    million. Unfunded requirement is $56 million over the POM years.
        Continuous Evaluation of Testing.--The Army Evaluation Center (AEC)
    conducts operational, live-fire, and technical evaluation for all Army
    acquisition programs. AEC provides integrated technical, operational,
    and live-fire evaluations to support major acquisition program
    milestone decisions. The minimum acceptable level of AEC funding is 70
    percent of anticipated evaluation requirements. Fiscal year 2001
    funding provides 68 percent which drops over the POM to 59 percent of
    required funding for integrated operational, technical and live-fire
    evaluation of over 500 acquisition programs necessary to meet
    acquisition milestone decisions that are intended to support the
    Transformation. The fiscal year 2001 bill is $725,000. Unfunded
    requirement is $28 million over the POM years.
        Test Capability and Test Facility Modernization.--The Developmental
    Test Command (DTC) conducts technical testing of all Army acquisition
    programs, ensures national test capabilities are available to program
    developers, and ensures developmental test workforce and facilities are
    responsive to program schedules. In order to ensure efficiency of the
    test workforce and remain responsive to the dynamics of program
    executive office and program milestone schedules, DTC must be funded to
    accomplish 80 percent of the customer workload. DTC must also modernize
    and upgrade essential test ranges and test facility infrastructure. DTC
    is responsible for Aberdeen Test Center, White Sands Missile Range,
    Yuma Proving Ground, Aviation Technical Test Center, Redstone Technical
    Test Center, Cold Regions Test Center, and the Electronic Proving
    Ground. Current funding provides for a 64 percent testing capability in
    fiscal year 2002 to 2004 and 75 percent in fiscal year 2005 to 2007 to
    support known testing requirements of key weapons systems and technical
    insertions necessary to meet acquisition milestone decisions that are
    intended to support the Transformation. The Army submitted a fiscal
    year 2001 unfunded requirement (UFR) for $14 million. This UFR provides
    minimum level of test capability to support testing requirements for
    critical Army systems. Additionally, a test facility modernization
    objective of $10 million per year is required to begin to stem
    deterioration of Army test facilities. Fiscal year 2001 to 2007 funding
    does not provide for any required test facility modernization. Overall,
    unfunded requirement is $130 million over the POM years. In addition to
    Army-funded requirements discussed above, DTC is also responsible for
    Dugway Proving Ground (DPG). In fiscal year 1997, DPG's test funding
    was transferred to the Office of the Secretary of Defense Chemical/
    Biological Defense Program (CBDP) in compliance with Public Law 103-
    160. DPG's funding posture is more dire than the other DTC test ranges,
    averaging 43 percent test capability with zero modernization since
    fiscal year 1996. The CBDP POM has recognized a $5 million per fiscal
    year modernization requirement; however, the UFR for test capability is
    $32 million over the POM years.
        Instrumentation for Developmental Testing.--Programmed resources
    fund only minimal technological advancement and sustainment of DTC
    range instrumentation, perpetuating a backlog of test instrumentation
    requirements. The backlog of requirements impacts technology
    advancement and creates test costs and inefficiencies that could be
    avoided. This lack of technology development and modern instrumentation
    increases the risk that the ranges will be unable to collect required
    test data, and that test results will be inaccurate, allowing
    inadequate equipment to enter the Army inventory. These requirements
    represent instrumentation shortfalls in chemical and biological
    modeling, on-board miniaturized vehicle instrumentation, advanced
    technology laboratory testing of multi-sensor guided missiles, pre-
    launch missile flight safety prediction, low-cost bridge testing
    capability, cost reduction in acoustic scoring, modernization of
    airborne video and automated time, space, and position information data
    analysis. If additional funding is not provided, testing high-
    performance, digital, sensor dependent weapons and support systems with
    manual, intrusive, low bandwidth, obsolete instrumentation will result
    in lost or incomplete test data, inefficiencies and test delays, and
    increased cost and risk to Army program managers and program executive
    offices.
        Digitization of instrumentation and real-time data collection and
    processing capabilities are essential. Lack of modernization of
    instrumentation will eventually result in the deterioration of test
    capabilities to the point where testing can no longer be safely
    conducted and required data parameters necessary to evaluate the
    performance and effectiveness of Army weapon systems will not be
    collected. The Army submitted an fiscal year 2001 UFR for $27.56
    million. This UFR provides funds for upgrade and replacement of test
    instrumentation. Current funding provides 56 percent of the
    requirements from fiscal year 2002 to fiscal year 2007.
                                     ______

               Questions Submitted by Senator Christopher S. Bond
                   fort leonard wood and army transformation
        Question. General Shinseki, while I applaud your effort to fill
    combat units at 100 percent, I'm concerned of the impact this may have
    to the institutional training and development base. Earlier you said
    drill sergeants and instructors would be manned at 100 percent also,
    but there are other functions at institutional training bases such as
    mechanics, soldiers who process new soldiers, equipment operators,
    doctrine writers, concept developers, etc. where military are required
    as well. I'm concerned we may be mortgaging our future. How do you plan
    to handle the functions I just listed?
        Answer. Maintaining the highest level of proficiency in the
    institutional training base is as important as our objective to fill
    combat units at 100 percent. Providing the best training and
    professional development for our soldiers is a key component to
    ensuring the Army's full-spectrum capability. However, to implement our
    initiative to fill combat units at 100 percent, we will take some risk
    in the fill of our institutional base generating force structure. To
    mitigate this risk, I have directed the staff to work with our major
    command headquarters to minimize this risk in functions critical to
    training and garrison operations, such as those at Fort Leonard Wood,
    Missouri. Through the recent Defense Reform Initiatives Directive and
    Federal Activities Inventory Reform Act policies, we have identified
    the manpower associated with all functions in our base generating force
    structure. We have developed procedures to monitor the resourcing of
    these functions in our total army analysis (TAA) process. We are also
    conducting a study of missions and functions in our base generating
    force to determine where we can re-engineer organizations to more
    efficiently use the military manpower in those essential functions. We
    will use TAA to effectively allocate our force structure personnel
    resources to ensure the appropriate fill of all our manning
    requirements as we implement the Army's Transformation initiatives.
        Question. General Shinseki, on my recent visit to Fort Leonard
    Wood, I was impressed by the prevalence of multi-service training
    there. I think our taxpayers would be pleased to know that all the
    Services have come together to lower the total cost of training
    engineers, military police, and truck drivers, for example. However, I
    was disappointed by the lack of investment into these facilities. I
    understand the Army and Marines teach employment of non-lethal weapons,
    a subject that appears to be very relevant to the Army Vision and
    Transformation. I think non-lethal weapons will help provide the array
    of versatile, affordable assets needed, particularly as you deploy for
    peace operations. What provisions are being made to support this course
    and the increased requirements it may have placed on it? Do you and the
    other service chiefs think you can come together to support improving
    these facilities--not just for the growing demand in such areas as non-
    lethal individual weapons, but for engineers and truck drivers as well?
        Answer. The U.S. Marine Corps (USMC) is the Department of Defense
    proponent for non-lethal weapons (NLW). The USMC conducts the only
    existing NLW instructor course (NLWIC) at Fort Leonard Wood. A board
    has recommended that the NLWIC be consolidated among the Services
    beginning fiscal year 2001. A cost analysis identified an initial one-
    time cost of $434,200 for new construction at Fort Leonard Wood to
    support the NLWIC. The Army student input will earn two Army instructor
    positions for the course. The USMC has requested funding from the Joint
    non-lethal weapons directorate for the initial one-time cost. The
    planning and development for the initial construction is complete and
    will be put into action as soon as the funding is received. The Army is
    considering implementation options, pending the outcome of the USMC
    funding request.
        The Services can come together to support improving these
    facilities as evidenced by the recent funding of two of eleven
    facilities projects required to support non-lethal weapons training,
    joint engineer, and truck driver training in fiscal year 2000. The
    Marines funded $350,000 to construct a NLW training facility at range
    17. The Army funded $617,000 for various improvement projects for truck
    driver training at 11 training sites. The remaining requirements will
    compete for funding in future year programs for operations and
    maintenance or military construction funds.
                               full-time support
        Question. General Shinseki, the National Guard's number one
    legislative priority is full-time support. Last year, the Army Guard
    identified 49,000 as the minimum number needed to put the Army Guard
    back onto the road to recovery. This past month, a full-time support
    requirements study was completed by the Army Guard and approved by
    Assistant Secretary of the Army, Manpower and Reserve Affairs, and
    Director, Force Programs, which identified a high-risk requirement of
    nearly 60,000 for the Army Guard. Please discuss the Army's plan to
    assist the Guard in meeting these requirements.
        Answer. The study you noted was the culmination of the Army's
    extensive review of its full-time support (FTS) requirement
    determination process. The study validated the total level of FTS
    manpower required to meet Department of Defense deployment standards.
    Realizing that it is cost prohibitive to satisfy 100 percent of the
    total manpower requirement, the Army formalized a criteria-based
    methodology based on Office of the Secretary of Defense readiness
    metrics to determine acceptable risk. With respect to current force
    structure and deployment scenarios, the Army National Guard will
    require nearly 60,000 Active Guard and Reserve and military technicians
    to achieve levels required to meet identified high-risk readiness
    levels.
        The Army quantified high-risk levels as a percentage of the total
    manpower required. Levels of FTS should, as a minimum, be 90 percent
    for units deploying in less than 30 days; 80 percent for units
    deploying between 30 to 75 days; 70 percent for units deploying between
    75 to 180 days; and 65 percent for those units deploying after 180
    days. As a point of reference, these units today are resourced
    respectively at only 65 to 70 percent, 60 percent, 55 percent, and 35
    to 40 percent.
        Resourcing to these levels is a matter of affordability within the
    Army. We cannot do it from our current projected total obligation
    authority, and thus will need outside support. Our plan is to
    incrementally increase our FTS program over an 11-year period beginning
    in fiscal year 2002 and continue through fiscal year 2012, keeping in
    mind that changes in force structure and deployment criteria will
    impact our requirements.
                  aviation modernization--blackhawk helicopter
        Question. General Shinseki, as we discussed last month, the Army
    National Guard currently has more than 390 Hueys grounded due to safety
    concerns. The Army National Guard's (ARNG) utility fleet of Hueys is
    more than 29 years old, and its aging Blackhawk fleet is about 19 years
    old. I understand that the ARNG comprises nearly 50 percent of the
    Total Army's aviation force and a majority of that is made up of
    utility helicopters. While you've recognized that aviation
    modernization is a serious readiness problem Army-wide, it seems that
    the bulk of the problem lies within the ARNG's utility fleet. The Army
    Guard's current unfunded requirement for Blackhawk helicopters is
    $148.8 million for 16 additional Blackhawks, but the requirement is
    even greater. States and communities rely on this resource in times of
    crisis and the nation relies on it for its defense. What is the plan to
    rectify this dreadful situation, and can it be addressed by funding
    only a few Blackhawks per year?
        Answer. The Army aviation modernization plan submitted to Congress
    on March 31 presented a concept that fields a more modernized and
    relevant aviation force. This is particularly true for the ARNG utility
    helicopter units where our goal is to divest of all UH-1 Huey aircraft
    by fiscal year 2004 and equip those units with a more capable and
    deployable UH-60 Blackhawk. The modernized force calls for the ARNG
    aviation units to reflect the same structure as the active component.
    Over the next four years, our challenge is to move aircraft within the
    ARNG and from the active component to resource the new structure and
    facilitate the divestiture of the UH-1. The Army Staff has begun
    planning to achieve this result. Also, we have continued to recognize
    the requirement for additional procurement and fund the procurement of
    UH-60s throughout the program objective memorandum period of fiscal
    year 2002 to 2007.
        To address the immediate problem of UH-1 readiness, the Army has
    placed on contract the procurement of additional engines for the UH-1s.
    Though we do not intend to return all grounded UH-1s to service, our
    goal is to sustain a fleet of sufficient quantity to act as a bridge to
    the modernized force. State mutual support agreements will ensure
    resources are available for emergency situations.
        The path ahead for the utility helicopter fleet is continued
    procurement of the UH-60 to support UH-1 divestiture and modernization,
    and focus on the recapitalization and sustainment of those UH-60s in
    the force.
                                bradley m2a2 ods
        Question. General Shinseki, the Army has stated that after it
    upgrades all its active Bradley Fighting Vehicles any outdated Bradleys
    will reside in the Army National Guard (ARNG) and will not be fit for
    combat because they are not capable of keeping up with the improved,
    digitized force. As I understand it, the Army Guard's current unfunded
    requirement for Bradleys in fiscal year 2001 is $81.3 million for the
    upgrade of 65 Bradleys. Would you please discuss the plan to modernize
    the National Guard's Bradley force?
        Answer. The ARNG Bradley force is modernized through both the
    cascading of active component Bradley A2 versions and the procurement
    of Operation Desert Storm (ODS) versions through Congressional
    adjustments to the President's budget. The enhanced brigades of ARNG
    Bradley force will be equipped with the A2 or A2 ODS version of the
    Bradley Fighting Vehicle. The Army fought Operation Desert Storm with
    the A2 version and it will remain fit for combat in the years to come.
    Unfortunately, funding limitations have forced the Army to limit active
    component modernization to utilizing the Bradley A2 as the baseline
    vehicle from which to upgrade. This means less Bradley A2's are
    available to cascade to the ARNG. The Army would clearly prefer to
    remove older version Bradleys from the ARNG, but fundamentally cannot
    afford to do so. Consequently, Bradley A0's and the M113 family of
    vehicles will remain in the ARNG's legacy force combat units. With
    constrained funding, our focus remains on upgrading the maximum amount
    of Bradleys to the most current version--the Bradley A3--and fielding
    these systems in brigade sets with the M1A2 system enhancement program
    tank and developing a viable Bradley A2 recapitalization program.
    Through Congressional adjustments from fiscal year 1997 to 2000, the
    Army is upgrading 193 Bradley A0's to Bradley ODS versions for the
    ARNG. The 218th South Carolina ARNG will be fielded 133 vehicles in
    fiscal year 2001. The 30th North Carolina ARNG will be fielded an
    additional 60 vehicles in fiscal year 2002. A potential fiscal year
    2001 adjustment of $81.3 million will provide the Army the ability to
    upgrade further Bradley A0's to the ODS configuration as well as
    procure artillery and air defense variants for the ARNG. Procuring
    modification kits for Bradley ODS fire support vehicle variants would
    reduce the total procurement, but would ensure greater combat variant
    compatibility with their associated active component units.
              armament retooling and manufacturing support program
        Question. General Shinseki, I understand that
    PriceWaterhouseCoopers recently evaluated the success of the Armament
    Retooling and Manufacturing Support (ARMS) program and concluded that
    it is meeting or exceeding all of the goals laid out in the original
    enabling Act and by the Army. Do you believe the ARMS program is a
    worthwhile program that should be continued? Should Congress provide
    additional funding for the program?
        Answer. For the last several years and currently, the Army has
    continued to support the ARMS program during the budgeting process
    within available total obligation authority (TOA). Realizing limited
    TOA does not fully support the ARMS program commercialization efforts,
    the Army listed the ARMS program as a fiscal year 2001 unfunded
    requirement. Thus, additional funds provided by Congress would be
    executable.
        In addition to PriceWaterhouseCoopers' evaluation, the Under
    Secretary of Defense for Acquisition, Technology, and Logistics
    convened a senior Defense and Army general officer level panel to
    review the accomplishments and continuation of the ARMS program. This
    panel agreed that the Department should continue the ARMS program
    within affordable funding authority.
                                     ______

                 Questions Submitted by Senator Mitch McConnell
                     mounted urban combat training facility
        Question. Where does the Army conduct training for mounted forces
    in urban terrain? Is Fort Knox's Mounted Urban Combat Training Facility
    adequate to assist in training future medium brigades in urban warfare?
        Answer. The Army has not designated a specific location dedicated
    to train mounted forces in urban terrain. However, the Army does train
    its light forces to fight with mounted units in urban terrain during
    training rotations at the Joint Readiness Training Center (JRTC) at
    Fort Polk, Louisiana. The Army has six large military operations on
    urban terrain (MOUT) collective training facilities located at Fort
    Polk, Fort Hood, Fort Bragg, Fort Knox, Fort Drum, and Fort Benning.
    Two new facilities are under construction at Fort Campbell and Fort
    Wainwright. However, units do not typically train with mounted forces
    inside these facilities. The Army is taking the necessary action to
    update our MOUT doctrine, training procedures, and training facilities
    necessary to support the new doctrine. The Army's combined arms MOUT
    task force (CAMTF), spearheaded by the infantry center, is updating the
    Army's doctrine to include mounted forces, artillery, aviation, combat
    support, and combat service support units. The CAMTF is also working
    with the other services, particularly the Marine Corps, to coordinate
    doctrine and identify common training requirements that will maximize
    the use of our new and existing MOUT training facilities. When the
    doctrine and facilities update is complete, the Army will be able to
    train with dismounted and mounted forces at several installations. The
    Fort Knox Mounted Urban Combat Training Facility is one of the Army's
    most modern urban warfare training facilities. Although the Army
    continues to build the training strategies for the medium brigades,
    this facility appears to be adequate to facilitate training the medium
    brigades in urban warfare. MOUT is not just a light infantryman's
    fight--it takes the entire combined arms team to win. No opponent can
    beat us in an open fight, and we must ensure that we can defeat any
    adversary that thinks they can challenge us inside cities.
        forces command staffing impact on training and doctrine command
        Question. You have announced your intention to fully staff all
    Forces Command (FORSCOM) units. Where will these extra soldiers come
    from, and specifically, what will the impact on the Training and
    Doctrine Command (TRADOC) units be?
        Answer. Our initiative to man the force has four phases. The first
    phase, which will be accomplished by the end of this fiscal year, is to
    fill the 10 active divisions, separate brigades, and our armored
    cavalry regiments to 100 percent of their authorized fill. The rest of
    the Army will drop slightly in strength as we redistribute soldiers to
    these units. Next year, we will fill those table of organization and
    equipment (TOE) units that are identified to deploy within the first 30
    to 45 days of a major theater war (MTW) to 100 percent, and again the
    remainder of the Army will share the remaining inventory. During fiscal
    year 2002, the rest of the TOE Army will be manned to 100 percent, with
    the remaining inventory shared among the institutional Army. In fiscal
    year 2003, the institutional Army will be manned to 100 percent of
    their authorizations. At this point, the entire Army is to be manned at
    100 percent, thus eliminating all remaining Army-wide shortages.
        For us to be successful throughout the duration of this process, we
    will have to continue to reduce attrition and meet our recruiting and
    retention missions. Additionally, we have developed a plan to reduce
    the size of the table of distribution and allowance (TDA) Army, while
    minimizing the impact on those affected installations. TRADOC has been
    a key player in that process. With regards to the impact on TRADOC, we
    will continue to man those key components of the training base, such as
    drill sergeants, recruiters, and classroom instructors, at 100 percent
    throughout this period. The biggest impact on TRADOC will be with
    skill-level one soldiers--private to specialist--because we did not
    meet recruiting goals over the past three years. Noncommissioned
    officer strengths will decline slightly but will remain sufficient to
    meet our training missions.
                fiscal year 2000 recruiting and retention goals
        Question. Has the Army met recruiting and retention goals to date
    in 2000? Are you satisfied with the results thus far?
        Answer. As of the end of the recruiting ship month of April, the
    Army has a recruiting shortfall of 2,233. An additional 5,000
    contracting opportunities are being made available in August and
    September to give us the opportunity to make up this shortfall. We
    remain cautiously optimistic that the recruiting initiatives we have
    put in place will help us to achieve our fiscal year 2000 accession
    requirements by year's end.
        The Army has exceeded its fiscal year 2000 retention mission
    through the second quarter of this year in all three categories:
    initial term, mid-career, and career. We fully expect this success to
    continue throughout the remainder of the year and could not be more
    pleased with the great work that is being done by commanders and their
    career counselors.
                             green to grad program
        Question. Can you explain your Green to Grad proposal?
        Answer. What has been commonly referred to as the Army's Green to
    Grad Program is a program in development which is designed to position
    the Army as an institution to which highly motivated young people are
    attracted because it is a place where one can earn a degree while
    serving the country. The program is being designed to allow eligible
    soldiers the opportunity to obtain higher education degrees by
    maximizing the use of technology-based distance learning opportunities.
    Currently, proposed features for a soldier include tuition assistance,
    a laptop computer, printer, and an internet service provider account.
                           interim brigade locations
        Question. What is the Army's timetable for deciding on where future
    interim brigades will be stationed? If decisions have already been
    made, what are they?
        Answer. We have not made any final decisions regarding which
    specific brigades will be converted to the interim brigade design. Our
    analysis will consider both active component and reserve component unit
    candidates. Our timetable will be driven by our ability to achieve
    prerequisite conditions in a number of functional areas to ensure
    successful transition from the Initial Brigade Combat Teams--the two
    brigades at Fort Lewis--to an Interim Brigade Combat Team organization.
    We are finalizing a management plan to help us synchronize the many
    actions that must occur. Our analysis of which brigades to convert will
    also consider how to best meet the requirements of the geographic
    commanders-in-chief.
                                     ______

                Questions Submitted by Senator Richard C. Shelby
                        transformation and army aviation
        Question. General Shinseki, you and I have talked at some length
    about the Army's Transformation. It presents a difficult but not
    insurmountable challenge. Would you please comment on Army aviation
    programs which will assist in transforming the Army into a lighter more
    lethal force?
        Answer. Army aviation is a key enabler for both the Army Vision and
    the Army strategy to implement the Vision. Army aviation is uniquely
    suited to enhance the Transformation of the Army into a lighter, more
    lethal force that is strategically responsive and dominant across the
    full spectrum of operations. Army aviation exhibits the characteristics
    of this new force with the capability of being responsive, deployable,
    agile, versatile, lethal, survivable, and sustainable. From an
    organizational perspective, the Army aviation force will transform from
    the current pure organizations into a multifunctional battalion
    organization, with reconnaissance, attack, and utility assets that will
    allow the force to be easily task-organized for specific operations
    without sacrificing capability. From an aircraft perspective, the RAH-
    66 Comanche is the centerpiece for the Transformation of Army aviation.
    Comanche provides a state-of-the-art helicopter capable of performing
    armed reconnaissance and light attack missions across the entire
    spectrum of operations. The enhanced survivability, digital
    versatility, increased lethality, self deployability, and field
    sustainability makes the Comanche the embodiment of the Army Vision.
    Army aviation will maintain warfighting capability by sustaining,
    recapitalizing, and modernizing the fielded aviation systems by
    accomplishing those readiness and sustainment actions necessary to
    ensure they maintain their combat overmatch. The aviation force will
    also divest the legacy fleets of UH-1 and AH-1 aircraft. These aircraft
    are experiencing ever rising support costs and ever decreasing
    operational readiness, and the Army supports continued procurement of
    the UH-60 to divest UH-1s and modernize the force. Lastly, aviation
    training methods must also be transformed. The Training and Doctrine
    Command has taken the initiative to meet the requirement to divest
    itself of UH-1s, invest in more modern training aircraft, and improve
    the quality of training through a program known as Flight School XXI.
    The investment by Army aviation in people, organization, materiel, and
    doctrine will all contribute to a more capable, lethal force, and
    fulfillment of the Army Vision.
                             technology investments
        Question. General Shinseki, investment in technology is a serious
    issue to me. I am concerned that the Army is eating its technological
    seed corn. I have been informed that $90 million was removed from
    missile technology lines for fiscal year 2000 through fiscal year 2003,
    reportedly to pay for procurement. I believe that as the Army gets
    leaner and more mobile it will need smaller, more lethal and affordable
    multi-mission missiles. General, how can we maintain our technological
    edge without a sufficient investment? What are your thoughts on
    reversing this trend?
        Answer. The Army's top priority is the Transformation to the
    Objective Force. The results from our science and technology (S&T)
    program over the next few years are key to its success. To keep our
    combat overmatch edge, missile technology is one of the major thrusts
    in our fiscal year 2000 S&T investment strategy. Army programs are
    focused on developing smaller, more lethal and affordable multi-mission
    missiles. The Army has increased, not decreased, its S&T investment in
    missile technology during the past few years. In the fiscal year 1998
    budget, we requested $426 million for missile S&T. In fiscal year 1999
    and 2000, we requested $432 million and $436 million, respectively.
    This year's budget request was $455 million for missile S&T. It is
    clear that the total missile technology funding for the period of
    fiscal year 2000 to fiscal year 2003 is increasing each budget cycle.
    We believe that this is the proper funding level for missile technology
    and is sufficient to keep our technological edge.
                     ballistic missile defense acquisition
        Question. General Shinseki, I understand that the Department of
    Defense has directed that Service program managers and program
    executive officers, who are responsible for the execution of Ballistic
    Missile Defense Organization (BMDO) acquisition programs, will report
    directly to General Kadish. How has the Army responded to this change
    in acquisition alignment? What are your thoughts on the proper role of
    the Army in the acquisition and operation of ballistic missile defense
    systems?
        Answer. We are still working with BMDO to finalize the details of
    this arrangement. We want to ensure we do this right, as it could have
    a profound impact on our ability to develop the Army's future
    acquisition leadership. We also want to ensure that missile defense
    programs are balanced and maintain the focus on fielding systems to the
    warfighters.
        As the user of missile defense systems and force provider for the
    geographic commander-in-chiefs (CINC), our responsibility is to field
    the best equipment on time to meet warfighter needs. This makes for a
    tough challenge in working through the trade-offs between research and
    development, procurement, operations, support, and sustainment. We face
    this challenge in all our programs; however, missile defense requires
    coordination with BMDO throughout system development. As the user of
    the equipment, the Army must stay involved throughout the development
    process to ensure the fielded product is supportable and meets Army and
    CINC requirements.
               theater high altitude area defense system fielding
        Question. General, the Theater High Altitude Area Defense (THAAD)
    system is scheduled to be fielded in fiscal year 2007. With the ever-
    increasing threat posed to our troops and installations by the
    proliferation and possible use of theater ballistic missiles, I am
    concerned that we are not fielding systems sooner. Can THAAD be fielded
    sooner than fiscal year 2007?
        Answer. We think THAAD can be fielded sooner. THAAD is currently
    funding constrained and could be fielded almost two years sooner if it
    received additional funding of $150 million in fiscal year 2001, $190
    million in fiscal year 2002, and $80 million in fiscal year 2003. This
    acceleration would also maintain the program at low risk. THAAD is on
    track for its milestone II decision in the next few weeks. Fielding
    sooner will provide our deployed forces unprecedented levels of
    protection from tactical ballistic missiles, as well as their only
    protection from numerous fielded medium range ballistic missiles like
    the no dong and shahab-3.
                         high energy laser technologies
        Question. The Committee continues to strongly support the
    development and exploitation of the potential for high-energy laser
    technologies in revolutionary, leap-ahead applications for military
    weapons. These technologies offer the potential for speed-of-light,
    highly lethal engagements; high kill probabilities at long ranges; and
    reduced logistics support. These capabilities appear to have
    particularly appropriate application to support your vision for the
    Army of the future. What is your vision for the development of these
    technologies and the subsequent exploitation of these capabilities in
    future Army applications? How does the Army plan to support this work
    with budget and programming priorities in this year's budget and in the
    future? Where do you envision these efforts being centralized?
        Answer. High-energy laser technologies, particularly the emerging
    solid-state devices, clearly offer significant potential to current
    forces as well as both Interim and Objective Forces. These devices
    offer the potential to provide the force with a capability to defeat a
    wide variety of advanced threats in a relatively small configuration
    that is easily transportable by the means envisioned for the Objective
    Force. Solid-state technologies could greatly simplify logistics
    support to a rapidly deployable force. We must provide the investment
    necessary to mature these technologies and verify the lethality
    predictions in time to support force structure issues in the middle of
    this decade.
        The Army recently reprogrammed $500,000 of fiscal year 2000 science
    and technology (S&T) funding for directed energy efforts at the Space
    and Missile Defense Command. These funds will be used to begin
    exploring areas that are the key drivers for application of high-
    energy, solid state lasers for advanced weapon systems. A new applied
    research program element was created in fiscal year 2001 in the S&T
    program to investigate the application of high-energy, solid state
    lasers for counter air munitions defense on the tactical battlefield
    and support the survivability of the Future Combat System.
        We agree with the position stated in the Department of Defense
    laser master plan. This report, produced by the high energy laser
    executive review panel, offers a new management approach by creating a
    Joint technology office to be located with the Office of the Secretary
    of Defense (Deputy Under Secretary of Defense (S&T)). Oversight for
    this office will be provided by a board of directors consisting of
    senior acquisition executives and advice will be provided by a
    technology council of senior science and technology executives. We
    believe this will ensure a well-coordinated program, visible at the
    highest levels, appropriately funded, reflecting the priorities of all
    the services.
                                     ______

                 Question Submitted by Senator Daniel K. Inouye
                              joint stars (jstars)
        Question. We have watched with interest your efforts to transform
    the Army, particularly the introduction of the new Interim Brigade
    Combat Team (IBCT) into the force structure. How do you see Joint Stars
    (JSTARS) supporting this new concept?
        Answer. The JSTARS common ground station (CGS) will continue to
    provide near real-time continuous correlated view of the commander's
    battle space for the IBCTs just as it does for today's brigade
    commanders. The JSTARS CGS will provide every brigade and IBCT
    commander with the capability to receive, process, and display near
    real-time moving target and synthetic aperture radar imagery, broadcast
    signals intelligence, near-real time tactical unmanned aerial vehicle
    video, as well as access to high-quality secondary imagery from theater
    and national sensors. This capability provides each brigade and IBCT an
    unprecedented level of information to conduct indications and warning,
    situational awareness, force protection, correlated targeting, and
    battle damage assessment operations. The result is that all brigade and
    IBCT commanders will have the critical knowledge of who, what, when,
    and where throughout their battle space as well as the capability to
    precisely target and engage high-value, high-payoff targets with
    organic and supporting weapons systems. Brigade and IBCT commanders'
    ability to view moving target and synthetic aperture radar imagery is
    crucial for the Army's vision of a light, mobile, lethal, and
    survivable combat team.

                              subcommittee recess

        Senator Inouye. We will meet again tomorrow, Wednesday,
    April 26, at 10 o'clock in the morning, to receive testimony
    from the Secretary of Defense and from the Chairman of the
    Joint Chiefs.
        Thank you very much. The subcommittee stands in recess.
        General Shinseki. Thank you, Senator.
        Mr. Caldera. Thank you, Senator Inouye.
        [Whereupon, at 12:18 p.m., Tuesday, April 25, the
    subcommittee was recessed, to reconvene at 10 a.m., Wednesday,
    April 26.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 2001

                                  ----------

                           WEDNESDAY, APRIL 26, 2000

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

                             DEPARTMENT OF DEFENSE

                       Office of the Secretary of Defense

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

                    OPENING STATEMENT OF SENATOR TED STEVENS

        Senator Stevens. Good morning, Mr. Secretary, Mr. Chairman.
    It is nice to have you before us again today. Let me start off
    by saying how much we appreciate what you have been doing. Mr.
    Secretary--Bill--you do not mind if I call you Bill. You were
    one of us, and you have distinguished yourself in this position
    as Secretary of Defense, and you have been very active in
    keeping us informed, so that we would not be critical based on
    ignorance anyway.
        But Mr. Chairman, this has been a tough period so far, and
    it is not going to be any easier with regards to money. We want
    to thank you for coming here.
        There are a series of priorities we want to discuss with
    you, Plan Colombia, health care, missile defense. We have had a
    series of hearings, as you know, that have dealt with our total
    national security, and considering the men and women under your
    Department and your command, General.
        We have tried to keep these on track, despite some rather
    strange budgets we have had to deal with, and circumstances
    that have led to using funds we have appropriated for purposes
    other than we originally intended them to be used for. But
    through it all I think we have kept a very good relationship
    with the two of you and I do want to commend you for presenting
    to us a budget that calls for a real increase.
        We have, it is no secret, decided to increase beyond that.
    I do think that this budget will go a long way towards meeting
    the needs of the men and women of the Armed Services. There is
    a provision for National Guard and Reserves here that we
    commend you for. We are very appreciative of your action in
    making that available.
        I have a series of questions, of course. We all do, and I
    have a long statement that I do not intend to give. I will put
    it in the record, and we will put in the record all the
    statements that have been prepared by you and everyone at the
    table, with the hopes that we will all try to shorten it so we
    can get down to your statements.
        I do want to emphasize the fact that there are still some
    problems here before us jointly, problems of retirees and the
    problems basically of how to catch up with this deferred
    maintenance that I think will plague us if we do not find a way
    to deal with them to the maximum extent possible this year. We
    are going to call on you once again to work with us in a
    partnership for the benefit of the total defense of our
    country, and particularly the men and women that volunteer to
    serve us. Again, I thank you for coming here. This may be--I do
    not know, Bill, it may be your last trip down the aisle here,
    but we are pleased to be able to visit with you this morning.
        [The statement follows:]

                   Prepared Statement of Senator Ted Stevens

        Secretary Cohen, General Shelton, let me welcome you again
    before the subcommittee, to discuss the Department's fiscal
    year 2001 budget.
        As you know, we have undertaken a series of hearings this
    year with the military services, and to review several specific
    programs advocated by the Department.
        These priorities include the ``Plan Colombia'' initiative,
    health care, and missile defense.
        Through these hearings, the committee has received
    testimony that indicates the increased funding provided by
    Congress during each of the past five years has had a real
    impact on our national security.
        Funding added by Congress has kept the missile defense
    program on track for deployment of the national missile defense
    system in 2005.
        Increased modernization funding made possible achieving the
    $60 billion target for procurement reached in the fiscal year
    2001 request.
        Finally, the congressionally mandated pay and retirement
    benefit changes appear to have stemmed the downward trends on
    recruiting and retention.
        Even these successes leave us much work to do this year,
    and in the year's ahead.
        Mr. Secretary, I want to commend you for presenting to the
    Congress the first real increase in the budget for many years.
        Your efforts demonstrate to the men and women of the Armed
    Forces the determination we all share to provide an adequate
    quality of life for them, and their families, and the tools and
    training to do their jobs right.
        In particular, this budget goes a long way to meet the
    needs of the National Guard and the Reserves. They are an
    integral and essential part of the force, and this budget
    recognizes their needs.
        Even with the enhanced funds requested in the budget, and
    an additional $4 billion made available under the budget
    resolution, there are many challenges facing us this year.
        Gen. Shelton, you have focused attention on the
    inadequacies in the current healthcare system for military
    personnel and retirees.
        Your concerns about these matters sends a powerful signal
    to all these communities of the recognition by the Joint Chiefs
    that efforts must be made now to remedy the lack of access to
    care for our retirees.
        We look forward to working with you on this initiative this
    year, in partnership with the Armed Services Committee and the
    House.
        In the end, we must fit all these needs under the fiscal
    cap set for fiscal year 2001.
        Quite frankly, I'm not sure yet how we will get the job
    done.
        The first step must be to get the supplemental bill for
    fiscal year 2000 done, and ensure you can get through the
    remainder of this year. I welcome any comments you might have
    on that.
        As always, we will get the job done here on this committee
    through the wise counsel and hard work of our distinguished
    ranking member, Sen. Inouye. Let me now recognize Sen. Inouye
    for his opening statement.

                     STATEMENT OF SENATOR DANIEL K. INOUYE

        Senator Stevens. Senator Inouye.
        Senator Inouye. Thank you. I wanted to join you in
    expressing our gratitude to the leadership team here. Mr.
    Secretary and Mr. Chairman, you have been very helpful to this
    committee, I need not say, and I have watched the improvements
    that have come forth as a result of your leadership. For
    example, I believe we had about the highest level on readiness,
    recruiting, and retention. You have done well in procurement.
    You have got $60 billion for each now to replace aging weapons
    systems. You have got an increase of $12 billion in overall
    budget, but we do have problems.
        For example, we do not have the supplemental before us, and
    if it is not brought forth in a timely fashion, then the Army
    is going to really take it in the neck, and we also have
    infrastructure problems of replacing and rebuilding old
    buildings, but I am not too worried, because under your
    guidance we are going to do well.
        I can assure you that we are prepared to do whatever we can
    to be of assistance. Thank you very much, sir.
        [The statement follows:]

                 Prepared Statement of Senator Daniel K. Inouye

        Good morning, I want to join my Chairman in welcoming you,
    Mr. Secretary and General Shelton.
        Based on the testimony we have received this year, I would
    offer that the Defense Department is better off on readiness,
    recruiting and retention than in the past few years.
        I would also note that the administration has finally
    reached its goal of $60 billion for procurement to replace our
    aging weapons systems.
        With the budget $12 billion more than last year, it appears
    that we may be on the right track.
        However, we cannot rest easy.
        We have not yet provided you with a supplemental
    appropriations bill to cover your costs in Kosovo for this
    year.
        We know that our forces are still stretched thin around the
    globe with some missions simply not being done.
        And the one area with the greatest shortfall remains
    infrastructure.
        We simply are not doing enough to repair, rebuild, and
    replace our facilities, here at home.
        Mr. Secretary, General Shelton we do appreciate all that
    you do to safeguard our defenses and the progress that you have
    made in the past couple of years to address many of the
    critical issues that we faced. We thank you for that and look
    forward to your statements today on these and other issues.

        Senator Stevens. Unless there is objection, we will follow
    the normal early bird routine and recognize members in the
    order in which they came into the room. I was the exception. I
    am sorry.
        And we will use a 5-minute clock, and I would ask you
    gentlemen to help us observe the 5-minute clock so we can all
    be fair in the allocation of time here this morning, and we
    will stay as long as the two of you wish to continue to answer
    questions.
        The next Senator on the list is Senator Shelby.

                     STATEMENT OF SENATOR RICHARD C. SHELBY

        Senator Shelby. Mr. Chairman, I will defer my time and hope
    to listen to the Secretary.

                    STATEMENT OF SENATOR ERNEST F. HOLLINGS

        Senator Hollings. I will put my statement in the record. We
    are already being recognized for questions?
        Senator Stevens. No. Just for opening statements.
        Senator Hollings. I will put my statement in the record. I
    thank Secretary Cohen and General Shelton for their outstanding
    job. Thank you.
        [The statement follows:]

                Prepared Statement of Senator Ernest F. Hollings

        Thank you Mr. Chairman, and thank you Mr. Secretary and
    General Shelton, distinguished Chairman of the Joint Chiefs of
    Staff. Let me begin by congratulating you Mr. Secretary for
    submitting to us a balanced, robust budget this year. There are
    many exciting initiatives in this year's budget as well as
    clear headway on military health care and quality of life for
    our soldiers. Military health care is of particular interest to
    me and the men and women in uniform that I visit in South
    Carolina. If we do not take care of the soldiers and their
    families we will not be able to carry out our National Security
    Strategy. Likewise if we do not provide adequate health care
    and benefits for our retirees, we cannot call upon them to help
    us to recruit new candidates for the armed services. I look
    forward to working with you to ensure that our men and women in
    uniform receive the support they deserve as they respond to the
    high frequency of strenuous international conflicts.
        It was widely believed that as a result of the end of the
    Cold War that the United States would be able to reap the
    benefits of the so-called ``peace dividend''--that is buy fewer
    guns and more butter. If one looks at the chart of U.S.
    government spending on defense over the period since the fall
    of the Berlin Wall it is true--spending on defense has been
    ramped down. The Congress, in conjunction with the White House,
    shifted resources away from Defense largely in an effort to
    reduce overall government spending. We all remember the dreaded
    BRAC rounds. As painful as they were--and I know personally
    with the closing of the Charleston Navy Base--the reduction in
    DOD infrastructure provided windfall efficiencies inside the
    military complex.
        Moreover, the Pentagon began to pay closer attention to
    fiscal responsibilities and embodied the efficient financial
    management that would make the CFO of a Fortune 500 company
    proud. Gone are the days of the $500 hammer. In part the
    efficiencies that were wrung from the excesses of a Cold War
    force structure have helped create the fertile conditions that
    fostered the unprecedented economic boom that this country has
    enjoyed over the last eight years. In a sense we have reaped
    ``the peace dividend''.
        However, with the frenzied pace of deployments to unstable
    regions in the world, the lasting infrastructure build-ups, and
    the over-stretch of our force structure globally, it appears
    that the days of apple pie and ice cream are over, the check
    has come due. Since the end of the Cold War in 1989,
    procurement spending has declined 59 percent in real terms yet
    the armed forces have been sent into over 25 different
    countries to serve in differing capacities. These divergent
    forces, decreases in defense spending and a corresponding
    increase in engagement has caused great strains on our men and
    women in uniform who are called upon to carry out these
    missions.
        Essentially we have two options: provide more funding to
    support our men and women in uniform or curtail the number of
    overseas missions that we support. I am a firm believer in
    providing our troops with the most advanced weapons and systems
    possible to help them achieve the assignments given to them,
    but I am careful to point out that the United States as a
    global superpower, cannot police the world over. We must
    operate within the framework of our National Security Strategy,
    and this doctrine must be paramount. We should lend our support
    to multinational and unified interagency conflict resolution
    efforts. We should lead by example yet encourage our allies to
    play a greater role in their own regional defense.
        I look forward to the testimony that both our distinguished
    witnesses will give today and look forward to working with them
    and my colleagues this year to ensure that we provide a robust
    and comprehensive national defense.

        Senator Stevens. Senator Dorgan.

                      STATEMENT OF SENATOR BYRON L. DORGAN

        Senator Dorgan. Mr. Chairman, let me just echo my thanks to
    Secretary Cohen and General Shelton for their service to our
    country.
        Senator Stevens. Senator Cochran.

                       STATEMENT OF SENATOR THAD COCHRAN

        Senator Cochran. Mr. Chairman, there are a couple of
    provisions in the budget request that concern me, and I hope
    the Secretary will be able to address them this morning. One is
    the assumptions for base closure rounds in 2003 and 2005.
        My concern is whether or not there is any realistic
    expectation that that is going to occur, and whether or not the
    administration is going to make any specific request of
    Congress to close bases, and what information you can provide
    to us on that count, and also the stretching out of the
    shipbuilding construction program. The reality is death, if not
    the serious economic squeeze on the industrial base and vendors
    who are involved. I am talking specifically about the DDG-51
    ship construction plans, the LHD-8 construction plan, and
    whether or not funds are going to be made available to keep the
    construction on schedule, or extend it out to a point where we
    are really going to see a serious decline in our capacity to
    build ships in the future.
        Senator Stevens. Senator Bond.

                 STATEMENT OF SENATOR CHRISTOPHER ``KIT'' BOND

        Senator Bond. Thank you, Mr. Chairman. Secretary Cohen,
    General Shelton, first our sincere thanks to you and the men
    and women of the Armed Forces who every day are making great
    contributions around the globe. Their patriotism and
    professionalism is something of which we are all proud, and we
    hope you will convey that to the members of the Department of
    Defense, and a special thanks to our old friend and former
    colleague Bill Cohen for the great job you have done, and if
    this is your last hearing here we have appreciated your
    leadership, and I recall very explicitly your frankness in
    dealing with us in this committee, and acknowledging that we
    needed more money, as the chairman has already referred to, for
    the missions that have been assigned, and I think we are
    scrambling to catch up.
        But I appreciate your standing up for these things. I
    understand that you all have challenges funding for Kosovo,
    your main concern about operating tempo, recruiting retention
    shortfalls, aging equipment, insufficient budgets. We have
    already mentioned, I believe--there have already been mentioned
    here the concerns we have on health care for the military and
    the retirees. We will have questions about that, and also a
    question or two about the National Guard, and we thank you for
    being here, and thank you, Mr. Chairman.
        Senator Stevens. Senator Harkin.

                        STATEMENT OF SENATOR TOM HARKIN

        Senator Harkin. Thank you, Mr. Chairman. I would like to
    join you in welcoming Secretary Cohen and General Shelton.
    Again, we thank you for your great service to our country. As a
    veteran myself, I strongly support the needs of military
    readiness and pay increases and improvements in the quality of
    life of our soldiers. That is why I am always concerned about
    items that pop up that look like elements of waste and abuse.
        For the last 10 years, I have waged an effort against waste
    and abuse in the Medicare program. First it was said, well, it
    is not that big a deal. Well, then the General Accounting
    Office (GAO) said, well, it is about $23 billion, which is not
    chump change. That is just in Medicare, but we have been going
    after it and ferreting it out, and so I have taken that also to
    the military, and when I see things like the procurement budget
    up to $60 billion, I want to make sure that it is money well-
    spent.
        Last year we found out there were Army trailers sitting in
    storage, 6,550 of them sitting in storage because they are
    unsafe, that cost more than $50 million. And now I have got a
    new report saying it is going to cost $22 million more just to
    fix them up at a minimum. There are a lot of examples. We are
    paying millions of dollars extra for simple brand-name items
    like boxes of cereal. We are paying $714 for a $47 electrical
    bell, $76 for a 57-cents screw. We have all heard these stories
    before.
        I guess what I am saying is that this is an ongoing
    problem. The Navy last year wrote off $3 billion in inventory,
    wrote it off, $3 billion. It was shipped between facilities and
    never recorded as received. The GAO concluded the system was
    highly susceptible to fraud and abuse because receipts for
    items, including classified and guided missile launchers, were
    never filled out or never required, and the GAO was not able to
    find out about some items because no records of the shipments
    existed at all; $3 billion just written off. Well, again, we
    need ongoing efforts to ferret out this kind of waste and
    abuse.
        One last item of a more parochial nature, perhaps. In the
    State of Iowa, Mr. Secretary, we had an Army ammunition plant
    in Eastern Iowa that had been assembling nuclear weapons for a
    number of years. We recently found out that a lot of these
    workers were exposed, like they were at Paducah. The Department
    of Energy is doing a great job in helping us to work with them,
    to inform them about what they were exposed to, but the
    Department of Defense still will neither confirm nor deny that
    nuclear weapons were assembled there.
        Well, they have not been assembled there in over--about 25
    years now, I guess, but it seems to me not only silly but
    inconsistent. Here we have the Department of Energy (DOE)
    saying yes, the Department of Defense saying, well, we will not
    confirm or deny it. This has left a lot of the people that
    worked there who took oaths, signed oaths saying they would not
    reveal what they did there, concerned that if they were to talk
    about this openly, that they might fall under the purview of
    the law, and of the oaths that they took to not discuss what
    they were doing at that plant.
        I would hope the Department of Defense could work with the
    Department of Energy to get over this hurdle and let people
    know that yes, we did assemble nuclear weapons there. Everyone
    knows it, DOE knows it, and we can move ahead and let these
    people know that they can indeed come forward and talk about
    what they did there.
        Thank you, Mr. Secretary. Thank you, Mr. Chairman.
        [The statement follows:]

                    Prepared Statement of Senator Tom Harkin

        Thank you, Mr. Chairman. Before I begin, I would like to
    welcome warmly our former colleague, Secretary Cohen, as well
    as General Shelton. Both of you have provided strong leadership
    for the Department.
        This year is a landmark of sorts in the defense budget. The
    Defense Budget Authority is passing the $300 billion mark for
    the first time in fiscal year 2001, with $306.3 billion in the
    President's request, and $310.8 billion in the budget
    resolution. And while the stock market indices may be bouncing
    around, the graphs of projected defense spending head straight
    for the stratosphere. As a veteran myself, I strongly support
    the real needs of military readiness as well as pay increases
    and other improvements in the quality of life of our soldiers.
    That's why I am incensed when I see so much money continuing to
    be wasted rather than meeting the real needs of our troops. And
    with an $18.2 billion increase in the budget resolution, what
    we have here is the Regis Philbin budget--it hands out millions
    to everyone without asking any of the hard questions.
        And there are so many important questions to be asked. With
    the procurement budget shooting up to $60 billion, we need to
    ask if it's being spent well. Last year I found out that there
    are 6,550 trailers sitting in storage because they are unsafe
    to use. These are basic trailers for hauling loads behind
    trucks, but the Army took them and paid for them without
    adequate testing. The Army can't buy a trailer that works, but
    we're asked to go ahead and pay for a National Missile Defense
    system that isn't adequately tested either.
        There are many more examples I could give. Chemical weapons
    protection suits may have been distributed to our troops even
    though they have holes in them. The Defense Department paid
    millions too much for simple brand-name items like boxes of
    cereal. And after reforms that were supposed to end the era of
    $640 toilet seats, it turns out we're paying $714 for a $47
    electric bell and $76 for a 57 cent screw.
        The record on items and money already owned by the Pentagon
    is no more encouraging. The Navy wrote off $3 billion in
    inventory that was shipped between facilities but that was
    never recorded as received. The General Accounting Office
    concluded the system was highly susceptible to fraud and abuse
    because receipts for items, including classified guided missile
    launchers, were never filled out or were not even required, or
    the GAO was unable to find out because no records of the
    shipment existed at all.
        As we look at giving the Pentagon extra billions, we also
    should note that at the end of 1998 there was a $9.6 billion
    difference between the Defense Department's records and the
    U.S. Treasury's records.
        The Pentagon doesn't know what it has in stock or how much
    money it has; it buys things that don't work and pays too much
    for them. Are they ready for a large increase in funds? We have
    critical needs in this country for school construction, better-
    paid teachers, universal health insurance, prescription drug
    coverage for seniors, and on and on. We cannot afford to
    continue throwing money at the Pentagon when so much leaks out
    in waste and fraud.
        There is one other issue I would like to bring up. The
    Defense Department has a policy to ``neither confirm nor deny''
    that nuclear weapons were ever at any site. We know that there
    were nuclear weapons at the Iowa Army Ammunition Plant because
    the Department of Energy now tells us that the old Atomic
    Energy Commission assembled the weapons there until 1975. But
    because of the ``neither confirm nor deny'' policy, the Army
    can't talk about it. The Department of Energy can, but the Army
    can't.
        This inconsistency is not just silly; it's a serious
    problem. The Department of Energy just announced a major
    initiative to help former workers who have health problems that
    may have been caused by chemical and radioactive exposures at
    nuclear weapons plants. We are now trying to get the former
    workers at the Iowa plant, who were trained never to talk about
    their work, to come forward and talk about what they did so
    they can get help. But while I, and the Energy Department,
    encourage openness, the Army can ``neither confirm nor deny''
    that nuclear weapons were even there. For the former workers,
    many of whom also worked for the Army at the same site, this
    silence sends the wrong message. The Army even petitioned the
    Pentagon to lift the restriction in a similar case, but the
    petition was denied. I greatly appreciate the Army's
    cooperation in reviewing records of the nuclear weapons work
    and cleaning up the site, but this secrecy about work that
    ended 25 years ago makes no sense. I hope you will review this
    policy and strictly enforce secrecy when it is necessary for
    our protection, but practice openness when it benefits your
    workers and the Nation.
        Thank you, Mr. Chairman, and I look forward to hearing from
    Secretary Cohen and General Shelton.

        Senator Stevens. Senator Leahy.
        Senator Leahy. Mr. Chairman, I will have some questions for
    the record, and I note for the Secretary of Defense that I
    wrote back in February to Deputy Secretary of Defense, John
    Hamre about the new alternative to nonself-destructive land
    mines. I understand today that a draft, or response is coming
    up to me.
        I want both you and General Shelton to know this is a
    matter that I am going to take great personal interest in. I am
    concerned about the so-called battle override feature on the
    system. I would like to get us closer to the Ottawa convention,
    rather than further away, and so I will look forward to that
    draft. I will have some follow-ups, Mr. Chairman, once I have
    received the response, but it is something that I will want to
    follow up with both of you later on on.
        Thank you.
        Senator Stevens. Thank you. Senator Lautenberg.

                    STATEMENT OF SENATOR FRANK R. LAUTENBERG

        Senator Lautenberg. Thank you, Mr. Chairman. I will put my
    full statement in the record, but I want to add my compliments
    and my commendation for the service Secretary Cohen and General
    Shelton have given the country.
        I know for Secretary Cohen the question was whether the
    objectivity that was required in the job would be there, and
    without a shred of doubt he has passed the partisan business
    and gone right ahead with his job in such a good fashion that I
    think his mark will be indelible in the history of Secretaries.
    I also commend General Shelton, for his fine job.
        Mr. Chairman, I support the increased spending for defense
    in this budget, but I am struggling with what may have to be
    done in terms of making adjustments with the other accounts
    also so vitally important. Also, Mr. Chairman, I am
    disappointed that we are not able to be looking at a
    supplemental that would take care of current serious needs in
    defense and other places, and I hope there is something we can
    do about it, and again I would close with a commendation to
    both of the distinguished people sitting at the desk.
        [The statement follows:]

               Prepared Statement of Senator Frank R. Lautenberg

        Thank you Mr. Chairman and good morning and welcome to
    Secretary Cohen and General Shelton.
        Let me say first that I want to thank and recognize the
    military for the outstanding job it has done in Kosovo and in
    many other places throughout the world. The country should be
    proud of the job our soldiers, sailors, marines and Air Force
    men and women, along with their civilian colleagues, have done
    to make the world less dangerous to the United States and our
    allies.
        Mr. Chairman, the Administration proposed an overall
    defense discretionary budget of about $306 billion for fiscal
    year 2001 and $1.6 trillion over the next five years. This
    includes defense funding that is handled by other
    subcommittees, though the bulk is handled by this subcommittee.
        This is a significant amount of money and represents about
    half of total discretionary funding. This fiscal year 2001
    level would represent an increase of about $12 billion over the
    current fiscal year 2000 level and would be almost $2 billion
    more than what was assumed for fiscal year 2001 in last year's
    Budget Resolution.
        On top of the President's requested increase for the
    military, the recently passed fiscal year 2001 Budget
    Resolution raised Function 050 by an additional $4 billion for
    fiscal year 2001. We also probably will be appropriating
    additional funding in some type of supplemental for defense for
    fiscal year 2000.
        Mr. Chairman, I support having a strong defense and have
    generally supported the Administration's proposed increases for
    defense. Providing for national security is a critical
    responsibility of the federal government and it would be
    reckless to provide less than what is needed for defense. But I
    also believe it would be wasteful and counterproductive to
    spend more than necessary on the military, given all the other
    demands on federal resources--especially at a time when the
    United States has strong allies and no peer adversary when it
    comes to national security.
        The United States spends more than double what Russia,
    China, and the so called ``rogue states'' spend on defense
    combined. And that does not include the defense spending of our
    allies, which if included would make this defense spending
    comparison even more in our favor.
        I have some burden sharing concerns also. Many of our
    allies are large economically strong nations that could and
    should do more in defense but spend significantly less as a
    percentage of their GDP on defense than we do. Shortfalls in
    the military capabilities of some of our allies were apparent
    in Kosovo. It is imperative that our allies increase their
    defense spending to eliminate these shortfalls.
        Some justify huge spending increases for the military by
    pointing to estimates of large budget surpluses in future
    years. But those projections generally are based on highly
    questionable assumptions about Congress' willingness to make
    cuts in other programs. Actual surplus levels could be much
    smaller.
        We must also realize that our national security is based on
    more than just how much we spend on defense. These funds must
    be spent efficiently and effectively. Spending money on the
    diplomacy and foreign assistance accounts, areas that have been
    severely constrained for many years, can also contribute to
    national security. We must also adequately fund our domestic
    needs and infrastructure because we know that the foundation of
    national security is a strong economy.
        So, Mr. Chairman while I believe it is imperative that we
    provide the funds necessary for defense, the defense budget
    should also be subject to intense review to ensure that we are
    properly balancing the numerous and varied spending needs of
    the nation.
        Thank you Mr. Chairman.

        Senator Stevens. Senator, it is our intention to be marking
    up the military construction (MILCON) bill and the agriculture
    bill the week of the 8th, and we will split that supplemental.
    The defense portion on the MILCON annual bill, the bill for
    fiscal year 2001 and the nondefense portion on the agricultural
    and it is our hope that we would be able to get both of those
    through conference and to the President as quickly as possible.
    We do have a plan now that I think we can pursue. I hope all
    Members will help us do that.
        Last but not least is, the chairman of the Budget
    Committee, who was successful in getting us this additional
    money this year for defense, Senator Domenici.
        Senator Domenici. Mr. Chairman, might I just ask of you how
    long you think we will be here this morning? Do you have kind
    of a guess? Will we be here another hour, or hour and a half?
        Senator Stevens. The head can absorb what the seat can
    endure, Senator. It depends upon how long these two gentlemen
    wish to stay seated there.
        Secretary Cohen. That would be another half-an-hour,
    Senator Domenici.
        Senator Stevens. We will be going under the 5-minute
    allocation of time.
        Senator Domenici. I will not make a statement at this
    point. I will return from another meeting, and I hope you are
    still here, at which time I will ask questions. Thank you very
    much.
        Senator Stevens. Thank you.
        Gentlemen, as I said, your statements will appear in the
    record as though read. We will be pleased to have your
    comments, and then we will go through the routine for our
    questions. Thank you very much, Mr. Secretary.

                       Secretary Cohen's opening remarks

        Secretary Cohen. Thank you, Mr. Chairman, Senator Inouye
    and members of the committee. Mr. Chairman, as you indicated,
    this is my last appearance before this committee, and I want
    you to know how important it has been for me to have your
    support.
        This is one of the most demanding jobs. I have had the
    wonderful experience of having served 24 years in both the
    House and in the Senate combined, and to go from the world's
    greatest deliberative body to be the civilian head of the
    world's greatest military is more than one can ever expect
    during their lifetime, and I will tell you that as much as I
    enjoyed my time here in this body, and I did truly enjoy those
    18 years, nothing can compare to being the Secretary of Defense
    of the world's greatest military.
        Every day that I go out and see the men and women who are
    serving us, and seeing how good they are, and how disciplined
    and patriotic and selfless, and to see, aside from the morning
    headlines to go out in the field, and to see how well they are
    performing and how enthusiastic they are about their work and
    what they are doing, and how gratified they are, you cannot
    help but come back totally optimistic about the future of this
    country.
        So I want to take this occasion publicly to thank President
    Clinton, because he did something that is virtually
    unprecedented by asking me to serve in his administration, to
    send a signal that national security should wear no political
    label, no party label. I think was a very courageous act on his
    part, to be willing to offer one of the most important
    positions in the Cabinet to a member of the opposite party, and
    I have been grateful to him ever since for giving me this
    opportunity.
        And I might point out that the chairman and I and before
    him General Shalikashvili, we have had the extraordinary
    privilege of working through some very difficult times, but I
    wanted, too, to thank both you, Mr. Chairman, Senator Inouye,
    and all the members of the committee, and another farewell I
    suppose is in order for Senator Lautenberg. I believe this is
    Senator Lautenberg's final year in this body, and to commend
    him for his service not only during wartime, but also in the
    wars up here on Capitol Hill. We may have disagreed from time
    to time on issues, but we worked together on many more.
        Mr. Chairman, I have a brief statement. I will submit it
    for the record. I looked at the chairman's submission for the
    record. It is 61 pages. Senator Domenici, he has agreed to read
    every word so you can get back in time.

                  fiscal year 2000 Supplemental appropriations

        I will simply summarize a couple of the key points here. I
    think you have all expressed the disappointment that we feel in
    not having a supplemental passed by this time. I know that you,
    Mr. Chairman, worked very hard, and I thank you also for the
    4.5 increase in the budget resolution, Senator Domenici, for
    achieving that, but the fact that we do not have a supplemental
    does put extraordinary pressure on the services, particularly
    the Army.
        I used the authority I have to shift some $200 million from
    the Navy and the Air Force. It was not exactly an easy thing
    for them to agree to, but to shift those funds over to the Army
    to cover the operating expenses that we currently have with the
    Kosovo operation.
        And if we are unable to get the funding by the end of May,
    then I think you all are aware that the Secretary of the Army
    has already testified, and General Shinsecki have testified
    what that will mean in terms of the final quarter, so I do not
    need to belabor that point, but it will have serious
    consequences as far as training and readiness, real property
    maintenance, and the potential to affect personnel and other
    matters.
        So hopefully we can receive that funding by the end of May,
    but beyond that I think some other draconian measures will be
    in order.
        We have achieved some of the peak effectiveness as far as
    our operations and our sustainment. I also want to take this
    occasion to emphasize the importance of the full and prompt
    approval of the supplemental appropriations request for
    international affairs, the 150. I know that perhaps it is not a
    strong sentiment for the funding of that account, but I must
    tell you, unless we get the civilian side of things right in
    Kosovo, it is going to make it that much more difficult and
    that much longer before we can depart, so I did want to express
    my strong support for the full funding of the function 150.

               priorities in fiscal year 2001 President's budget

        Mr. Chairman, I will just touch quickly on a couple of
    things I wanted to focus on this year. For the first 2 years I
    tried to focus on how do we balance this need of maintaining
    operational readiness and then start to get the accounts up for
    the procurement.
        Senator Inouye pointed out we finally achieved the $60
    billion mark that was set so many years ago but always proved
    elusive. Every year we used to see the situation where the $60
    billion mark was at a desired level of spending for
    procurement, but it was always just off into the future. Well,
    we now have achieved that, and over the future years defense
    plan (FYDP) in the next 5 years we will go up, calculated to go
    to $70 billion.
        Now, that will mark roughly a 46 percent increase in
    procurement during that timeframe, and that is going to be a
    tremendous benefit to all who are serving this country, so I
    thank you for your support of that.
        So we have dealt with pay raise last year. Thank you for
    increasing even what we requested. That has had a major impact.
    That plus the retirement change and pay table reforms had a
    major impact in the field.
        I have been out to reenlist soldiers and sailors, and I ask
    them each time, why are you doing this? Well, you are listening
    to us. You heard us on the need for pay increases and changing
    retirement benefits, and we have had a turn-around in sentiment
    on retention.
        Two other areas that have been of most concern to me have
    been the housing and the health care. On housing, we in this
    budget, as you know, included some $3.1, as I recall, billion
    in the budget for the 5-year period to eliminate the inequity
    that currently exists, and that is that those that live off-
    base are required to pay on an average almost 19 percent out of
    their pocket for their housing cost. That is completely unfair,
    and so we put the $3-plus billion into the budget to eliminate
    that inequity.
        It is going to require a change in law, and hopefully that
    will have the strong endorsement of all concerned, but we
    should not have a situation where people are required or forced
    to live off base because we do not have on-base housing
    adequate for them, and say but you have got to pay almost 20
    percent out of your pocket, that plus transportation cost, and
    all that is associated with the inconvenience of being off-base
    comes directly out of their pockets, and so one thing I have
    tried to do is address that in this final budget.
        And just as we are addressing that in the budget, of course
    there was a new study that came out that imposed changes in
    reimbursement rates. Some went higher, some went lower, and we
    found a great inequity, and the moment we spotted that we
    changed it as well, so we are trying to deal very seriously
    with the housing situation as you all are aware. We have got a
    long way to go in terms of rehabing and replacing much of the
    housing that currently exists to make sure that we provide
    adequate housing for the men and women who are serving us.
        On the operations and maintenance (O&M) funding it is fully
    sufficient. I will tell you there is no margin for major cuts,
    and I know that from my own experience in this body that at the
    end of the year usually we find ourselves in a situation making
    undistributed O&M cuts.
        I will tell you that I have dedicated myself, Senator
    Harkin, to looking for ways in which we can eliminate fraud and
    waste. I worked with you very closely while I was here, and
    especially on the Aging Committee in trying to make changes in
    our health care field in terms of fraud and abuse, and we were
    successful, and I have tried to dedicate myself to finding ways
    in which we can do that in the Department of Defense as well. I
    will tell you there is not any margin for us to absorb further
    cuts in the operation and maintenance funding.
        I have already touched upon the $60 billion, and a final
    priority requiring special mention is full funding for the
    chemical weapons demilitarization program. That is going to be
    critical to have full funding for that if we are going to meet
    our obligations under the chemical weapons convention and to
    assure that those aging munitions are safely destroyed as
    quickly as possible.
        That, Mr. Chairman, is the sum, and I will answer the
    questions as they come. I know that base closures and other
    types of issues have been raised in the opening statements, but
    let me just conclude by saying that I look at our position
    around the world and I know that we are overstretched. We are
    engaged in many, many operations, but I would also say that we
    are looked upon by virtually everyone as a stabilizing force in
    the world, and to our great credit our presence in all the
    regions that we are currently deployed is having an important
    and salutary impact in promoting stability, and when there is
    stability, investment usually follows, and where there is
    investment there is an opportunity for prosperity and promoting
    our common ideals.

                               prepared statement

        I think we have made and continue to make and will continue
    to make an enormous contribution to the security not only of
    this country but to that of our allies and friends, and
    hopefully each Congress in the future will support the
    Department, then the Department will work, as we have worked,
    with you. As you have indicated, it is a partnership. There
    should be no dividing line. We should not be firing across the
    Potomac at each other. This is something we all have a common
    interest in, and it is incumbent upon those who succeed me to
    work with you as a full partner in this great cause of
    promoting our national security.
        Thank you, Mr. Chairman.
        [The statement follows:]
                     Prepared Statement of William S. Cohen
        Mr. Chairman, members of the Committee, it is a pleasure to be here
    for this wrap-up hearing on President Clinton's fiscal year 2001
    Department of Defense (DOD) budget request. You previously received my
    full statement detailing our fiscal year 2001 request and had a
    productive hearing with John Hamre shortly before he completed his
    brilliant tenure as Deputy Secretary. So today I will highlight only a
    few budget issues and leave plenty of time for your questions and
    comments.
              fiscal year 2000 kosovo supplemental appropriations
        Before getting to fiscal year 2001, I want to emphasize the
    escalating criticality of President Clinton's fiscal year 2000 Kosovo
    supplemental appropriations request. Further delays in approval
    threaten to weaken our force readiness and undermine NATO efforts to
    foster stability in this critical region.
        I am very disappointed that final passage will not occur by the end
    of April. This delay has required me to take steps to try to prevent it
    from damaging Army readiness, which is our most serious concern. Most
    notably, I am shifting over $200 million from Navy and Air Force
    accounts to the Army--using the flexibility Congress granted the
    Secretary of Defense for managing the Overseas Contingency Operations
    Transfer Fund. This shift will be disruptive for the Navy and Air
    Force, but it will enable the Army to fulfill its planned unit
    rotations to the National Training Center for the rest of the fiscal
    year.
        Now, the Department is running out of options. If the requested
    fiscal year 2000 Kosovo supplemental appropriations are not available
    by the end of May, the Military Services will have to initiate very
    disruptive actions and move toward cancellation of major fourth quarter
    activities that would damage the readiness, military capabilities, and
    troop morale of our armed forces.
        Hardest hit would be the Army, which would have little choice but
    to curtail or postpone major training, operations, maintenance,
    personnel actions, procurement, and other activities that it has
    authority to control. The Army's initial actions in June would likely
    include decisions to defer all minor construction and real property
    maintenance and to eliminate overtime and delay promotions for its
    civilian personnel for the rest of the fiscal year. By July, the Army
    would likely have to severely cut back maintenance, home station
    training, and supply purchases.
        America's armed forces work exceedingly hard to operate at peak
    effectiveness and sustain high readiness. They need our resolute
    support. I urge you and your colleagues to move quickly to complete
    work on our shared objective: to provide our military men and women the
    funds needed to sustain their unparalleled excellence and to fulfill
    the missions assigned them.
        I also want to emphasize the importance of full and prompt approval
    of the fiscal year 2000 supplemental appropriations request for
    International Affairs (Function 150) Kosovo and Southeast Europe
    programs. The requested funds will support essential civilian programs
    and peace implementation efforts vital to a prudent exit strategy for
    Kosovo and achievement of long-term stability in the Balkans.
                  president clinton's fiscal year 2001 budget
        Turning now to next year's budget, the President's request is a
    strong plan for sustaining America's military excellence and continuing
    the transformation of our defense posture for the post-Cold War era.
    The new budget protects President Clinton's commitment to preserving
    the high readiness and quality of U.S. forces in the years ahead.
        I am pleased that the Congress' fiscal year 2001 budget resolution
    includes a sufficient defense topline to support all the programs and
    priorities in the President's request. Working with you and our other
    defense committees to achieve that support now becomes the Department's
    primary focus. To that end, let me briefly comment on some of my key
    spending priorities.
        Our new budget seeks to continue to put people first with strong
    pay and benefits proposals. I especially want to highlight our Basic
    Allowance for Housing (BAH) plan to eliminate by 2005 the out-of-pocket
    housing costs of our military members. I also want to emphasize the
    Department's resolve to continue to make much-needed improvements to
    military health care--which is increasingly expensive, but more
    important than ever. Recruiting and retention constitute a huge
    challenge for the Department. Pay and benefits alone cannot overcome
    this challenge, but they need to be seen by our servicemen and women as
    sufficient compensation for the sacrifices of military life.
        Regarding our other top priority of readiness, the new budget fully
    funds the Military Services' Operation and Maintenance budgets so that
    their training, maintenance, and other key goals can be met. The budget
    will ensure that U.S. forces will continue to be fully capable of
    executing the National Military Strategy and that the readiness of
    first-to-fight forces will remain high.
        Our proposed O&M funding is fully sufficient, but it includes no
    margin to absorb major cuts. Therefore I want to caution against
    undistributed O&M cuts that are made on the basis that they will compel
    the Pentagon to cut waste or bureaucracy. The ultimate effect of these
    undistributed cuts is to impair and reduce force readiness. I want to
    assure this committee that I am doing everything I can to streamline
    DOD infrastructure and prevent waste. We are making progress, and I
    urge your support so we can do much more. But achieving greater savings
    will take more than legislative provisions mandating such savings. And
    as I have stressed repeatedly, by far the best way to achieve greater
    streamlining is for Congress to approve two additional base closure
    rounds.
        Another critical priority in our proposed budget is the
    modernization of our weapons and supporting systems. For fiscal year
    2001, we are proud to have reached our goal of $60 billion for
    procurement. But this is a beginning, not an end. The President's
    Budget calls for procurement to climb to over $70 billion by 2005. And
    even higher levels will be needed in the years beyond 2005--as many of
    our new-generation systems enter full production. Achieving these
    procurement spending levels will be one of the major challenges for my
    successors and for future Congresses.
        For now, in the fiscal year 2001 budget our challenge is to invest
    our modernization dollars most wisely. I am convinced that the
    President's request does that, with an allocation of procurement and
    RDT&E spending resulting from rigorous scrutiny by the Department's
    civilian and military leadership. As you approach your decisions on our
    spending priorities, please let the Department know where we need to
    justify our modernization plans more convincingly. The Department of
    Defense and Congress need to continue to work together closely to
    modernize and ensure the future combat dominance of U.S. forces.
        A final priority requiring special mention is full funding of our
    Chemical Weapons Demilitarization program, which is critical to ensure
    compliance with the Chemical Weapons Convention and to ensure that
    these aging munitions are safely destroyed as quickly as possible.
                                    closing
        I want to close by thanking members of this committee for
    maintaining such a highly productive and cooperative relationship with
    the Department and our civilian and military leaders. This hearing
    seems likely to be my final one with this committee, so I want to
    publicly salute your hard work and support on behalf of our national
    security. You should feel very proud of your substantial contributions
    to the unparalleled excellence of America's armed forces.

        Senator Stevens. Thank you, Mr. Secretary. I mentioned we
    would mark up the MILCON bill and the agriculture bill on the
    9th. We will also mark up the foreign assistance bill. We will
    cover the 150 accounts that you have mentioned, in the hopes
    that they can move rapidly, too.
        General.
    STATEMENT OF GEN. HENRY H. SHELTON, CHAIRMAN, JOINT
                CHIEFS OF STAFF
        General Shelton. Chairman Stevens, Senator Inouye, other
    distinguished members of the committee, let me first of all say
    it is an honor to be with you here again and to report on the
    state of America's Armed Forces. Chairman Stevens, up front let
    me also thank each member of this committee for their very
    staunch support that our men and women in uniform have received
    from you during this past year, and I speak for the Active, the
    Guard, and the Reserve.
        You have got my rather lengthy written statement that was
    referred to by Secretary Cohen and so I will ask that that be
    included in the record and just make a few comments to address
    the priorities and concerns I have, and then move on to your
    questions.
        First of all, since appearing before this committee last
    year, I have had the opportunity to visit our troops in the
    Middle East and in the Balkans and Asia and in many other
    places around the globe, as I know many of you have and, as
    always, I came away, as I am sure you do, impressed not only by
    what they are doing, but also by the enthusiasm with which they
    carry out their somewhat tough missions on many occasions that
    we give them.
        I can tell you the troops are fully aware of the great
    support they have received from you, the Members of Congress,
    and also from the administration, and also in particular in the
    increased budget last year and the improvement in procurement
    and operations and pay and retirement, and the other things
    that affect their quality of life.
        Your efforts have sent a very powerful signal to our troops
    in the field, and I have no doubt, have been very instrumental
    in helping us turn around some of the recruiting and retention
    challenges that we have faced.
        Today, I think the force is relatively healthy, although it
    is stretched, and I would also tell you that unit personnel
    shortages continue to plague many of the units in the field.
    Our men and women in uniform continue to do a great job
    safeguarding America's interest around the globe and helping
    keep the peace in what you know is a very complex and dangerous
    world that we live in, and our people in uniform are the very
    best in the world, as I am sure you have observed as you went
    out to visit with them.
        However, the current operating tempo (OPTEMPO), the current
    tempo of operations, if you will, is having an effect on them
    and also on the family members. We still encounter frequent,
    often unexpected and persistent deployments, and that, of
    course, produces stress. Ultimately, if we are not careful, too
    many protracted deployments will inevitably disrupt our
    operating budgets and cause lost training opportunities and, of
    course, that always accelerates the wear and the tear on the
    equipment, which then leads to additional recapitalization
    requirements.
        But most importantly, I think a high pace of operations
    impacts quality of life, and it could, if we are not careful,
    jeopardize our capability to retain the great quality force
    that we have worked so hard to build, and I can tell you that
    the Joint Chiefs are tackling the personnel tempo (PERSTEMPO)
    with the great support, I might add, of Secretary Cohen, to try
    to tackle this PERSTEMPO issue and lower that in as many areas
    as can.
        Of course, we have got some great help from the members of
    this committee and from the Congress and the administration in
    terms of increasing the assets in some of our low density, high
    demand units. As I reported last year, we continue to seek
    innovative ways to help us lower that, and we will continue to
    do that, but at the same time we also are very cognizant of the
    fact that we must work very hard to try to use all the tools in
    our kit bag to solve our problems for the United States before
    we commit our troops to extended deployments.
        This year, of course, with the help of the Secretary the
    Joint Chiefs and I are focusing on another key issue that was
    raised by Senator Bond, and that is TRICARE, our military
    health care system. As we are all aware, TRICARE, which is
    America's largest health care provider, and the one that is
    tasked to provide health services both in peacetime as well as
    in war, is simply not user-friendly.
        While many service members and their families are normally
    very pleased with the care that they receive once they have
    entered into the system, and I say that normally it is rated as
    outstanding care by our doctors and our nurses and by other
    health care providers, they are frustrated with the system as a
    whole.
        It is, quite frankly, immensely complex, as you might
    imagine. It is administratively confusing, and it is not very
    customer-oriented and, of course, we all agree that our service
    men and women deserve better, and we in fact are working that
    issue very hard, particularly in some of those areas that deal
    with the administration and the management of the system, and
    we have gotten great support out of the Secretary and out of
    Dr. Bailey in improving that.
        Likewise, those who have served in the Armed Service for a
    career, those retirees who gave the very best years of their
    life in the defense of America, also deserve quality health
    care. TRICARE from our perspective must be fixed, and the
    overall military health care system must be improved if we are
    to sustain the quality of force that we have today, and also if
    we are to keep faith with those who have served with honor.
        Mr. Chairman, at the end of the day, fixing TRICARE is not
    only the right thing to do, it is the smart thing to do, as it
    sends a strong signal to all those that are serving today, but
    also to those that are considering a career in our Armed
    Forces, and it keeps a commitment that we have made to our
    retirees.
        Mr. Chairman, I would like to shift from that to some other
    dimensions of our readiness issue. In my testimony to the
    committee last year, I noted that our forward-deployed and
    first-to-fight forces remain capable of carrying out and
    executing our national military strategy, and that remains true
    today.
        I also spoke of the difficulties we have experienced in
    maintaining readiness, and a number of reasons for these
    readiness problems, including higher-than-anticipated OPTEMPO,
    increased wear and tear on aging and overused equipment systems
    and personnel issues and again, thanks to the great support of
    the Congress and the administration, this readiness picture has
    started moving in the right direction.
        Last year's budget, Secretary Cohen commented on the
    additional support that was received from Congress arrested the
    very steep decline in purchasing power we had experienced over
    the previous several years, and also enabled us to fund our
    most critical readiness requirements. It enabled us to fund the
    Bosnia operation, and our efforts to increase the
    recapitalization of equipment and facilities.
        Most importantly, Congress' timely approval of the 1999
    emergency nonoffset supplemental last May enabled us to meet
    the unprogrammed costs that we had encountered as a result of
    the Kosovo operation without negatively impacting our other
    programs. We must sustain the momentum that we have gotten
    started.
        That is why, Mr. Chairman, the package of initiatives that
    are proposed in the President's 2001 budget is so important to
    not only the Joint Chiefs but to our uniformed commanders as
    well. This forward-looking budget we think addresses and helps
    us obtain our quadrennial defense review (QDR) goals and also
    helps us to reshape our forces to reflect the changing threats
    we face. It funds a broad array of programs that are designed
    to protect America's interest and our forces against terrorism,
    against chemical-biological attacks, as well as other
    asymmetrical threats.
        It also funds some of the Kosovo lessons learned, and
    allows us to improve some of the low density, high demand
    elements of the force, specifically the additional squadron of
    the EA-6B electronic aircraft, increased funding for precision
    munitions to bring those accounts back up to where they should
    be, our unmanned aerial vehicle (UAV), and our intelligence and
    surveillance capabilities which also are another low density,
    very high demand part of our war-fighting capabilities.
        Overall, this budget will fund our critical readiness
    requirements. It supports the quality of life initiatives that
    we have initiated. It meets our QDR procurement goals, and it
    supports the reshaping of our forces while it continues to
    allow us to streamline and reform within.
        Prompt congressional action to provide the requested
    emergency nonoffset supplemental to replace the dollars that
    are already obligated, as addressed by Secretary Cohen and you,
    Mr. Chairman, are necessary to protect our readiness for the
    remainder of the year.
        And let me also add my support for the 150 account, which
    is critical in terms of fulfilling our obligations to reach the
    long-term solution in Kosovo, and it allows us to get those
    elements of the rule of law and civil implementation in place
    that would be critical so that we can, in fact, reduce our
    long-term troop commitments into that area.
        And while there are many important measures proposed for
    funding in the current supplemental, including such things as
    resources to help Colombia carry out the fight against
    narcotraffickers, by far the critical aspect to the service
    chiefs and me is the provision to reimburse the Department of
    Defense (DOD) for the money already spent in Kosovo, and
    without rapid approval of this funding we are going to be
    forced to divert sources, as you heard General Shinseki and
    Secretary Caldera testify to yesterday, and as Secretary Cohen
    mentioned. But the impact will also be felt by the Army, the
    Navy, the Air Force, and the Marine Corps.
        Mr. Chairman, let me turn for just a few minutes to the
    threats and challenges that we face from abroad. As I said
    earlier, although the United States enjoys relative peace now,
    the international security environment remains complex and
    dangerous. As a worldwide power, a global power, we have global
    security commitments and, of course, our interests in many
    cases are challenged almost on a daily basis.
        My written statement goes into some detail about our
    challenges in the Balkans, the Middle East, Korea, and East
    Timor, but I would like to spend just a few minutes on the
    situation that we see happening in the Balkans.
        As you know, today we have a sizeable force committed in
    the Balkans, in Bosnia and in Kosovo, and while some violence
    continues, U.S. forces, along with our NATO allies and our
    coalition partners have been successful in establishing a
    relatively safe and secure environment. While the North
    Atlantic treaty organization (NATO) may need to make some minor
    adjustments to the size of Kosovo protection force (KFOR) in
    the near term to meet current security requirements, including
    the increased threats that have been identified in the Prezevo
    Valley, the southern region of Serbia, we must remain wary of
    taking on new missions in Kosovo.
        KFOR's mission today is clear, and any extension of that
    mission would require approval of the North Atlantic Council.
    At the end of the day, however, I am less concerned with
    mission expansion than with mission extension, and though I
    would support some short-term increases to KFOR to secure the
    gains that we have made thus far, soldiers, of course, are not
    the long-term answer to what we face in Kosovo in terms of
    achieving self-sustaining peace.
        American soldiers in Bosnia and Kosovo are just that. They
    are soldiers first and foremost. They are not policemen, and
    they lack the training and the experience to effectively police
    the large civil societies that we find in the Balkans. As this
    committee well knows, in Kosovo and in Bosnia achieving a
    lasting solution is going to require us to successfully
    accomplish a host of civil, political, and economic tasks not
    the last of which is the establishment of a rule of law, a
    functioning court system, and an effective police force. I
    remain concerned today about the slow progress in civil
    implementation in Bosnia, and the glacial pace that we see
    occurring in Kosovo.
        For long-term success, it is incumbent upon the United
    Nations and Organization for security and cooperation in Europe
    (OSCE) and other governmental and nongovernmental organizations
    to move in and fill the void that has been created by the lack
    of effective civil institutions. It is not enough to say that
    KFOR will perform missions until UNMIK, the United Nations
    Mission in Kosovo, is able to take over.
        We must determine how much smaller KFOR can become and
    still allow UNMIK to operate successfully, and we must continue
    to press the international community and the donor nations to
    meet their obligations. While the U.N. administration is
    putting forth a good effort, they are often handicapped by a
    lack of resources and personnel.
        Mr. Chairman, I have talked about how the force is being
    employed today and what our priorities are for the coming year.
    I would like to spend just a few minutes in closing about what
    we are doing to meet future threats and to ensure that our
    forces are ready for tomorrow. We of course want to ensure that
    we have forces that are not only trained and ready, but also
    are as versatile and as capable as they are today.
        Today's forces benefit from the tough decisions made by my
    predecessors and yours. We, too, have an obligation, I think,
    to make the right choices now to ensure that our successors
    inherit the best possible military to defend our Nation's
    interests in the future. Balancing our current readiness and
    sustaining the quality of our people against modernization for
    the future will often conflict, but all are very important. As
    all of you are aware, today America spends about 3 percent of
    its GDP on defense, where as late as 1987 we were spending
    approximately 6 percent.
        America has been the beneficiary of a great peace dividend,
    the result of having won the cold war. But if we are to sustain
    the world class force that we have today, a world class but
    very heavily used, I might add, it is critical that we continue
    to work on the quality of life issues that are faced by this
    force, and also continue to provide appropriate funding to
    ensure that we continue to modernize the force and recapitalize
    the equipment that we are using very heavily.
        For our part, to ensure tomorrow's joint force remains the
    world's best, we have been moving forward to turn our
    conceptual framework for transforming the U.S. military into
    reality. We are engaged in updating and refining our Joint
    Vision to build on the solid foundation of Joint Vision 2010,
    and to meet the challenges of the 21st century and maintain
    forward momentum.
        One of the principal mechanisms that we are using to turn
    Joint Vision into a reality is Joint Experimentation. The
    Secretary has assigned the Commander in Chief of U.S. Joint
    Forces Command as the executive agent for this very important
    process for the Department, a process that, I might add,
    complements, not replaces, the existing experimentation efforts
    that are being carried out by our Services.
        Ultimately, the Joint Experimentation process will play a
    vital role in key decisions on how to build the joint force of
    the future, including systems, strategy, force structure, and
    doctrine. We have also refined our Joint Requirements Oversight
    Council procedures to better accommodate a review of the war-
    fighting requirements on the front end of the process, when it
    is easier and less expensive.
        We are already beginning to see the first fruits of this
    effort. This year, U.S. Joint Forces Command will begin
    experimenting with its first integrating concept, which is
    rapid, decisive operations, how a Joint Force Commander can
    determine and employ the right balance of air, land, sea,
    amphibious, space, and information-based capabilities to defeat
    any adversary.
        Rapid, decisive operations emphasizes critical functional
    concepts, including attack against critical mobile targets,
    which focuses on near simultaneous sensor-to-shooter data flow
    and high speed, long-range weapons; common operational picture,
    fusing information from multiple sources into a common picture
    of the battle space to enable commanders to move rapidly and
    confidently based on maximum knowledge of enemy, neutral, and
    friendly positions: joint interactive planning, a virtual
    collaborative system enabling planners to assess wide spectrum
    information and commanders to react quickly to changing events:
    and adapted Joint Command and Control which will leverage
    advances and information technologies to revolutionize the
    structure of the Joint Task Force Headquarters, ultimately
    providing the warfighter with the most effective and efficient
    operational command and control.
        The objective of this massive effort is nothing less than a
    Joint Force that will be persuasive in peace and decisive in
    war, and I believe that we are off to a good start under the
    leadership of Admiral Hal Gehman at U.S. Joint Forces Command.
        Mr. Chairman, let me close with one important observation
    that parallels Secretary Cohen's closing comments. As all of
    you are aware, in a very troubled world today many people turn
    to America for hope and for resurrection. They turn to America
    for a bedrock of values, democracy, liberty, and the rule of
    law. They unabashedly seek the very freedoms for which we
    stand. If they do not turn to us as a first option, they
    normally will turn to us as a last resort. This tells me that
    the light that is America burns brighter than ever, and that
    the light that is fueled by America's sons and daughters who
    wear their country's uniform in times of peace and war is very
    important.
        I think that America's forces today remain fundamentally
    sound, and are capable of fulfilling their role of executing
    our national military strategy. Together with the Congress and
    the administration, we are transforming our military forces to
    ensure that they remain ready to meet the threats to America's
    security in the 21st century, just as we have in the past.

                               prepared statement

        Mr. Chairman, thank you very much for the opportunity of
    appearing here today, and for the opportunity to make a
    statement, and now Secretary Cohen and I are prepared to take
    your questions.
        [The statement follows:]
                  Prepared Statement of Gen. Henry H. Shelton
        It is an honor to report to the Congress today on the state of the
    United States Armed Forces. At the outset, I would like to pay tribute
    to our men and women in uniform. As always, they serve our country
    selflessly, often far from home and loved ones, defending our Nation
    and its interests and helping to keep the peace in a still dangerous
    world. America can--and should--take great pride in its soldiers,
    sailors, airmen, and marines. They represent the United States at its
    very best.
        I intend to discuss three broad categories of concern in this
    statement: (1) Sustaining a Quality Force, concentrating on those
    programs that benefit our people and are critical to maintaining the
    health of the force; (2) Supporting the National Security Strategy,
    specifically the readiness of the force to meet often-competing demands
    of this strategy; and (3) Building Tomorrow's Joint Force--what we are
    doing today to prepare for tomorrow's challenges.
                           sustaining a quality force
        America's military strength is built on a foundation of quality
    people, trained and ready forces, and an effective modernization
    program. While each of these elements is absolutely essential, one is
    first among equals--people! Without motivated, skilled, and committed
    people, we cannot exploit the full potential of our advanced weapons
    systems on the battlefield. Further, without the support of strong
    military families, we cannot sustain a force capable of meeting the
    demands of this new century. To preserve a high quality, professional
    military we must provide the quality of life that our service members
    and their families expect--and deserve.
        As I have in the past, allow me to express my appreciation of
    Congress' strong support of America's uniformed men and women through
    the passage of several significant pieces of legislation in 1999. The
    first systematic reform of pay tables in half a century; the almost
    $14.0 billion in military pay increases--the highest in 18 years; and
    the $5.9 billion in retirement reform were bold steps that recognized
    the value of our high-quality, hard-working personnel, especially our
    experienced mid-career service members. I hear a lot of favorable
    remarks from the troops when I visit them, as I'm sure you do. Taken
    together, this pay and retirement reform package was an essential step
    in sustaining a viable All Volunteer Force. We must continue to meet
    this challenge in the future.
    Military Health Care
        Last year, I testified that we were in the midst of a long-term
    program to restructure the military medical community's ability to
    better support its wartime mission and assess whether our managed
    health care system--TRICARE--was meeting its twin goals of improving
    access and holding down costs. We ask our service members to be ready
    to serve anywhere; they and their families deserve no less than an
    adequate health care system.
        In survey after survey, we have learned that TRICARE simply is not
    user-friendly. While service members and their families are normally
    pleased with the care they receive from doctors, nurses, and other
    health care providers, they are frustrated by other aspects of TRICARE.
    It is, quite frankly, immensely complex, administratively confusing,
    and not customer-friendly. Due to the region-based structure of
    TRICARE, there is no consistency or standardization for appointments,
    benefits, claims, and enrollments across duty stations.
        To significantly improve how we meet the health needs of both our
    active duty and retired service members, and their families, we are
    recommending a phased approach. In the near term, we would include
    implementing business practice improvements and fully funding the
    Defense Health Program. Several of these improvements are already
    underway and include: automatic enrollment for all Active Duty Family
    Members into TRICARE Prime and making easy-to-understand enrollment
    materials available across all TRICARE regions. To ensure that all of
    our members know who is responsible for their care, those enrolled in
    TRICARE Prime will know who their Primary Care Manager (PCM) is by
    name. Active duty members and their families assigned to remote areas
    need to have the peace of mind that the same benefit will be provided
    to them regardless of where they are located. Additionally, members
    with complex illnesses and extensive treatment plans require clinical
    case management experts to help the patient successfully navigate the
    system, reducing delay and frustration while ensuring quality and
    continuity of care. Finally, TRICARE requires that members re-enroll
    every time they transfer from region to region. Enrollment in one
    region must be honored in all regions.
        The claims process is another major source of frustration for our
    Active Duty members and their families. We must have a system that
    ensures the government, not the beneficiary, receives the bills.
    Additionally, the protracted time it takes contractors to pay provider
    bills creates a disincentive for providers to remain in the network. My
    staff is working closely with Dr. Sue Bailey, ASD (Health Affairs), to
    fix or remove these major irritants.
        In the near-term, the Joint Chiefs would like to see improvements
    in the overall health care benefit. For years our recruiters have
    promised health care for life for career members and their families. As
    we all know, that is not what they receive. To honor this promise, the
    President's budget includes the expansion of TRICARE Prime Remote for
    active duty family members and the elimination of co-pays for all
    active duty family members enrolled in the TRICARE Prime network.
        The Chiefs and I recognize the compelling need, to provide more
    comprehensive coverage for our retirees and their family members. Where
    specific TRICARE coverage is not available, we must offer them other
    benefits. Our intent is to reduce out-of-pocket expenses.
        Let me stress that the Joint Chiefs' commitment to quality
    healthcare for all military members, including retirees, remains firm.
    Keeping our promise of ensuring quality healthcare for military
    retirees is not only the right thing to do, it also is a pragmatic
    decision because it sends a strong signal to all those considering a
    career in uniform.
    Housing
        Housing has an obvious and immediate impact on the quality of life
    for our servicemembers, making it an important priority. Thanks in
    large measure to Congress' targeted funding to improve quality-of-life
    of the force, the Services have established plans to eliminate
    inadequate housing for our unaccompanied enlisted personnel by 2008.
        At the same time, almost two-thirds of all military housing, or
    approximately 180,000 units, are considered inadequate. The Services
    are preparing family housing masterplans to meet the Defense Planning
    Guidance requirement to revitalize, divest through privatization, or
    demolish inadequate housing by 2010.
        The Services will be working closely with the Congress this year on
    a three-pronged strategy to improve family housing. These measures
    include the Secretary's initiative to raise allowances for off-post
    housing, continued funding for revitalization and construction of new
    units on-post, and privatization in areas where that approach is cost-
    effective. Congress' support of the budget request and the request to
    extend privatization authority for another 5 years will help improve
    the housing outlook for our service members and their families.
    Recruiting
        The need to recruit and retain quality people is the bedrock for
    the force and remains a significant challenge for all the Services. As
    the Congress well knows, recruiting and retention are often related--
    but they present very different sets of challenges. Let me first
    address recruiting.
        The current recruiting challenge is complex and affected by a
    number of factors including a robust, job-rich economy, a reduced
    willingness on the part of young Americans to volunteer for military
    service, the much larger number of high school graduates pursuing
    college degrees, and the smallest cohort of 18-to-23 year olds to
    recruit from in the history of the All-Volunteer Force.
        The Navy and Marine Corps met their recruiting objectives in 1999,
    while the Army fell short about 6,300 soldiers, achieving 92 percent of
    its recruiting goals. The Air Force, meanwhile, achieved 95 percent of
    its goal, falling short by about 1,700 airmen.
        Building on the tremendous support of the Congress and the
    Administration, the Services are taking aggressive steps to recruit
    enough quality men and women for a vital All-Volunteer Force. For
    example, the Services have significantly increased their recruiter
    force and budgets to continue to achieve the quality of accessions that
    fall in line with DOD guidelines. The Services are also offering larger
    enlistment bonuses and college fund incentives, as well as pursuing new
    advertising strategies.
    Retention
        Because of the quality of the people we recruit, and the
    significant training they receive, the private sector is anxious to
    outbid us for their services. The perception of a more stable and
    predictable lifestyle in the private sector also presents an attractive
    alternative to military service, given the increasing demands we are
    placing on a much smaller force. Long duty hours, frequent moves,
    disruptions in a spouse's employment, and extended family separations--
    separations that could include the risk of death, injury, or capture--
    are all burdens borne by our service members and their loved ones.
        Though the jury is still out and we continue to walk a personnel
    tightrope, it appears we may be turning the corner on retention, thanks
    in large measure to the Congress' support of our efforts to improve pay
    and the military retirement system. We must sustain the momentum. This
    year we need your support on improving the military health care system.
        I am pleased to report that the Army exceeded its aggregate
    retention goals by 5,000 personnel in 1999, which helped to overcome
    recruiting shortfalls and meet end strength requirements.
        While the Navy met its end-strength numbers, retention of first
    term sailors fell short of requirements, which could spell danger for
    effective management of future petty officer needs. Retention of Naval
    Aviators, Surface Warfare Officers and SEALS also remains a continuing
    concern.
        The Marine Corps met all of its goals, with retention concerns
    limited to aviators and chronic shortages in specific high-demand, low-
    density specialties, such as intelligence, electronic maintenance, and
    logistics.
        The Air Force missed its retention goals in all enlisted
    categories, causing it to fall short of the adjusted fiscal year 1999
    end-strength requirement by about 5,000 personnel. On a positive note,
    while the Air Force pilot continuation rate struggled to reach 41
    percent, aviator bonus ``take rates'' jumped to 62 percent overall,
    underscoring the importance of targeted bonuses and incentives, in
    addition to general improvements in military compensation across-the-
    board.
        In today's Total Force, concerns about recruiting and retention in
    the Reserve Component must also be addressed. While the Army National
    Guard, Air National Guard, and Marine Corps Reserve substantially met
    their recruiting goals, the Army, Naval, and Air Force Reserves fell
    considerably short. Additionally, the Navy and Air Force Reserves
    failed to meet their end strength requirements, reflecting continuing
    retention challenges.
    Equal Opportunity
        America's Armed Forces reflect American society, with its diverse
    experiences, goals, and expectations. Our task is to transform these
    young men and women into a cohesive, well-trained force, always
    cognizant of the right of our service members to be treated with
    dignity and respect. America's sons and daughters deserve the
    opportunity to succeed and work in an environment free of
    discrimination and harassment. Nonetheless, equal opportunity is more
    of a journey than a destination and there will always be room for
    improvement. The Armed Forces remain committed to providing equal
    opportunity and fair treatment as core values for all its members. This
    commitment reflects the very best of what our country offers.
                   supporting the national security strategy
        At the beginning of the 21st Century, the United States currently
    enjoys relative peace and security. The international security
    environment, however, remains complex, dangerous, and unpredictable.
    Even as the threat of global war recedes and former enemies now
    cooperate with us on some issues, very real threats to our citizens and
    interests remain. Though we currently face no peer competitor, openly
    hostile regional adversaries fielding potent forces have both the
    desire and the means to challenge the United States militarily.
    Transnational organizations and forces threaten our interests, our
    values, and even our physical security at home and abroad. And, while
    our military strength remains unmatched, both state and non-state
    actors may attempt to circumvent our strengths and exploit our
    weaknesses using methods that differ significantly from our own.
    Attacks on our information systems, the use of weapons of mass
    destruction, domestic and international terrorism, and even man-made
    environmental disasters are all examples of asymmetric threats that
    could be employed against us. Indeed, some already have.
        To deal successfully with these challenges, the 1999 National
    Security Strategy stresses the fundamental need for U.S. leadership and
    engagement abroad to shape the international environment and position
    our military to respond rapidly to a full spectrum of emerging crises.
    If the United States were to withdraw from international commitments,
    forsake its leadership responsibilities, or relinquish military
    superiority, the world would surely become more dangerous and the
    threats to American citizens and interests would increase. Within their
    capabilities, therefore, our Armed Forces are committed to peacetime
    military engagement as the best way of reducing the sources of
    conflict, preventing local crises from escalating, and shaping the
    international environment.
        The National Security Strategy also recognizes that countering the
    wide range of threats that we face requires an integrated approach
    involving both interagency and multinational cooperation. An integrated
    approach brings to bear all instruments of national power--military,
    economic, information, and diplomatic--to achieve our national
    objectives, unilaterally if necessary. And, whenever possible, it makes
    optimum use of the skills, resources, and political support provided by
    multinational military forces, regional and international
    organizations, and non-governmental organizations. We will continue to
    improve our abilities to effectively operate as one element of unified
    interagency and multinational efforts, while encouraging other
    organizations to do likewise. At the same time, we are also improving
    our capabilities to support state and local civil authorities in
    response to growing threats to the US homeland, such as terrorism and
    Weapons of Mass Destruction.
        Peacetime military engagement (PME) can help ameliorate potential
    sources of conflict, promote more efficient operations among
    participating nations, and ensure access to key infrastructures.
    Through these means, PME assists in reducing response requirements
    while supporting the fundamental, overarching purpose of the U.S.
    military--to fight and win our Nation's wars.
        The Theater Engagement Plan (TEP) process brings this ``shaping''
    element of our National Military Strategy fully into the arena of
    deliberate planning and national-level oversight. We are continuing to
    evolve and refine the TEP process and philosophy. A standardized
    automated database, the Theater Engagement Planning Management
    Information System (TEPMIS), is being developed to provide a tool for
    all CINC engagement managers to use in planning, analyzing, executing,
    and assessing engagement programs and activities. Additionally, the
    regional engagement and presence joint warfighting capabilities
    assessment (REPJWCA) team is planning a study that will ultimately be
    used to identify engagement requirements, shortfalls, and resource
    implications.
        Peacetime military engagement, however, does not supplant the core
    requirement to have a military capable of deterring and, if necessary,
    defeating nearly simultaneous large-scale, cross-border aggression in
    more than one theater, in overlapping time frames. The defense of
    America's lives, territories, and interests is, and must remain, a
    cornerstone mission of our Armed Forces. This capability defines the
    U.S. as a global power, ensuring that our Nation will be able to
    protect its vital interests or fulfill its international commitments
    with military power when confronted with more than one crisis. It also
    deters opportunistic aggression against our interests or those of our
    friends elsewhere in the world if we become involved in a major
    conflict. Furthermore, this capability provides needed flexibility and
    responsiveness against the possibility that we might encounter unknown
    threats, or threats larger or more difficult than expected.
    Overall Readiness Assessment
        The starting point for any assessment of the readiness of the Armed
    Forces must be our ability to execute this National Security Strategy,
    including the most demanding scenario--fighting and winning two nearly
    simultaneous major theater wars in overlapping time frames.
        Though military readiness has been challenged in many ways over the
    past year, our Armed Forces remain capable of executing our military
    strategy. The combat operations conducted against the Milosevic regime
    in Serbia last year--Operation ALLIED FORCE--demonstrated once again
    that our deployed and first-to-fight units remain very capable. Well-
    trained and armed with the best equipment in the world, our forward-
    deployed forces in the Balkans, the Persian Gulf, and the Western
    Pacific executed a demanding range of missions superbly. Although we
    remain capable of executing our current strategy, the risks associated
    with the most demanding scenario have increased. We assess the risk
    factors for fighting and winning the 1st Major Theater War as moderate,
    but lower readiness levels of later-deploying forces combined with
    capability shortfalls in our lift and other critical force enablers
    result in high risk for the 2nd MTW.
        As I have explained in the past, this does not mean that U.S.
    forces would not prevail in either contingency. We eventually would
    win, but longer timelines increase the potential for higher casualties.
    Readiness of the Force
        In my prior testimony to the Senate Armed Services Committee, I
    spoke of the difficulties we experienced maintaining current readiness.
    At that time, we identified problems that, if left unchecked, would
    have eroded the readiness of our Armed Forces.
        We also identified a number of reasons for these readiness issues
    including the higher than anticipated OPTEMPO, increased wear and tear
    on our aging and overused equipment, as well as personnel and quality
    of life issues.
        Thanks to the great support of the Congress and the Administration,
    the readiness picture is starting to move in the right direction. The
    $112 billion increase in the fiscal year 2000 President's Budget (PB)
    across the FYDP, and the additional funding support from Congress,
    arrested the steep decline in purchasing power we had experienced over
    the last several years. This increased buying power enabled us to fund
    military compensation improvements, operations in Bosnia, our most
    critical readiness requirements, and our efforts to increase
    recapitalization of our equipment and facilities.
        The fiscal year 2001 PB protects this $112 billion commitment to
    current and future readiness. Specifically, it provides $1.4 billion in
    fiscal year 2001 for increases in fuel prices above those in last
    year's request ($3.3 billion total in fiscal year 2001-05). It also
    provides $2.2 billion more for on-going operations in Bosnia, Kosovo,
    and Southwest Asia ($6.2 billion of new funding in fiscal year 2001-
    05).
        The fiscal year 2001 PB also builds on last year's substantial
    quality of life initiatives. It fully funds a military base pay raise
    of 3.7 percent (ECI plus 0.5 percent) in fiscal year 2001, as well as
    the Congressional changes to our military retirement reform initiative.
    Equally important, it requests and adds resources necessary to reduce
    off-base housing out-of-pocket costs for our soldiers, airmen, sailors,
    and marines from about 18.8 to 15 percent in fiscal year 2001. By
    fiscal year 2005, these housing-related out-of-pocket expenses should
    be eliminated. Finally, the importance of military health care is
    reflected in significant increases to the Defense Health Program (DHP)
    in fiscal year 2001. Although this budget addresses most of our health
    care problems, there is more that we need to do in this area, as I have
    discussed earlier. I look forward to working with you as we tackle
    these problems over the next year.
        Notwithstanding all these funding increases, we still face
    challenges primarily due to excess infrastructure, unbudgeted
    contingency operations, and higher than expected maintenance costs for
    our aging equipment and infrastructure.
        We continue to have excess infrastructure, and any funds applied
    toward maintaining unneeded facilities diminishes our capacity to
    redirect those funds toward higher priority modernization programs.
    Closing bases is painful, but it provides the opportunity to
    significantly reduce excess capacity and reinvest the resultant savings
    in modernization and readiness accounts. Accordingly, our fiscal year
    2001 PB proposes and funds new base closure and realignment (BRAC)
    rounds in fiscal year 2003 and fiscal year 2005. We look forward to the
    Congressional support essential for BRAC to achieve needed savings.
        Continued timely funding for contingency operations is also crucial
    to preserving the readiness of our Armed Forces. Almost a year ago, we
    embarked on a major buildup of forces in the Balkans in support of
    Operation ALLIED FORCE. The cost of this response totaled nearly $2
    billion in unforeseen fiscal year 1999 expenses.
        Additionally, the follow-on mission sending U.S. forces into Kosovo
    as part of KFOR resulted in an additional $1 billion of unprogrammed
    fiscal year 1999 expenses. These costs could not have been met within
    the existing defense budget without impacting readiness. However,
    thanks to Congress' timely approval of an emergency supplemental
    appropriations in May 1999, we avoided having a negative impact on
    other programs.
        We are currently involved in peacekeeping operations in Kosovo and
    East Timor, and have forwarded an fiscal year 2000 supplemental request
    seeking additional funding to meet these requirements. Prompt
    Congressional action to provide emergency non-offset funding to replace
    dollars already obligated is essential to protect readiness in the
    latter half of this fiscal year.
    Current Readiness vs. Modernizing the Force
        The fiscal year 2001 PB has nearly a 2 percent real growth compared
    to the fiscal year 2000 appropriated level. This is the first time in
    over eight years that we have submitted a budget request with real
    growth.
        This forward-looking budget continues us on the path of achieving
    our Quadrennial Defense Review (QDR) procurement goals. Specifically,
    our fiscal year 2001 procurement request is $6.1 billion above the
    fiscal year 2000 appropriated level. This funding allowed us to achieve
    the QDR procurement goal of $60 billion in fiscal year 2001. This is
    now the fourth year of significant real growth in our procurement
    funding. Ultimately, these funding increases will go a long way toward
    fielding replacements for aging systems and gaining the new
    capabilities essential to continued U.S. battlefield supremacy.
        The fiscal year 2001 budget seeks to reshape our forces to reflect
    changing threats and lessons learned. It supports the Army's new vision
    that stresses lighter, more lethal/agile/deployable forces that have a
    smaller logistical footprint. It funds a broad array of programs to
    protect U.S. forces and interests against terrorism, chemical-
    biological attack, and other asymmetric threats. It adds over $2
    billion for National Missile Defense.
        The fiscal year 2001 PB also funds Kosovo lessons learned.
    Specifically, the budget supports the formation of an additional
    squadron of EA-6B electronic warfare aircraft to be operational in
    fiscal year 2003. It also provides strong funding for munitions, UAVs,
    and communications-intelligence-surveillance capabilities.
        The budget reflects the Department's expanding efforts to improve
    and streamline its support activities so they function better and cost
    less. Under the umbrella of the Defense Reform Initiative (DRI), our
    efforts are showing positive results, and the substantial savings
    achieved or identified are being allocated to readiness, modernization,
    and other priorities.
        In a nutshell, the fiscal year 2001 PB funds key readiness
    indicators, supports quality of life initiatives, meets the procurement
    goal of $60 billion in fiscal year 2001, supports the reshaping of U.S.
    forces to reflect changing threats and lessons learned, and continues
    streamlining and reform initiatives.
        Despite these efforts, I am not convinced that we have turned the
    corner yet. Many units continue to be plagued with personnel shortages.
    History tells us that readiness is fragile and that, once it starts
    down, it requires considerable resources, time, and attention to
    regain. There is still much that needs to be done in order to sustain
    the momentum. To avoid mortgaging future readiness, we must have
    sustained funding to meet the competing demands of maintaining current
    readiness, sustaining the quality force, and funding modernization.
        We look forward to fiscal year 2001 Defense Authorization and
    Appropriations Bills that are a powerful endorsement on behalf of our
    soldiers, sailors, airmen, and marines, and their families, and
    sustains the readiness enhancements provided in the fiscal year 2000
    bills. Doing so will allow us to keep our current readiness posture
    high while preparing for tomorrow's challenges.
    OPTEMPO Concerns and Readiness Reporting Improvements
        It is clear that the current tempo of operations, or OPTEMPO,
    continues to have a significant impact on service members and their
    families, and therefore remains a concern for the Joint Chiefs and the
    CINCs. Frequent, often unexpected, and persistent deployments stress
    the force and stretch scarce mobility assets, ultimately degrading
    readiness and increasing the risk to our ability to execute the most
    demanding MTW scenarios. In the long run, too many protracted
    deployments will inevitably disrupt operating budgets, cause lost
    training opportunities, and accelerate wear and tear on equipment. Most
    importantly, unchecked OPTEMPO impacts quality of life and could
    jeopardize our ability to retain the high-quality people we need for
    tomorrow's force.
        Measuring readiness is an ongoing process and we continue to assess
    how Operation ALLIED FORCE and the long-term deployments to both Bosnia
    and Kosovo affect the force. In the aggregate, ALLIED FORCE may delay
    readiness improvements we sought through the emergency supplemental and
    top line increases. For example, though the supplemental budget request
    was fully funded this year, it will take up to two years to manufacture
    replacements for certain types of munitions. In addition, long-term
    deployments to the region represent a major force commitment that will
    be with us for some time to come.
        Our experience in the Balkans underscores the reality that
    multiple, persistent commitments place a significant strain on our
    people and can erode warfighting readiness. Rapidly withdrawing from a
    commitment like Bosnia or Kosovo to support a major theater war would
    require a quick decision by the National Command Authorities to allow
    time for units to withdraw, retrain, redeploy, and be used effectively.
    This could mean the late arrival of some forces for MTW employment.
        While operational tempo is often a function of unpredictable world
    events and our global commitments, the Services, Joint Staff and CINCs
    are all taking steps to reduce its impact on the force.
        First, we have increased our global sourcing of units to fill
    deployment commitments, and more equitably distribute the workload
    across the force. This includes substituting units with similar
    capabilities and increasing the use of the Reserve Component,
    contractor support, and coalition or host nation support.
        Second, we have expanded our Global Military Force Policy, or GMFP,
    to improve worldwide management of Low Density/High Demand (LD/HD)
    assets. These include U-2 and RC-135 surveillance aircraft and crews,
    Psychological Operations (PSYOPS) and Civil Affairs specialists, EA-6B
    electronic warfare aircraft, and other units and platforms with unique
    or preferred capabilities. GMFP ensures senior level visibility into
    LD/HD allocation and provides top-down direction to prioritize
    requirements and balance them against available resources in order to
    preserve the long-term readiness of these critical assets. The Joint
    Staff, in conjunction with the Services, is assessing each of our LD/HD
    capabilities to determine which force structure increases will best
    meet CINCs' requirements. For some of our most overworked assets, we
    have already acted through the POM process to increase our numbers.
        Third, as we closely monitor current overall readiness, we continue
    to refine the tools and procedures to improve our readiness reporting
    and assessment process. We have developed, in conjunction with the
    Services, an improved Tempo Management process that provides senior
    level visibility into how we are using the force. Tempo thresholds and
    metrics are regularly briefed within our Joint Monthly Readiness Review
    (JMRR) forum. The focus of our readiness reporting system remains
    assessing and managing risk in executing the National Military Strategy
    by placing resources where they are needed most. We have increased the
    level of detail available within our readiness assessment systems and
    reports to Congress to ensure problem areas are highlighted to senior
    leadership within the Services, my staff, OSD, and Congress.
        In consonance with new Congressional reporting requirements
    outlined in the Fiscal Year 2000 Defense Authorization Act, we will
    assess readiness over three broad areas: unit readiness, institutional
    training, and defense installations. This will be accomplished by: (1)
    enhancing the existing Global Status of Resources and Training System,
    or GSORTS; (2) providing an annual assessment of the readiness of DOD's
    individual training establishments to provide qualified personnel to
    operational units; and (3) establishing a common installation reporting
    methodology that annually assesses the effect of facility readiness on
    operational missions. These reporting requirements were implemented as
    part of DOD's Readiness Reporting System on 1 April, 2000.
    Capability Concerns
        Joint Staff, CINC, and Service assessments have confirmed that much
    of the risk in executing MTW scenarios is driven by significant
    capability shortfalls. These fall into six areas: (1) intelligence,
    surveillance, and reconnaissance; (2) logistics sustainment; (3)
    command, control, communications and computers; (4) mobility and en
    route infrastructure; (5) defense against terrorism and weapons of mass
    destruction; and (6) information vulnerabilities.
        For each of these areas, where possible, we have implemented
    measures that will reduce the impact of these capability shortfalls.
    For the most part, long-term fixes in these areas are funded within the
    FYDP, but will not be fully implemented until fiscal year 2009. A
    continued commitment to increased resourcing will help alleviate these
    capability deficiencies. While recent funding increases should prevent
    further deterioration of current readiness, they will not guarantee the
    levels of readiness needed to significantly reduce risk in executing
    the National Military Strategy.
    Airborne Intelligence, Surveillance, & Reconnaissance (ISR)
        Over the past year, many theater CINCs have consistently raised
    concerns about ISR asset shortages, specifically, the availability of
    airborne reconnaissance platforms, trained aircrews, pilots, linguists,
    and sensors.
        Many ISR assets are categorized as Low Density/High Demand (LD/HD)
    because demands for these assets continue to outpace the current
    inventory. To more efficiently and effectively use current airborne ISR
    assets, the Joint Staff developed a peacetime airborne ISR reallocation
    plan that responded to CINC peacetime requirements. In addition, a more
    detailed requirements-based request process was put in place to better
    assess and prioritize CINC needs. This new process should ensure the
    most critical CINC information needs are met while managing tasking on
    limited ISR resources. We are also evaluating alternate collection
    means such as allied or non-airborne ISR capabilities to reduce demand
    on LD/HD ISR systems. Finally, an ongoing effort to increase the
    numbers of airborne ISR assets will increase their availability.
        For the longer-term, my staff is assessing ISR deficiencies as the
    basis for my recommendations to the Secretary of Defense. We will
    continue to closely monitor and manage these crucial warfighting
    enhancement assets to ensure we can meet our most pressing needs.
    CJCS Exercise Program Reductions
        An important component of joint readiness and the CINCs' theater
    engagement strategies is the CJCS Exercise Program. This is the
    principal tool for achieving joint and multinational training. It
    provides combatant commanders with their primary means to train battle
    staffs and forces in joint and combined operations, to evaluate war
    plans, and to execute their engagement strategies. This critical
    program also provides a vehicle for DOD to assess the military's
    ability to satisfy joint national security requirements and to enhance
    and evaluate interoperability between the Services.
        To reduce the impact of OPTEMPO on people, I directed an overall 30
    percent reduction in joint exercise man-days between fiscal year 1996
    and fiscal year 2001--a goal that has already been met. Additionally,
    this directive resulted in reducing the number of joint exercises from
    277 in fiscal year 1996 to 189 in fiscal year 2000.
        The additional fiscal year 2000 Congressional reductions in the
    CJCS Exercise Program Service Incremental Funding make it more
    difficult for this important program to match essential training with
    the need to reduce OPTEMPO/PERSTEMPO. The CINCs are unanimous in their
    concerns about the impact that these further reductions will have on
    the readiness of the first-to-fight forces. We seek Congressional
    support in restoring this program to its former level.
    Headquarters Reductions
        The Fiscal Year 1998 National Defense Authorization Act, as
    continued for fiscal year 1999 and fiscal year 2000, mandated
    headquarters reductions. The current language requires an additional 15
    percent cut over three years. While reductions in headquarters staffs
    are generally a good idea, there are compelling reasons why we seek
    relief for the Joint Staff and the combatant commander staffs from this
    mandate.
        Specifically, the Goldwater-Nichols Act, and subsequent
    legislation, and implemented accommodations of the Packard Commission
    greatly increased my responsibilities and those of my staff, as well as
    the combatant commanders. The Joint Staff, for instance, assumed
    significant additional responsibilities for force integration and
    budgeting.
        Each succeeding Unified Command Plan also added commands and
    missions, to include theater engagement, space planning/operations, and
    joint force integration and training. For example, the Strategic Air
    Command was transformed from a specified command into a new unified
    command, STRATCOM. TRANSCOM was activated to assume global airlift,
    sealift, and traffic management responsibilities.
        Additionally, continued joint mission increases, as well as
    emerging missions, typically come with a need for a high degree of
    combatant commander headquarters support. Mission area increases
    include counter-drug, theater engagement, force protection, missile
    defense, computer network defense/attack, and development of joint
    warfare concepts, capabilities, and doctrine.
        The combination of increased responsibilities, more mission areas,
    and the cuts already taken mean that further reductions come with
    serious risk, and will impede our ability to provide effective
    management and oversight of readiness, force development, and
    operations.
    AC/RC Integration
        In coping with an increasingly demanding security environment, the
    role of our Reserve Components has grown markedly as the active force
    has drawn down. In virtually every domestic and overseas mission, from
    disaster relief in the continental U.S. to humanitarian assistance in
    Central America to ongoing operations in Iraq, Bosnia, and Kosovo, our
    Reservists and National Guardsmen have performed magnificently in
    important and, in many cases, indispensable roles. Since the beginning
    of operations in Bosnia and Kosovo, a total of more than 19,000 Reserve
    Component personnel have been activated for duty in the Balkans.
    Another 5,600 were activated for NATO's Operation ALLIED FORCE against
    Milosevic's forces under the authority of a Presidential Reserve Call-
    up (PRC). Almost 10,000 Reservists and National Guardsmen have served
    throughout Southwest Asia since the end of the Gulf War.
        Effective integration and utilization of the men and women in our
    Reserve Component will continue to be key elements of Joint Personnel
    Readiness and are critical to the success of the Total Force. Often the
    capabilities they provide--such as civil affairs, psychological
    operations, and civil support--are found predominantly in the Reserve
    Components. We have made a number of steps in creating a true Total
    Force, and I am enthusiastic about the opportunities inherent in the
    ``Chairman's Ten''--the Reserve Flag and General officers provided by
    the Congress for assignment to the CINCs. This program will allow us to
    tap the tremendous skill and expertise in our Reserve and Guard
    officers, and aid the CINCs in the full range of their
    responsibilities. The first assignment--Commander, Joint Task Force
    Civil Support--has already been made. We will have the rest in place by
    the end of this calendar year, including such key positions as Deputy
    Director for Operations, Plans, and Policy at SOCOM, Chief of Staff to
    TRANSCOM, and the Director for Logistics for STRATCOM.
        Clearly, the wide range of contributions by the Reserve Components
    continues to be a bright spot as we strive to match available resources
    to a demanding mission load. Their service also demonstrates the
    enduring value and relevance of the citizen-soldier. We will continue
    to look for innovative ways to capitalize upon the strengths of our
    Reserve Components, our trump card for maintaining high readiness
    levels in these challenging times.
    Force Protection
        Whether the units deployed are Reserve or Active, wherever our
    troops go force protection is a top priority for commanders. The tragic
    bombings of our embassies in Tanzania and Kenya in 1998 reminded us
    again that terrorists can strike anywhere, at any time. During my
    testimony last year, I noted that our adversaries--unable to confront
    or compete with the United States militarily--spend millions of dollars
    each year to finance terrorist organizations that target U.S. citizens,
    property, and interests. Consequently, our Combatant Commanders and the
    Services continue to focus on force protection issues as a first order
    priority.
        Six important force protection initiatives have increased our
    antiterrorism efforts. First, the Joint Staff Integrated Vulnerability
    Assessment Teams and CINC and Service Vulnerability Assessment Teams
    assist installation commanders and force protection officers in
    refining existing plans and providing assessment lessons learned which
    are made available to all commands.
        Second, we continue to improve our Antiterrorism Force Protection
    Training Program which provides antiterrorism awareness training to all
    DOD military and civilian personnel and their families, specialized
    training to Antiterrorism Force Protection Officers, ``pre-command
    training'' to prospective Commanders, and operational level seminars to
    our most senior officers.
        Third, the Combating Terrorism Readiness Initiative Fund provides
    an important means for our Combatant Commanders to fund time-critical,
    emergent requirements that cannot wait for the normal budget or
    acquisition processes.
        Fourth, the Operations and Intelligence Fusion Initiative
    recognizes the importance of timely dissemination of terrorist threat
    information from the intelligence community to the operators in the
    field. We are making progress toward the goal of having fully
    coordinated Joint Operations and Intelligence Fusion Cells at all
    levels.
        Fifth, we have embarked on a major effort to provide minimum force
    protection standards for Military Construction (MILCON) projects. DOD
    has recently approved prescriptive standards for construction of new
    high occupancy buildings, including barracks, dining halls, and
    recreation facilities. The additional cost involved depends upon such
    things as construction location, required vehicle standoff distance,
    and the threat level, but is not expected to significantly increase the
    overall construction cost.
        Finally, during the past year we completed an Antiterrorism Best
    Practices Study that examined some of our allies' best efforts to
    combat terrorism at the strategic, operational, and tactical levels. We
    discovered several different approaches that merit closer evaluation.
    For example, several of our allies' antiterrorism strategies include
    more proactive engagement with local communities in higher threat
    areas. They found that gaining the trust and confidence of local
    citizens makes it far more difficult for terrorist organizations to
    effectively operate within their communities. As we consider the
    lessons from this study, we must continue to carefully balance any
    potential increased risk to our men and women against expected force
    protection benefits.
        Key technology enablers, such as threat analysis and warning,
    explosive device detection, and early detection of WMD, also enhance
    our ability to counter terrorism.
        Our best efforts notwithstanding, we know that terrorism will
    remain a serious threat as we move further into the 21st century. We
    cannot afford to subscribe to a ``zero casualty'' mentality. Our
    enemies will continue to test our resolve, both at home and abroad.
    While we cannot prevent every attack, we can lower both the threat and
    the consequences of terrorist incidents. Therefore, it is imperative
    that we have the resources and training needed to put appropriate
    procedures in place.
    Counterdrug Forward Operating Locations
        Progress continues on U.S. Southern Command's Forward Operating
    Locations (FOLs) to replace counterdrug aerial detection and monitoring
    missions formerly flown by DOD and interagency aircraft from Howard Air
    Force Base in Panama. Since the first of May, we have staged air
    operations from Curacao and Aruba, and Manta, Ecuador. Additionally, we
    recently signed a long-term access agreement for a third FOL in Central
    America. Thus far, our total numbers of hours on station are equal to
    or greater than when we flew from Howard. However, we need to increase
    our operations in the ``source zone'' (SZ): Colombia, Peru, and
    Bolivia.
        The SZ is our number one counterdrug (CD) priority and we are
    taking several steps to increase our presence there. Our detection and
    monitoring coverage shortfall was mainly driven by the physical
    condition of FOL Manta, Ecuador, which restricts our forces to single
    plane, Day Visual Flight Rules operations. The result has been fewer
    hours flown over southern Colombia and the rest of the SZ than desired.
    USCINCSO has directed his Air Force component commander to develop a
    plan to increase the capability of the airfield as soon as possible. As
    of 1 April of this year, we have the capability to fly 3 aircraft from
    Manta at night and in any weather. This will go a long way toward
    overcoming the current coverage shortfall. Longer-term, we will need to
    address some other infrastructure deficiencies at the FOLs, such as
    ramp space and support, operations, and maintenance facilities.
        USCINCSO's implementation concept is a phased approach. He
    recognizes the requirement to operate from the FOLs in an expeditionary
    manner, but also believes that such operations are not sustainable in
    the long term. Certain safety and infrastructure improvements will need
    to be completed before commencing full-scale operations to maximize our
    use of these airfields, but construction is planned only where existing
    host-nation facilities are unavailable. For example, we are planning
    for ``expeditionary construction'' of structures using concrete
    foundations and metal skin siding exteriors. All of this is designed to
    meet minimum requirements while minimizing costs. When the projects are
    completed, we fully expect to replicate the level of detection and
    monitoring flown from Howard Air Force Base, without increasing costs
    or OPTEMPO of the Services.
        The Department of State (DOS), which has the lead on securing long-
    term access agreements, concluded a 10-year agreement with Ecuador in
    November, 1999 and a Curacao/Aruba agreement with the Dutch in March,
    2000. Official negotiations for a FOL in El Salvador resulted in a
    draft agreement that was signed on 31 March 2000.
        FOLs are not bases, but staging airfields, owned and operated by
    the host nation as part of our collective efforts to stem the flow of
    illegal narcotics into the United States. Without these FOLs, we would
    be unable to effectively carry out our detection and monitoring mission
    and would fall well short--50 percent--of the historical source zone
    coverage provided from Howard AFB. Coverage in the deep source zone,
    the area identified as ``critical'' in the President's National Drug
    Control Strategy, would be severely degraded.
    Personnel Recovery
        Recovery of our personnel behind enemy lines, or in the vicinity of
    enemy forces, is one of our most important tasks. And it is one we take
    very seriously. To consolidate personnel recovery responsibilities
    under one agency, the Joint Personnel Recovery Agency was established
    as an entity under U.S. Joint Forces Command on 1 October 1999.
        In addition to organizational changes, we are working to field a
    new-generation handheld survival radios with integrated communications
    and GPS capability to increase the probability of survival and
    successful recovery. Additionally, the V-22 Osprey holds great
    potential for combat search and rescue operations, and the Air Force is
    exploring its utility in this area. Finally, we are looking into some
    areas that merit increasing interaction between DOD and the
    interagency, such as standardized survival, evasion, resistance and
    escape training for non-DOD personnel at risk of capture.
    Global Hot Spots
        While there are many areas of interest around the world, three
    specific regions continue to occupy much of our attention and
    resources: the Korean peninsula, the Balkans, and Southwest Asia.
    Instability and tension in these areas pose the greatest potential
    threats to U.S. interests, and consume more energy and resources than
    any others. Additionally, East Timor bears some discussion, since U.S.
    forces remain involved in the peacekeeping effort there.
    Korea
        Despite a collapsed economy and an ongoing struggle to feed its own
    population, the North Korean government continues to pour its limited
    resources into the military and to pursue a policy of confrontation
    with South Korea and neighbors in the region. Additionally, it
    represents a nation capable of launching a significant conventional
    attack on U.S. forces with minimal warning.
        More than one million North Korean troops serve on active duty, the
    vast majority deployed within hours of the DMZ and South Korea's
    capital city, Seoul. Infiltration by North Korean special forces and
    provocations such as last year's Yellow Sea clash over fishing rights
    continue to exacerbate tensions between the two governments, while
    ongoing development of long-range ballistic missile technology worries
    all countries in the region. Finally, North Korea's repeated threats to
    walk away from the Agreed Framework that curtailed their nuclear
    production program have been unsettling to the international community.
        The North Korean challenge remains one that we must--and do--take
    very seriously. We have pursued a number of initiatives in recent years
    to enhance the capabilities of both our forces forward deployed on the
    peninsula and our reinforcing elements, as well as the forces of our
    South Korean Allies. As I testified last year, we now have better U.S.
    tanks, better infantry fighting vehicles and better artillery, as well
    as improved attack helicopters and aircraft, on hand in Korea. We have
    also deployed Patriot missile defense systems, improved surveillance
    capabilities, and assisted with a number of upgrades to South Korean
    forces. Our naval forces have greatly stepped up their anti-SOF
    activities, while forward-deployed Marine forces stand ready to
    reinforce the peninsula on short notice. We have upgraded our
    prepositioned stocks as well, substantially improving our ability to
    reinforce the peninsula with ground troops from the continental United
    States.
        These measures are particularly important to support the dramatic
    shift in U.S. policy toward Pyongyang proposed by former Secretary of
    Defense William Perry following his visit to North Korea in May of last
    year. He concluded that North Korea's development of long-range
    missiles and the capability to build nuclear weapons created an
    instability that compromised previous policies. Mr. Perry advocated a
    new, dual-track strategy: a positive path, called Mutual Threat
    Reduction, designed to improve relations leading ultimately to
    normalization; and a negative path, called Threat Containment,
    consisting of increasing containment, isolation, and military
    readiness. The U.S. is currently pursuing the Mutual Threat Reduction
    path, which promises improved bilateral relations in exchange for a
    Democratic Peoples Republic of Korea commitment to continue
    negotiations to eliminate their long-range missile program and enter
    into discussions about their nuclear weapons program. If this approach
    fails, then the Threat Containment path will be pursued.
        While this strategy holds promise, our defensive posture in Korea
    must remain both viable and strong as long as the threat remains. North
    Korea's substantial chemical and biological weapons capability, coupled
    with its continued pursuit of ballistic missile technology, will demand
    our attention for the foreseeable future.
    Southwest Asia
        Long-term U.S. interests and the potential for instability combine
    to focus our attention and concern in Southwest Asia as well. Saddam
    Hussein's continuing disregard for the United Nations and the
    agreements he previously signed, his belligerent actions to challenge
    enforcement of U.N. sanctions, and the military threat he poses to the
    neighboring states all require that the U.S. and our allies maintain a
    substantial, capable, and ready military force in Southwest Asia.
    Additionally, powerful reinforcing units in the U.S. are prepared to
    move quickly should conditions warrant a rapid deployment of any
    additional assets.
        Our resolve and the ability of our forces in Southwest Asia have
    been tested throughout 1999. In the wake of Operation DESERT FOX at the
    end of 1998, Saddam Hussein has increased his belligerence against U.S.
    and coalition forces enforcing the Iraqi No-Fly-Zones. On a regular
    basis, Iraqi forces fire anti-aircraft artillery and surface-to-air
    missiles against U.S. and coalition aircraft, forcing them to act in
    self-defense.
        The U.S. military presence in the region includes land-based
    fighter and bomber forces, an aircraft carrier battle group with strike
    aircraft and cruise missiles, and substantial ground forces that can be
    reinforced within days. In recent years we have built up our pre-
    positioned stocks of weapons and supplies, considerably improved our
    strategic lift, and developed a crisis response force in the United
    States that can deploy to the Gulf region on very short notice.
        The current posture of our deployed forces in the Persian Gulf is
    one example of our efforts to reduce the number of soldiers, sailors,
    airmen, and marines deployed overseas on contingency operations, while
    still maintaining sufficient capability to meet our security
    responsibilities and commitments around the world.
    Balkans
        The Balkan region continues to be a key area of interest and
    involvement, and U.S. forces remain committed throughout the area. In
    Bosnia-Herzegovina, up to 4,600 U.S. servicemen and women are
    supporting the NATO multi-national Stabilization Force, or SFOR.
    Approximately 5,500 personnel are deployed to Kosovo, and another 600
    are deployed to the Former Yugoslavia Republic of Macedonia (FYROM) and
    Greece, all in support of NATO's Kosovo Force, or KFOR.
        In Bosnia, while NATO military units continue to maintain a safe
    and secure environment, progress in civil implementation remains slow,
    but steady. A restructuring of SFOR has reduced the U.S. contribution
    by about 25 percent, from 6,200 to 4,600 personnel, this year.
        The KFOR mission in Kosovo has significantly increased the U.S.
    presence in the region, not just in Kosovo, but in the FYROM as well.
    While some violence continues, U.S. forces--along with NATO allies and
    coalition partners--have contributed to establishing a safe and secure
    environment in Kosovo, and enhanced regional stability. To create a
    lasting and durable solution, however, a host of civil, political, and
    economic tasks still must be accomplished to build a better future. The
    United Nations Mission in Kosovo is helping in this recovery process
    and one of the next challenges for the international community will be
    to properly fund, organize, equip, and train the new Kosovo Protection
    Corps.
        The Milosevic regime in the Federal Republic of Yugoslavia remains
    a source of tension throughout Southeastern Europe. The ability of the
    United States to use all the instruments of national power--political,
    economic, as well as military--while convincing our Allies to do the
    same, may help prevent another conflict in the region. Positive
    developments in regional stability, democratization, and economic
    revitalization include NATO's Southeastern Europe Initiative--initiated
    at the Washington Summit--and the European Union-sponsored Stability
    Pact for Southeastern Europe. Both initiatives look toward regional
    integration and cooperation in finding regional solutions to the
    challenges in the Balkans.
    East Timor
        Following cessation of open hostilities in East Timor, the
    challenge for the international community is to help rebuild a civil
    structure, essentially from scratch. The United Nations Transitional
    Administration for East Timor (UNTAET) has this responsibility. The
    U.N. mandate for the peacekeeping component of UNTAET calls for a force
    of up to 8,950 troops plus 200 military observers. The U.S.
    contribution to the UNTAET mission consists of a small number of U.S.
    military officers serving as observers. Also, as part of normal
    regional exercises from the U.S. Pacific Command, other U.S. personnel
    contribute to humanitarian and civic action efforts through exercises
    configured to assist in building infrastructure and restoring some
    social services. These activities are coordinated by the U.S. Support
    Group East Timor (USGET), consisting of staff and support personnel.
        The central security issue for East Timor remains the maintenance
    and security of the border with West Timor. We remain cautiously
    optimistic of eventual stability in light of the Wahid government of
    Indonesia's expressed intentions to disarm and sever relations with the
    militias.
    Mozambique
        In response to heavy rainfall and cyclone-induced flooding across
    the southeastern Africa region, the Secretary of Defense authorized
    Operation ATLAS RESPONSE to support humanitarian assistance and
    disaster relief efforts in South Africa, Mozambique, Zimbabwe, and
    Botswana. Over 700 military personnel from all U.S. Services
    participated in Joint Task Force ATLAS RESPONSE, providing a unique
    capability to the relief effort. A U.S. Coast Guard Search and Rescue
    controller team worked with USAID and local agencies to provide
    immediate lifesaving services. The Civil Military Operations Center
    (CMOC) staff coordinated the multinational relief effort and trained IO
    and NGO personnel to perform this duty when the joint task force
    redeployed. Helicopter and airlift crews flew nearly 1,050 tons of
    relief supplies to villages in southern and central Mozambique. C-130s
    equipped with KEEN SAGE imaging capabilities provided near real-time
    data to the Government of Mozambique--information that helped officials
    prioritize road and bridge repair projects. After three weeks, the
    situation in southeastern Africa had stabilized and allowed for the
    transition of these responsibilities back to local and international
    relief organizations.
                        building tomorrow's joint force
        Even as we focus on the present we must look to the future to
    ensure that tomorrow's force is as ready, and even more capable and
    versatile than today's. Today's force benefits from some of the tough
    decisions made by my predecessors and yours. We have an equal
    obligation to make the right choices today to pave the way for our
    successors. Given finite resources, balancing current readiness and
    taking care of our quality people against modernization for the future
    will often conflict--but all are equally important. To ensure that
    tomorrow's Joint Force remains the world's best, we are moving forward
    to make Joint Vision 2010--our conceptual framework for future joint
    operations--a reality. Additionally, we are engaged in developing the
    next Joint Vision document that builds on the JV2010 foundation and
    maintains the momentum forward toward the future.
    Joint Experimentation
        The Secretary of Defense has assigned the Commander-In-Chief, U.S.
    Joint Forces Command (JFCOM) to serve as the executive agent for joint
    warfighting experimentation. Joint Experimentation is the principal
    mechanism for translating JV2010 into reality. The Joint
    Experimentation Program will complement--not replace--existing Service
    experimentation efforts. Experimentation will also include efforts to
    improve our interoperability and effectiveness with multinational
    partners.
        To facilitate joint, service-leveraged, and multinational
    experimentation efforts, JFCOM has developed and published a
    cornerstone document depicting the way ahead. Campaign Plan 00, a
    comprehensive six-year effort covering the years 2000-2005, is designed
    to identify new concepts, processes, organizations, capabilities, and
    technologies that will enable dramatic improvements in our joint
    warfighting. The results of these experiments will be captured within
    an interdependent package of doctrine, organization, training,
    materiel, leadership and education, people, and facilities
    recommendations. Following the completion of each series of
    experiments, a package of recommendations will be delivered to me for
    approval and follow-on implementation, where applicable, within the
    joint force.
        The annual JFCOM campaign plans are bold approaches to joint force
    and operational concept development. The plans emphasize
    experimentation in two areas: (1) integrating concepts and (2)
    functional concepts. Integrating concepts describe an overarching
    warfighting approach and provide the context and focus for the
    functional concepts. The functional concepts are critical to achieving
    the overarching integrating concept capability.
        In the near term, JFCOM will be experimenting with its first
    integrating concept: Rapid Decisive Operations. This concept focuses on
    the joint force at the operational level. It describes how a Joint
    Force Commander can determine and employ the right balance of air,
    land, sea, amphibious, space, and information-based capabilities in an
    intense non-linear campaign to defeat an adversary's strategic and
    operational centers of gravity. The Rapid Decisive Operations
    Integrating Concept emphasizes the following four functional concepts
    considered critical for the future:
      --Attack Operations Against Critical Mobile Targets.--A system with
            advanced sensors, near-instantaneous sensor-to-shooter data
            flow, and high speed, long range accurate weapons that allows
            rapid identification and engagement of armor, Surface-to-Air
            Missiles, Theater Ballistic Missiles, and other mobile targets
            to enhance offensive operations and improve force protection.
      --Common Relevant Operational Picture.--Provide timely, fused,
            accurate, consistent, and relevant information from multiple
            sources into a readily understandable, scalable, and
            interactive depiction of the joint battlespace. This picture
            depicts information on friendly and enemy force dispositions
            while enhancing attack operations and minimizing fratricide.
      --Joint Interactive Planning.--A virtual, collaborative system which
            enables planners to access a wide array of information and
            planning efforts from numerous sources to improve decisions,
            enable faster response time and allow commanders to react
            quickly to changing events.
      --Adaptive Joint Command and Control.--Leverages advances in
            information technologies to revolutionize the structure of the
            Joint Task Force Headquarters and the dissemination of
            information to the Joint Force, as well as provide the joint
            warfighter with the most effective and efficient operational
            command and control.
        The capstone event within the joint experimentation program for
    this year will be Millennium Challenge 00. This joint experiment
    provides an overarching joint context and scenario for the integration
    of four Service-based experiments into a single joint event. The
    Service events are the Army's Joint Contingency Force Advanced
    Warfighting Experiment, the Navy's Fleet Battle Experiment Hotel, the
    Air Force's Joint Expeditionary Force Experiment 00, and the Marine
    Corps' Millennium Dragon.
        Ultimately, the joint experimentation process will influence
    everything about the Joint Force of 2010 including strategy, doctrine,
    organizations, training, materiel, leadership and education,
    facilities, and recruiting. By examining our assumptions and refining
    our future warfighting concepts in the crucible of joint and
    multinational experimentation, we can best achieve the full potential
    of JV2010. Our objective remains the same: a Joint Force that is
    persuasive in peace, decisive in war, and preeminent in any form of
    conflict.
    Military Transformation
        Department of Defense transformation will result from the
    Revolution in Business Affairs (RBA), which modernizes Department-wide
    business practices, and the Revolution in Military Affairs (RMA), which
    profoundly changes military forces and capabilities. As reported to the
    President and Congress, this military transformation relies upon
    progress and change within six critical areas. Development and
    experimentation by the Services, CINCs, and JFCOM will eventually
    enable the Services to provide a truly interoperable and compatible
    joint force with Joint Vision 2010 operational capabilities. These
    critical areas include:
      --Science & Technology.--We will exploit the information revolution
            and our Nation's dynamic and innovative technological
            capabilities to achieve new levels of force integration and
            force effectiveness.
      --Service Concept Development.--We will work closely with the
            Services to provide a compatible joint force framework that
            maximizes Service core competencies, while maintaining a highly
            effective, interoperable and compatible joint and combined
            force in execution.
      --Joint Concept Development.--We will strive for joint
            interoperability and compatibility through Service-based and
            joint-leveraged experimentation designed to produce
            interdependent initiatives.
      --Robust Implementation.--Service, joint, and multinational
            experimentation is a long-term investment that will yield
            recommended breakthrough capabilities and force enhancements
            for military transformation. The specific processes for the
            recommendation and approval of experimentation results are
            currently under development. We seek the means to thoughtfully,
            but rapidly, institute a package of recommended changes within
            our forces in the areas of doctrine, organizations, training,
            materiel, leadership and education, personnel and facilities.
      --Multinational Transformation Activities.--We seek to encourage and
            support multinational transformation activities among our
            potential partners. We will develop the means to interface with
            and enhance the interoperability of combined forces.
      --Exceptional People.--Our people are the key to lasting
            institutional change. We will continue to invest heavily in
            leading, educating, training, and caring for our military and
            civilian personnel and their family members in every affordable
            way.
        Additionally, I am undertaking initiatives that will further
    institutionalize military transformation through:
      --Metrics Development.--We are in the process of developing metrics
            for military transformation. Metrics are the key measures to
            judge the overall progress of transformation in so many inter-
            related and interdependent areas. In this effort, we will be
            supported by a 21st Century information and decision center
            known as the Joint Vision Integration Cell.
      --Joint Doctrine Process Improvement.--Joint doctrine is the engine
            of change and is key to the transformation effort--it wins
            wars, saves lives, saves money, and is the foundation of all
            military operations. We are transforming the joint doctrine
            development program to ensure that we get doctrine into
            warfighters' hands in a timely manner. We are in the process of
            modifying the development process by leveraging information
            technologies to reduce the development timeline for a joint
            publication. In the area of joint doctrine development, we are
            working hard to include the contributions of our interagency
            and multinational partners to ensure that our joint forces are
            capable of operating as part of combined joint task forces
            within an interagency environment.
      --Joint Doctrine Training and Education.--Technology will play a
            leading role in transforming joint doctrine. The emerging
            capability to distribute information and apply doctrine
            knowledge heralds a new era of opportunity in the military. The
            Internet and CD-ROM based distributed learning methodology
            employed to enhance doctrine awareness promises quality
            doctrine education to every member of the U.S. military.
            Information and hands-on training formerly available only to
            those people able to participate in resident education now will
            be available to all participants. The critical elements of
            efforts to achieve these objectives are already under
            development. These include the Joint Electronic Library (JEL)
            and Joint Doctrine Electronic Information System (JDEIS)--
            repositories of joint doctrine information, Doctrine Networked
            Education and Training (DOCNET)--on-line multimedia joint
            doctrine instructional modules, and the Joint Doctrine
            Interactive Practical Application--a CD-ROM based doctrine war
            game.
      --War Planning.--Comprehensive plans that allow for employment of
            forces across the full spectrum of military operations are
            critical to support our National Security Strategy and
            Engagement Objectives. As we prepare our Armed Forces for a
            challenging future we will continue to refine and improve our
            planning process to leverage technological advances and achieve
            new levels of integration and effectiveness by: (1) conducting
            a quality review of all plans to ensure synchronization with
            strategic documents; (2) integrating all elements of National
            Power into the DOD deliberate planning process; (3)
            participating with the Contingency Planning Interagency Working
            Group (CP IWG) in the production of politico-military plans;
            (4) conducting thorough reviews of operation plans submitted by
            international treaty organizations; and (5) incorporating
            emerging technologies to achieve real-time information flow for
            collaborative planning.
    Intelligence Interoperability
        Intelligence interoperability is the linchpin of our efforts to
    achieve the goal of Information Superiority--a key enabler of the four
    operational concepts of Joint Vision 2010--and the foundation for
    providing the commander with dominant battlespace awareness.
        To be fully interoperable in the context of Joint Vision 2010,
    intelligence must be produced and delivered in a fashion that
    immediately supports command decision making and mission execution.
    Barriers to interoperability between intelligence and operations
    systems and environments are being eliminated to ensure we are able to
    provide a Common Operational Picture--which will tremendously enhance
    the Joint Task Force commander's ability to exercise command and
    control.
        As interoperability requirements expand, we are aggressively
    working through a wide-range of opportunities. Today, I can report that
    we are on the cusp of a significant leap forward in redressing
    interoperability shortfalls with the fielding of the Global Command and
    Control System, or GCCS, which will provide integrated imagery and
    intelligence to the Common Operational Picture.
    Intelligence Support for Precision Engagement
        Successful employment of modern weapons systems, new operational
    concepts, and innovative combat techniques--particularly those
    involving forces that are lighter, faster, more agile, and more
    lethal--also depends on rapid, precise, accurate, and detailed
    intelligence. The persistent demand for very-high-resolution
    intelligence data is driven by a combination of factors: the inventory
    of increasingly precise weaponry; a mission mix that requires the
    ``surgical'' application of force; and the growing use of high-fidelity
    modeling to support mission planning. In addition, future trends--such
    as the weaponization of information technologies or the increased
    probability of combat operations in urban terrain--foreshadow a
    dramatic growth in requirements for fine-grained, time sensitive
    intelligence collection and analysis.
        This evolving focus on pinpoint accuracy extends beyond precisely
    striking a target with explosive ordnance. The JTF commander must be
    able to understand the situation, select an appropriate course of
    action and the forces to execute it, accurately assess the effects of
    that action, and re-engage as necessary. Such situations and actions
    encompass the full range of military operations--from full-scale combat
    to humanitarian relief missions. Detailed intelligence is needed to
    expand the options available not only to the operator but also to the
    policymaker or peacekeeper. Achieving this degree of granularity will
    require continued investment in, and modernization of, intelligence
    collection and analysis capabilities. The defense intelligence
    community is working to reshape its workforce, reform its processes,
    and refine its capabilities to improve both precision and efficiency.
    We will need the continued help of the Congress as we shepherd the
    resources necessary to ensure that intelligence keeps pace with the
    demands of modernized military capabilities.
    Information Operations
        Emerging threats and increasing dependence on information systems
    make Information Operations (IO) an area of intense interest for DOD.
    Information Operations consist of actions taken to affect adversary
    information and information systems while defending one's own
    information and information systems. A significant force multiplier,
    both offensively and defensively, IO offers great potential across the
    spectrum of conflict from peace to war. In a noncombat or ambiguous
    situation, IO includes the actions taken to preserve one's own
    information and information systems, as well as those taken to
    influence a target's systems. Focusing on the decision-maker and/or
    decision making process, IO integrates traditional military activities
    and capabilities; such as Electronic Warfare (EW), Psychological
    Operations, Operations Security, Physical Destruction, and others, with
    the newer mission of Computer Network Defense/Attack (CND/CNA). The
    emergence of this new realm of conflict brings significant
    vulnerabilities as well. An adversary using CNA techniques could gain a
    significant advantage by attacking portions of the U.S. military and/or
    commercial information infrastructure.
        To avert such a scenario, DOD has focused a great deal of attention
    on Information Assurance (IA): measures aimed at protecting and
    defending information and information systems. Effective IA transcends
    DOD and requires coordination throughout the government as well as a
    rational approach to integrating commercial sector efforts. The nature
    of modern information technology makes identification of adversary
    actors and motives difficult. Joint Task Force--Computer Network
    Defense was established in 1999 to address this threat. Assigned to
    SPACECOM, it works in concert with the National Infrastructure
    Protection Center (NIPC) to ensure the security of vital DOD
    Information systems.
        The role of the DOD and other agencies, as well as the role of the
    federal government in general in protecting our country's information
    and information systems while preserving individual rights, needs
    further study and clarification. We are involved in several senior
    level venues to shape DOD IO efforts. The DOD IO concept white paper,
    when completed, will provide a framework for future DOD IO policy and a
    stimulus for greater interagency coordination.
    Global Information Grid
        An important aspect of future operations will be the development of
    a Global Information Grid, or GIG, to provide the network-centric
    environment required to achieve information superiority. The GIG is the
    globally interconnected, end-to-end set of information capabilities,
    associated processes, and personnel to manage and provide information
    on demand to warfighters, policy makers, and supporting personnel. It
    will enhance combat power through greatly increased battlespace
    awareness, improved ability to employ weapons beyond line-of-sight,
    employment of massed effects instead of massed forces, and reduced
    decision cycles. It will contribute to the success of non-combat
    military operations as well.
        Though the GIG is not yet a reality, the way ahead is clear. For
    example, JFCOM has been given the lead and is currently writing the GIG
    Capstone Requirements Document. This is the first time a single,
    overarching document will drive all future C\4\ requirements and
    provide the framework for increasing numbers of new capabilities to be
    ``conceived and born joint.''
    Global Positioning System
        To preserve our ability to prosecute military operations with
    precision at standoff ranges in all weather conditions, we are
    embarking on a Global Positioning System (GPS) modernization program.
    This modernization effort will include a new military navigation signal
    from space that will increase the performance of weapons systems in the
    presence of enemy jamming. In our role as the stewards of the GPS
    constellation, these modernized satellites will also include additional
    civil signals to meet the national goal of enhancing the utility of GPS
    across commercial, scientific, and aviation communities.
    Unified Command Plan
        A major part of our transformation effort is our long-range vision
    of how to organize for the future. Last October, Joint Forces Command
    was established to focus on joint training, experimentation,
    interoperability, and doctrine. At the same time, we also established
    the Computer Network Defense Joint Task Force to help protect our
    critical defense information systems, as well as the Joint Task Force
    for Civil Support (JTF-CS) which will become fully operational by April
    2000.
        JTF-CS, located in Norfolk, Virginia, has a staff of 36 and is led
    by an Army National Guard Brigadier General. JTF-CS will assume overall
    responsibility for coordinating DOD's Consequence Management (CM)
    support efforts to civil authorities for WMD incidents within the U.S.,
    its territories, and possessions. It will also train forces, develop
    doctrine, and serve as a command and control headquarters for military
    units deployed in support of consequence management efforts. During
    routine, day-to-day operations, JTF-CS will act as JFCOM's primary
    point of contact for all WMD consequence management matters.
        This DOD organizational change will provide the best possible
    military support to our country's WMD consequence management effort. I
    want to underscore, however, that this action in no way alters our
    relationship with the Lead Federal Agency (LFA) during a CM operation.
    JTF-CS will always be in a supporting role to the LFA, and civilian
    control will always be firmly maintained.
        As part of the Unified Command Plan (UCP) review cycle, my staff
    also worked with the CINCs and Services to study a wide range of
    options for the future. The results of this review, called UCP 21,
    provide a flexible, evolutionary path designed to improve jointness and
    protect our national interests against evolving threats well into the
    early part of this new century.
    Ballistic Missile Proliferation
        The global proliferation of technology and the ballistic missile
    programs underway in many nations mean that we must take steps now to
    counter emerging threats to the U.S., our forward deployed forces, and
    our allies. Future strategic and regional threats are characterized by
    the increasing potential for an opponent's use of weapons of mass
    destruction (WMD) across the spectrum of conflict. Counterproliferation
    (CP) refers to DOD efforts to combat proliferation, including: (1) the
    application of military power to protect U.S. forces and interests; (2)
    intelligence collection and analysis; and (3) support to diplomacy,
    arms control, and export controls. We must be fully prepared to counter
    the military threats posed by WMD. CP helps shape the international
    environment by deterring proliferation and use of WMD. Nuclear
    capabilities serve as a hedge against an uncertain future, a guarantee
    of security commitments to allies, and a disincentive to those who
    would contemplate employment of WMD. While the U.S. may not be
    successful in preventing proliferation all the time and in all places,
    when proliferation does occur and national interests and commitments
    are threatened, we must be in a position to respond and prevail during
    a crisis or on the battlefield.
        To prepare now for an uncertain future, our CP strategy focuses on:
    (1) preventing proliferation from occurring; (2) protecting U.S.
    forces, interests, and citizens against WMD; and, (3) being able to
    respond against those who would use WMD against the U.S. or its allies.
    This strategy is characterized by a set of mutually supporting
    capabilities: counterforce, active defense, passive defense, and
    consequence management.
        Theater Missile Defense (TMD) and National Missile Defense (NMD)
    are important components of the active defense capability mentioned
    above. TMD is designed to protect U.S. and allied forces against
    ballistic missile threats within theaters. The CINCs require a family
    of systems for Theater Ballistic Missile Defense (TBMD) consisting of a
    mix of interoperable air, land, and sea-based capabilities. This
    architecture is both complementary and flexible, allowing the CINCs to
    adequately defend assets across the continuum of peacetime operations,
    through crisis response to a major theater conflict. The Department's
    priorities for TBMD remain unchanged--lower tier capability (Patriot
    Advanced Capability-3 and Navy Area Defense System) is still our
    highest priority, followed by upper tier capability (Theater High
    Altitude Area Defense System and Navy Theater Wide Defense System).
    However, the development and deployment of an upper tier capability by
    fiscal year 2007 is operationally critical to ensure protection against
    the projected Medium Range Ballistic Missile threat, to provide wide-
    area coverage, and to enhance theater air and missile defense
    protection.
        Moreover, TMD enhances regional stability. As part of broader
    efforts, the U.S. is actively engaged in cooperative programs with
    Japan, NATO, Israel, and Russia. Cooperation with Japan is presently
    limited to Shared Early Warning (SEW) information on theater ballistic
    missile launches and the Navy Theater Wide Block II cooperative
    research effort. NATO and Israeli cooperation includes SEW. Additional
    cooperative programs include the co-development of the Medium Extended
    Air Defense System (MEADS) with Germany and Italy, and the ARROW
    weapons system with Israel. Finally, cooperation with Russia includes a
    TMD exercise program and discussions on strategic and theater SEW.
        The NMD program will continue to develop and maintain the option to
    deploy an anti-ballistic missile defense to protect all 50 states
    against limited strategic ballistic missile threats from rogue states.
    This will also provide some capability against a small accidental or
    unauthorized launch from a nuclear-capable state. The objectives of the
    NMD program are threefold: (1) to develop and demonstrate a system
    capable of protecting against small-scale ballistic missile attacks;
    (2) to complete system development and, if directed, field an initial
    capability system by 2005; and (3) to maintain a system development
    path that allows evolutionary upgrading of system capabilities
    commensurate with the threat. The NMD program is progressing toward the
    July 2000 Deployment Readiness Review and a subsequent deployment
    decision by the President. The decision to deploy will be based on an
    assessment of the system's technical maturity, status of the threat,
    operational effectiveness, cost, and international security
    considerations.
    Integrating Interagency Planning
        In the ten years since the end of the Cold War, the United States
    has been engaged in planning and executing a series of Complex
    Contingency Operations (CCOs). During these operations, it has become
    increasingly clear that an integrated approach for the application of
    USG policy and assets must be made to optimize scarce resources and
    ensure success. Several initiatives are currently being coordinated and
    developed that will better integrate DOD with other agencies in
    conducting complex, and small-scale contingencies, as well as Major
    Theater War (MTW).
        The first step in establishing dedicated mechanisms and integrated
    planning processes needed to ensure rapid, effective, well-structured,
    multi-agency efforts in response to crises was the publication of
    Presidential Decision Directive 56 (PDD-56)--Managing Complex
    Contingency Operations--in 1997.
        Since then there have been four PDD-56 training events to link the
    Interagency with the CINC. The most recent was done in conjunction with
    EUCOM's ``Brave Knight'' exercise last spring. This event was exercised
    at the Deputy Assistant Secretary level, and addressed a WMD crisis in
    Europe. We have learned many lessons from these exercises, but among
    the most important may be the need to have senior officials routinely
    participate.
        In November 1999, the President directed the Secretary of Defense
    to forward to the National Security Council those politico-military
    issues deemed necessary for interagency review and appropriate action.
    This will be accomplished by the development of an Interagency
    Coordination Annex (Annex V) to all CJCS-approved plans. Annex V does
    not duplicate operations covered in other annexes, appendices, or tabs,
    but, rather, provides a single source reference for the CINCs to
    identify Interagency requirements and lays the groundwork for potential
    coordination with international civilian organizations and private
    voluntary organizations. These Annex Vs, when approved, will be
    repackaged into politico-military strategic concepts and forwarded
    through OSD to the NSC.
        These politico-military strategic concepts are the mechanism to
    facilitate the development of contingency politico-military plans.
    Spelling out the CINCs' Interagency requirements enables other agencies
    to conduct detailed advanced planning in concert with DOD. These
    contingency politico-military plans can be maintained for use in a
    future crisis. At the onset of a crisis, the PDD-56 process is
    initiated. The starting point to conduct PDD-56 planning will be these
    politico-military contingency plans. This advance planning will greatly
    enhance our ability to rapidly resolve crises as they emerge.
        In December 1999, the National Security Advisor established a new
    standing Contingency Planning Interagency Working Group (CP IWG),
    chaired by the NSC staff, whose goal is to improve the PDD-56 process
    and receive these politico-military strategic concepts in order to do
    advance interagency planning. This CP IWG will include Assistant
    Secretary level representation from Departments within the Interagency.
    The CP IWG will meet regularly to:
      --Assess potential contingencies and make recommendations for the
            development of political-military plans to manage them.
      --Oversee political-military contingency planning and provide
            reaction and comment to DOD regarding Interagency involvement
            contained in CINC plans.
      --Review and provide advice and recommendations to senior leaders on
            possible follow-on efforts.
      --Provide policy guidance on the implementation of the interagency
            training and after-action review components of PDD-56.
        Our experiences in Kosovo and elsewhere have demonstrated the
    necessity to ensure that all concerned government agencies conduct
    comprehensive planning to encompass the full range of instruments
    available to decision-makers. We all must move forward with our efforts
    to achieve increased levels of integrated interagency planning now. To
    better support other agencies, DOD needs to give greater consideration
    to political, diplomatic, humanitarian, economic, information, and
    other non-military activities in defense planning. In addition, the
    U.S. government must establish dedicated mechanisms and integrated
    planning processes to ensure rapid, effective, well-structured, multi-
    agency efforts in response to crises. Finally, we must continue to
    emphasize that our senior officials routinely participate in
    rehearsals, gaming, exercises, and simulations, as well as the CP/IWG--
    which has become a genuine leap forward in the effort to establish a
    sound system to incorporate crisis and deliberate planning across the
    interagency.
    Joint Officer Management
        Arguably, one of the most important pieces of legislation that
    affected not only the structure of the Department, but also the way we
    execute our responsibilities and manage our personnel, was the
    Goldwater-Nichols Defense Reorganization Act of 1986. I am convinced
    that the many operational successes the military has enjoyed since its
    passage, including Operations DESERT STORM and ALLIED FORCE, are
    attributable to the remarkable vision inherent in this Act.
        We have had 13 good years of experience in the joint arena under
    this Act, and we have come a long way to achieving its original
    intention. It is time to consider evolutionary changes to the joint
    officer management process to ensure that our warfighting commanders-
    in-chief have the best men and women possible to meet their daunting
    responsibilities.
        The Goldwater-Nichols Act originally presumed joint operations
    would require an extensive joint bureaucracy and an associated cadre of
    joint specialists to sustain it. What we have learned, however, is that
    our joint warfighting CINCs need officers with fresh experience in
    their area of functional expertise and a strong grounding in their
    Service's core competencies. The joint officer management process, as
    it exists today, is preoccupied with meeting quotas, not matching skill
    sets to requirements. We have submitted several proposed changes, each
    of which I believe will strengthen Goldwater-Nichols objectives by
    changing the existing process to address joint requirements.
        For example, we would like to match the joint tour length
    requirement to the established DOD tour length for a particular
    location, not the arbitrary 36 months that is established in current
    law. As it exists today, officers who are posted to joint assignments
    in remote, but nonetheless critical, locations such as Korea and
    Southwest Asia do not typically receive joint credit.
        Let me assure the Congress that we are not trying to circumvent or
    weaken what has become a vitally important part of how we defend our
    Nation's interests. To the contrary, we are working not only to improve
    jointness, but to champion it, as well. For example, though permitted
    by internal DOD policy, we are seeking to limit even more the number of
    waivers for those officers promoted to Flag and General officer rank.
    JPME 2010
        In 1998, we conducted an extensive review of Joint Professional
    Military Education (JPME) with a view toward defining requirements and
    identifying better ways to prepare officers for current and future
    challenges. The results of this study revealed a need to develop a JPME
    continuum that would expand the JPME audience to include Active and
    Reserve components, deepen and broaden JPME content, simplify joint
    officer management, and make JPME more accessible through distance
    learning and broader opportunities to receive JPME Phase II at
    Intermediate and Senior Service Schools.
        We intend to work closely with the Congress to enact these
    important initiatives to improve joint education throughout the force.
    Logistics Transformation
        While the United States military continues to have the most
    effective logistics system in the world, this is another area where we
    are striving to become better. In the past, logistics information
    systems were traditionally Service and function specific. These
    ``stovepiped'' systems are invaluable to the respective Service
    component commander, but fragmented at the joint task force (JTF)
    level. Today, CINCs, Components and JTF Commanders do not have an
    integrated logistics information system that fully supports joint
    operational requirements; nor is there a repository of accurate, real-
    time, and seamless logistics information on which such a system can be
    based.
        We are developing a strategy, in conjunction with OSD, the
    Services, and the appropriate Defense Agencies to: (1) adopt commercial
    solutions reflecting best industry practices; (2) review and optimize
    our logistics processes at all levels; and (3) arrive at a cohesive,
    web-based, network-centric, real-time, integrated logistics information
    environment by fiscal year 2004.
        Our goal is to provide the joint warfighter real-time logistics
    situational awareness by leveraging technology as we optimize our
    logistics processes while minimizing disruptions. To achieve this aim,
    we have recommended several intermediate steps:
      --Implement Customer Wait Time as a new logistics metric.
      --Establish a time-definite delivery based on a user established
            required delivery date.
      --Continue to integrate Automatic Identification Technology (AIT) and
            Automated Information Systems (AIS) at all levels to capture
            accurate and timely information thereby obtaining true joint
            asset visibility.
      --Develop and field a web-based, shared data environment providing
            seamless, interoperable, real-time logistics information to
            ensure the joint warfighter has the ability to make timely and
            confident logistics decisions.
        Implementing these measures will significantly enhance
    modernization initiatives within the logistics community. I am
    optimistic that we will be making significant progress in this
    important area in the year ahead.
                                   conclusion
        The U.S. armed forces remain fundamentally sound and capable of
    fulfilling their role in executing our national security strategy.
    However, the combination of multiple, competing missions, recruiting
    and retention shortfalls, aging equipment, and fixed defense budgets
    has frayed the force. With the support of this Committee and the
    Congress as a whole, we can continue to apply the right kind of
    corrective action now and avoid a downward spiral that could take years
    to overcome. As I have outlined above, we have a clear vision and a
    plan for achieving that vision. Together with the Congress and the
    Administration, the Department will transform our military forces to
    ensure that we meet all threats to America's security in the 21st
    Century--just as we have for the past two centuries. And as we move
    forward, we do so with complete confidence in America's sons and
    daughters in uniform. They represent the heart and soul of our Armed
    Forces; it is incumbent upon us collectively to ensure that their
    sacrifices are not in vain.

        Senator Stevens. Thank you very much. We will start the
    clock, but let me start with just a comment and request. I
    would ask that you each carry to your wives our expression of
    gratitude. Bill, Janet, and you, Carolyn, your wives have a
    role that nobody really understands and appreciates. They
    travel with you. They are our hostesses in so many ways, and
    they are the role models for the men and women, particularly
    the women in the Armed Services. You are blessed with two great
    wives, and we thank you very much for sharing them with us from
    time to time.

                         European defense capabilities

        I would like to ask you first, Mr. Secretary, about the
    problems that some of us perceive to be developing in Europe as
    the European Union creates its own military. Now, I know you
    went to the Vercunda Conference and we did not--I did not,
    anyway, but there was discussed there--can you tell us, is that
    going to lead us to trouble now in terms of bifurcating our
    support with the NATO forces and the European military?
        Secretary Cohen. Mr. Chairman, the answer is, it depends.
    It depends on how this European Security Defense Identity
    (ESDI) proceeds. What I said at the conference was that we have
    been for years banging on the European door saying, you must do
    more, you are not carrying enough weight here, and that was
    clearly evidenced during the Kosovo campaign with the
    deficiencies that were highlighted and illuminated in terms of
    what we have been talking about for years finally were revealed
    during the course of that air campaign.
        So we have been saying you have to do more. Now they are
    saying, okay, we are prepared to do more. The question is, how
    will it be structured?
        To the extent that ESDI, the European Security Defense
    Identity, means it is going to be a component of, or under the
    umbrella of NATO, and to the extent that NATO determines it is
    not prepared, does not want to take action, then this European
    Defense Initiative or capability could take action under those
    circumstances, calling upon certain assets of NATO in order to
    conduct the missions, then I think that that is something we
    are all are very strongly in favor.
        The fear that I have at least had and voiced was that there
    might be a tendency to create a separate bureaucracy, with
    separate command and control elements, and that that would be
    in competition with NATO rather than a complement to it.
        We had something that all of the NATO countries signed up
    to last year when we had the NATO summit meeting here in
    Washington, and that was something called the Defense
    Capabilities Initiative, and it essentially means that we have
    identified those capabilities that we should have. It had to do
    with what the chairman is talking about, precision guided
    munitions, having air-to-air refueling, having secure
    communications, having things that are fully integrated into
    NATO's capabilities.
        What would be of concern is if the Europeans start to
    develop capabilities which do not measure up into their
    obligations to NATO, they are separate and apart, not fully
    integrated, and so then you have the worst of all worlds, where
    you have a separate bureaucracy with countries who have perhaps
    increased their defense spending, which is something I want to
    talk about just for a moment, but it is not fully integrated
    into NATO's obligations and capabilities. There you would have
    a separate bureaucracy with less capability and not
    complementary to NATO itself. That would be the thing we should
    avoid.
        As a matter of fact, I am going to be hosting a meeting in
    June at the Wye River Plantation, or Estate, with Europeans who
    want to come over, leading European defense ministers who want
    to come over and to lay out their vision of ESDI.
        So I think, again, it depends. Based on what the British
    are saying, based upon the strong support of the Germans and
    the Italians, I think that the concept of ESDI as it is
    unfolding is something we should strongly support, but there
    are some who have a different interpretation of what that means
    and the way in which it should go, and I think we have to be
    very careful, because otherwise I think you and all the Members
    of Congress will rightfully look at what is taking place.
        Here I am coming before you saying, we need at least $112
    billion, and more than that, in order to modernize our forces
    and make sure that we stay as capable as we are, and we look at
    the comparable budgets amongst the European nations, and they
    are going down.
        Now, some of that is doing it so they can achieve some
    efficiencies through their acquisition strategies and so forth.
    That is true. They cannot achieve the kind of efficiencies
    necessary in order to measure up to the capabilities required,
    and that is the danger as we see budgets going down and ours
    going up, and at some point in time, you are going to say, wait
    a minute. We are not seeing an equitable sharing of the burden
    here, and that will have political consequences to the European
    nations.
        So it is something that I talk about, have talked about,
    will continue to do so, but it is something we need to keep our
    focus on.
        Senator Stevens. Mr. Secretary, the time is now--we are
    hearing those comments now as to whether this is so bifurcating
    the support of the Europeans and our joint efforts over there
    that they will not be bearing their fair share of the expenses
    in Kosovo. It is a real question, but I do thank you for your
    answer. Senator Inouye.
        Senator Inouye. Mr. Secretary, in your presentation you
    spoke of how thin our troops are stretched out overseas. We
    know that some of the pilots and specialists are repeatedly
    called upon to serve overseas. In fact, we take out equipment
    from potential trouble areas to meet emergency needs elsewhere.
    Now, as you prepare to advise the President on the quadrennial
    review, are you going to suggest that we increase our force
    structure?

                           Force structure increases

        Secretary Cohen. I have not recommended an increase in the
    force structure at this point, Senator Inouye. What we have
    tried to do and the chairman touched upon this in his opening
    comments in terms of trying to find ways in which we can reduce
    the operational tempo of our forces. I will give you one
    example. In East Timor when that situation unfolded we had a
    strong pressure coming from our Australian friends saying we
    need you to take the leadership role, meaning the United States
    in this effort and join with us in a partnership. The
    Australians are our great friends. They have been with us in
    every conflict, but we at that point had to point out that we
    are stretched, we are in Bosnia, we are in Kosovo, we are in
    the Gulf, we are throughout the Asia-Pacific region.
        We have obligations which are stretching our force, and so
    we will be supportive, but we cannot commit the kind of forces
    that were required at that time, so we were able to help
    organize a number of countries from the region to take the lead
    in support of the Australians, and so we have tried to resist
    what the chairman is talking about where we are the first ones
    people want to call upon because of our capability and
    sometimes they do it as a last resort, but we have to resist
    not the temptation but the request of many countries who say
    you are the only ones who can handle this.
        So it is always a tough issue, and if it comes to the point
    where we find that we can no longer carry out our mission and
    we continue to see a depletion of our forces because of the
    operational tempo, then we will have to go back and say we need
    more. I would point out that we are having difficulty right now
    achieving our target goals to fulfill the forces that are
    required under the current force structure so that is another
    element that we would have to look at, assuming we have higher
    numbers. What would the cost be and could we achieve those
    higher numbers under the current planning, but it is something
    I have not recommended at this time.

                          START II and missile defense

        Senator Inouye. The Russian Duma just approved START II,
    and I suppose you will be called upon to make your
    recommendations to the President on the deployment of our
    national missile defense system. Can you tell us what you are
    going to recommend?
        Secretary Cohen. I think you should ask me that question
    this summer when I will not be available to testify before you.
    But let me just give you what I have tried to do today. First
    of all, I commend the new President for getting the Duma to
    ratify this. I understand, Senator Cochran, you met recently
    with some of the Duma members, and I would commend this to all
    of you whenever you have a chance to travel to Moscow, or visit
    in Russia, try to arrange meeting your counterparts. It is very
    important that you talk to them and you talk very straight with
    them, and I found that every occasion that I have been there I
    always try to meet with Duma members and to lay out our
    strategy and what our goals are.
        I believe the ratification under the circumstances tying it
    to no deployment for national missile defense is simply
    unacceptable. They should ratify START II based on the
    agreement. And that we will negotiate with them and to see
    whether or not we can amend the ABM Treaty to take into account
    a national missile defense system if the President should
    choose to go forward, and what I have tried to lay out to the
    Russians is exactly what we contemplate, assuming that we
    satisfy the four requirements the President has said, number
    one, is there a threat that would justify a national missile
    defense system? I believe the threat is real. It is here. I
    believe it will increase.
        Number 2, do we have the technology, we have not resolved
    that issue just yet. We are close, but I think the tests that
    are forthcoming will give us the ability to make that
    determination.
        Number 3, what are the costs? I saw in today's paper that
    the Congressional Budget Office (CBO) has now pegged the cost
    at some $60 billion. I have no way of knowing whether those
    numbers are accurate or not or what they have included, whether
    they have included the 15-year period as opposed to 5-year
    period, how many satellites they have included, all of that is
    open to resolution, assuming the cost factor that we satisfied
    that.
        The next question is, what is the impact upon our arms
    reductions and stability in the world in terms of strategic
    systems. Those four tests the President is going to apply.
    After the test which is set for late June, early July there
    will be about a 30-day period in which I will then have to
    examine what the results of that test are and then make a
    recommendation to the President, but it will be separate and
    distinct from Russia's ratification of START II in my mind, and
    I would not have the Duma be in a position to tie the two
    together.
        We have to look at what the threat is to our country, we
    have to look in terms of the countries that are most critical
    of the national missile defense (NMD) also have participated in
    the spreading of that technology to some degree, and we have to
    take that into account as well, but we will look at what our
    national security interests are, and then see whether this
    system as contemplated is designed to defeat a threat from a
    rogue nation, but I cannot tell you that now. I will be in a
    position this summer to make a recommendation to the President,
    and I certainly will communicate with all of you prior to any
    decision being made.
        Senator Inouye. I am encouraged by your statement, sir.
        Senator Stevens. Senator Shelby.
        Senator Shelby. Thank you. Mr. Secretary, just to follow up
    on what Senator Inouye was talking about and you, too, on
    national missile defense. We all know basically that today we
    have no missile defense.
        Secretary Cohen. That's right.
        Senator Shelby. And so I appreciate your candor and I
    appreciate your work in this respect because we are all
    concerned about the big nations at times, but more so right
    now, rogue nations, people that you cannot predict, that you
    cannot reason with at times; is that correct?
        Secretary Cohen. That's right.

                      duration of U.S. Balkan deployments

        Senator Shelby. I want to jump over to the Balkans. General
    Shelton, both of you talked about this. What timeframe, Mr.
    Secretary, do you place on our presence in the Balkans, our
    military presence starting with Bosnia and Kosovo? I was just
    there last week, and you are absolutely right, General, about
    the morale of our troops, the stability they are bringing in
    there, but at a cost, how long will we be in Bosnia in your
    judgment?

                                 Bosnia/Kosovo

        Secretary Cohen. Senator Shelby, I do not know. I really
    cannot tell you. I can tell you there has been great progress.
    You have seen it, I have seen it. The chairman has seen it. We
    have seen our forces come from 20,000 in number down to roughly
    4,300 or so. There has been dramatic reduction in the size of
    our force. We are hopeful that they can reduce in the next
    evaluation period, but it is going to take more time.
        In Kosovo we have seen a rather significant change on the
    ground from last year where we were in the middle of waging an
    air campaign to where we are today. Again, identifying some of
    the flash points we have seen, but it is going to take some
    time I think. Anyone who tells you that they have a fixed
    period in mind in which they can tell you that that is when the
    job will be complete I think would be misleading you.
        Senator Shelby. Are we about as drawn down, about as far in
    Bosnia as we can at the moment?
        Secretary Cohen. I think as far as the security situation
    permits and the chairman I think would be in a better position
    to give you a judgment on that, but our European commander
    makes an assessment in terms of what is the security
    environment and then tries to match our forces to that threat,
    and I think the numbers we have there are adequate. To go below
    that absent his recommendation would be a mistake, but the
    chairman should perhaps comment on that.
        General Shelton. Senator Shelby, I think the Secretary is
    right on the mark. It gets tougher and tougher to reduce as you
    get down to these lower numbers now. I think the last time I
    was there, which was about 1 month ago talking to General Adams
    there in Bosnia, he did not at that time see an ability to come
    down significantly in the next look, we look at it every 6
    months. So I think we will see it get tougher and tougher until
    such time as the civil implementation piece kicks in and the
    police start to become a more effective police, and the rule of
    law is in effect, then those things allow you to reduce without
    the risk going up to the troops you are leaving behind. So we
    try to balance the risk with the number of troops, but I think
    we are reaching kind of a stable point until such time as we
    can get the civil implementation piece stood completely up.

                            Theater war capabilities

        Senator Shelby. Mr. Secretary, it has been the policy of
    this country that we maintain a military capable of fighting
    and winning two major theater wars (MTW) almost simultaneously.
    Given the drawdown in forces, is this policy still executable?
    Can we still execute this policy or does it depend upon the
    intensity of the conflict?
        Secretary Cohen. The answer to that is yes, but as the
    chairman and I have pointed out, with much higher risk on the
    second MTW than is desirable. We could, in fact, carry out one
    major theater war capability and have that capability to wage
    it, and then on the second one the risk goes up, meaning the
    duration of the conflict and the amount of people, personnel
    who would be lost as casualties would increase, and so the risk
    is higher than it has been in the past on the second.
        Senator Shelby. Have you had thoughts about reviewing that
    policy in any way? I guess you review it at times anyway.
        Secretary Cohen. Well, we always review it. We have the
    quadrennial defense review, the next one will be coming up in
    the next administration. As you know, I have been supportive of
    the Hart-Rudman study group and composed of a number of
    distinguished experts in the field. They have called into
    question whether we have--that should be our strategy, and I
    would point out it is not a strategy, it is a capability we are
    talking about that we feel that we still need to maintain that
    capability for the foreseeable future because we still have at
    least two major theater war potentials that we have to address;
    namely, the gulf region and also in the Korean peninsula.
        Senator Shelby. Thank you, Mr. Chairman.
        Senator Stevens. Senator Hollings.
        Senator Hollings. Thank you, Mr. Chairman. Obviously, we
    need more troops and we need more money to pay those troops to
    attract them into the military because the opportunities with
    the booming economy is otherwise, and right to the point, mark
    me down as a 5 percent value-added tax in the Finance Committee
    and bring in the $185 billion, and I will gladly get a hearing
    on it and vote for it to pay for this thing. We are not paying
    our way. We spent $127.4 billion more last year than we took
    in. There is no surplus, and even with the wonderful returns we
    got from income tax on April 15, we still have spent $71
    billion more than we took in this year so far. The debt has
    increased. The public debt to the penny, tap it out on your
    computer, the Treasury puts it out every day to the penny.
        Now, you have got the stretch of nine peacekeeping
    operations at the moment. There are four additional ones asked
    for in the emergency supplemental, and in fact there could be
    one more if we get a peace agreement in the Mideast. I have
    just come from Israel, and they are talking about some kind of
    personnel there on the Golan Heights.
        So let us get realistic with each other. Kosovo. I am
    thinking today it was 25 years before Secretary McNamara
    finally said Vietnam was a mistake. I am wondering how long the
    Secretary of Defense is going to say that about Kosovo. I
    understand it is Madeleine's war, do not worry, I am not
    getting you, but do not give me that stuff, I have just gotten
    back, and Secretary Albright said, now wait a minute, now we
    will withdraw when we develop the infrastructure, the schools,
    the highways, the hospitals are rebuilt. We put in a court
    system, we have got security, we have got industry, we have got
    opportunity. I think about 30 years ago when I met with Martin
    Agronsky in London, and he had just spent 3 weeks in Northern
    Ireland, and he said it would take 30 years before they get
    together, and 30 years later we have still got the British
    troops in Northern Ireland, and they have had for 30 years the
    infrastructure, the schools, the opportunities, the industry,
    the hospitals. They just do not get along.
        And you folks are whistling Dixie. That thing is not going
    to happen. Bosnia was supposed to be 1 year, that is 6 years,
    and you talk like it is going to happen in your time. It is not
    going to happen in your time, General Shelton, I can tell you,
    I have been over there, and incidentally, the violence is 95
    percent Albanian on Albanian. They do not get along with each
    other right now.
        So we look now at the emergency supplemental and the
    chairman of the Armed Services Committee, Secretary Cohen has
    got an amendment that he wanted me to cosponsor it saying the
    United Nations, as you all have just testified, the European
    Union, a tremendous shortfall, they have not put what they put
    in there for General Reinhart or now General Ortuna. They are
    way behind. The jails are overflowing, so they make arrests,
    have to let them go and everything of that kind.
        So it's not a pretty picture and there is no use to try to
    finesse it and kid each other, and Senator Warner says if they
    do not come forth we are going to cut the money and start
    withdrawing troops. Now, that is where we are this minute, as
    you are testifying. So let us have a realistic appraisal of
    where we are headed there because you are asking for four,
    perhaps five more peacekeeping. You do not have the money now
    because you both have testified you are stretched and we ought
    to quit kidding each other, and let us try to pull out of
    Bosnia and Kosovo and let the Europeans take it over. That is
    it right there. We have a peace as you all have described it
    right now, and there's wonderful progress, so if you have
    everything settled, are they going to go back at each other?
        They are still up in Northern Ireland. Thank gosh we did
    not send Secretary Albright to Northern Ireland. I mean, we
    sent our good friend, Senator Mitchell, and he has done a
    magnificent job, and that is the kind of job that is required.
    Thank you, Mr. Chairman. What are you going to do about Senator
    Warner's amendment?

                      Senator Warner's amendment on Kosovo

        Secretary Cohen. Well, I am going to obviously have to meet
    with Senator Warner to say that mandating a withdrawal at a
    fixed time based upon a perception of what the Europeans are
    doing is probably not the right way to proceed with this. The
    Europeans, I might point out, as a result of congressional
    pressure, as a result of what we are doing, they have, in fact,
    been putting more money into the civilian side. They have been
    responding not as much as we want yet, but I think it is
    important to have pressure, but I think anytime you say okay,
    we are pulling out and we will start withdrawing, that is not
    the right way to set that in legislative concrete.
        I think we can keep the pressure up, we are keeping the
    pressure up, I would say Secretary Albright is trying to bring
    about resolution of these tough issues, and they are not easy.
    I give her credit. I mean, she is trying her best to deal with
    very tough issues. You say it is not a pretty picture. It was
    not a pretty picture last year, it was not a pretty picture to
    see almost 1 million people pouring over the borders with
    Milosevic and his troops out there rampaging, and so I think
    the picture is prettier today than it was 1 year ago. How long
    will it be? We are not trying to kid you. It is not going to be
    during our time. It will not be perhaps during the time of our
    successor, but I think great progress is being made, and we can
    say we are out, let it all go back to a state of nature. Hatred
    is a much more intense emotion than certainly respectability
    and respect for others. We have given them.
        We are giving them an opportunity for peace. They can
    choose to embrace it or they can choose to reject it, but I
    think our commitment has been that we recognize what the
    potential is for instability in that region to spill over to
    affect our NATO allies and us, as a result of it. We can give
    them an opportunity, we are giving them that. It is costing us,
    but the option of letting it just spread and saying we are not
    involved I think is not one that we could accept, either,
    Senator Hollings.
        Senator Hollings. Thank you, Mr. Chairman.
        Senator Stevens. Thank you. Senator Dorgan.

                         U.S. national missile defense

        Senator Dorgan. Mr. Chairman, thank you very much. In
    response to a previous question I think by Senator Shelby who
    asked we do not now have a missile defense, do we? You said no
    we do not. It would also be true to say we have never had a
    missile defense, is that not the case?
        Secretary Cohen. That is correct.
        Senator Dorgan. If we build whatever it is we are
    suggesting, even those on this committee are suggesting we
    build, it would be true or accurate to say that we will not
    have a missile defense to defend against any kind of robust
    attack from a Russia, for example. Would that be the case?
        Secretary Cohen. That is correct. Nor was it ever intended
    we would have that kind of system.
        Senator Dorgan. I understand that. But in terms of the
    response to the question, do we have a missile defense? The
    answer is no. The answer was no 10 years ago and 20 years ago
    and the answer will be no with respect to robust threats from a
    nuclear superpower 10 years from now or 20 years from now.
        Secretary Cohen. That is correct.
        Senator Dorgan. Let me ask a couple of questions about this
    because I think one way to respond is to build and another way
    is through threat reduction, and you are familiar, of course,
    and this subcommittee certainly is familiar with the Nunn-Lugar
    program, which has, I think, been extraordinarily effective in
    threat reduction. As I understand it, we spent about $2.5
    billion on the Nunn-Lugar program, and I think the dismantling
    of bombers, submarines, missiles, warheads in the old Soviet
    Union and now Russia is somewhere in the neighborhood of $30 to
    $40 billion. Is it your assessment that the Nunn-Lugar threat
    reduction program has been fairly effective and a pretty wise
    use of funds?
        Secretary Cohen. It has been very effective. I had occasion
    to go to northern Russia to see the dismantlement of some of
    the submarines up there. The typhoon submarine, for those of
    you who have not seen it is about two football fields in
    length, and those are in the process under the START agreements
    of being dismantled and cut up. We have seen the deactivation
    of some 4,966 warheads as a result of the Nunn-Lugar
    Cooperative Threat Reduction Act. I could go through and give
    you all the numbers, but it is very impressive.
        Senator Dorgan. The point is I think you have requested
    $460 million, and that is an important piece that we need to be
    attentive to because that program you say works. I believe it
    works, I think it is a pretty remarkable program. Let me ask
    with respect to the START agreements and the recent Russian
    action, the Russians have recently ratified the Comprehensive
    Nuclear Test Ban Treaty, they have ratified START II with some
    provisos, and we are now engaged with the Russians on the
    subject of modifying the Anti-Ballistic Missile (ABM) Treaty in
    order to accommodate the potential national missile defense
    program that is being discussed.
        Today in The New York Times, there are a number of
    articles, The Washington Times, New York Times that the United
    Nations, Russia hardens its line on changes to missile treaty.
    One of the prospects is that we may find in months ahead that
    we are not able to negotiate agreements to modify the ABM
    Treaty. What is the administration willing to do and what would
    your recommendations be with respect to abrogating that treaty
    or simply saying that NMD program to defend against a limited
    threat ergo a rogue nation threat is more important than
    retaining the centerpiece of arms control, how would you
    proceed in that circumstance?
        My guess is if you proceeded by saying the arms control
    regime really is not as important as the NMD program we want to
    build that you are going to be asking for a great deal more
    money because that will reignite an appetite by the Chinese and
    Russians and others to build offensive weapons. How are you
    going to reconcile that?

                  Arms control, missile defense and deterrence

        Secretary Cohen. They are both important. What I think we
    have to do, and I have tried to do with the Russians, for
    example, is to point out that over the years that we were very
    critical of the Soviet Union in sponsoring and supporting
    terrorism and terrorist groups. When I was in Russia the last
    time a bomb went off, destroying an apartment building, and so
    terrorism had come home to Russia itself, and they were
    justifiably concerned about that.
        I have indicated to them that because of the proliferation
    of missile technology they will not be immune from this threat,
    that what is taking place, be it in North Korea, in North
    Korea's own transfer of technology, what is taking place with
    Iran, trying to acquire long-range missile capability with the
    help of a number of countries that they will be just as
    vulnerable to such an attack as we, and therefore they should
    take that into account in their opposition to this NMD program.
    I think the President will have to make that determination.
    Obviously, I cannot make it.
        I can make a recommendation based upon the nature of the
    threat which I think is real, and it is real in this sense,
    Senator Dorgan. We have a retaliatory capability if anyone
    should ever be foolhardy enough to launch a missile attack of a
    limited or expanded nature against the United States, they
    would be destroyed in the process. That ordinarily should be a
    sufficient deterrent for the North Koreans, Iran, Iraq or Libya
    or any other country that would seek to acquire this
    capability. But what we never want to be subject to is what I
    would say would be a nuclear blackmail situation where a Saddam
    Hussein occupies Kuwait or possibly Saudi Arabia or there is
    some other type of aggressive action, and you then say, well,
    we are going to put half a million troops in Kuwait and Saudi
    Arabia to drive Saddam out and he says, wait a minute, if you
    seek to put troops in this region, you run the risk of me
    launching an attack upon New York, Washington or some of your
    major cities. That might force a change in our calculation as
    to whether or not we are prepared to wage a conventional
    campaign against such a dictator, and so it could change in
    fact the way in which we conduct conventional operations.
        We do not want to be in that position. We want to be able
    to say to a Saddam or to an Iran or to a Libya or whomever that
    you are not going to put us in that position, that we are going
    to carry out our international responsibilities, protect our
    national security interests and your possession of 5 or 10 or
    20 or whatever the number of missiles is not going to deter us.
    That I think is the principal benefit of having this capability
    not against Russia, not against a superpower, but against those
    nations who might otherwise try to impede us from carrying out
    the protection of our national security interests.
        Senator Stevens. Senator Cochran.
        Senator Cochran. Thank you, Mr. Chairman. I have a follow-
    up on the question about the national missile defense and what
    your intentions are with respect to recommending going forward
    this summer.
        In the budget request you have included $102 million for
    national missile defense military construction. Most of this
    would go toward the construction of the Shemya radar. I assume
    you feel the testing program has been successful enough up to
    this point that it justifies the budget request for these
    military construction dollars.
        Do you intend to go forward with the construction of the
    radar site without regard to the consequences of this last
    remaining test on the national missile defense system that is
    scheduled for a couple of months from now?

                          preparing for NMD deployment

        Secretary Cohen. The answer to that would be no. What I
    will do is I have included the money in the budget because if I
    did not include the money in the budget, it would indicate that
    I do not have confidence in the system, that this is not a real
    program.
        My expectation would be to have the test completed and make
    a recommendation to the President either to go forward or to
    not go forward, depending upon what the results of that test
    would be, to then have the President in a position to see
    whether we have been successful with the Russians in agreeing
    to a modification of the ABM Treaty.
        Then if they have indicated that they are not and our
    allies are adamantly opposed to it, then the President will
    have to make a determination as to whether he wants to give
    notice at that point and move forward, and so I have tried to
    work from the 2005 timeframe back to the present, and that 2005
    period has really been dictated by the threat, and so if there
    is a delay beyond this year as far as a decision being made,
    that will push that timeframe back, but I wanted to include the
    money so that it would be real to you and to the other members
    that this is a serious proposal, this is not simply words. We
    have money in the budget for it in the event that the four
    tests are met in the judgment of the President.
        Senator Cochran. You were right. I did have a chance to
    visit with some Russian Duma members and the Federation Council
    members as well on the trip to Moscow with Senators Levin and
    Dodd accompanying me. One thing became very clear to me during
    that series of meetings that we had not only with the members
    of the Duma but also with those who have high positions of
    responsibility in the government of Russia, and that is that
    somebody has forgotten to tell them that the cold war is over.
        If you look at the language in the Duma ratification
    legislation where they ratify START II--they did this in the
    Duma the day before we arrived--the Federation Council took the
    action of approving the Duma legislation while we were there.
    But the overtones in the language are fairly ominous,
    suggesting that if we insist on amending the ABM Treaty, then
    they will not consider themselves bound by the provisions of
    START II. And further, if we do not approve the demarcation
    agreements that have already been negotiated by the
    administration, if we, the Senate, do not ratify them, then
    they will withdraw from all arms control agreements that they
    have entered into with the United States.
        Those are threatening suggestions. Those are threats, and
    it hearkens back to the days of saber rattling and hitting your
    shoe on the podium and the kind of behavior that we saw from
    some Russian leaders that have no place now in this supposedly
    new relationship between our two countries.
        We are working to provide funds for building down and
    destroying weapons systems that have been aimed at us and that
    are fairly unsafe because of security and other reasons. We
    have been working together on a number of programs.
        I pointed out an exchange program I had helped start 15
    years ago that is administered by the Department of Agriculture
    to bridge gaps and create better understanding in the food
    production and marketing industries. Over 500 students have
    come from Russia to the United States under that program to
    date. It is very successful.
        People talked about how well it is going and what this has
    meant in terms of new trade opportunities and economic progress
    in Russia. It just seems to me that somebody is not getting the
    word that this is a new day. They talk about a new Russia, but
    we need to see it in terms of practice with these agreements on
    arms control, and mutual security interests.
        To me it sounds like we are entering a period of
    brinksmanship, but I am glad to hear your comments and your
    suggestion that we cannot accept those provisions, that they
    are unacceptable to us, that we have to proceed to do what is
    in our own national security interest. And Russia has to
    understand that we are not trying to threaten them with these
    missile defense capabilities, they are not aimed at Russia,
    they are not designed to defeat a Russian military attack by
    intercontinental ballistic missiles against us. They are
    designed to protect ourselves and our citizens against a rogue
    nation attack, a limited missile attack, a few missiles that
    might be fired from North Korea or from Iran or some other
    country.
        We are not in the business of escalating tensions between
    the United States and Russia. That is not our attitude, and we
    say that but nobody seems to hear it or understand it. I hope
    maybe that what we are seeing over there is just politics for
    the moment, and that this was done to assuage some concerns of
    some of the more militaristic cold warriors who are sorry that
    the cold war is over. And maybe as time goes on the rhetoric
    will cool down and there will be mutual trust and
    understanding, which is what we are hoping for, which is what I
    hope for, but I am not in favor of knuckling under and throwing
    up our hands in holy horror over the actions that have been
    taken by the Russian Duma.
        I think we have got to proceed on course. I am glad you've
    got this money in for construction. I hope we will approve it.
    I am glad to hear your comments about the success that you
    expect from the program as it proceeds because national missile
    defense is something we need to deploy as soon as possible. The
    2005 date is important, and I think you can count on us
    providing the funds and the support to accomplish that
    objective.

                       communicating with Russian leaders

        Secretary Cohen. Mr. Chairman, can I just respond quickly?
    Based upon what you have said, I think it is all the more
    important that members of this committee, the Armed Services
    Committee and others continue to have contact with the Russians
    so that you can at least make very clear to them that these
    types of bombastic statements or intimidation or attempts to
    intimidate the United States into a position that is
    unacceptable are not going to work, and to then lay out where
    we can have mutual agreement.
        Now, there is something of a split in this in terms of what
    they say and what they do. On the one hand, you have some of
    this language that has been used which is very aggressive and
    perhaps a throwback to a different era.
        On the other hand, you have Russian soldiers serving side
    by side with us in Bosnia and Kosovo. You have the new
    President who is now talking about reviving the PJC, the
    Permanent Joint Council. It works with NATO in terms of
    resolving some of the issues, and they have the Cooperative
    Threat Reduction Act, which they want very much, as do we. So
    there are levels of cooperation that are distinct from some of
    the rhetoric that you hear from time to time.
        I will tell you, based on my last two appearances at the
    Wehrkunde conference, the Russians have sent delegates who have
    used language reminiscent of the cold war, and they have been
    resoundingly rejected by everyone in attendance, all of the
    European nations, the Ukrainians, the Poles and others soundly
    rejected, so they have isolated themselves with that kind of
    rhetoric.
        So I think it is important that we meet that and we talk to
    them and that we deal very straightforward with them and lay
    out what our security concerns are and how we intend to meet
    it. We do not have a hidden agenda. This is what we intend to
    do and then see if we cannot reconcile what their interests are
    and ours but not yield to any kind of chest thumping or
    chauvinistic types of displays on the part of any of the
    members, the Duma members or others.
        Senator Stevens. Mr. Secretary, the majority leaders
    invited some of us to a meeting with the Russian foreign
    minister this afternoon. I hope that will be a direct
    conversation, as you have indicated. Senator Lautenberg.
        Senator Lautenberg. Thank you, Mr. Chairman.
        Secretary Cohen. Who, by the way, is going to get a
    briefing on the NMD program while he is here in Washington.
        Senator Stevens. Well, I have got time coming.
        Senator Lautenberg. Do you want to finish this colloquy
    now?
        Senator Stevens. Thank you. I do not know why we do not go
    back to President Reagan's concept and share it with them. I do
    not know why we would not share NMD with them. I would love to
    see us have a joint session with the Duma to say let us build
    it together. They have problems from rogue nations just as we
    do. If you live where the two of us live in Hawaii and Alaska,
    you would be very interested in this in view of what is going
    on over there along the Asian coast, particularly in North
    Korea.
        Senator Hollings. Nobody is going to attack Hawaii or
    Alaska, for God sakes.
        Senator Stevens. Bill, tell him where World War II started,
    will you, please?
        Senator Lautenberg.
        Senator Lautenberg. Thank you. One of the things I noted,
    General Shelton, in your comments was the fact that generally
    recruiting and retention is pretty good. There are a few weak
    spots. It looks to me, and correct me if I am wrong here, that
    the Reserve forces are being called on for ever longer periods
    of service, time away from home, jobs, et cetera, and I worry
    about a change in attitude about joining the Reserves.
        I think the common concept is that you are away for
    training periods and away for short spurts when necessary in
    emergency situations. Has the deployment of the Reserves become
    a different kind of a policy issue in recent years and what do
    you find attitudinally of people who are asked to join the
    Reserves? What do we have to do to maintain their morale and
    retain their service?

                          National Guard and Reserves

        Secretary Cohen. Well, I would yield to the Chairman in
    terms of his perceptions. I will tell you, Senator Lautenberg,
    what we have tried to do is say that we have a total force. For
    many years both the Guard and the Reserve felt that they were
    treated as poor cousins for the active forces, and we changed
    that.
        We have said we have one force, and the Guard and Reserve
    today are performing missions that otherwise would have been
    performed by the active forces. The impact I think overall has
    been quite positive with also addressing the issue of
    employers. We have had to go to employers and also have laws on
    the books protecting the jobs of those who are called upon to
    serve for limited periods of time. We have tried to balance the
    requirement that we have now for this total force and not
    overutilize the Reserve, but it has changed during the past
    several years. I will let the Chairman talk about what the
    impact has been in terms of whether we are having recruiting
    problems in the Reserves. I think it has had some marginal
    impact, but not a fundamental one.
        General Shelton. Senator Lautenberg, first of all, let me
    say that the Reserves are doing a fantastic job for us, as I am
    sure you see when you go out to visit with our troops, both the
    National Guard and the Reserves.
        As a matter of fact, in Bosnia today we have the 49th
    National Guard Division out of Texas that is actually leading
    that force. General Halverson is in charge and again performing
    outstandingly.
        However, in a lot of cases, as a result of our downsizing,
    we placed a lot of our capability in the Reserve. For example,
    if you look at the civil affairs, which is being used heavily
    today, 24 out of 25 battalions are in the Reserve, and so when
    you get into long-term requirements for civil affairs, which
    you have both in Bosnia and Kosovo as well as many other
    regions of the world, you have to go to the Reserves in order
    to fulfill it.
        We have looked at that. We are bringing more of that
    structure into the active component right now, but what we are
    seeing as a result of some heavy use in certain areas are some
    recruiting and retention challenges that we had not seen before
    in our Reserve components.
        The Chiefs of Staff of the Army and the Air Force, both of
    whom are affected by this, to a lesser extent the Navy and
    Marine Corps, are looking at what the implications of this are
    and what the causative factors are, as to why they are and how
    they might have to change in order to increase their recruiting
    and their retention levels in both of those forces.
        When I have talked to the Chiefs of the Services, they have
    expressed some concern, but not an alarming concern at this
    point, but they are interested in finding out what they have to
    do in order to try to turn this around. So we are looking at it
    because it is obviously going to be a challenge in the future
    if we maintain the same structure we have now.
        Senator Lautenberg. The issue has been written about in
    very prominent places, national newspapers, particularly in
    Texas, I think, where they are saying good-bye to their
    families and going to be away for a long time, and I thought,
    well, that is really tough. But I hope we can continue to
    maintain the excellence that we have in our Reserve forces
    which I have seen in lots of places, particularly coming out of
    McGuire where they are carrying material and troops to far away
    places. As we get further extended, the question that is always
    raised is can we be the policemen of the world. I was very
    pleased, Mr. Secretary and General Shelton when you talked
    about the necessity for funding additional resources for budget
    function 150 because to me very often the diplomatic thrust can
    often thwart having to make a military thrust.
        But when we talk about being in distant places for long
    periods of time, one need only look back at a time when three
    or four of us here wore uniforms in World War II. We are a very
    young group considering that distance in time, but the fact is
    that there are troops still in place where we fought, and I
    think it has worked out to the benefit of America and the
    world.
        So I think it is an illusion that we cannot be in places
    for a long time. We are in places, and I think we are going to
    continue to be, and again seeing the Reserve forces in there
    gives me some reassurance. However, when you say that they are
    there and the morale seems to be good, I think you will have to
    do some analysis to see what the long-term effect will be.
        Senator Stevens. Thank you. Senator Domenici.
        Senator Domenici. Thank you very much, Mr. Chairman.
    Senator Hollings, I have so little time, I do not want to get
    into an argument as to whether we have a surplus or not, if
    that is all right with you.
        Senator Stevens. This is not the proper forum for that.
        Senator Domenici. He raised the question. I just wanted to
    tell everyone who is listening, we have a very big surplus. In
    fact, we have a big enough surplus to put $171 billion back
    into Social Security. He is using different numbers.
        Senator Stevens. This is not a budget hearing.
        Senator Domenici. In any event, I wanted to ask the
    Secretary three or four questions. I clearly did not come to
    discuss the surplus.
        First, in your statements, Mr. Secretary, you indicate that
    the highest priority is to take care of the men and women in
    the service, and then you proceed to the military needs in your
    second and third paragraph. Among those issues that are
    obviously very, very difficult for you and the Department is
    the health programs that we need, not only for our active
    military but for those who are retired and who lay claim to the
    proposition that they are not being given what they had been
    promised.
        I note that both of you, including the chief, indicate this
    is a serious problem, the health situation. Are you preparing a
    precise recommendation to address this, and if so, when will
    that be ready?

                         Military retirees health care

        Secretary Cohen. Well, Senator Domenici, the Chairman and I
    are trying to work our way through this right now to have a
    proposal to this Congress in terms of what needs to be done. We
    have looked at for retirees, for example, of having a pharmacy
    benefit and we have tried to factor that out in terms of what
    the cost would be over a 5-year period. I believe it is--we
    have looked at what the cost would be for fiscal year 2001 and
    then we have tried to factor that out over the FYDP as well. It
    is fairly expensive.
        We are also examining proposals that would see whether or
    not the Federal Employee Health Benefit Plan should be made
    available to retirees. That is a very big cost factor involved.
    We hope to be able to get something to you during the course of
    the next several months as we factor and analyze what the cost
    would be.
        Senator Domenici. Mr. Chairman, I asked the question
    because it is obvious that Senators are anxious to do something
    with reference to the military health care system. We have
    proposals around, but we have not heard from the Defense
    Department yet. I think it's imperative that you give us your
    proposals quickly because I do not know how long it will be
    before somebody offers a plan. It is going to be very difficult
    not to vote for a health plan reform, so I did not raise the
    question just because it is one of the issues. It is one of the
    most important ones in terms of what we are going to use our
    money for this year and in the next 5 or 6 years.

                       maintaining U.S. nuclear deterrent

        My second question has to do with the nuclear deterrent of
    the United States. The Defense Department, through three
    services, is in charge of the nuclear weapons after they leave
    the jurisdiction of the Department of Energy at the
    manufacturing centers and national laboratories.
        I have some grave concern, and I just lay it on you today
    because I do not quite have the answer. It seems to me that the
    Defense Department makes a big strong case for things needed
    for defense, but nobody is making the strong case for what is
    needed for the nuclear deterrent that is our nuclear weapons
    program, something in your vital interests. Take for example
    the allocation in the United States House for the Energy
    Subcommittee, which is a misnomer. It is energy, but it is
    about half defense, and about half of that is for nuclear
    weapons and stockpile stewardship and programs with Russia to
    get rid of plutonium and highly enriched uranium. These are
    pretty big ticket items.
        If you look at what the House Energy Subcommittee on
    Appropriations plans to spend, it was as if this was not part
    of the defense program of the country. The rest of defense is
    going up, yet they are dramatically cutting the programs which
    have to do with maintenance of our stockpile.
        Now, frankly, the Department of Energy is supposed to be in
    charge of this. They have a general named Gioconda who is the
    Energy liaison with your Department.
        Now, Mr. Secretary, I would ask if you would, after this
    session, go back and take a look as to who has oversight in
    your Department. It used to be Dr. Hamre, and I do not know who
    it is now. I want to let them know that I think we are in a
    very serious bind. We have found that our production complexes
    are not in order. After the Senate vote on the test ban treaty,
    DOE went back and looked at five or six communities wherein the
    nuclear weapons pieces are manufactured, called the production
    complex.
        Everybody should know we do not make new bombs, we have not
    made any new bombs for a long time. Zero. We are setting about
    a new strategy to maintain what we have through science-based
    stockpile stewardship. This is a very complicated, and very
    scientific approach to maintenance, and with it comes a lot of
    needs.
        Yet, we do not see anything from the Defense Department
    that says maybe we ought to back some increases for our
    stockpile stewardship program. It is as if it is sort of an
    orphan in the Department of Energy. But I tell you, this is a
    very important program. It is our so-called nuclear deterrent
    capacity. I for one want to tell you that is why I came today,
    because I do not get a chance to say to the defense
    establishment--it is always DOE--that we need some very strong
    support from you in analyzing the defense needs of the DOE
    especially as it pertains to manufacturing new pits. We are way
    behind schedule again and I am trying to find out why.
        Do you know one of the principal components to a nuclear
    weapon is a pit? And as of this moment Pakistan can manufacture
    pits and the United States of America cannot. None. We do not
    have any that we have manufactured in recent times. We are
    supposed to have the first one ready in 2001, and then 10 more
    as we continue to manufacture.
        It looks like the Department of Energy has put the money
    someplace else and we are not going to get any pit production.
    I have to ask defense-minded Senators to be concerned about
    this because it is just not an Energy Department issue. It is a
    defense issue of high magnitude. If you will look at that and
    tell me who I might meet within the Department of Defense, so I
    would like to ask them if they know that we are not going to do
    the pits on time. Can you tell me who that would be?
        Secretary Cohen. Yes. Two people you would want to talk to
    would be Jack Gansler and Rudy de Leon, the new Deputy
    Secretary of Defense, the two cochair the Nuclear Weapons
    Council.
        Senator Stevens. Senator Durbin.
        Senator Durbin. Thank you very much, Mr. Chairman.
    Secretary Cohen, General Shelton and to all who have gathered
    with you today, civilian and active military component, our
    gratitude for your service to our country.
        Mr. Secretary, I will just make a note, and I can follow up
    with you a little later. I am waiting on a decision by the Army
    War Decorations Board in a case that I wrote to you about
    several years ago concerning a Sergeant Smith, and I would like
    to follow up with you afterwards and see if we might be able to
    expedite that for some personal and family reasons related to
    his family.
        I would like to spend my time questioning on this national
    missile defense system because if the Congressional Budget
    Office estimates are accurate or nearly accurate, we have seen
    a dramatic increase in the estimated cost of this system. At
    the same time, we at best have mixed results from the tests
    which have occurred.
        We have had testimony as recently as a few weeks ago from
    the Union of Concerned Scientists about the countermeasure
    question. It is their position that if any country can develop
    a long-range missile capacity, they can easily develop
    countermeasure techniques that would defeat some of the
    premises of our national missile defense system.
        I know as I read your testimony and listen to it that you
    are both in a very delicate and difficult position. You have to
    allocate scarce dollars for our national defense in a way that
    makes sense.
        I read the Secretary's comments about Kosovo and what will
    happen if we do not meet our congressional responsibility to
    provide you the resources you need. What a dramatic impact that
    will have on plans that you have made to defend our Nation, and
    I read also General Shelton's testimony where he said, and I
    couldn't agree more, that our highest priority is our people
    and what we need to do to retain them and recruit them,
    investments that have to be made.
        I guess my first question to both of you is, you have to
    make hard choices based on limited resources. If we know this
    national missile defense system estimated cost is now growing
    at such a dramatic pace that it is going to call into question
    other national defense priorities, is cost a factor that has to
    be taken into consideration about the viability of this system?

                        cost of National missile defense

        Secretary Cohen. Senator Durbin, as a matter of fact, that
    is one of the four factors the President will have to take into
    account. Is there a threat? You will have to make a
    determination on your own as to whether you think there is a
    viable threat out there. I happen to believe that given the
    spread of technology that if it is not here today that it will
    be here tomorrow. Then you have to decide in your own mind
    whether or not we have a deterrent capability that will
    discourage anyone from ever launching such an attack. But
    second, as to whether the technology is there, that is the
    purpose of having the test we have had to date and the one we
    will have this June or early July. And so we will make an
    assessment.
        The third factor is cost. And now the one that appeared in
    today's news as far as CBO is concerned, they have included
    some 250 missiles, two sites and SBRS-High. Under the
    Pentagon's estimate we only factored in 100 missiles for the
    first in one site and no satellite, so to the extent that you
    add the second site, you add SBRS-High that is going to
    obviously increase the cost.
        You will then have to make a determination as to whether or
    not this is a cost worth bearing. You could look at it and say,
    well, what happens if you had an attack upon a city of the
    United States; what would be the cost involved there? And that
    is a debate that you will be involved with as well as other
    members of this committee. We spend a good deal of money for F-
    22s, Joint Strike Fighters, F-18 EF, Commanche, Crusader, et
    cetera, because we believe it is in our national security
    interest to do so. I personally believe that there is a threat
    that needs to be addressed, but the cost obviously will be a
    factor that we will have to take into account, and you as well.
        Senator Durbin. Well, let me ask you about the testing
    element here. Do you believe that with three tests under your
    belt that you are prepared to answer that one question as to
    whether the testing justifies the technological feasibility of
    a national missile defense system to the point that we should
    go forward?

                        testing a Missile defense system

        Secretary Cohen. Under the program as it is structured, if
    there are two successful tests, as far as the interceptor is
    concerned, that that would be sufficient for me to make a
    recommendation to the President to go forward. I have tried to
    follow this very carefully, and I believe the so-called failure
    of last test was not one of science, but one of mechanics. And
    we will see whether or not that can be in fact corrected. But
    if we have two successful interceptor tests, that would put me
    in a position of making a recommendation to the President as to
    whether I am satisfied that not only do we have the 5 tests,
    there will be a total of 12 or 13 before there is any
    deployment of a system as such. But I think that I would be in
    a position to make a recommendation to the President based upon
    the next test, yes.
        Senator Durbin. Thank you.
        Senator Stevens. Following up on what Senator Domenici
    said, and Senator Cochran, I am disturbed slightly about the
    information that came to us concerning the Russians still
    manufacturing warheads and manufacturing nuclear ICBMs. And we
    are trying through the Stewardship Stockpile Program to
    maintain ones that are getting very old, and I am very worried
    about this hiatus that has developed in the Department of
    Energy as to whether or not that is jeopardizing our national
    security.
        I really believe that if that is not straightened out, I am
    going to demand a hearing and really a hearing in public, to
    tell the public how bad off we really are vis-a-vis the nuclear
    weapons of the world, and how much we have been delayed in
    trying to perfect the systems that will maintain the
    Stewardship Program as it must be maintained. I will just tell
    you, I think that is one of the worst things I have heard of in
    recent years.
        Let me ask you about this, General Shelton. The mobility
    requirement studies have been delayed and I am sure you know
    that Senator Inouye and I have been talking to everybody about
    C-17s. We support the acquisition of 60 additional aircraft
    under the multiyear procurement authority that Congress passed
    last year. We continue to ask, however, about rewinging the C-5
    and postponing the C-17. Will you give us your judgment what
    should we do with regard to the C-17 and C-5?
        General Shelton. Mr. Chairman, we are in the process right
    now of taking a look at the long-term cost of the C-5 and doing
    an analysis of alternatives in terms of whether or not we
    should continue to pour money into an element of the C-5 fleet,
    the C-5 Alpha, the older version of the C-5, or whether or not
    it would be more cost-effective over the long term to start
    converting, phasing them out and replacing them with C-17s.
    That is an ongoing study right now. There is not an easy answer
    to it, but we think----
        Senator Stevens. Should we buy the new ones?
        General Shelton. We have some tremendous challenges with
    the C-5 Alpha right now. When we complete this analysis of
    alternatives, we will be in a position, I think, to recommend
    to the Secretary, and to be able to tell you, whether or not we
    think it would be best to make a decision to stop pouring money
    into the C-5 Alpha and come to you and say, we need to increase
    the production on the C-17s or buy more, or whether or not we
    should go ahead and fix the C-5 Alphas right now. The intuition
    says that probably C-17s would be the right answer, but I would
    defer on making a recommendation until we finish the analysis.
        Senator Stevens. Senator Lautenberg pointed out the four of
    us were World War II types and we remember some of those
    commitments that were made to people back there who made a
    career out of the military and are now retirees. And Senator
    Domenici has already mentioned the problem of the defense
    medical benefits. We already have legislation, Senator, that
    has been introduced now to greatly expand that medical benefit.
        Currently the program costs us about $11 billion. The bill
    that was introduced as I understand it costs out to $9 billion
    more. We do not have guidance yet from the Department as to
    what you want us to do. Now, all of us are committed to doing
    something, but the question is what should we do now? The
    budget has a very small item for TRICARE, roughly $100 million.
    That is like dotting the i of TRICARE; it is not enough. Now we
    all know that, but are you going to give us a recommendation? I
    think we should. I do not want this to turn into a partisan
    battle here, who is going to put up the most money, for
    particularly the retiree benefits, but we have got to do
    something this year. I hope you agree. What do you want us to
    do?

                       expanding Military health benefits

        Secretary Cohen. I want you to wait just a little bit
    longer until the Chairman and I work this out. Mr. Chairman,
    you are right, the money in the budget we include was really to
    try to reduce some of the cost for TRICARE prime on the
    copayments TRICARE remote, to eliminate those copayments, and
    that is what the money was in this budget for, to try to reduce
    some of the burdens that are currently in the current system.
        But the Chairman and I are looking at the pharmacy benefit
    and that is something that we think we can recommend fairly
    quickly. But we are still trying to work out what the price tag
    is going to be if we go to alternatives that we have yet to
    work out. We are looking at the possibility of using medical
    treatment facilities, looking at the Veterans Administration
    (VA) as one aspect of it. That is something we just have not
    worked our way through, but I would say in the next few weeks
    we should have some kind of recommendation coming to you.
        Senator Stevens. We will have to mark up sometime next
    month, I think. I hope we will have a recommendation by then. I
    am sure that Chairman Young faces the same problem we do over
    here on what to do. We want to do what is right, but we will
    have to take money out of a lot of other places to get $9
    billion. We have about a $4 billion increase in the overall
    budget, and that will not even start funding that one, and the
    other deferred maintenance and other things. We will now go
    back. Senator Inouye, you have another question?
        Senator, can we agree to cut this down to about 3 minutes
    each?

                      importance of Pacific Asian theater

        Senator Inouye. Mr. Secretary, in your testimony and in our
    questioning, East Timor was mentioned once, the Korean
    Peninsula was mentioned twice, once by my chairman and in your
    response. The rest of the time we spent on Bosnia, Kosovo, the
    European security. Is the Defense Department less concerned
    about the Pacific-Asian theater than Europe?
        Secretary Cohen. Not at all, Senator Inouye. As a matter of
    fact, I spend a good deal of my time traveling to the Asian-
    Pacific region. Most recently having gone, not only to Hong
    Kong, Vietnam, Japan, and South Korea, but I do this quite
    frequently. It is because I believe that the Asian-Pacific
    region is crucial to our national security interest.
        Indonesia. We have not talked about Indonesia today. That
    remains a great challenge to the security of all of Asia, not
    just Southeast Asian countries, but all of the countries
    throughout the Asian-Pacific region. A country of 210 million
    people, and should there be instability that really takes root
    and starts to spread in Indonesia, that could flood not only
    the geography but also the economies of all the other countries
    in the region, and so our interest there is of paramount
    importance.
        Singapore, we have not talked about Singapore, and as you
    know, they are building a pier that will accommodate our
    aircraft carriers, and they want them to come.
        You also know that we have a visiting forces agreement that
    was ratified by the Philippine Senate. And so we are actively
    engaged with the Philippines again, and not to mention Thailand
    and beyond. So no, the Asian-Pacific region is very important.
        We have not even talked, only incidentally, about
    Australia, which also is crucial to our security interest
    throughout the Asia-Pacific region. I think that we have to put
    additional focus upon it. The economy appears to be coming back
    through that region, which is good news, but the security
    interest--and we have not talked about Taiwan, either, in terms
    of China and what China's relationship is going to be in the
    future.

                                  China-Taiwan

        Senator Inouye. We are interested in that.
        Secretary Cohen. We all should be interested in that. I
    will tell you one of the reasons I made the trip to the Asia-
    Pacific region last time was to send a message. Senator
    Hollings and I made this trip, I think in 1996, the last time
    we went, and there was also great controversy in terms of China
    versus Taiwan at that time.
        What I have said to all of the Chinese that I come into
    contact with who visit or whom I visit in the region, when they
    come here to visit with me--and I had a meeting just last week
    with the equivalent of the Chief of Naval Operations (CNO) of
    the Navy--was that we do recognize the One China policy; we
    also have our obligation under the Taiwan Relations Act, that
    we expect that there will be reconciliation through peaceful
    means, and that is the only way that can come about, that they
    should not seek in any way to take a military action or
    threaten Taiwan, taking military action. I have advocated that
    the Taiwanese reduce their rhetoric about independence and a
    movement toward independence which we do not support, and that
    everybody back away from this abyss that started to develop.
    Hopefully that calming influence of the elections and what has
    been the words that have been emanating from the new president-
    elect in Taiwan will help, will cause everybody to back away
    from the rhetoric we have seen in the past, and not in any way
    encourage the Chinese to think they can take military action.
    So it is very important. I think it would have grave
    consequences to all concerned, should China ever seek to
    achieve reconciliation with Taiwan through the use of force--
    economic, diplomatic, and potentially even military. That is
    the message we have sent, and hopefully that will be
    persuasive.
        Senator Stevens. Senator Hollings.
        Senator Hollings. Well, I like the Secretary's answer. That
    was a question I had. Let us be careful about grave
    consequences. I think we learned something in Korea and
    Vietnam, and I do not think we are ready to take on a billion
    three hundred million with nuclear power. And that is enough
    said. Thank you, Mr. Chairman.
        Senator Stevens. Senator Cochran.

                               Ship construction

        Senator Cochran. Mr. Chairman, I mentioned in my opening
    statement my concern that stretching the construction schedule
    for ships is dangerously imperiling our ability to maintain an
    industrial base and to do the things that are necessary to
    maintain the goal of a 300-ship Navy, and also meet the
    commitments we have already made in appropriations bills that
    this committee has recommended and the Congress has approved
    and the President signed, one of which authorized an
    incremental basis for providing construction funds for an LHD-
    8. We had $45 million in the 1999 bill, $375 million in last
    year's bill. In February, the Navy suggested that you release
    the entire $400 million to support this ship construction
    program. To my knowledge you have not done that yet. Why not?

             Base realignment and closure (BRAC) savings and LHD-8

        Secretary Cohen. Senator Cochran, let me try to answer two
    questions that you raised during your opening statement. First,
    on the BRAC, we included the funding for two more rounds. You
    asked whether it is realistic or not. I would hope that this
    Congress would act on that in order to achieve the savings, so
    that the money saved in future years would help pay for ships
    like LHD-8.
        I believe you had the Secretary of the Navy testify before
    the committee. He pointed out we have roughly, we are funding
    eight ships a year. We need to fund 8.6 ships per year in order
    to sustain that 300-ship Navy. That is not going to come about
    unless we have either an increase in the top line or a savings
    from base closures that will in fact be able to be invested,
    either in personnel or shipbuilding.
        With respect to LHD-8, my understanding is that last year
    you included some $380 million toward the LHD-8, and to
    accelerate the ship to fiscal year 2001 you wanted us to put
    money in that. The Navy, I am told, indicated that it would
    have to come up with $1.2 billion, that they were unable to do
    that. What we are doing now is now going back and looking at
    that $400 million you had mentioned to see what kind of long
    lead that we could invest in in working with the Navy to make
    sure that the LHD-8 comes on line by fiscal year 2005.
        Senator Cochran. The DDG-51 program is also misleading in
    terms of the advertising used, that you got $60 billion in
    procurement money; therefore we have met our goal. Well that
    was the goal in fiscal year 1998, and what we are seeing now,
    is stretching the construction schedules out in the out-years
    so that instead of building, for example, six ships over 2
    years, you are now planning to build seven ships over 4 years.
    This is going to put the shipyards in a very difficult
    position, and I know you are experienced personally with these
    issues, and you have to be sympathetic with that problem. What
    are you going to do about it?

                        increasing Procurement spending

        Secretary Cohen. Well, I am sympathetic to it. When I took
    over this position, the procurement levels were at $43 billion.
    And now, 3\1/2\ years later, they are at $60 billion. And they
    are scheduled to climb to $70 billion under our projections. In
    my judgment, that is still not going to be enough, Senator
    Cochran, and so we have got to find ways in which we can either
    increase the top line to accommodate our shipbuilding needs,
    because it will not achieve our goals, or we are going to have
    to have the savings that I talked about from more closure and
    more savings. But there is no easy way around this.
        That is one of the reasons I say that the BRAC process,
    tough as it is, will produce the kind of savings that we need
    to invest in our shipbuilding and our other programs. But I do
    not have a good answer for you, other than we need to do more
    on the shipbuilding account if we are going to maintain that
    300-ship Navy.
        Senator Cochran. Thank you, Mr. Chairman.
        Senator Stevens. Senator Domenici.
        Senator Domenici. Mr. Chairman, might I first comment on
    your observations regarding nuclear weapons and the Soviet
    Union. As a matter of fact, Mr. Chairman, they have a
    completely different nuclear weapon than we do, which requires
    that they produce them regularly because after about 10 years
    they are ineffective. So the Russians produce a very simplistic
    nuclear weapon compared to ours. Ours is much more complicated.
    We try to preserve ours and make their utility spread over a
    number of decades. Right now our effort in the United States is
    to scientifically analyze everything about a nuclear weapon and
    do replacements and repairs so we preserve it. The Russians
    replace theirs every decade or so. They get rid of them and
    they build new ones. So they have manufacturing going on to
    this day to build new nuclear weapons to take the place of
    their old ones. We do it a different way, and that is exactly
    what frightens me. Our way is very scientific, and if people do
    not diligently stay on top of it, our deterrent capability
    could be weakened. Also, this process is our only way of
    knowing that our weapons are viable and functioning; we do not
    test anymore.

                                Air borne laser

        My last question has to do with another phase of missile
    defense, that is, the ABL, the air borne laser. The air borne
    laser is the only missile defense system contemplated that
    achieves what we call boost-phase intercept, and the testing
    has been going along very, very successfully. It looks like it
    is moving to enter the weapons inventory of the United States
    in the not-too-distant future.
        I am very concerned because this year, when we had some
    very important tests to complete, their appropriations level
    has been decreased by $92 million. I do not think we are going
    to end up doing that. We have not done it the last two times
    you have cut it but I just want to know why it is continuously
    reduced so much when it has been praised by so many as being an
    essential scientific breakthrough for us.
        Secretary Cohen. Well, this is a recommendation that the
    Air Force made. The Air Force made a determination, looking at
    its capabilities and the demands that the Air Force had on
    other parts of the budget, that they could afford to not fund
    that $92 million account, that it would be delayed several
    years as a result of that.
        I know that it is a question of affordability for the Air
    Force. They made the judgment and we supported that. I am also
    aware that you have had testimony from General Kadish that by
    putting funding in, you could in fact put that on a more
    accelerated deployment schedule, and that is something the
    committee will have to decide.
        Senator Domenici. Thank you very much. Thank you, Mr.
    Chairman.
        Senator Stevens. Mr. Secretary, General, we are pleased to
    have you with us. I was just talking to our chief of staff, Mr.
    Cortese, about the level of our procurement funding. You
    mentioned it, Mr. Secretary, it is very low. When you consider
    the amount of money we are putting into quality of life,
    retirement benefits and pay for our volunteer service.
        One of the things I have been thinking about, and so I
    thought I would just think out loud, and see what your reaction
    is. Why do we not have a recruitment program for peacekeepers
    for a shorter period of time and bring them in to handle the
    problems such as Bosnia and other places, once, an interim
    peace has been established?
        Yesterday we were told during the period of the whole cold
    war, we deployed forces away from their permanent assignment.
    Many were permanently assigned in Europe, but only 10 times.
    Since the Wall has come down, it is almost 40 times that we
    have deployed personnel away from their permanent duty
    assignment, and often for 3, 4 and 5 years, such as we have
    seen in the Persian Gulf, Bosnia, Kosovo, and so many places
    now. But it does seem that part of the strain that is being put
    upon the war fighters is that they are being made into
    peacekeepers. And I wonder, have you given any thought, Mr.
    Secretary and Mr. Chairman, to a concept of shorter-term,
    voluntary enlistment to be a peacekeeper? Is that a viable
    concept?

                         dedicated Peacekeepers forces

        Secretary Cohen. Mr. Chairman, let me just give you some
    off the top of my head reactions to that proposal. The Hart-
    Rudman study group, in fact, recently made a recommendation,
    phase two of a three-phase study, and one of the
    recommendations included something along these lines, that
    perhaps we ought to segment--I would hesitate to use the word
    ``balkanize''--our forces in conjunction with this, but to
    segment the capabilities so that you would have specialized
    forces for different facets of a military operation.
        The problem I have with this concept is, and I will go
    back, when I was serving on the other side of this table, in
    creating the Special Forces Command, you may recall what the
    reaction was at that time. It was strongly opposed by the
    Pentagon at that time, that we should set up a Special Forces
    Command and create a SOLIC--a Special Operations Low Intensity
    Civilian department as such, with leadership in the Pentagon.
        I believed at that time that that was essential and we have
    seen the validity of that concept prove itself out. I would
    hesitate, the Chairman is in a much better position to comment
    on this, but we expect our forces to have a full mission
    capability. They can go all the way from humanitarian types of
    missions, of unloading C-17s and delivering supplies, to people
    who are either starving to death or flood victims, all the way
    up to peacekeeping, to waging war against Milosevic and Saddam
    Hussein. And I think it would be very difficult to say, we want
    you and we are going to train you, but only for a peacekeeping
    mission, which by the way can escalate very quickly to a full
    wartime mission if they come under attack. So the notion that
    you could just train people to be a peacekeeper, I think, is
    quite different than saying you are going to have a capability
    of responding as a military man or woman on the front lines
    when the contingency evolves. But I would defer to the Chairman
    to give you a much more professional judgment on that.
        General Shelton. Mr. Chairman, I would second what
    Secretary Cohen said. I am very wary of proposals that would
    advocate specializing our force. I think that we have
    demonstrated with the force that we have today, that we have
    the flexibility to use that force in a full spectrum from
    peacekeeping to war fighting. And I guess the best example I
    could give you of why I think that is important, we were going
    into Haiti in 1994 and we thought we would face 7,000 armed
    personnel plus the remaining police force that was there. We
    were invading basically by air and by sea.
        That all changed in a matter of hours, and 8 hours later,
    that same force that had war paint on is suddenly going in as a
    peacekeeping force. And they did a magnificent job because of
    the quality of force we have got today and being able to have
    that kind of flexibility--young men and women that could
    understand what the differences were and could go in and do
    great as a peacekeeper. But even as they did their peacekeeping
    job, if you recall, we had a contact up in the Cape Haitien
    area in which our young marines on patrol were taken under
    fire. And when the results were over, we had 10 Haitian
    military that were dead, and we had zero marines that were
    wounded. And so it had changed instantaneously.
        I think that is the thing that makes us a pre-eminent war
    fighting power today, we have that kind of flexibility, that
    kind of force. I think that if we have got the group that the
    Secretary referred to, the National Security Study Group (NSSG)
    also talked about potentially a constabulary force. And that is
    very similar I think to what you are talking about as a type of
    force that would be trained on the lower end of the spectrum,
    and would only deal with constabulary-type duties. We have got
    a couple of historical examples, I think, that showed we ought
    not to mix that with our war fighting forces or with our armed
    forces.
        If we look back in the fifties when the Army had basically
    become somewhat of a constabulary army and then suddenly got
    called on to go into Korea, we found that we were not very well
    prepared to do that. We had Task Force Smith that responded,
    and we all know the results that that bore out.
        Of course, we also had an occupation army that was doing
    constabulary type duty both in Germany as well as in Japan, and
    we found out that we did not have the time with that type of
    force to train them and keep them prepared for war fighting. So
    while the idea has merit, I think, and it is something that
    should be examined, I would not--I do not think that it should
    be part of our active force, and I do not say that out of
    parochialism or out of resistance to change. I think that we
    look at the emotional and physical requirements for combat and
    a force that can very quickly find themselves confronted with
    that, we need to keep these two separated.
        Senator Stevens. Well, gentlemen, I spent the last week
    during the recess reading Michael Pillsbury's book on China. I
    think you ought to send it to everyone, by the way, Mr.
    Secretary. It is an Armed Forces Institute book, but everyone
    in the Congress ought to have an opportunity to read it.
        But clearly at the level of the procurement budget of $60
    billion, we cannot meet the needs for modernization and the
    development of new technology in the period ahead without some
    sort of traumatic change. Now maybe it is going to have to be
    the draft. I do not know what it is going to be, but clearly I
    think, everywhere we have gone--and Senator Inouye, Senator
    Hollings, Senator Cochran and I and Senator Domenici have
    travelled extensively, as you have--we have been urged to keep
    America strong. I have not heard anyone, even the Russians and
    the Chinese, say that they want a weak America. Yet, we are on
    the course of becoming less and less strong, let us put it that
    way, in the years ahead, unless we modernize.
        Ten years from now, I do not see someone sitting in this
    seat, these seats that we have asking why we did not do
    something differently, because the money is not there on a
    sustained basis to meet the challenges of the future unless we
    get some new military doctrine or we get a new bank, somehow
    print new money somewhere.
        The budget chairman is laughing, but I am serious. I did
    not know that the Rudman group had made similar
    recommendations. I will look into that, but I think we have got
    to find some way to bring about an increased flow of money into
    procurement. We now have retirement, we have medical benefits,
    we have all of the retiree problems. We have a majority of our
    people are married. When we served, the only person that was
    married was the colonel and above.
        When you look at this change today, if you push it out into
    the future and the cost of keeping up a family that has five or
    six kids and both of them are in the service, is staggering by
    the time you get out to their retirement. I will tell you I
    worry about not being innovative as far as the forces
    concerned. I worry about not being innovative about what we are
    going to replace with new technology, and one of my worst
    worries is what is going to happen to the Joint Strike Fighter
    during our own watch, to find the money for that.

                              Procurement funding

        But I would urge you to help us, and let us think out loud
    for the public to hear it, rather than behind closed doors. I
    do not think the public knows how little the procurement budget
    is, really, in terms of historical terms. It is very low. Yet
    it is being asked to do a tremendous amount. President Reagan
    wanted 600 ships. What have we got now, General, 270 ships?
        General Shelton. We are on the way down to 315 ships,
    roughly, right now.
        Senator Stevens. And at the rate of replacement, it would
    take 40 years to maintain them. We have to find some way to
    build more ships; we know we have to build more planes. And we
    have to find some way to meet these obligations abroad. I have
    talked too long, Mr. Secretary, you can have the last word.

                      preserving U.S. military excellence

        Secretary Cohen. Mr. Chairman, I have tried to communicate
    the nature of this problem wherever I go. Most of us went
    through that period following the end of the cold war when we
    were all looking for quote, ``peace dividend.'' There is no
    longer a peace dividend; it is over. And what we saw is that we
    were living off the Reagan buildup.
        When Ronald Reagan came in, we all remember what the state
    of affairs was in the military, what the morale was. And Ronald
    Reagan came in and said we need more, and we provided it. And
    much of what we are using today, be it in Kosovo or Bosnia or
    off the various coasts, is a result of that buildup. Well, that
    buildup is over, and we have built down. We have cut the size
    of our force by a third; we have cut procurement back 3 years
    ago, to the point that it was two-thirds below that at the
    height of the cold war. And that is what I mentioned when I
    took over this job, we were at $43 billion. We are now at $60
    billion; we need to go to $70 billion and higher. But I think
    it is incumbent upon me and you and all the other Members of
    the committee and the Members of Congress to remind the
    American people of exactly what is at stake.
        Now you were very kind in talking about General Shelton's
    wife and mine. Janet and I have been out trying to talk about
    reconnecting America to its military. The phrase basically is
    to remind people of the crown jewel that we have in our
    military, how good we are, the talent that we have in our
    military, what they are doing day in and day out. And the
    American public tends to see it in times of crisis. You and I
    and all of us see it every day, and we go out and see the kind
    of sacrifices being made by these young men and women and those
    who have made a career in the military, and we have come to
    take it for granted and we cannot continue to do so. We have to
    give them a quality of life in the way of compensation, we have
    to have their retirement benefits, the health care benefits,
    the housing, and we need to give them the best technology
    available.
        So the $60 billion is not going to be enough. We are
    modernizing. You mentioned, what are we doing? Well, we are
    doing more in terms of Joint Strike Fighter, F-22, all of the
    systems, the new destroyer, the new aircraft carrier, those
    designs have come into being. In the years 2008 to 2015, we do
    not have the money to pay for them. That is why I come back to
    the point, well, can we make any savings?
        Hopefully my successor will enjoy, if I cannot, the benefit
    of saying we have another round or two of base closures that
    will save us $20 billion over the course of the period between
    fiscal years 2008 and 2015. That will save us $3 billion
    annually, and we are looking at $5.5 billion in savings from
    the four rounds we have had before. So we need to have savings
    in terms of how we are doing business and the cost of doing
    business, but we need to focus the American people in terms of
    what we need to protect our national security interest. So we
    have had our peace dividend, it is over, and now we have got to
    pay.
        So when people say, can we afford these three new systems?
    The answer is yes. We are a rich country, and we need to spend
    more for our national security and we ought to make that very
    clear each and every time that we go out. We ought to go out
    and thank the uniformed personnel that we have, saying, thank
    you for what you are doing. You are making sacrifices that the
    American people need to be reminded about, and not only say it
    in time of going to war against Milosevic or Saddam Hussein,
    but rather day in and day out. We need you; we thank you. Not
    enough people are saying this, so every time you see somebody
    in an airport, go over and thank them. But thank them, and then
    say, and here, by the way, is what we are going to give you to
    carry out your mission, the best technology that is available,
    and it is going to cost money, and we need to pay it.
        Senator Stevens. Thank you very much. I said that was the
    last word, but we do have an elder Senator here.
        Senator Hollings. No. Senator Domenici and I sponsored that
    5 percent increase at the very beginning of the Reagan term.
    You remember that, Pete. But in all respect, what you are
    hearing is the distinguished Secretary say, we do not have
    enough money, and yet the Chairman of the Budget says that we
    have got a surplus.
        Senator Stevens. Here we go.

                         additional committee questions

        There will be some additional questions that will be
    submitted for your response in the record.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
                  Questions Submitted to Hon. William S. Cohen
                  Questions Submitted by Senator Thad Cochran
                              airborne laser (abl)
        The Air Force, for affordability reasons, recommended removing $258
    million from ABL over the fiscal year 2002-05 period. But OSD increased
    that amount to about $900 million from fiscal year 2001-05.
        Question. ABL is the only Major Defense Acquisition Program that is
    on schedule, on budget, and meeting or exceeding its technical
    requirements. Why did OSD increase the cut to ABL from $258 million to
    $900 million?
        Answer. In this year's budget development process, the Air Force
    and OSD identified a number of tradeoffs to balance the Air Force's
    portfolio of programs against priorities and available resources.
    Despite the cuts, the ABL program was and remains on track technically.
    The Department's reasons for submitting a budget that cut ABL funding
    were financial.
        Question. Given the progression of the North Korean threat, do you
    think it is important to have the first ABL aircraft available in
    fiscal year 2003 as the first capability able to deal with North Korean
    missiles of any range?
        Answer. The first ABL aircraft will be the Program Definition and
    Risk Reduction aircraft. It will have roughly half the laser power of
    an operational aircraft and will not have a mature combat system.
    Alone, it could not sustain a combat air patrol because it would need
    to land periodically. The Department does not assess that the
    contingency capability gained from a near-term deployment of this lone
    testbed aircraft would be sufficient to alter its investment
    priorities.
                            strategic warhead levels
        Presidents Clinton and Yeltsin agreed in 1997 on a START III goal
    of 2,000-2,500 warheads. Senior Defense Department and military
    officials have stated their belief that U.S. security requires force
    levels no lower than 2,000 warheads.
        Question. Do you forsee any circumstances in which the Defense
    Department would agree to go below 2,000 warheads in a START III
    agreement? If so, what are those circumstances?
        Answer. The Department of Defense has completed a comprehensive
    review of the START III agreement with respect to our ability to
    maintain our policy of strategic deterrence, as outlined in the
    President's decision directive issued in the fall of 1997, at lower
    levels of warheads. We have concluded that START III negotiations
    should proceed on the basis of the 2,000-2,500 accountable warheads as
    agreed by Presidents Clinton and Yeltsin at Helsinki in 1997.
                                     ______

               Questions Submitted by Senator Christopher S. Bond
                               full-time support
        Secretary Cohen, you and General Shelton mentioned that in spite of
    an increasingly-demanding security environment, the active force has
    been so drastically reduced, resulting in greater dependence upon our
    Reserve Components. As the co-chair of the Senate Guard Caucus, I am
    very proud of the tremendous work of our Army and Air National Guard as
    they respond to a variety of missions throughout the world. General
    Shelton stated that the effective integration and utilization of these
    men and women will continue to be key elements of Joint Personnel
    Readiness and are critical to the success of the Total Force. However,
    you will not achieve these objectives unless you adequately resource
    the Guard to meet these increasing demands. Year after year, the Army
    Guard's requirements far outweigh the resources provided to it by the
    Department of Defense. Accordingly, the National Guard's number one
    legislative priority remains full-time support.
        Question. What are the Department's plans to assist the Guard in
    meeting these requirements?
        Answer. Adequate full-time support for all of the Reserve
    components is absolutely critical, especially in these times of
    increased OPTEMPO. I will look to the Service Secretaries to
    effectively balance their Reserve components' full-time resources to
    handle these increased responsibilities. You are correct in your
    statement that integration and effective use of the Reserve components
    is critical to the Total Force. That is why I directed the Service
    Chiefs to remove all barriers to integration, and included the Reserve
    component Chiefs in our OSD-level deliberations on DOD-wide resourcing
    issues. I can assure you of my commitment to Total Force integration,
    and providing the necessary resources for our fighting forces.
                                 plan colombia
        Secretary Cohen, I applaud the many sacrifices made by members of
    the military in the war against drugs and strongly support efforts to
    increase efficiencies in counter-drug operations. However, I am
    concerned by the military's statement that its priority is to increase
    operations in Columbia, Peru, and Bolivia, the ``source zone.'' We need
    not look far to see the devastating results of ``mission creep.''
    Operations in Bosnia and Kosovo have expanded far beyond initial
    estimates, and I fear the same form of expansion in South America. We
    must ensure that counter-drug operations are addressed with an
    appropriate, not excessive, level of military support.
        Question. Does the Department of Defense support a cap on U.S.
    military involvement for Plan Colombia?
        Answer. As a matter of policy, the Department of Defense does not
    support troop caps due to the impact that such restrictions can have on
    military operations. However, in the case of Plan Colombia, where the
    objectives are quite clear and of limited scope, the Department can
    accept a troop cap on U.S. military personnel provided that the
    language is properly structured and developed in coordination with the
    Commander in Chief of U.S. Southern Command.
                                     ______

                Questions Submitted by Senator Richard C. Shelby
                                    tricare
        Question. Secretary Cohen, I have been advised of a TRICARE payment
    policy which, on the surface, appears awkward and antiquated. According
    to TRICARE, a professional service rendered a beneficiary by one class
    of physicians (MD) is often compensated at a higher level than if the
    same identical service were administered by another class of physicians
    (DPM, OD, etc.). In the civilian world, I am told that most private
    third party carriers, as well as Medicare, have adopted an ``equal pay
    for equal work'' policy.
        This is a budget year in which we will see long-needed reforms in
    military health care. What is the justification for this TRICARE
    payment plan?
        Answer. Prior to the CHAMPUS Maximum Allowable Charge (CMAC)
    methodology, CHAMPUS set pricing based on the allowable charges for an
    area, generally a state, at the 80th percentile. CHAMPUS has always had
    at least two professional provider classes, physician class (MD, DO)
    and non-physician class. Separate area allowable charges were
    established for each class. The reasoning used for establishing two
    separate classes and hence two payment amounts was twofold. First, each
    payment amount was based on the allowable charges of the provider
    group. Normally, the allowable charges of the physician class were
    higher than those of the non-physician class; otherwise, the non-
    physician class was limited to the payment amount of the physician
    class. This meant the physician normally charged more for the same
    service than the non-physician charged. To combine the charges of the
    non-physician class with those of the physician class would have
    resulted in a lower payment level to the physicians and a higher
    payment level for the non-physicians. The other reason for not
    combining the two provider classes was based on paying more to the
    providers (physicians) who had more training and a broader knowledge
    base than the providers (non-physicians) who had fewer years of formal
    training and a smaller knowledge base.
        When CHAMPUS implemented the CMAC methodology, some of the old
    allowable charge reimbursement process remained, this being the
    establishment of allowable charges based now on national allowable
    charges instead of state allowable charges. The separate classes
    remained under CMAC. As physician pricing under the CMAC system was
    gradually brought in line with the Medicare Fee Scheduled amount, the
    differences in pricing between the two classes of providers disappeared
    for many of the care procedures. A few procedures still have pricing
    higher for the physician class versus the non-physician class. When it
    was found that Medicare does not make a pricing distinction for
    physician and certain non-physician providers (podiatrists, oral
    surgeons/dentists, psychologists, therapists including speech,
    physical, occupational, and optometrists), the Department decided to
    adjust the pricing for these providers equal to the physician payment
    amount.
        Question. Why is there no ``equal pay for equal work?''
        Answer. We are currently in the process of updating our policy to
    ensure consistency with Medicare, which will address the issue of equal
    pay for equal work. Providers other than physicians will be raised to
    the physician payment level when like services are provided. We are
    hopeful that the change can be initiated by the end of this year
    (Calendar Year 2000).
                                     ______

                 Questions Submitted by Senator Robert C. Byrd
               defense tactical aircraft and carrier procurement
        Mr. Secretary, in your opening statement, you emphasize several
    priorities, as you called for transforming our nation's defense for the
    post-Cold War era, including modernization of weapons and support and
    investing modernization wisely.
        Just two weeks ago, Congress approved, over my objections, a fiscal
    year 2001 Budget Resolution that increases overall spending for defense
    to $307 billion, an increase of $9 billion over the $298 billion that
    CBO tells us is the amount necessary to maintain this year's level of
    Defense spending, including an adjustment for inflation.
        At the same time, this budget resolution cuts $19 billion in budget
    authority from non-defense discretionary programs to a level of $290
    billion. That's below the amount CBO estimates is necessary to maintain
    domestic programs at a current services level. Where are these cuts
    going to come from? Police officers? Community crime prevention? Coast
    Guard drug interdictions? Less children in Head Start? Fewer teachers
    in schools? Less for science education? Cuts at the National Institutes
    of Health?
        Mr. Secretary, this Congressional Budget is a throwback to voo-doo
    economics. It cuts very real needs at home and proposes risky,
    financially imprudent tax cuts.
        Question. Critics say we are building duplicate air force and naval
    aircraft wings at unprecedented cost against cold war enemies that
    don't exist.
        We have 3 major fighter aircraft procurement programs--the Air
    Force's F-22, the Navy's F/A-18E/F, and the Joint Strike Fighter. When
    are we going to make the hard decisions on these fighter procurement
    programs, Mr. Secretary?
        Answer. These three aircraft in the tactical aircraft modernization
    plan bring various individual characteristics to the battle, and they
    complement each other. In the grand scheme, the capability of our armed
    forces to execute our military strategy depends upon the capabilities
    that each of these aircraft will bring to the battle. The Defense
    Resources Board (DRB) is required to review each weapons system on its
    own merit and as part of an existing force structure to ensure the
    capability brought to the table by the individual system merits the
    resources being devoted to its procurement or modernization.
    Specifically, the DRB is chartered to review the overall defense
    program with a view toward balancing resources available against the
    needs of the Services; the Commanders-in-Chief; and the Department as a
    whole. Annually, the DRB reviews the long-term tactical aviation
    modernization requirements, and they have validated the current
    approach to proceed with the F-22, the Joint Strike Fighter, and the F/
    A-18E/F. The plan is sound because it addresses the long-term core
    needs of the Services and accomplishes the following three basic
    objectives: (1) sustains platform modernization through new aircraft
    development and procurement that supports long-term force structure
    goals and protects U.S. qualitative advantages; (2) improves the
    accurate guided weapons carried by increasing standoff-range, enhancing
    all-weather capability, and reducing costs; and (3) develops a dominant
    capability to exploit off-board, all-source intelligence information.
        Question. The CBO has suggested the option of buying 219 F-15s to
    allow modernization, while cutting F-22 production from the current
    plans of 339 to 120 fighters at a savings of $10 billion. Is this a
    hard decision you can support?
        Answer. No, I cannot support the CBO's proposed approach. Such an
    approach would leave our warfighters at a distinct disadvantage, and
    that is unacceptable. The F-22 has been designed to replace the F-15
    aircraft in the Air Superiority role to counter emerging threats
    worldwide. By design, the F-22 will dominate the future air combat
    arena--flying over 50 percent more sorties, with 40 percent fewer
    military maintenance personnel, and using 50 percent less airlift than
    the F-15. The F-22 is designed to penetrate enemy airspace and achieve
    first look-shoot-kill capability through stealth, supercruise, and
    integrated avionics. The F-22 is the first weapon system designed from
    the outset with its principal focus on exploiting the ongoing
    information revolution while simultaneously denying an enemy the
    ability to do the same. While integrated avionics allow for dominant
    battlespace awareness, stealth denies crucial information to the enemy.
    Supercruise increases weapon performance, while reducing the enemy's
    ability to make effective use of the small amount of information they
    can gather.
                           submarine force structure
        Question. The CBO has suggested we consider keeping Los Angeles
    class submarines in service until the end of their 30-year life and
    slowing procurement of the new Virginia class. This would save $13
    billion over 10 years. Is this a hard decision you could support?
        Answer. The option of refueling Los Angeles class submarines in
    lieu of building new Virginia class submarines is being considered. A
    funding wedge is included in the Presidents fiscal year 2001 budget to
    support such an action.
        The President's fiscal year 2001 budget supports the potential
    decision to increase attack submarine force levels. Refueling the
    additional three Los Angeles class submarines, scheduled for early
    inactivation outside of the Future Years Defense Program (FYDP), will
    only address today's SSN force in the short-term.
        For the longer-term, all refueled Los Angeles class submarines will
    reach end of life by 2018. As a result, this option will not support an
    increased force level in the longer-term.
        The current low production rate was established, in part, to
    sustain the submarine industrial base's capability. Any reduction in
    the planned procurement rate would likely endanger portions of this
    critical industrial base, place at risk industry's ability to increase
    the production rate when necessary, and would result in increased unit
    costs. Any near term savings in delaying Virginia class procurement
    would be offset by these added risks and increased unit costs.
        Refueling additional Los Angeles class submarines is not a suitable
    substitute for building Virginia class submarines other than as a
    short-term force level increase.
                                 affordability
        According to news reports, the Center for Strategic and Budgetary
    Assessments, a Washington think tank, has indicated that the defense
    program may be short as much as $50 billion a year. Another independent
    group, the Center for Strategic and International Studies, claims that
    the underfunding could be as high as $100 billion a year.
        Question. Given probable constraints on defense spending in future
    years, can we afford a tactical aircraft modernization program as
    currently projected?
        Answer. This is a question that has been repeatedly asked, and the
    Department has been very consistent in its response. The Department
    believes that the three aircraft (F/A-18E/F, F-22, and Joint Strike
    Fighter (JSF)) in the tactical aircraft (TACAIR) modernization plan are
    affordable so long as they are properly phased and scoped. The fiscal
    requirements for the F/A-18E/F, F-22, and JSF programs do not exceed
    historical spending norms for total aviation modernization (though
    TACAIR will take a majority of the resources over the next decade or
    so). The Quadrennial Defense Review (QDR) determined that all three
    aircraft were important to meet warfighting needs with a prudent level
    of risk, and also will sustain needed technology development and the
    defense industrial base. The QDR adjusted the procurement quantities
    for each aircraft in order to balance warfighting risk against the need
    to use scarce modernization resources prudently, and support
    acquisition stability by reducing overall costs to a level we can
    afford.
                              capability required
        Question. Mr. Cohen, in view of the demise of the Soviet Union, and
    the changed international security environment, what capabilities are
    required in U.S. tactical aircraft? Does the current modernization
    program build in (an) excessive and expensive capability that is
    unnecessary in the post-Cold War environment?
        Answer. No. Potential future adversaries are projected to field
    significant numbers of improved surface-to-air missile systems that
    could restrict the rapid application of air power against key ground
    targets at the outset of a conflict. As shown during the 1999
    operations against Serbian air defenses, even older air defense
    systems, adroitly employed, can limit the application of air power.
        Aviation systems and weaponry currently being offered for sale
    include fighter aircraft, air-to-air missiles, and air defense systems.
    Properly employed, these advanced systems could pose a difficult
    challenge to U.S. forces in combat. The further proliferation of such
    weapon systems could drive up U.S. losses in a future conflict, making
    continued improvements in the nation's air forces imperative.
        The overall numbers of U.S. tactical aircraft reflect both possible
    wartime needs and the force levels appropriate to support peacetime
    forward deployments at an acceptable operational tempo. With the
    existing basing arrangements and current forward presence levels, force
    levels are not excessive to meet operational needs. In fact, the
    services continue to adapt their force operations to mitigate personnel
    operational tempo pressures. The Air Force Expeditionary Air Force
    concept is an example of such initiatives to reduce operational tempo
    pressures within existing force structure.
                                force structure
        The Secretary of Defense, Les Aspin, announced in September 1993
    that the Administration projected a base force of twenty Air Force
    fighter/attack wings (13 active, 7 reserve), eleven Navy carrier air
    wings, and four Marine Corps air wings. The Quadrennial Defense Review
    released by the current Defense Secretary William Cohen in May 1997,
    recommended no major changes in this force structure, although the
    twenty Air Force tactical wings would comprise twelve active and eight
    reserve wings. A reduction in the number of air wings would lead to a
    corresponding reduction in the number of aircraft to be procured.
        Question. Looking ahead, how many wings of tactical aircraft does
    the United States need in the post-Cold War era? Will the United States
    still need thirty-five air wings in 2010, 2020, the time period for
    which the new aircraft will be operational?
        Answer. The Quadrennial Defense Review (QDR) struck a balance
    between retaining sufficient force structure to meet the full range of
    contemporary requirements while also investing in a future force
    through a focused modernization plan. The forces provided in the QDR
    were designed to ensure our superiority ``throughout the 1997-2015
    period and beyond''.
        The Quadrennial Defense Review reduced total planned procurement of
    the Air Force's F-22 fighter from 438 to 339 aircraft, consistent with
    its much greater capability compared to the current F-15, as well as
    overall affordability concerns and force structure decisions. Navy and
    Marine Corps tactical aviation force structure were not adjusted in the
    QDR, although the planned quantity of Navy F/A-18E/Fs was reduced
    significantly in favor of an increased number of the newer Joint Strike
    Fighter (JSF) aircraft. Further, the planned total quantities of Navy
    F/A-18E/F and Navy/Marine JSF aircraft were reduced to reflect improved
    efficiency in utilization of the supporting aircraft inventory.
    Similarly, the planned inventory of Air Force JSFs was reduced to
    reflect corresponding inventory efficiencies. Thus, the QDR program
    provided a net reduction to the previous stated program plans of 677
    fighter/attack aircraft: 99 F-22s, 452 F/A-18E/Fs, and 126 JSFs.
        Recent operations, including the 1999 conflict in Kosovo, show that
    the tactical air forces continue to be in high demand to meet current
    operational needs. Consistent with this experience, the Department
    maintains the QDR program as the basis for future tactical air force
    structure and modernization.
                         unmanned aerial vehicles (uav)
        Unmanned Aerial Vehicles (UAV) that can perform many surveillance
    and other functions of manned aircraft are being developed and produced
    by the United States.
        Question. How does the role of UAVs fit into the Administration's
    overall strategy for the procurement of tactical aircraft?
        Answer. While Unmanned Aerial Vehicles (UAVs) have been around for
    quite a while, Operation ALLIED FORCE--the conflict over Kosovo in
    1999--allowed for the most extensive use of UAVs in support of combat
    operations. The experience validated our need for these types of
    systems, and has broadened our understanding of how we might
    incorporate UAVs into future combat. Based on our lessons learned, UAVs
    are likely to be used in expanded applications beyond their traditional
    reconnaissance and surveillance roles, including combat strike
    functions. However, we need to proceed carefully and deliberately as we
    expand the roles of UAVs, ensuring that the new missions are both
    militarily effective and cost efficient.
        To this end, several activities are being accomplished. The JROC-
    sponsored UAV Special Study Group is currently updating the 1997 CINC-
    generated UAV mission/payload prioritization list. This list will
    provide a firm requirements base for future UAV roles. Additionally,
    there are a number of Science & Technology efforts and experiments/
    exercises underway to further develop and understand advanced UAV
    technologies, payloads/sensors, and concept of operations that will
    contribute to the evolution of UAVs. Both the AF and the Navy, in
    conjunction with Defense Advanced Research Projects Agency (DARPA), are
    exploring Unmanned Combat Aerial Vehicle (UCAV) concepts.
        As these activities come to fruition, we will be able to model
    military effectiveness and cost, and we can make judgments on the most
    probable UAV roles. The modeling will be the basis for adjustments to
    the Department's overall procurement plans (i.e., increase the quantity
    of specific types of UAVs, reduce the number of manned surveillance
    aircraft or manned tactical aircraft, etc.) It would be premature to
    make any adjustments without the requirements-based perspective and a
    greater understanding the technology. It is essential that we complete
    the on-going activities and the modeling first.
                                 other threats
        Secretary Cohen, some have raised concerns about other threats to
    the United States, such as inadequate border security, suitcase bombs,
    bombs smuggled into the United States by ship, and other weapons of
    mass destruction, such as biological and chemical warfare and other
    sabotage.
        Question. What are your thoughts about this, Mr. Secretary? Are we
    putting too many eggs into the conventional weapons basket, and
    ignoring other threats at our own peril? Do you have any views on that
    matter?
        Answer. Just as the USG cannot focus on one area of the world, it
    cannot focus on a single type U.S. forces must be able to respond to
    the broad spectrum of threats anywhere in the world.
        In the case of terrorism, no single department or agency possesses
    all the capabilities needed to combat the problem. Cooperation within
    the USG is essential. By supporting both the Department of State and
    the Department of Justice or acting unilaterally as directed by the
    National Command Authorities, the DOD is required to be ready to combat
    terrorism throughout the globe. Our forces and their capabilities are
    not specific to one region or another. The rigorous budget and
    acquisition processes in place ensure that our military forces are
    prepared to operate internationally in a variety of environments.
        An emerging and significant threat is represented by the
    proliferation of WMD, including improvised biological, chemical, and
    nuclear devices that exploit technologies that once were the sole
    preserve of world and regional powers. The potential to attack large
    population centers and wreak havoc on an unprecedented scale has
    devolved from nation states to groups and even individuals.
        Given this threat to the United States and U.S. citizens at both
    home and abroad, the Department in cooperation with the Department of
    Justice, Federal Emergency Management Agency, and other departments and
    agencies has taken steps to prevent and deter terrorism and the use of
    WMD. Additionally, we work to ensure that the USG can assist victims of
    WMD terrorism if necessary. As in counterterrorism, the Department is
    prepared to assist the lead Federal agencies for consequence management
    as necessary.
                          threats against agriculture
        Secretary Cohen, with regard to chemical and biological weapons
    threats to the United States, I am concerned about biological weapons
    that could be targeted against U.S. agriculture the largest
    agricultural market in the world.
        Attacks on U.S. agriculture would offer huge financial rewards to
    terrorist through international future markets, or manipulations that
    would be--for the terrorists risk free.
        I am advised that Iraq had large stocks of biological weapons that
    cause severe disease in humans and animals; and that these agents had
    been made into weapons. Genetic engineering technologies allow creation
    of new pathogens with enhanced toxicity that may cause a biological
    weapons surprise to agriculture.
        Question. I am concerned that as we concentrate on funding for new
    weapons systems, we may be blinded to other, perhaps greater, threats
    of sabotage and short change other necessary initiatives to protect our
    national security. Do you have any comment on that Mr. Secretary?
        Answer: The Department recognizes the need to address
    unconventional as well as conventional threats, and is applying
    resources to both. While we need to develop new weapons systems to
    ensure that our war fighters are equipped with the best available
    technology, we also recognize the need to address domestic
    unconventional threats. The Department does this in an interagency
    context, where Defense acts in a support role. The Department, in
    cooperation with the Department of Justice, the Federal Emergency
    Management Agency, and other departments and agencies, performs a
    significant role to prevent, deter, and mitigate terrorist events.
        As you know, in May 1998 President Clinton signed Presidential
    Decision Directive 62, which is serving to fully incorporate all
    Federal Agencies in a deliberate planning and coordination process for
    domestic preparedness and within the structure of the National Security
    Council (NSC). The NSC has chartered nine subcommittees to address
    functional aspects of domestic preparedness with the general objectives
    to assess preparedness status and to recommend appropriate federal
    responses to emergent problem areas. The subgroup for Protection of
    Food and Agriculture deals solely with food and agriculture protection
    issues and is chaired by the Department of Agriculture. DOD is a member
    of this subgroup and will continue to support its activities.
        In addition to operational support for domestic preparedness, the
    Department also provides research and development resources to the
    interagency Technical Support Working Group (TSWG). Through the
    Department's Combating Terrorism Technology Support Program and funding
    provided by other agencies, the TSWG rapidly develops technologies and
    equipment to meet the high-priority needs of the combating terrorism
    community, and addresses joint international operational requirements
    through cooperative R&D with major allies. The Department of
    Agriculture (USDA) is the newest member of the TSWG, where solutions
    are being sought with USDA scientists on promising biological agent
    detection technologies for agriculture and food processing.
                       russian biological weapons program
        I am advised that there is a continuing threat from undisclosed
    Russian biological weapons programs. This involves proliferation of
    biological weapons technologies to foreign countries, enhanced by
    trained personnel, expertise and materials from the former Soviet
    program. I am advised that one area of the Soviet program (BIOPEPARAT)
    had 10,000 scientists working on agricultural biological weapons mostly
    targeting U.S. agriculture. Our own Department of Agriculture
    Agricultural Research Service has only 2,000 scientists for all
    research programs nationwide.
        I am concerned that U.S. agriculture is uniquely vulnerable to
    biological weapons attacks because of its size. (U.S. Agriculture is
    13.1 percent of Gross Domestic Product and 16.9 percent of employment.)
    These could take the form of highly infectious biological weapons
    diseases and pests, particularly foreign diseases that do not now occur
    in the U.S. This could adversely affect U.S. agricultural exports ($140
    billion annually) which are the largest positive contribution to the
    U.S. balance of trade.
        Protecting U.S. agriculture equates to protecting one of the major
    infrastructures of the U.S. economy.
        Question. Mr. Secretary, at the same time, we are planning to spend
    hundreds of billions of dollars on new weapons systems, we are woefully
    underfunding efforts to counter biological weapons threats to
    agriculture and the food-supply system. As a senior member of the
    administration's Cabinet concerned with national security, what is your
    response to my concerns?
        It seems to me that little is being done to protect agriculture and
    the food supply despite some recent increases in the budgets for
    intelligence, law enforcement, the medical community, and the armed
    forces in this area.
        It also seems to me that policymakers have inadvertently overlooked
    weapons targeting animal and plant agriculture in the urgent thrust to
    establish a national security program in an unfamiliar area.
        Question. What are your thoughts on this matter? What more can be
    done?
        Answer: The Department recognizes the need to address
    unconventional as well as conventional threats, and is applying
    resources to both. While we need to develop new weapons systems to
    ensure that our war fighters are equipped with the best available
    technology, we also recognize the need to address domestic
    unconventional threats. The Department does this in an interagency
    context, where Defense acts in a support role. The Department, in
    cooperation with the Department of Justice, the Federal Emergency
    Management Agency, and other departments and agencies, performs a
    significant role to prevent, deter, and mitigate terrorist events.
        As you know, in May 1998 President Clinton signed Presidential
    Decision Directive 62, which is serving to fully incorporate all
    Federal Agencies in a deliberate planning and coordination process for
    domestic preparedness and within the structure of the National Security
    Council (NSC). The NSC has chartered nine subcommittees to address
    functional aspects of domestic preparedness with the general objectives
    to assess preparedness status and to recommend appropriate federal
    responses to emergent problem areas. The subgroup for Protection of
    Food and Agriculture deals solely with food and agriculture protection
    issues and is chaired by the Department of Agriculture. DOD is a member
    of this subgroup and will continue to support its activities.
        In addition to operational support for domestic preparedness, the
    Department also provides research and development resources to the
    interagency Technical Support Working Group (TSWG). Through the
    Department's Combating Terrorism Technology Support Program and funding
    provided by other agencies, the TSWG rapidly develops technologies and
    equipment to meet the high-priority needs of the combating terrorism
    community, and addresses joint international operational requirements
    through cooperative R&D with major allies. The Department of
    Agriculture (USDA) is the newest member of the TSWG, where solutions
    are being sought with USDA scientists on promising biological agent
    detection technologies for agriculture and food processing.
                      fiscal year 2000 kosovo supplemental
        Mr. Secretary, Republican leadership made the recent unfortunate
    decision to kill the fiscal year 2000 emergency supplemental. I believe
    that risks undermining our troops and commanders in the field. At the
    same time, we need confidence in Congress that the United States has an
    exit strategy. We learned from Somalia that standard doctrine cannot be
    ignored even in peacekeeping missions. When commanders need
    overwhelming force, we need to provide it and it has to be timely. The
    alternative is we leave room open for mistakes and horrible images of
    our troops being dragged through the streets.
        Question. Mr. Secretary, you have stated that failure to pass a
    timely supplemental will cut back on training, morale, capabilities,
    and readiness. What have your commanders said will be the impact on
    mission safety and pacification efforts for a prudent exit strategy?
        Answer. Without supplemental funding to offset contingency
    operation costs, the Department of Defense has no choice but to take
    extremely disruptive actions that will have serious readiness
    consequences. Since the estimated cost of contingency operations has
    not changed, the reduction in funds will require that contingency
    operations costs be absorbed within the Service's operating and
    military personnel accounts. Absorbing these costs, especially this
    late in the fiscal year, will dictate that core programs be canceled or
    deferred. To preserve near-term readiness, the most likely actions
    would include the deferral of depot maintenance, implementing supply
    constraints, deferring civilian hires/change of stations, reduction of
    home station training, and deferring equipment reconstitution of units
    recently rotated from contingency operations. The bottom line is that
    without full supplemental funding approval, fourth quarter activities
    that will damage the readiness, military capabilities, and troop morale
    of our armed forces will result.
                                     kosovo
        I am very concerned about the level of U.S. participation in the
    Kosovo peacekeeping operation, and the anticipated duration of the U.S.
    military deployment in that operation.
        Question. How many military personnel are currently assigned to the
    KFOR operation in Kosovo, and how many of those are U.S. personnel?
        Answer. As of 27 April 2000, there were approximately 39,900
    military personnel (NATO/non-NATO) deployed with the KFOR mission in
    Kosovo itself. Of this total, the U.S. force contribution is
    approximately 5,500, or 13.8 percent of the force structure. If we look
    at total KFOR manning, which includes personnel not only in Kosovo but
    also in FYROM, Albania, and Greece, the U.S. force contribution is
    approximately 6,200, or 13.4 percent of a total force of approximately
    46,100 (NATO/non-NATO).
        Question. Which country has the single largest contingent of
    military personnel stationed in Kosovo?
        (If the answer is not the United States, then a follow up question:
    How does the number of U.S. personnel compare to the number of troops
    from other individual nations in Kosovo--is the U.S. the second or
    third largest contingent?)
        Answer. In Kosovo itself, the U.S. contribution is the largest at
    approximately 5,500 (valid as of 27 April 2000). If we consider total
    KFOR manning (which includes Kosovo, FYROM, Greece, and Albania), then
    the Italian force contribution of approximately 6,500 is the largest
    national element, with the U.S. contribution second at approximately
    6,200. This is due to the large Italian contingent of approximately
    1,000 personnel assigned to KFOR in Albania (the Italian contribution
    to KFOR in Kosovo itself is approximately 5,100, second to the U.S.
    force of 5,500). All force contributions are valid as of 27 April 2000.
        Question. Congress authorized the air strikes against Yugoslavia
    last year, but Congress has not authorized U.S. participation in the
    Kosovo peacekeeping operation. Given the amount of tax dollars that the
    Administration is requesting for this operation, and the dangerous
    situation that U.S. service men and women are facing in Kosovo, do you
    not think that a full discussion in Congress on the future of this
    mission would be prudent?
        Answer. I welcome appropriate congressional discussion of the
    mission in Kosovo; however I oppose any legislation that would create
    uncertainty about U.S. intentions in Kosovo, or would take the decision
    making authority on the deployment of U.S. troops out of the hands of
    Congress and the President.
        Question. What types of peacekeeping activities are U.S. troops in
    Kosovo typically involved in?
        Answer. It is the continuing mission of KFOR to maintain a secure
    environment throughout Kosovo. Within means and capabilities, KFOR will
    also provide support to the Special Representative to the Secretary
    General of the United Nations (SRSG) and to the United Nations Mission
    in Kosovo (UNMIK). The United States continues to command Multinational
    Brigade East (MNB-E), one of the five sectors of responsibility. To
    accomplish their assigned mission, KFOR units carry out a number of
    necessary military tasks. For example, U.S. forces conduct daily
    patrols, man traffic control checkpoints, and provide security details
    at selected sites of significance within their assigned sector. In
    addition, KFOR units continue to support the U.N. International Police
    (UNIP) in all five regions as they work to establish law and order in
    the province.
        Question. Would you describe the bulk of these activities as
    military maneuvers or as law enforcement activities?
        Answer. The activities that our forces are currently involved with
    on a regular basis would best be characterized as typical military
    tasks for a peacekeeping force. When KFOR first entered Kosovo, they
    were filling an administrative and public security vacuum created
    primarily by the departure of the Serb military and police units. In
    addition to their key military tasks, our forces initially assumed a
    number of additional responsibilities. For example, until the various
    international organizations (IOs) and NGOs were ready to assume their
    responsibilities, KFOR was tasked (within means and capabilities) to
    provide initial public security operations and initial basic civil
    administrative functions, as well as other essential non-military
    functions. They were also tasked with providing initial humanitarian
    assistance to internally displaced persons (IDPs), returning refugees,
    and other inhabitants of Kosovo. Over time, these initial
    responsibilities have largely shifted back to their primary
    organizations of responsibility.
        Question. When do you anticipate that U.S. military forces will be
    able to hand over their police and law enforcement duties to a civilian
    police force?
        Answer. As of 27 April 2000, the United Nations International
    Police (UNIP) had 3,159 civilian police deployed in all five regions of
    the province. As this force has grown, it has assumed increasing
    responsibility for the tasks of ensuring public security and law
    enforcement. An effective judicial system is also necessary to ensure a
    fully functioning legal framework.
                                    colombia
        Secretary Cohen, Assistant Secretary of Defense Brian Sheridan
    testified before the Senate Armed Services Committee earlier this month
    during a hearing on the Administration's counter-narcotics proposal for
    Columbia and neighboring countries. In response to a question from me,
    Mr. Sheridan said that the Administration would not seek force caps for
    the operation, but could work within a force cap.
        Question. Do you agree with that statement?
        Answer. Yes, the Department could work within a force cap while
    providing counter-drug support to Colombia. However, as a matter of
    policy, the Department of Defense does not support troop caps due to
    the impact that such restrictions can have on military operations.
    Nevertheless, in the case of Plan Colombia, where the objectives are
    quite clear and of limited scope, the Department can accept a troop cap
    on U.S. military personnel provided that the language is properly
    structured and developed in coordination with the Commander in Chief of
    U.S. Southern Command.
        Question. The figures supplied by Mr. Sheridan and others
    testifying at that hearing included an average U.S. military presence
    in Colombia of 209 personnel, ranging from a low of 92 to a high of 309
    over the past year. Would you please provide for this committee by the
    end of the week specific recommendations on a troop cap for Colombia
    counter-drug operations, including numbers for both military personnel
    and civilian contractors working with the military?
        Answer. General Wilhelm, the Commander in Chief of U.S. Southern
    Command, has looked closely at the troop cap issue and has determined
    that a limit of 500 personnel would provide sufficient operational
    capability and flexibility to facilitate Department counter-drug
    support to Colombia. The Department would require legislation that
    provides exceptions in the case of noncombatant evacuations, search and
    rescue operations, ship's company associated with U.S. Naval vessel
    port visits, equipment salvage and recovery, as well as exclusions for
    Department personnel involved in conferences, meetings and
    investigations. Additionally, the Department would want to exclude
    military personnel permanently assigned to the U.S. Embassy in Colombia
    as well as members of units participating in relief efforts in response
    to natural disasters or other humanitarian assistance. A rigorous
    assessment of the number of civilian contractors has not been
    completed. Historically to date, the maximum number of Department
    civilian contractors in Colombia has been in the range of 40 to 50
    personnel. However, this figure does not include additional DOD
    contractors that will be needed to implement Plan Colombia, nor does it
    include contractors presently in Colombia supporting the requirements
    of the Department of State and other departments and agencies.
                                     ______

                   Questions Submitted by Senator Tom Harkin
                                    secrecy
        Secretary Cohen, the nuclear weapons portion of the Iowa Army
    Ammunition Plant has been closed for 25 years, but the Army is not
    allowed even to acknowledge that nuclear weapons were ever there. I
    would like the Army to join with the Energy Department in encouraging
    former workers to come forward, to discuss any exposures that occurred
    at the plant, and to receive care for any medical problems that have
    resulted. But the Pentagon's secrecy sends the opposite message.
        Question. What is the harm in admitting that nuclear weapons once
    were in a facility that has closed for twenty-five years?
        I recently hosted Energy Secretary Richardson at a town meeting
    near the plant to talk about the nuclear weapons work that occurred
    there. When the Energy Department is publicly dealing with the nuclear
    legacy, is it consistent for the Defense Department not to admit such a
    legacy exists? How should I explain to Iowans why one federal agency
    will talk about it but another federal agency won't?
        The Defense Department has released a list of place where nuclear
    weapons were deployed that named Alaska, Cuba, Guam, Hawaii, Johnston
    Islands, Midway, Puerto Rico, United Kingdom, and West Germany. A
    Department Official later said that Iceland was not on the list. Why
    will the Department refer to nuclear weapons in Alaska or Puerto Rico
    or German, but not in Iowa?
        Answer. This is a complex issue with a history going back over 40
    years. Its complexity is driven by evolving: classification policy,
    physical security posture for nuclear weapons, and public safety, which
    are all protected by an umbrella public affairs policy regarding
    comment on nuclear weapons, i.e., the Neither Confirm Nor Deny (NCND)
    policy. In response to public affairs questions about the general or
    specific location of nuclear weapons, the response--NCND--will be given
    even when such location is thought to be known or obvious. The purpose
    of the policy is to deny militarily useful information to potential or
    actual enemies, to enhance the effectiveness of nuclear deterrence, and
    to contribute to the security of nuclear weapons, especially against
    the threats of sabotage and terrorism. This policy applies to U.S.
    weapons deployed within the United States and its territories or to
    locations beyond our territorial boarders.
        In the case you cite in your question, if the Army spokesperson
    were to have responded--other than NCND--to questions regarding the
    presence of weapons at the Iowa Ammunition Plant, for consistency, the
    Army would also have an obligation to answer questions about any of
    their facilities. The same obligation would apply to the U.S. Navy,
    U.S. Air Force, Marine Corps, or any other Department spokesperson. We
    cannot answer questions about the location of nuclear weapons
    selectively. There is, however, an exception to the NCND policy.
        It is U.S. policy to confirm to the general public the presence or
    absence of nuclear weapons or radioactive nuclear components, when
    necessary, in the interest of public safety or to reduce or prevent
    widespread public alarm. For example, in the unlikely event of an
    accident involving a nuclear weapon, we make an exception to NCND
    policy. Notification of public authorities is also required if the
    public is, or may be, in danger of radiation exposure or other danger
    posed by a weapon or its components.
        The policy has a long history. It does not apply uniquely to this
    Department. It was established by President Eisenhower in 1959.

              ``It is the policy of the U.S. Government to neither confirm
            nor deny the presence or absence of nuclear weapons at any
            general or specific location. It is also U.S. policy not to
            comment on request for information regarding the movement of
            nuclear weapons, the capability to store weapons at U.S. or
            foreign locations, or planning for any of these activities.''

        In 1991, the National Security Council directed a review of the
    NCND policy with regard to ships following the announcement by
    President Bush that the U.S. Navy would remove certain tactical nuclear
    weapons from some naval vessels. In 1992, the interagency community
    agreed to a slight modification to the policy with regard to naval
    vessels and aircraft.

              ``We will not discuss the presence or absence of nuclear
            weapons aboard specific ships, submarines, or aircraft.
            However, it is now U.S. practice not to deploy nuclear weapons
            aboard surface ships, attack submarines, and naval aircraft.''

        The deployment of U.S. weapons beyond our territorial borders also
    adds complexity of harmonizing classification and NCND policies. The
    United States must honor joint security agreements and consider the
    wishes of other nations to have served as host to U.S. weapons in the
    past, or continue to do so today.
        While I share your concerns, we cannot, however, conduct a
    comprehensive review of NCND policy taking into account only some
    weapon locations, or former locations, without affecting the security
    policies of current and former basing nations around the world. For
    example, when a non-government organization published a false
    conclusion reached from a redacted version of a classified report, our
    comment was that their conclusion was in error with regard to missing
    information. We do not confirm nor deny the presence of weapons in any
    country, with the exceptions of the United Kingdom and Germany.
        We have, nonetheless, begun informally to explore the prospects of
    harmonizing the NCND policy and classification policy regarding the
    deployment and movement of U.S. nuclear weapons with allies who serve
    as hosts to U.S. nuclear weapons, or have done so in the past.
    Developing a single exception to deal with Iowa would instantly raise
    other exceptions, causing even more questions about the NCND policy,
    which could have international implications.
                                    trailers
        Question. A recent report by the General Accounting Office found
    that 6,550 trailers were purchased over the last five years for over
    $50 million and are sitting in storage because they are unsafe. After
    several rounds of tests and modifications, I understand that the Army
    has proposed a fix to the trailers and the High Mobility Multipurpose
    Wheeled Vehicle (HMMWVs) that pull them, but that it has yet to be
    tested. What went wrong--why has this program been such a mess?
        Answer. A market survey was conducted prior to contracting, the
    results of that survey concluded that a commercial industry capability
    and capacity existed to meet the High Mobility Trailer requirements.
    Based upon the market survey results, a Non-Developmental Item
    strategy, coupled with a performance specification and a First Article
    Test to ensure compliance, seemed at the time to be a reasonable
    procurement strategy. In hindsight, the Army and our contractors
    underestimated the challenge of fielding a light trailer capable of
    strenuous off-road speeds to be pulled by a vehicle that was never
    supposed to pull a trailer. To save time and money, we procured a
    slightly modified commercially off-the-shelf trailer without the
    benefit of any research and development (R&D) effort. Perhaps, we
    should have done things differently. I would like to state for the
    record, that in all cases, the many program decisions that affected
    this program over the years were made in the best interests of the Army
    and soldiers and were based upon the best available information.
        Question. An earlier letter from Mr. Hoeper stated that all Army
    units ``are currently about 30 percent short of the authorized
    inventory'' due to trailer problems, and stated that the Army needs at
    least 18,412 trailers. But now I am told that future procurements will
    abandon this flawed trailer and choose a new design. When do you expect
    to complete testing of the fix and complete modifications of the
    existing trailers and trucks? When do you expect to be ready to
    purchase additional trailers?
        Answer. The Army expects to complete all testing by the end of the
    first quarter, fiscal year 2001 and complete all modifications to the
    trailers and HMMWVs by the end of the fourth quarter, fiscal year 2002.
    The initiation of any new trailer program will be contingent upon the
    need to buy additional trailers weighted against the needs of other
    modernization programs and the amount of funding available to effect
    these purchases.
        Question. A letter from Mr. Paul Hoeper of the Army gave me a
    ``conservative cost estimate'' of $22 million to fix the problems with
    what started as a $51 million contract. The plan is to modify only one
    truck per trailer. But the letter states that the Army is evaluating
    modifying all the trucks in units with trailers, which comes to almost
    20,000 trucks. How much extra would that cost?
        Answer. The cost for the retrofit program entails the application
    of 3 modifications, 2 to the trailer and 1 to the High Mobility
    Multipurpose Wheeled Vehicle (HMMWV), prime mover. The modification
    kits are as follows: Drawbar Modification Kit, Brake System Actuator
    Kit, and HMMWV Cross Member Kit/HMMWV Bumper Modification Kit. The
    conservative cost estimate provided by Mr. Hoeper was, in fact, the
    worst case or most expensive option of modifying all the trucks in a
    unit with trailers. For the record, the total estimated cost of
    modifying only one truck per trailer is $6.1 million.
        Question. I also understand that there is no money to fix or
    purchase trailers in this year's budget or in the Future Years Plan. Is
    that correct? If so, how do you plan to fund the repairs of old
    trailers and the purchase of new ones?
        Answer. The Army has current and prior years, unobligated dollars
    in the program to effect the fixes. In addition, the Army plans to use
    its below threshold reprogramming authority to add additional dollars
    to the program. The funding for the purchase of additional trailers
    will be presented to the Congress in future budget submissions as part
    of the annual appropriation request.
        Question. The first letter from Mr. Hoeper stated that some of the
    program personnel have received merit increases or promotions recently.
    Can you tell me which personnel received merit pay raises or
    promotions, what their role in the trailer program was, and what
    promotions or merit raises did they receive?
        Answer. As Mr. Hoeper stated some individuals associated with the
    program have received pay increases or promotions. The promotions and
    pay increases were deserved. The many program decisions that affected
    this program over the years were made in the best interests of the Army
    and soldiers and were based upon the best available information. These
    decisions were not made in a vacuum but with the approval of the
    appropriate Army and the Office of the Secretary of Defense officials
    at all levels. All our employees are held accountable for their
    actions, however, the many people involved in this effort made
    decisions with the best possible intentions so that no individual
    deserves to be held responsible for the program shortcomings. No
    employees need to be singled out. Our focus has been fixing the trailer
    not fixing any blame.
                               troops on welfare
        I know that many of my colleagues join me in finding it outrageous
    that some of our troops need welfare to get by, and even more
    outrageous that some of our troops are excluded from welfare they need.
    You recently released a statement that it ``is wrong'' that military
    members in on-base housing can qualify for food stamps while those off
    base who receive a housing allowance cannot. And you said you ``will
    work vigorously'' to exclude the cash housing allowance from
    consideration.
        Question. Will you pay for the additional food stamps from Defense
    Department funds, or do you expect the Agriculture Department to pay
    for them?
        Answer. Not counting the value of housing for those members
    residing off-base in determining food stamp eligibility is a fairer way
    of addressing the current inequities created by the governing food
    stamp law. I fully recognize that this would result in an increase in
    the number of people eligible for the benefit, but prefer that over
    pursuing a course that would result in taking away a tangible benefit
    some people are currently receiving. The Department has begun
    discussions with the Department of Agriculture, but the answer to this
    issue is very complex since any change in law regarding food stamp
    eligibility determination affects a much larger population, nationwide,
    than those Service members receiving food stamps. Counting the value of
    housing creates inequity between military and civilian populations. I
    am committed, however, to working this issue and would be glad to
    report back to the Committee as we determine how we will accomplish
    this, and how any proposal would be funded.
        Question. Will you support measures to increase the pay of the
    lowest income military members, whether they live on or off base, so
    they no longer need food stamps?
        Answer. I will always support paying our people more. As I have
    stated in the past, we, as a nation, can never pay our people enough
    for the sacrifices they make, but we can pay them more than they are
    currently receiving. However, simply paying our most junior people more
    money to address food stamp participation results in a compression of
    the pay table. This compression could have the inadvertent result of
    removing the incentive for promotion if there is not a significant
    monetary recognition in future promotions. Thus, we need to be
    examining the overall adequacy of pay for all our people, and we are
    doing that. The 9th Quadrennial Review of Military Compensation is
    looking at pay issues at all levels on the enlisted pay table to assess
    the adequacy of pay in providing the right standard of living as well
    as the ability to attract and retain the quality force we currently
    enjoy.
        Last year, I'm sure you recall, Congress passed a provision to
    provide WIC payments to troops overseas. That provision specifically
    included on-base housing (not just housing allowances) in qualifying
    for the payments.
        Question. Will you support excluding on-base housing and cash
    housing allowances from income in troops overseas qualifying for WIC,
    as you do for food stamps here?
        Answer. Philosophically, I support not counting the value of
    housing in determining WIC eligibility. The programs we provide for our
    people ought to be fair and equitable, and not counting the value of
    housing errs on the side of the human, not the program. Most states do
    not count the value of housing, and making this change would provide a
    more equitable benefit for our Service members.
        Question. I understand that troops overseas are not yet receiving
    any WIC support, and that overseas service is not expected to begin
    until mid-2001, almost two years after the provision passed. What is
    your plan for implementing this provision, and when exactly do you
    expect it will be implemented? Could you please provide me with a
    detailed timeline for implementation that shows why it will take so
    long for the Congressional directive to be implemented?
        Answer. The Assistant Secretary of Defense (Health Affairs)/TRICARE
    Management Activity (TMA) recently assumed responsibility for
    implementing the Women, Infants, and Children (WIC) program for
    military personnel stationed overseas. Official designation of this
    responsibility was made April 13, 2000. Since then, the WIC Overseas
    Program Manager has formed an Integrated Program Team (IPT) that will
    oversee the development of the program and monitor its implementation.
    Three meetings have been held, and the next meeting is scheduled for
    July 13, 2000. Meetings will continue as frequently as necessary.
        Because of the complex nature of this project, the IPT is composed
    of members representing many diverse disciplines and organizational
    components: DOD TRICARE Management Activity; Assistant Secretary of
    Defense (Force Management Policy); Under Secretary of Defense
    (Comptroller); Service Assistant Secretaries (Manpower and Reserve
    Affairs); Service Surgeons General; Lead Agents in TRICARE Europe,
    Pacific, and Latin America; Defense Commissary Agency; Navy Exchange
    Command; and Defense Financing and Accounting Service. Additionally,
    several civilians familiar with domestic WIC programs are providing the
    team with expert consultation.
        Among the issues requiring refinement and coordination are the
    following: determining parameters for WIC eligibility, both in terms of
    income and nutritional need; deciding on a range of supplemental food
    packages and arranging for these products to be available in overseas
    commissaries; developing an accounting system to handle the WIC
    vouchers that will be used to ``purchase'' the supplemental food;
    developing and providing training for medical, commissary, accounting,
    and family center staffs on their roles in the program; and developing
    and providing the required educational materials for WIC beneficiaries.
    Clearly, this is a complex program with many moving parts, all of which
    require careful development and coordination as implementation plans
    are put into place. While having WIC operational overseas as soon as
    possible is certainly a high priority, it will take time to do this
    program right. Hasty execution of a poorly planned program will only
    cause more delays in the long run and frustrate our beneficiaries even
    further.
        Funding for the program has been, and continues to be, a major
    concern. To date, only $1 million has been programmed for start-up
    activities. We estimate that start-up costs will approach $5 million,
    with annual maintenance of the program to be approximately $12 million
    to $16 million. Clearly, the magnitude, scope, and sophistication of
    WIC overseas will be directly related to the funds appropriated for it.
        A detailed timeline for WIC implementation overseas is being
    developed; however, a rough timeline contains the following milestones:
    July 15, 2000--identification of pilot sites--two in Europe, two in the
    western Pacific, and one in Latin America; October 31, 2000--completion
    of focus group interviews; December 15, 2000--completion of training
    for commissary and NEXMART staffs at pilot sites; January 2001--begin
    WIC services at pilot sites; July 2001--full implementation of WIC
    overseas.
                                     ______

                  Questions Submitted to Gen. Henry H. Shelton
               Questions Submitted by Senator Christopher S. Bond
                                   healthcare
        Question. General Shelton, the credibility of our work at
    maintaining morale and meeting recruiting and retention objectives is
    tested by our ability to care for our veterans. While we debate who
    promised what to whom and what to do about it, our veterans who paved
    the way for the prosperity we enjoy today are asking for help. 1,000
    World War II and Korean veterans are dying every day and they cannot
    wait years for your program improvements. I am still waiting to hear
    solutions from the Department of Defense. General Shelton, in your
    testimony you recognize the compelling need to provide more
    comprehensive health-care coverage for military retirees and their
    family members. In addition, you say that where specific TRICARE
    coverage is not available, you must offer them other benefits and that
    your intent is to reduce out-of-pocket expenses. What are your specific
    plans to expand these benefits and reduce expenses for military
    retirees?
        Answer. Simply stated, I would ask that Congress pass legislation
    that addresses the health care needs of all beneficiaries who have
    served 20 years or more in the Armed Forces.
        Today, our retirees over the age of 65 pay on the average $4,500 a
    year per family out of their own pockets. This cost varies depending on
    the medical condition of the individual, the number and types of
    medications he or she happens to be taking, and the type of Medicare
    supplemental insurance carried. The Joint Chief's plan expands TRICARE
    Senior Prime for this population from six to 15 sites, with the intent
    to expand to all TRICARE Regions. Where TRICARE Senior Prime is not
    available, we propose funding a robust pharmacy benefit and a Medigap-
    like policy. These initiatives would go a long way in honoring the
    promise made.
        For retirees under the age of 65, we propose that they make a
    binding decision on a regular basis to commit to either enroll in
    TRICARE Prime or remain in TRICARE Standard. For those choosing TRICARE
    Standard, use of the medical treatment facility would be authorized
    only for pharmacy and catastrophic illness. Where TRICARE Prime is not
    available, we propose offering a benefit similar to TRICARE Remote.
        Question. General Shelton, most of the military retirees and
    veterans I hear from complain that the rules are being changed in the
    middle of the game. They were promised free health care for life, and
    the military broke its promise. I share your concerns over increased
    access and better care for military beneficiaries, however, we must
    maintain the quality of care as we increase access. In your statement,
    you refer to the implementation of ``business practice improvements''
    to address the health needs of military beneficiaries. Having seen some
    of the metrics that aim to increase productivity and access, I am
    concerned that these ``business practice improvements: will mortgage
    the future stability of military health-care. For example, the Army and
    Air Force will force each doctor to see 25 patients per day. This
    metric seems overly optimistic and will force physicians to see
    approximately three patients per hour. This severely reduced the
    doctor's time for training and administrative requirements, and, more
    important, it eliminates critical time for building the doctor-patient
    relationship. If not careful, you may so overburden health-care
    providers that you exacerbate rather than solve problems with the
    Defense Health Program. How will the military increase access while
    maintaining the quality of health care?
        Answer. Our commitment to high-quality health care for all military
    members, including retirees, remains firm. I share your sensitivity to
    overburdening our health care system and preserving the quality of the
    provider-patient relationship. As validated by survey after survey,
    Service members and their families are generally pleased with the care
    they receive from doctors, nurses, and other health care providers.
    However, they are frustrated by the administrative aspects of TRICARE.
    It is these aspects of the program that our business practice
    improvement initiatives are targeting.
        Analysis of industry-wide healthcare standards has shown that we
    have an opportunity to further optimize the use of our military
    treatment facilities by increasing access to more beneficiaries. This
    means each military treatment facility (MTF) commander must carefully
    evaluate and, where under-utilization exists, implement policies that
    encourage providers to increase the number of patients they see in a
    day without sacrificing the quality our surveys are reflecting. Doing
    so will open MTF access to more beneficiaries where they truly want to
    be seen, enhances the readiness posture of our patient providers, and
    optimizes our medical resource. It is a ``win-win'' for everybody.
                                 plan colombia
        Question. General Shelton, you mention several infrastructure
    deficiencies at the Forward Operating Locations. Are funds for these
    infrastructure requirements provided in Plan Colombia?
        Answer. Yes, we have planned for the necessary infrastructure
    requirements. The forward operating locations (FOLs) at Manta, Curacao,
    and Aruba provide austere support to our counterdrug effort. We are
    already operating from those locations, but some prudent infrastructure
    improvements will be necessary before full operations can commence.
    This work totals $116.5 million.
        Manta is the most critical FOL, and the airfield deficiencies there
    prevent us from meeting our strategic milestones. For those reasons, we
    asked for $38.6 million for Manta airfield improvements in the fiscal
    year 2000 Emergency Supplemental. The remaining funds required for
    Manta, as well as funds for Aruba and Curacao, were included in DOD's
    fiscal year 2001 counterdrug Budget request. Recent congressional
    action in the House and Senate has brought all these funds forward to
    fiscal year 2000.
        Infrastructure improvements at the FOLs are critical to our support
    of Plan Colombia. I am confident that we have correctly identified the
    requirements and included them in our budget requests.
                      joint training at fort leonard wood
        Question. General Shelton, on my recent visit to Fort Leonard Wood
    I was impressed by the prevalence of multi-service training. I think
    our taxpayers would be pleased to know that all the services have come
    together to lower the total costs of training engineers, military
    police, and truck drivers. However, I was disappointed by the lack of
    investment into these facilities. I understand the Army and Marines
    teach employment of non-lethal weapons, a subject that appears to be
    very relevant to today's Joint Force, but I would like to know what
    provisions are being made to support this training and the increased
    requirements placed on it. I think non-lethal weapons will help provide
    the array of versatile, affordable assets needed, particularly as you
    deploy for Peace Operations. Will you and the service chiefs come
    together to support improving these facilities--not just for the
    growing demand in such areas as non-lethal individual weapons, but for
    engineers and truck drivers as well?
        Answer. I can assure you we are all working to provide the best
    training, training facilities, and technology for our Armed Forces. The
    Army and Marine Corps are collaborating in many training venues to
    enhance their readiness while insuring their forces are interoperable.
    Both Services are working together on Military Operations in Urban
    Terrain training, advanced distributive and distance learning, and
    common/linked military skills training. Active and Reserve Component
    forces commonly use multi-Service use training facilities. The Services
    have conducted interoperability training at Fort Leonard Wood and other
    installations for several years. Fort Leonard Wood is currently
    executing $617,000 for various improvement projects supporting multi-
    Service use classrooms, restrooms, weather shelters, road paving,
    covered eating areas, and observation towers. Additionally, a $350,000
    Marine Corps project is scheduled for execution this year for a non-
    lethal weapons training facility. Fort Leonard Wood's Interservice
    Training Review Organization has also addressed seven additional
    projects in the installation's master plan that will support joint
    training facilities for our engineers and truck drivers.
                                     ______

                Questions Submitted to Lt. Gen. Ronald T. Kadish
                  Questions Submitted by Senator Thad Cochran
                             nmd radar construction
        Lieutenant General Kadish testified to this committee a few weeks
    ago that construction on the X-Band National Missile Defense radar at
    Shemya must begin next year if the NMD system is to be deployed by
    2005. He also testified that the results of the ongoing flight test
    program would have little effect on the construction activities that
    will take place next year. You have requested $102 million for NMD
    military construction, most of which will go toward the Shemya radar.
        Question. Given the challenges of building this facility in the
    Alaskan climate, do you believe it is prudent to move ahead with
    construction of the NMD radar next year, even if there are setbacks in
    the NMD flight test program?
        Answer. Yes, we believe it's not only prudent but essential. The
    potential that the threat will mature sooner rather than later means
    that we must make every attempt to minimize the time it will take to
    deploy the NMD system. Because the NMD radar is difficult to build in
    the face of typical Alaskan weather, it could well become the pacing
    element. We therefore must make its construction a priority. We are
    confident that any problems we may uncover with the flight tests will
    be solvable, and that the deployment will not be delayed by them very
    much if at all. But if we permit the construction of the radar to be
    delayed until we have substantially demonstrated the rest of the
    system, we could delay the deployment significantly. That would
    needlessly risk a period during which we are undefended against a
    ballistic missile threat from the rogue nations.
        Question. General Kadish also testified that he was unsure what
    portion of the radar construction--if any would constitute a violation
    of the ABM Treaty.
        At what point in the construction of the Shemya radar would the
    U.S. be in violation of the ABM Treaty?
        Answer. The Administration is reviewing this issue now and we are
    awaiting the results of that review.
        Question. If you do not know, when will you be able to tell us
    whether this military construction for which you've requested $102
    million will put us in violation of our arms control commitments?
        Answer. The Administration is reviewing this issue now and we are
    awaiting the results of that review.
                         options for a second nmd site
        The Director of BMDO has testified that the ``Extended'' Capability
    1 National Missile Defense System (the Phase I system) does not meet
    the full operational requirements for NMD, but that Capability 3, with
    two ground-based interceptor sites, X-band radars in various locations,
    and SBIRS High and Low would meet the user's requirements.
        Question. Are you convinced that a second ground-based interceptor
    site would be more effective than a sea-based interceptor complement to
    the first ground-based site?
        Answer. Yes, in the near term at least. A second interceptor site
    could be deployed and effective well before any sea based components
    usable for a National Missile Defense could be deployed. Owing to
    constraints such as the ABM treaty, budgets, and competing theater
    defense requirements, no sea-based components usable for National
    Missile Defense have been designed, developed, or demonstrated, and
    they are therefore considerably further from maturity than their
    corresponding NMD land-based components. Therefore, the initial
    opportunity to meet full User requirements for National Missile Defense
    is afforded via the deployment of ground based components.
        In the longer term, there appear to be a number of important roles
    for sea based assets, including intercepts during the boost phase or
    early ascent phases of the missile flight. We plan to work with the
    Navy to implement such capabilities as soon as feasible, assuming the
    removal of constraints in the ABM treaty against the development of sea
    based National Missile Defense components.
        Question. With respect to protecting our NATO allies, which would
    be preferable: a ground-based site in Europe or a sea-based component
    to NMD?
        Answer. The answer depends on the range of the missiles against
    which the defense must be effective, on where the assets are that need
    to be protected, and on competing missions for the naval vessels.
    Against long range missiles (i.e., ICBMs), the same arguments used
    above (answer 3) imply that the only available answer in the near term
    is via a ground based site in Europe with the same types of components
    used for the American National Missile Defense system. Against shorter-
    range theater systems, both ground-based and sea based area defense
    systems, such as Navy Theater Wide, could be effective. For sea based
    defense, the ships would have to be able to take up positions in the
    proper locations to make defense of particular NATO assets effective.
    Also, the defending ships would have to be committed to the defense of
    these NATO assets in lieu of other naval priorities.
        All in all, we believe that a ground-based site in Europe provides
    the best solution for the nearer term, and could be augmented by naval
    assets, as they become available.
                              cbo estimate on nmd
        The Congressional Budget Office recently released a cost estimate
    on NMD. I understand that the CBO used different assumptions than the
    Department of Defense, scored not only the Department of Defense plan,
    but also what the CBO thought should be included as part of the plan,
    and despite several requests from the Ballistic Missile Defense
    Organization, CBO failed to share the draft report for comment with
    BMDO.
        Question. Does the CBO's methodology for this report concern you?
        Answer. The CBO estimated a program with content not yet directed
    by DOD including an additional interceptor site, more interceptors,
    higher operating costs, and additional flight tests. Whereas CBO
    estimates appear largely accurate for the costs, estimates, and
    assumptions they represent, they include costs for advanced
    architectures that would not be incurred unless required by threat
    advances.
                                     ______

                   Questions Submitted by Senator Tom Harkin
                        missile defense and arms control
        A few months ago, the cost of the missile defense system was
    generally given as $12.7 billion. A few weeks ago, the Pentagon
    estimated that the cost of the initial system including 100
    interceptors would be $30.2 billion. Lieutenant General Kadish told us
    that is only a rough estimate. And now the CBO estimates that the full
    250 interceptor system, with some needed satellites, comes to roughly
    $60 billion. If we added sea-based or space-based interceptors for a
    layered defense system, as some of my colleagues would like, the cost
    would be much higher.
        Question. Now most experts don't even think ballistic missiles are
    the likely delivery system if anyone did want to attack us with a
    nuclear weapon. So how much money should we be willing to spend for a
    defense against an unlikely threat? At what point do we say enough,
    it's not worth it?
        Answer. We believe National Missile Defense is not only ``worth
    it'' but essential. Admittedly, National Missile Defense is not the
    only defense capability the nation must undertake, but it is one of the
    most important and pressing. Ballistic missile threats to American
    populations are uniquely valuable to rogue nations, in several ways.
    First, ballistic missiles owned by a rogue nation could become an
    important tool for coercion when it wants to constrain American
    responses to aggression elsewhere in the world. Effective National
    Missile Defense would permit America to ignore such coercion. Second,
    ballistic missiles owned by a rogue nation are a way of implementing an
    immediate attack, within a half hour of a decision, before calmer minds
    can prevail. Effective National Missile Defense would preclude any
    American deaths and damage if such a decision were made. Third, we
    believe that the very presence of an effective American National
    Missile Defense system would support counterproliferation and limit the
    threat. An American National Missile Defense would likely persuade
    rogue nations not to buy ballistic missile systems that they would have
    to assume would be ineffective. These benefits of a National Missile
    Defense are therefore well worth the investment.
        Question. Governmental and outside panels of experts have suggested
    that any nation that could launch ballistic missiles could include
    effective countermeasures. This prediction seems to be supported by
    official suggestions that Russian countermeasures could defeat the
    planned U.S. missile defense system, and concerns that Russia would
    likely sell its countermeasure technology to others. Yet planned tests
    of the defense system before deployment seem to include only very
    limited countermeasures. Will you support more realistic tests of the
    system's ability to defeat all likely countermeasures before the system
    is deployed? Who determined what countermeasures are included in the
    planned tests?
        Answer. We are preparing for the defense system to be fully
    effective against the number and types of ballistic missiles, with or
    without countermeasures, that a rogue nation could realistically
    deploy. Even if the Russians share some of their countermeasure
    technology, we can still expect National Missile Defense systems to
    perform effectively against those threats when deployed by a rogue
    nation. Our test program has already included representative
    countermeasures, and it will continue to do so. The scope of this
    testing is classified.
        The conclusion that National Missile Defense will be effective
    against a missile attack with countermeasures applies to rogue states,
    but it does not apply to Russia. What makes the Russian threat able to
    defeat the National Missile Defense system is not the presence of their
    countermeasures; rather it is the relatively large number of missiles
    and warheads the Russians could bring to bear. While a National Missile
    Defense system could preclude damage from a small number of missiles,
    the results of an attack to the United States by even a hundred
    missiles would be devastating. We know that, and so do the Russians.
    This truth preserves the viability of deterrence while permitting us to
    defend against rogue states. It also preserves the viability of
    offensive arms control: under any arms control regime even being
    considered in the START environment, the Russian inventory would be
    many times what is sufficient to ensure deterrence.

                              subcommittee recess

        Senator Stevens. Thank you all very much. The subcommittee
    will stand in recess.
        [Whereupon, at 12:20 p.m., Wednesday, April 26, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 2001

                                  ----------

                             WEDNESDAY, MAY 3, 2000

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 9:40 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Ted Stevens (chairman) presiding.
        Present: Senators Stevens, Domenici, Inouye, and Dorgan.

                           NONDEPARTMENTAL WITNESSES

                    OPENING STATEMENT OF Senator TED STEVENS

        Senator Stevens. Good morning. I apologize for being late
    in starting. Maybe some of you got caught in the same traffic
    jam I was in. It was 20 minutes before we moved.
        I say good morning to my good friend from Hawaii here.
        There will be 37 witnesses today who have indicated they
    wanted to testify or submit statements to our committee. In
    order to get this large number finished on time--we start on
    the floor at 1 p.m.--I want to ask that you limit your oral
    testimony to not more than 5 minutes. All of your statements
    that you present will be printed in the record subject to the
    question of how large they are, but we will negotiate that with
    you if we think they are too long. We do appreciate your
    interest, and I want you to know we do review these items that
    you present. We are going to do our best to see to it that we
    get a chance to ask some questions. So if you think you are
    going to be provoking questions, leave a little bit of your 5
    minutes for you to answer our questions.
        Senator Inouye, do you have any opening comments?

                     STATEMENT OF Senator DANIEL K. INOUYE

        Senator Inouye. Mr. Chairman, I just wanted to underscore
    your assurance that we do read and review these statements.
        Senator Stevens. Thank you very much.
        We will follow the list of witnesses that has been prepared
    by our staff. The first witness is Master Chief Joe Barnes,
    Legislative Director for the Fleet Reserve Association. Good
    morning.
    STATEMENT OF JOE BARNES, MASTER CHIEF, USN (RETIRED),
                DIRECTOR, LEGISLATIVE PROGRAMS, FLEET
                RESERVE ASSOCIATION
        Master Chief Barnes. Good morning, Mr. Chairman, Senator
    Inouye. Thank you for the opportunity to present the Fleet
    Reserve Association's views on the fiscal year 2001 Defense
    appropriations, especially as they related to personnel issues.
        My name is Joe Barnes. I am Director of Legislative
    Programs for the Fleet Reserve Association (FRA), and Co-Chair
    of the Military Coalition's Personnel Committee. FRA and the
    Military Coalition thank this distinguished subcommittee for
    its leadership and strong support for the generous pay and
    benefits improvements enacted last year. These enhancements are
    important steps. However, more needs to be done.
        The administration's fiscal year 2001 budget request is
    inadequate and falls short of addressing essential personnel
    readiness requirements. I will briefly summarize several key
    personnel issues. The Association's top legislative priority is
    improving health care for active duty, Reserve and retired
    personnel, with special emphasis in Medicare-eligible retirees.
        The TRICARE Senior Prime demonstrations should be expanded
    nationwide and made permanent. The pharmacy benefits should
    also be expanded to include all Medicare eligibles. And more of
    these beneficiaries should be afforded the option of
    participating in the Federal Employees Health Benefit Plan.
    Health care will also be addressed in more detail by another
    witness on behalf of the entire Military Coalition.
        These concerns and others are directly related to the
    continuing recruiting, retention and overall readiness
    challenges. Additional active duty and Reserve personnel are
    required to sustain current deployments and long-term
    commitments. Without relief, there will be additional strains
    on service members and their families, thus exacerbating
    retention problems.
        Pay comparability remains a top priority, and both FRA and
    the Military Coalition appreciate the incremental progress on
    this issue through 2006. However, at the end of this period,
    the gap between military and civilian pay will still be over 8
    percent. Despite improvements, pay table revisions have
    generated frustration within the mid-career enlisted ranks.
    These personnel sense that they were misled into believing
    their expectations would be addressed, and now view their
    service as being undervalued compared to other pay grades with
    regard to the pay table reform set to be implemented on 1 July
    2000.
        The Military Coalition and seven enlisted organizations
    have endorsed FRA's study on pay reform for mid-career enlisted
    grades. Legislation addressing this issue was recently
    introduced in the House of Representatives.
        Housing allowance improvements are a budget priority for
    the Department of Defense (DOD), and we applaud this
    initiative. Reducing out-of-pocket expenses is long overdue,
    and eliminating the 15 percent out-of-pocket costs over 3 years
    will ease financial pressures on service members and their
    families.
        Authorization of the Military Thrift Savings Plan (TSP)
    last year was a positive step toward improved financial
    planning, and also essential to the reducts retirement choice.
    However, there is concern that the TSP may be in jeopardy, and
    we urge the subcommittee to help find a way to overcome budget
    challenges on this program.
        Finally, DOD is reneging on funding its fair share of the
    Survivor Benefit Plan, and the Association and Coalition ask
    for your support for reform of that program. Witnesses
    regularly state that people are the Defense Department's most
    important asset. However, the defense budget does not include
    sufficient funding to back up these claims.
        Again, Mr. Chairman, Senator Inouye, thank you for the
    opportunity to present the Fleet Reserve Association and
    Military Coalition views, and I stand ready to answer any
    questions you may have.
        [The statement follows:]
                Prepared Statement of Master Chief Joseph Barnes
                                  introduction
        Mr. Chairman and Members of this distinguished Subcommittee. On
    behalf of the 153,000 members of the Fleet Reserve Association (FRA),
    all active, reserve, or retired career enlisted uniformed personnel of
    the Navy, Marine Corps, and Coast Guard, their families and survivors;
    I extend greetings and appreciation for the opportunity to present the
    Association's views on the fiscal year 2001 National Defense budget
    request. Additionally, the Association salutes you, Mr. Chairman, and
    your colleagues for a job well done over the years. This is one of the
    Congressional panels the military community can depend on to do its
    utmost to secure the best of quality of life programs for the men and
    women who serve in the Nation's Armed Forces.
                               the budget request
        With the exception of improvements in housing allowance and modest
    health care enhancements for active duty personnel, FRA is extremely
    disappointed in the Administration's fiscal year 2001 budget request
    for National Defense programs. Although there is minimal growth in the
    proposed budget, it falls short of addressing the needs of the military
    services; their people, infrastructure, weapons and modernization
    programs, spare parts, training dollars, and--in short--overall
    readiness.
        The Association does not have the staff or resources to offer
    expertise in matters of bullets and hardware, or how much money is
    required to modernize and adequately equip the forces, but it does
    understand the people issues and quality of life programs necessary to
    keep the forces manned and at the ready. For example, from 1996 to
    1999, FRA's advised this distinguished Subcommittee of warning signs
    including a serious shortfall in unformed personnel necessary to meet
    the extraordinary high operation tempos; the need for funds to offer
    sea pay to junior enlisted sailors; that military personnel reaching
    mid-career years were thinking of leaving the Services because of
    Redux, the military's 1986 retirement program; and that and that the
    Montgomery GI Bill needs ``pumping-up'' to make it a more valuable
    recruiting and retention tool.
        Thanks in large part to your strong support, the most generous pay
    and benefit improvements in nearly 20 years have been enacted. Redux is
    now a choice and no longer a mandatory system for non-disabled
    retirees. Military end strengths are stabilized and even DOD's threat
    to further ``downsize'' the Army National Guard has been overcome by
    current events. The Navy is now working to enhance sea pay which is
    strongly endorsed by FRA along with extending the benefit to junior
    enlisted crew members.
        FRA also is seeking equitable pay reform for NCOs and Petty
    Officers, an initiative strongly endorsed by The Military Coalition
    (TMC) the National Military Veterans' Alliance, and seven major
    enlisted associations (Air Force Sergeants Association, Enlisted
    Association of the National Guard of the U.S., Naval Enlisted Reserve
    Association, Non Commissioned Officers Association, The Retired
    Enlisted Association, USCG Chief Petty Officers Association, and USCG
    Enlisted Association). Additional comments on this issue are included
    later in this statement.
                          priority personnel programs
        (Health care enhancements noted below top FRA's priority list for
    fiscal year 2001. Later today, The Military Coalition (TMC) will
    present its priority health care goals in greater detail for the
    Subcommittee's consideration which are fully endorsed by FRA.)
        Health Care.--FRA seeks the Subcommittee's support for restoring
    equity to Medicare-eligible military beneficiaries, improving Tricare,
    and the redesign of the military's pharmacy program.
        Tricare Senior Prime is one part of a comprehensive health care
    delivery system for Medicare eligible military beneficiaries and their
    dependents who reside near military treatment facilities (MTFs). Input
    from several demonstration sites indicates that the program works, and
    beneficiaries appreciate returning to the military healthcare system.
    It should be expanded to all MTFs facilities nationwide and made
    permanent.
        Tricare does not provide a uniform health care benefit for all
    military beneficiaries. In addition, Tricare Prime and Standard options
    must be strengthened to make them more viable. Other problems and
    recommended improvements include expanding Tricare Prime Remote to
    family members which is addressed in the budget and ensuring adequate
    reporting and quality control.
        FRA believes the current pharmacy program design ignores the
    government's commitment to provide lifetime health care for military
    retirees. As retirees age, this aspect of health becomes increasingly
    important. Medicare eligible retirees (apart from those detailed above
    and those having Medigap coverage) are currently paying the full cost
    of prescription drugs. The Fiscal Year 2000 National Defense
    Authorization Act authorizes a pharmacy redesign with a report on plans
    to accomplish this due to Congress by 15 April 2000. The enrollment fee
    requirement will eliminate many potential participants which will skew
    demonstration results making the program appear more costly than it is.
    These health care concerns are discussed in greater detail in the
    Coalition's statement.
        As Co-chair of TMC's Personnel, Compensation and Commissary
    Committee, I will briefly summarize recommendations on key military
    personnel programs that are also endorsed by TMC.
        Personnel Strengths and OPTEMPO.--FRA urges funding for the
    restoration of end strength levels commensurate with the demanding
    operations tempo and formidable long-term commitments. Retention and
    readiness are adversely impacted by the stress of maintaining current
    operations and the quality of life for service members and their
    families suffer accordingly.
        Pay Raise Comparability.--FRA is most grateful to Congress for
    reversing the practice of capping military pay adjustments below the
    Employment Cost Index (ECI). The comparability plus adjustments through
    2006 send a much needed acknowledgment to service members that their
    service is of great value to our Nation. However, given the recruiting,
    retention and readiness crisis, further acceleration of projected pay
    raises are recommended.
        Basic Allowance for Housing (BAH).--FRA is grateful for the
    additional funds appropriated last year to reduce service members' out
    of pocket housing expenses. However, the Association is concerned that
    BAH is funded at barely 81 percent of the standard requiring members to
    cover the remainder. FRA strongly supports the Administration's budget
    request proposal to increase BAH funding to limit out of pocket
    expenses to 15 percent of national median costs in fiscal year 2001,
    with a goal of also eliminating this expense over several years.
        Recruiting.--FRA is concerned that a number of high school
    districts in the United States deny access to military recruiters. FRA
    notes a situation in Portland, Oregon where access by recruiters is
    denied. FRA Branch 55 officials and representatives of other veterans'
    groups appeared before the district's school board seeking repeal of
    the policy only to be informed that the state's governor supports the
    school board policy. The Association endorses legislation recently
    introduced (S. 2397) by Sen. Tim Hutchinson addressing this issue.
        Thrift Savings Plan (TSP).--A glaring omission from the
    Administration budget is funding to offset the cost of implementing the
    TSP which was authorized last year. The program was touted by DOD and
    Congress to service personnel along with other pay and benefit
    improvements. Hopefully this is not another empty promise.
        Survivor Benefit Plan and Uniformed Services Former Spouses
    Protection Act.--Your support is solicited for amending the Uniformed
    Services Survivor Benefit Program (SBP) and the Uniformed Services
    Former Spouses Protection Act (FSPA). The Association is aware that
    this distinguished Subcommittee has control of the former's funding,
    but no oversight of the latter program but, Mr. Chairman, the FRA
    membership knows that you and your colleagues are most concerned with
    military personnel programs and work diligently to make each as
    equitable as possible for all hands. Currently, DOD is reneging on
    funding its fair share of the SBP program, and the FSPA is weighted
    heavily against our service members. Just recently, a Navy retiree
    found that the Defense Finance and Accounting Service (DFAS) had
    overpaid his ex-spouse $43,000. However, the DOD Claims Appeals Board
    ruled that the government isn't liable--the law does not require DFAS
    to ``police the former spouse's entitlements.''
        Mr. Chairman and Members of the Subcommittee, please note that FRA
    earlier provided under separate cover a report of its survey on the
    effect the FSPA has had on respondents. Copies are available on
    request.
        Further, Mr. Chairman, a member of the FRA staff provides a monthly
    briefing on legislative issues to groups of mid-career, senior active
    duty and reserve personnel. It is apparent that the military fails to
    inform its members of either the SBP or FSPA programs and how they may
    affect career personnel. They are stunned to learn that the Federal
    government isn't paying its fair share of the SBP program, and that
    they can lose some, most, or all of their retired pay and veterans
    compensation payments to a former spouse because of state court
    interpretations of FSPA. The men and women in our uniformed services
    need your help in ``fixing'' both programs.
        The Association also directs the Subcommittee's attention to the
    positions on other issues addressed in the full Coalition statement
    including the importance of pay comparability and pay reform for mid-
    career enlisted personnel. (Note FRA is not criticizing deserved pay
    increases or pay reform for either commissioned officers, warrant
    officers or junior enlisted members. It simply asks that Congress be as
    generous to the Nation's NCOs and Petty Officers.)
        Pay Reform for Mid-Career Enlisted Personnel.--The following has
    been extracted from FRA's study on Pay Reform for Mid-Career Non-
    Commissioned (NCOs) and Petty Officers (POs) of the U.S. Armed Forces.
    Copies have been distributed to members of the House and Senate Defense
    Appropriations Subcommittees, both Armed Services Committees and key
    defense and military officials.
                         enter: the all volunteer force
        ``Before the draft ended, a senior Master Sergeant earned seven
    times the pay of a private.''--Charles Moskos, Military Sociologist,
    Northwestern University
        Prior to the advent of the AVF, the basic pay of a 16-year veteran
    Chief Petty Officer (CPO) in the Navy or Coast Guard, or a Gunnery
    Sergeant (GYSGT) in the Marine Corps, was more than four (4) times that
    of a recruit seaman or private. In less than one year the basic pay of
    the two senior enlisted grades dropped nearly 50 percent of its
    original value.
        Other enlisted pay grades suffered similar decreases in value when
    the AVF was inaugurated. Congress, acting on the recommendations of the
    Gates Commission (1970), chose to raise the pay of the Armed Forces'
    most junior members while ignoring the worth of experienced and
    qualified senior enlisted personnel. It wasn't until essential POs/NCOs
    began an exodus from military ranks in the mid-1970s that Congress
    became concerned.
                           the lean years: 1973-1998
        ``When you get to be an E-5, E-6, or E-7, the gap between military
    and civilian pay starts to widen''--Hon. John Hamre, Deputy Secretary
    of Defense, 1998
        In the years subsequent to the birth of the AVF and prior to the
    late 1970s, DOD and Congress were suspect of holding the line in favor
    of leaner basic pay increases for two reasons, high inflation and
    adequate retention rates. As long as there were sufficient numbers of
    POs/NCOs to man the necessary billets, there was no logic in increasing
    basic pay.
        With the exception of 1980 and 1981, the three decades following
    the birth of the AVF were not kind to military personnel. After 1981
    and through the 1990s, military pay raises fell behind comparable
    civilian pay increases.
        Further erosion in basic pay primarily affecting POs/NCOs occurred
    in 1977 when Congress, at the urging of DOD, terminated payments for as
    much as 60 days of unused leave at the end of each enlistment served.
    The new statute (Public Law 94-361) restricted enlisted personnel to 60
    days over a member's career. In addition, the payments would be limited
    to basic pay only and would no longer include payments for basic
    allowances for quarters (BAQ) and subsistence (BAS).
        Public Law 94-361, the 1977 Appropriation Authorization Act,
    authorized the President of the United States to reallocate
    compensation increases among basic pay, BAQ and BAS by redirecting
    increases normally allocated to basic pay. In turn, the Act had the
    effect of reducing retired and retainer pay, drill pay, certain bonuses
    and separation payments--all determined by the amount of basic pay
    received by an affected member.
        The USPA of 1981 was the culmination of a decade of effort to have
    Congress address the devaluation of PO/NCO basic pay created by the
    AVF. The issue gradually caught the attention of the Senate which
    agreed that a ``targeted'' pay hike for POs and NCOs was necessary to
    correct the problem. The Senate Armed Services Personnel Subcommittee
    found further justification for pursuing a larger increase in basic pay
    for POs/NCOs when the Navy's CNO testified that he could not get his
    ships to sea for the lack of qualified petty officers. Concurrently,
    the Army's Chief of Staff complained that he did not have sufficient
    numbers of sergeants to man the service's combat arms.
        The Chairman of the House Defense Appropriations Subcommittee at
    that time, also realized a need for an increase in basic pay for POs/
    NCOs and introduced his own pay bill, eventually adopted by the full
    House. On November 1, 1981, the senior enlisted grades realized a 17
    percent hike in pay as opposed to an average increase of 14.3 percent
    for other pay grades.
        The authorization for an additional 2.7 percent for senior enlisted
    grades, increased the CPO/GYSGT rate of pay by a mere 10 cents for each
    dollar paid to seamen and privates. Further comparison of the November
    1981 enlisted pay hike with that of the previous decade proves there
    was a most definitive decline in the monetary value of the Nation's
    senior enlisted personnel. Whereas there was a 225 percent hike in
    monthly basic pay ($83 to $269) for the most junior enlisted pay grade,
    the CPO/GYSGT, for example, realized less than a 74 percent monthly
    increase, $360 to $627.
        For the 1990s, Congress continued to limit increases in pay because
    of ``budget constraints'' and ``the extraordinary pressure to reduce
    defense spending.'' Both reasons were justifiable, but the suspicion
    that there was a third reason--downsizing the military forces--was
    extraordinarily strong. By keeping pay increases at lower percentage
    rates, pay could and would act as a counter-incentive to the retention
    of service members.
                             pay reform: july 2000
        It's safe to say that today's Petty Officers and NCOs were elated
    when reading that both uniformed and civilian Pentagon leaders were
    discussing the possibility of targeting pay raises to POs/NCOs and mid-
    level officers. ``Bigger raises for NCOs among ideas,'' headlined one
    news item. Another read, ``And NCOs and mid-career officers are at the
    heart of a plan now working its way through the Joint Chiefs in
    Washington.'' Then it was the Chiefs of Staff and Congress promising
    pay reform in the Fiscal Year 2000 National Defense Authorization Act
    (Fiscal Year 2000 NDAA). The reform, in addition to the 4.8 percent
    increase on January 1, 2000, would ``provide enhanced pay raises for
    mid-career officers and non-commissioned officers.''
        The pay reform, as perceived by mid-career POs/NCOs never
    materialized. According to a news item, the money earmarked for
    enlisted pay increases was used to fix the REDUX retirement program.
    Early elation soon turned to disappointment when proposed increases
    were published in military-oriented newspapers.
        Even the Army, Navy, Air Force and Marine Corps Times discovered
    that ``unhappiness is spreading so quickly that the defense officials
    who drew up the plan are preparing an October (1999) campaign to
    explain how the rates were determined.''
        More disillusionment occurred when the latest offer of larger
    enlistment bonuses and benefits were authorized for new accessions.
    Certain non-service candidates can receive $12,000 for enlisting and as
    much as $20,000 for choosing a critical skill. Another $50,000 in
    scholarships may be added depending on the recruit's chosen
    occupational skill and length of commitment. For the majority of POs/
    NCOs, mid-career as well as seniors, no re-enlistment bonuses are in
    the offering unless they have the critical skills needed by their
    respective military service. Even the critical skilled PO/NCO cannot
    receive a bonus once he or she attains 14 years of service.
        Other frustrations have added to the dissatisfaction expressed
    above and in the 1998-99 General Accounting Office survey among
    enlisted grades. Of the top ten concerns, enlisted personnel named
    basic pay and re-enlistment bonuses as numbers 4 and 6. (Basic pay was
    no. 1 with Army enlisted personnel.)
        FRA and others over the years have recognized the disparity in the
    basic pay of POs/NCOs. FRA has addressed the issue with and before the
    appropriate House and Senate committees for some years. A November 23,
    1998 Army Times editorial opinion stated that raising the NCO pay ``is
    key.' It called attention to the fact that ``even some of the most
    junior commissioned officers are paid more than the senior non-
    commissioned officers who train them and teach them the lay of the
    land.''
        Charles Moskos, a sociology professor specializing in military
    personnel issues, and John Hamre, Deputy Secretary of Defense are among
    the more prominent advocates for increasing PO/NCO pay. In an
    appearance before the House Armed Services Military Personnel
    Subcommittee, November 4, 1999 Moskos suggested pay scales may need
    major modification to restore the pre-1972 ratio of pay for non-
    commissioned officers. He reiterated his earlier charge that sergeants
    (and petty officers) are underpaid. ``Eventually,'' he said, ``someone
    has to come to the realization that we've overpaid recruits and
    underpaid sergeants.''
        ``We have a retention problem,'' he warned. ``And part of this, I
    think, is attributable to the way the pay scales have been arranged,
    with the advent of the all-volunteer force. For example, an E-8--a
    senior master sergeant in Army terminology--used to make seven times
    the compensation of a private. Today that same E-8 makes three times
    the compensation of a private.''
        Hamre was more direct than Moskos. ``Our NCOs are significantly
    underpaid--(W)hen you get to be an E-5, E-6, or E-7 the gap between
    military and civilian pay starts to widen.''
                  comparison of enlisted vs officers pay rates
        It was not the intent of this study to compare officer pay scales
    with those in the PO/NCO ranks. But when service officials were queried
    as to why the pay reform targeted mostly commissioned officer pay
    grades of 0-4, 0-5, and 0-6, and not POs/NCOs, one source responded as
    follows: the largest increases occurred where the pay table was most
    deficient; officers only receive four or five promotions while enlisted
    expect six or seven; enlisted are being promoted through more pay
    tables faster than officers; enlisted on the average can expect
    promotion every three to five years, a lieutenant can spend two tours
    in that pay grade; and members should not look at one cell at a time;
    the idea is to reward promotion, not longevity.
        Three of the responses involve comparisons with enlisted personnel
    where no such absolute exists. It appears there always has been a
    definitive line between the officers' pay table and that of enlisted.
    Each was established for a different purpose. In addition to providing
    a pay and allowance system ``intended to be both equitable to military
    personnel as well as to be responsive to the needs of the United States
    in terms of attracting and retaining the numbers and types of personnel
    needed;'' the officer pay table was developed to recognize a grade
    distinction for both active duty and retired pay. Enlisted pay has the
    goal of providing ``additional incentives to encourage enlisted
    personnel and potential enlistees to undertake career enlisted
    service.''
        Other sources attributed the higher ``targeted'' pay increases to
    mid-grade officers as ``a correction to past table distortions''; that
    the pay table reform for July 2000 was to ``emphasize performance
    rather than longevity.'' However, a review of DOD's history of military
    compensation reflects that the same theory was used in developing pay
    tables 41 years ago. The Pay Act of 1958 ``changed the longevity
    configuration by precluding increases beyond the length-of-service
    point in each pay grade at which individuals are normally promoted, so
    as to maintain a closer relationship between performance and higher
    pay.''
        Pay increases under the fiscal year 2000 reform provision offer
    minimal raises for most mid-grade Petty Officers and NCOs (a maximum of
    3.5 percent but at only one E-5 pay cell) in comparison with what will
    be provided mid-grade officers (as high as 5.5 percent for 10 mid-level
    officer pay cells). (See Chart A below.) Whereas, only 7 of 33 mid-
    career PO/NCO pay grades will be in receipt of increases above 2
    percent, 15 of the 33 mid-career officer pay cells will realize
    increases above 4 percent. (Note: POs/NCOs in pay grade E-4 will
    receive pay increases of 2.5 percent for most year increments with two
    early year increases above 4 percent. However, E-4 is the most junior
    of PO/NCO pay grades and is not considered a mid-career grade.)
        Others have noted the pay reform was weighted heavily toward
    certain officer pay cells. The Washington Times, Oct. 6, 1999, noted it
    ``gave additional targeted salary increases of up to 5.5 percent for
    mid-career officers. The 150 highest-ranking generals and admirals
    would get even higher pay raises, increasing their salaries to as much
    as $125,000 a year from the current top pay of $110,700.''

                                        CHART A.--MID-GRADE PAY REFORM INCREASES
    ----------------------------------------------------------------------------------------------------------------
                                                                       Years of Service
                 Pay Grade              ----------------------------------------------------------------------------
                                           2      3      4      6      8      10     12     14     16     18     20
    ----------------------------------------------------------------------------------------------------------------
    Officers:
        O-6............................  .....  .....  .....  ( \1\    4.9    5.5    5.5    5.4    1.8    1.8    4.6
                                                                  )
        O-5............................  .....  .....    1.3    5.5    5.5    5.5    5.5    5.5    4.3    1.3    1.1
        O-4............................  .....  .....    1.5    5.5    5.5    5.5    4.8    3.5    2.3    0.5    0.5
    POs/NCOs:
        E-7............................    1.2    1.3    1.4    1.6    1.8    1.9    2.0    0.5    0.7    0.9    2.5
        E-6............................    1.4    1.7    1.5    1.9    2.2    2.3    0.6    0.9    0.1    0.3    0.4
        E-5............................    3.1    3.1    3.5    1.4    1.7    1.8    2.1    0.2    0.2    0.2    0.2
    ----------------------------------------------------------------------------------------------------------------
    \1\ Denotes increase in the amount of 2 percent or less.

                            using pre-avf pay tables
        There are those who suggest that comparing pre-AVF pay tables with
    today's mid-grade (or senior) enlisted pay tables is inappropriate
    justification for reform of certain enlisted pay cells and that a
    comparison should begin after the AVF came into being. FRA disagrees.
    The major damage was done at the beginning of the AVF and not
    subsequent thereto.
        Congress was sold on the AVF and the recommendation to increase
    junior enlisted pay so prospective enlistees would have a greater
    incentive to sign on the dotted line. Junior enlisted pay cells were
    nearly doubled while the upper enlisted pay cells remained at their
    January 1, 1971 rates. The most junior commissioned officer pay grade;
    however, was only increased by 10 percent. The effect was nearly a 50
    percent devaluation of the pay of more senior enlisted personnel but
    only a marginal loss in ratio of pay for officers in pay grades 0-4 and
    above. (See Graph A.)
        The recommendation that this paper should not go back to 1971 to
    justify pay reform for POs/NCOs flies in the face of the July 2000 pay
    reform that revisits the Uniformed Services Pay Act of 1958 to justify
    targeting certain officer grades for higher increases in pay.
                                   conclusion
        Again, Mr. Chairman and distinguished members of the Subcommittee,
    FRA thanks you for the opportunity to present its views on important
    personnel issues. The Association also appreciates your strong support
    and leadership in the enactment last year of the most generous pay and
    benefit package in nearly 20 years.
        As indicated above, however, the reform of the military pay tables
    missed the mark with regard to mid-career POs and NCOs and is the
    subject of growing concern within the enlisted ranks. With a strong
    economy and low unemployment, retaining key mid-career POs and NCOs
    must be a priority.
        These personnel are integral to training both enlisted and officers
    and to providing advanced training. They are essential for providing
    face-to-face leadership, to monitor, to guide, and to mentor. They are
    well better educated and highly trained, and when there are
    insufficient or no commissioned officers available, they are called
    upon to assume command positions.
        The Association salutes your untiring commitment to the men and
    women serving our Nation in uniform and stands ready to be of
    assistance to you and members of this distinguished Subcommittee.

    [GRAPHIC] [TIFF OMITTED] T02MY03.000

        Senator Stevens. Senator, do you have any questions?
        Senator Inouye. No, Mr. Chairman.
        Senator Stevens. We still are working as hard as we can on
    the pay structure and allowances, too. I do think we have to
    take into account the allowances as being part of the total
    compensation package. We are working with the Armed Services
    Committee for those adjustments. I hope you are conveying your
    views to them, too.
        Master Chief Barnes. Yes, we are, Mr. Chairman. Thank you.
        Senator Stevens. Thank you very much, Chief.
        Next is Dr. David Johnson, Executive Director, Federation
    of Behavioral, Psychological and Cognitive Sciences. Good
    morning.
    STATEMENT OF DAVID JOHNSON, PH.D., EXECUTIVE DIRECTOR,
                FEDERATION OF BEHAVIORAL, PSYCHOLOGICAL AND
                COGNITIVE SCIENCES
        Dr. Johnson. Good morning, Mr. Chairman, Senator Inouye. I
    am testifying today on the request for behavioral and social
    science research in the Army, Navy and Air Force. But let me
    first say a word about the overall defense research budget.
        In adjusted terms, the buying power of that budget has
    decreased about 25 percent in the last 10 years. The Congress
    showed its discomfort with a research budget that is too low to
    support medium- and long-term security by providing an increase
    above the President's request in fiscal year 2000. Your
    increase was in line with the Defense Science Board
    recommendation that $8 billion was needed to fund 6.1, 6.2 and
    6.3 research.
        We are recommending a budget of $8.4 billion for fiscal
    year 2001, an amount that maintains the buying power of the
    budget you put in place last year. It represents a 3-percent
    increase over current funding and a 12-percent increase over
    the request.
        While the overall research budget declined steadily during
    the nineties, the behavioral and social science research budget
    declined precipitously. The Army Research Institute budget, for
    example, declined 70 percent in buying power. At the same time,
    the services have encountered growing difficulty meeting
    recruitment quotas and maintaining officers. The human-centered
    research addresses many military relevant questions. But among
    the most important questions it addresses is how to properly
    prepare personnel to do their jobs.
        As you know, the current difficulty in recruitment has
    meant that enlistees are being accepted with less than a high
    school education. At the same time, the technological
    sophistication of modern defense grows every day, requiring
    equal growth in the skill and proficiency of personnel. Given
    these opposing realities, cutting research whose purpose is to
    improve human performance makes little sense.
        It has been argued that the military should cut costs by
    purchasing commercial products originally developed for
    civilian uses and adapting them to fit military needs. That is
    hard enough to do with respect to specialized hardware; it is
    impossible in human performance. Industry has invested little
    research in improving human performance. Many of the selection
    and training tools used in the private sector had their origin
    in research supported by the military. This means the military
    must generate its own science in this area or have nothing to
    draw on to assure that its personnel will be able to perform
    their jobs.
        But the budget request does not reflect the growing need
    for good, basic, and applied research and powerful
    applications. In particular, the Air Force has made drastic
    cuts in the past 2 years in its own behavioral research
    laboratories. Last year, despite congressional efforts to
    maintain funding, the Air Force essentially gutted the Brooks
    Air Force Base testing and training laboratory. That was
    followed by sizable personnel cuts at Wright Patterson Air
    Force Base, which specializes in human/machine interface
    research.
        These, and the simulation research facility in Mesa,
    Arizona, are what remain of an Air Force behavioral research
    laboratory system that once contained as many as 17
    laboratories, each focused on a specialized set of research
    problems. If the military continues to divest itself of these
    scientists who do human-focused research, the asset they
    represent will be destroyed. The scientists possess such
    military-specific research skills and knowledge that acquiring
    replacements, once it is recognized what capabilities have been
    lost, will be all but impossible.
        We think it is important to the safety of the country that
    human-centered research capabilities in the Army, Navy and Air
    Force not be lost, and we ask you to do all you can to preserve
    and rebuild those capabilities.
        [The statement follows:]
                   Prepared Statement of David Johnson, Ph.D.
        Mr. Chairman, members of the Subcommittee, my name is David
    Johnson. I am testifying today on behalf of the Federation of
    Behavioral, Psychological and Cognitive Sciences and the Human Factors
    and Ergonomics Society. The Federation is a coalition of 19 scientific
    societies containing most of the scientists who carry out defense-
    related behavioral research. Among those societies, the Human Factors
    and Ergonomics Society has the highest concentration of scientists
    whose major research focus is the enhancement of national defense. My
    comments will be directed at the President's request for behavioral
    research in the Army, Navy, and Air Force.
      the overall research budget is falling. and the behavioral research
                            budget is falling faster
        Let me set the fiscal year 2001 request in context. Science has
    made our security forces first in the world. Normally when we think of
    science and the military, we think of science applied to technology,
    and that is not an incorrect perception because the bulk of military
    research is directed at improvements and innovations in the technology
    of defense. Of the $37.8 billion requested for Research, Development,
    Testing, and Evaluation, about $153 million is being requested for
    research to improve human resource utilization. That works out to about
    four dollars of every thousand dollars spent on military research being
    devoted to the selection, training, placement, evaluation, safety, and
    interfacing with technology of the 1.37 million people who are the
    armed forces of the United States.
        Despite the importance of research to the strength of our defense,
    support for military research has been dwindling. Between 1989 and 1999
    the military RDT&E budget lost about 25 percent of its buying power in
    terms of constant dollars. The behavioral research budget has followed
    the same downward slope, but at a much steeper angle. Between 1989 and
    1999, for example, the buying power of the behavioral research budget
    of the Army shrank by 70 percent. I pick the Army to show the shocking
    decline in support because the Army is the most personnel-intensive of
    the armed services. That is, the Army has the largest personnel
    complement, about 478,000, of any of the services.
    Both Overall Research Losses and Behavioral Research Losses Are
            Weakening Preparedness. The Situation Needs to Be Turned
            Around.
        This reality leads me to emphasize two points: The overall research
    budget has shrunk too much to guarantee both medium and long-term
    military preparedness. And the behavioral and social science research
    budget has shrunk to a point where it would be more accurate to say
    that it guarantees unpreparedness than to say that it endangers
    preparedness.
        Scientists are not the only ones sounding the alarm about this
    situation. As you know, sufficient concern has grown in Congress that a
    group of House and Senate legislators has formed a military research
    caucus in order to try to bring funding back to a prudent level.
    Likewise, a group of scientific society, university, and industry
    representatives has formed the Coalition for National Security Research
    to work for a research budget that is sufficient to secure medium and
    long-term national security. In concert with the other organizations in
    that membership, we are asking this Subcommittee to recommend a funding
    level of $8.4 billion for the combined 6.1, 6.2, and 6.3 research
    budget. That amount is based on the recommendation of the Defense
    Science Board. It represents a three percent increase over the amount
    appropriated for fiscal year 2000 and a 12 percent increase over the
    amount requested for 2001 by the President.
    The Behavioral Research Budget
        Let me turn more specifically to the behavioral and social science
    budgets for the Army, Navy and Air Force. It is most often the case
    that we come before you to ask your support for the basic research or
    6.1 budget. Most of that budget is spent for research carried out in
    universities by the scientists who are the members of our
    organizations. We certainly do ask for that support again this year.
    Fortunately, those budgets are not slated for cuts beyond those
    inflicted by inflation. They are essentially frozen. Our deep concern
    this year is for the applied research and advanced development, or 6.2
    and 6.3, budgets. This is research that is normally carried out in the
    defense research laboratories. It is the follow-on research to 6.1. It
    is the research that produces the products that are the purpose of
    military support of behavioral and social science research. And we are
    particularly alarmed by the pattern of cuts that has been coming from
    the Air Force, the one branch of the armed services that was meant from
    the beginning to be a science-based defense service.
    Air Force 6.2 and 6.3 Cuts Are of Particular Concern
        For the past two years, we have looked to the Congress to save this
    research from being eliminated entirely. We are, indeed, grateful for
    the attention you have shown this problem. Two years ago, you restored
    funding for the laboratory at Brooks Air Force Base which the Air Force
    attempted to close despite your efforts. Brooks has been the center for
    Air Force research on recruiting, testing and training and has been
    responsible to all the armed services under Project Reliance for
    research on personnel testing instruments. This year, you provided $5
    million to maintain at least a vestige of the research that had been
    carried out at Brooks.
                The Losses at Brooks Air Force Base Were Devastating
        Nevertheless, the cuts at Brooks have decimated the ranks of its
    scientists greatly weakening the ability of the Air Force to meet its
    own and defense-wide needs in recruiting, testing and training. The
    cuts at Brooks are particularly striking in light of the well known
    difficulty the services are experiencing now in recruiting sufficient
    numbers of personnel with high enough educational levels to perform the
    tasks required of those in military service. It can be assumed that as
    more service men and women are recruited from the pool of candidates
    with less than a high school education performance ratings on the Armed
    Services Vocational Aptitude Battery (ASVAB), the entrance examination
    for all the military services, will go down substantially. There is,
    therefore, a serious current need for research to determine the
    compensatory factors that are predictors of high performance in lieu of
    adequate scores on the ASVAB. The very real risk that is faced from not
    doing this research is that the services may make their recruitment
    quotas but not be able to fulfill their missions. Numbers alone do not
    constitute a strong military as has been proven over and over through
    millennia of armed conflict.
                Now the Same Thing Is Beginning to Happen at Wright
                        Patterson
        The losses at Brooks have been extremely unfortunate. Now a similar
    threat is being made to the behavioral research programs at Wright
    Patterson Air Force Base. Wright Patterson has been the site of
    research aimed at achieving effective human-machine interfaces. Brooks,
    Wright Patterson, and Mesa, Arizona are the three sites where Air Force
    applied and advanced behavioral research still takes place. The Mesa
    facility carries out research to improve simulators and methods for
    judging the likely performance of aviators from the kind of training
    they receive in simulators. Already Wright Patterson has experienced
    reductions in force with the familiar result that many whose jobs are
    not immediately threatened have also been leaving the Wright Patterson
    laboratories. The research capability of Wright Patterson is quickly
    being weakened by the cuts. The situation must be turned around now if
    the Air Force is to maintain its capabilities in human-machine
    interface applications.
                It Is Not a Problem That Private Industry Will Be Able to
                        Help Solve
        As military research money has grown more scarce, the proposition
    that the Defense Department can sustain the research losses simply by
    buying off-the-shelf products from civilian-sector industries. We
    thinks there are severe limitations to that approach even for
    technology acquisition, but there is no way that the military can make
    up its losses in human resources research by looking to the civilian
    sector. The research the military needs in this area is simply not done
    outside the military. In the human resources area, the military has
    built up over decades a pool of researchers who know and respond to
    military needs. In fact, far from looking to the private sector for
    this research, much of what the private sector uses in terms of human
    resource applications was produced through military funding. If the
    military loses its capabilities in these areas of research, they will
    be lost altogether.
                Restoration of Air Force Behavioral Research Dollars Is a
                        Necessity
        That is why we are asking you to act decisively to keep this
    research alive. We believe that Congress should undertake over a number
    of years to rebuild the human resources research capabilities of the
    Army, the Navy and the Air Force. But during the coming fiscal year, we
    urge you in the strongest possible terms to restore funding for the 6.2
    and 6.3 behavioral research budgets of the Air Force Research
    Laboratory. The President's request for Air Force behavioral research
    is $91.689 million. The current funding level is $114.333 million. At
    the least, we believe that funding for the Manpower, Personnel, and
    Training program and the Crew Technology program should be restored.
    The request for those two programs is $91.689 million. We recommend
    additional spending of $7.809 million which would freeze the funding
    level for these programs at their current level of $99.498 million. Our
    preference would be to see a restoration of the entire Air Force
    behavioral research budget to its current $114.333 million. We support
    the President's request for the Army Research Institute ($21.974
    million) and the request for the Office of Naval Research ($39.264
    million). I thank you for the opportunity to present our views and
    would be happy to answer any questions you might have.

        Senator Stevens. Has this been affected at all by base
    closures?
        Dr. Johnson. The Brooks may have been. Because it was just
    unfortunate that that lab happened to be at a base that was
    part of the desired closings. But there were really
    alternatives; there was another base nearby where some of that
    work was done. So it is not completely base closures.
        Senator Stevens. This is not a question, but just a
    suggestion. You have been here before, I know, and others on
    the same subject. I cannot recall a time when basic research
    people gave us some examples of the positive results of such
    research. We do continue it year after year, but I do not think
    we have had any kind of show-and-tell, if you will, of some of
    the progress that has been made by this research and some of
    the benefits that have been derived by the people in the armed
    services. I think we have to see that or hear about it in order
    to continue the funding at the level that you are suggesting,
    which is higher each year than what the President has asked.
        Dr. Johnson. I would be happy to.
        Senator Stevens. We have raised it each year. And I think
    we have raised it because we have hopes that what you are doing
    will improve the lifestyle of the people and protect them in
    terms of the assignments that are given to them. But I am not
    really seeing much in terms of that kind of an approach, and I
    would urge you to do it next year.
        Dr. Johnson. I have those examples, and I will be happy to
    send you a list now. And I will make sure that it is in next
    year's presentation.
        [The information follows:]
         Federation of Behavioral, Psychological and Cognitive
                                                      Sciences,
                                         Washington, DC, June 21, 2000.
    Senator Ted Stevens,
    Senator Daniel K. Inouye,
    Senate Appropriations Committee, Subcommittee on Defense, United States
            Senate, Washington, D.C. 20510.
        Dear Senators Stevens and Inouye: When I testified before you on
    May 3, you suggested that it would be good to have examples of
    improvements that have been made in military operations as a result of
    behavioral and social science research. I said that I would provide you
    with examples. Here is a selection. One thing to know is that the
    behavioral and social research supported by the services covers a range
    that is not immediately apparent from the terms ``behavioral'' and
    ``social.'' In what follows, I will try to give a sense of that range.
    How do we know what unproven recruits can do?
    And how effectively can we develop their capabilities?
                The role of testing and training research
        Perhaps the longest running line of behavioral research supported
    by the military has been in the area of testing. It began in World War
    I with the creation of the Army Alpha test, the first test of aptitude.
    In World War I, there was a rapid calling up and mobilization of
    troops. The Army needed a way to determine what these enlistees could
    do so good choices could be made about the tasks each enlistee would be
    assigned. Research on testing continued after the war. That research
    permitted development of the theoretical base for aptitude testing that
    underlies not just today's service-wide aptitude test, the Armed
    Services Vocational Aptitude Battery (ASVAB) but also such civilian
    tests as the Scholastic Achievement Tests (SAT) and the Graduate Record
    Examination (GRE).
    What happens when quotas cannot be met and minimal education levels for
            new recruits must be lowered?
                Research to adapt measurement instruments to new realities
        That research continues today in at least two forms. As use of
    technology by the military increases and changes, the skill
    requirements of new personnel change. There is a constant need to
    adjust the ASVAB to take account of new military needs. This line of
    research is applied rather than basic, and is somewhat routine in that
    there are standard ways of testing potential new items for the battery
    and determining whether they yield desired information. Workaday as
    this work is, it is still important. Consider that, in order to meet
    quotas, some services will be admitting enlistees with less than a high
    school education. Not much useful information is going to come from
    finding that recruits without a high school degree do poorly on the
    ASVAB. What needs to be known is the true potential of each recruit.
    Through careful testing, the ASVAB can be adjusted to yield information
    that will be useful in making sound decisions about training and
    placement of these individuals.
    Faster, better, cheaper
                Research is bringing unprecedented precision to training
        There is a second line of research in testing that is more basic.
    It has to do with using tests not just as measures of the current state
    of a person's skills but as dynamic diagnostic instruments.
        Training is necessary for new personnel. It is also expensive. And
    there is pressure to accomplish it in the least possible amount of
    time. Dynamic diagnostic testing helps. The research is computer-based.
    It is aimed at creating tests that change to fit the test taker. The
    answer a person gives on one item determines what question will be
    asked next. As test items accumulate, the computer program begins to
    profile in detailed ways the person's general and specific strengths
    and weaknesses. The results of the diagnostic test then go to the
    trainer who tailors training to the person, putting more time in areas
    where the person is weak and less time where the person is strong.
        Some of the training can also be done by computer with the computer
    giving the person more experience in weak areas, but also monitoring
    the person's progress and adjusting training to assure that each
    required skill is practiced to a predetermined criterion before moving
    on to a skill whose mastery is dependent on having mastered the prior
    skill. This tool is known as artificially intelligent tutoring. The
    teaching it offers is finely adapted to each student's state of
    knowledge. In addition to the efficiency that artificially intelligent
    tutoring brings to military training a very powerful mathematics tutor
    has also been developed as a spin-off of the military research.
        The result of this mating of diagnostic testing with precise
    training is that new personnel can be better trained in less time, and,
    thus, at less cost.
    Taking advantage of what personnel didn't learn in school
                Skill Domains and Dimensions of Performance
        Another way military research is responding to the changing
    demographics of new recruits is by expanding understanding of the
    nature of skill and exploring the multi-dimensionality of performance.
        Knowledge of facts and processes is only one aspect of being an
    effective member of the military. There are important aspects of skill
    that are not trained in academic settings and yet have a great deal to
    do with quality of performance. Spatial ability is one such skill.
    There are individuals, for example, who are capable of keeping track of
    their direction even if they are moving through caves hundreds of feet
    underground without visual cues to distinguish north, south, east and
    west. Such individuals might lack a college degree or a high school
    diploma, but their ability to keep a heading regardless of the presence
    of directional aids is golden. For pilots, shipboard navigators, tank
    operators, and leaders of reconnaissance teams natural navigational
    skill gives an edge in performance that training without natural
    ability is unlikely to match. Researchers are learning how to identify
    such important native abilities in new recruits so that those skills
    can be sharpened through disciplined practice and then put to good use.
        Relatedly, researchers are reconceptualizing the nature of
    performance by looking more closely at the components of performance in
    specific tasks. How much of successful aircraft maintenance, for
    example, is troubleshooting strategy, how much knowledge of the
    aircraft, how much work speed? Comparison of repair team accuracy from
    one base to another, for example, shows considerable variation.
    Researchers are working at understanding the dimensions of performance
    and the impact of performance along each dimension on the quality of
    overall performance. The goal is to identify the special skills of
    individuals and the dimensions of high quality, task-specific
    performance so that task teams may be deliberately selected and trained
    for maximum performance. One outcome of this research could be that in
    the future we will be more prone to use our sophisticated and expensive
    attack helicopters because we will be confident that they will be
    properly and efficiently maintained and expertly flown.
    No more Vincennes incidents
                The virtues of embedded training
        The Navy has invested heavily in yet another approach to testing
    and training. It is called embedded training. The idea is that when
    sailors are at sea, opportunities for extremely realistic training and
    practice present themselves and should be taken advantage of. So the
    Navy has been funding research aimed at building training routines into
    the equipment sailors would use in combat. As the products of this
    research are coming on line, it is becoming possible for those on a
    ship or a fleet of ships to engage in war games as they cruise to their
    destination. Various scenarios can be programmed, and the sailors can
    be faced with solving a variety of problems they would encounter in
    combat. The programs can monitor how well a crew performed and arrange
    the next simulation to allow personnel to work on areas where
    weaknesses were revealed. Through embedded training, personnel are able
    to sharpen skills using the very equipment they would be using in
    battle. The increased experience will lead to better battle performance
    and improved rejection rates for false indicators of attack.
    Can a soldier become a formidable warrior without being in a war?
                The role of simulation in making novices into experts
        Embedded training is a special case of the use of simulation for
    training. More familiar to most people than embedded training are the
    cockpit simulators used for training aircraft crews and the tank
    simulators used for training tank crews. A great many basic behavioral
    research questions had to be answered in order to build effective
    simulators of any kind. Here is a small sample: How ``real'' does a
    simulation have to be before it is real enough to elicit the desired
    physical, cognitive, and emotional responses from trainees?
    Alternatively, how unfaithful to reality (and therefore less expensive)
    can a simulation be before it ceases to be effective as a training
    tool? Does learning transfer from a simulated to an actual environment?
    Does learning in one domain affect learning and skill use in other
    domains? How similar are cognitive processes in the training
    environment to cognitive processes in the environment of skill use?
    What constitutes sufficient learning in a training or other simulation
    environment? Do skills acquired in artificial settings transfer and
    persist in the environment of use? What cognitive changes take place as
    a novice advances to the performance level of an expert?
        Some of these questions and others have been only partially
    answered to date. While simulators have been developed and are in use,
    research continues to improve these learning environments and to point
    the way toward simpler, less expensive learning tools for introductory-
    level training.
        Simulation research has taken on special urgency. Countries in
    which our air bases are located are becoming increasingly wary of
    permitting extensive training flight hours in their airspace. The loss
    of life that occurred when one of several planes on a training flight
    in Europe severed the cable of a loaded ski-lift is just the most
    prominent of grievances now being used to curtail flight hours. A good
    alternative is needed immediately if the readiness of pilots and their
    crews is not to degrade. Simulators are most likely that alternative.
    But as more hours begin to be logged in simulators and fewer in actual
    flight, we have to intensify research aimed at understanding and
    minimizing readiness-relevant differences between simulator and in-
    flight training. We must see that simulators are as good at turning
    novices into experts as are hours spent piloting actual aircraft.
        Question. How good can an aircraft technician who hasn't touched a
    plane really be?
        Answer. Pretty darned good!
    Virtual reality is hands-on training with nothing to get one's hands on
        Yet another variation on simulated environments for training is
    virtual reality. One advantage of this approach to training is that a
    computer, software, and some peripherals like virtual reality goggles
    and sensorized gloves can give trainees ``hands-on'' experience without
    having to provide anything the trainee actually has to touch. The cost
    for such setups is a fraction of simulators. Their cost stands at a
    point between full-scale simulators and low fidelity non-mechanical
    mockups used for the most rudimentary initial training. The virtual
    reality equipment can be brought to the trainees rather than the other
    way around. And as with simulators, instructors have a means for close
    monitoring of a trainee's progress in skill acquisition. Through
    virtual reality, a technician can gain unlimited hands-on experience
    without causing a minute of down time for the plane or tank or other
    piece of equipment on which he or she is being trained.
    How can a soldier hear, see and fight the enemy without leaving his
            tent?
                Virtual reality is changing how personnel function on the
                        battlefield
        As skill in building virtual reality environments grows, it is
    becoming possible to take an awesome next step by removing fighters
    from the field of battle. In virtual reality environments for training,
    personnel learn to manipulate tools, machinery, and even vehicles that
    exist only in cyberspace. But by mating advances in nanotechnology with
    advances in virtual reality, a new generation of remotely controlled
    hardware is being enabled: planes whose pilots are not in the plane,
    ``eyes'' that can perform scouting missions while the soldier remains
    in his tent, and ``ears'' with wings that can fly to listening posts
    and relay sensitive information to personnel who are miles away. The
    nature of ground warfare was transformed by the advent of the tank. The
    nature of warfare itself is on the verge of being transformed by
    virtual reality.
    How can instruction continue when reduction in force eliminated the
            instructor?
                Remote instruction: making the most of a tough situation
        The large reductions in force experienced by the military in recent
    years presented a surprising problem. There are no longer enough
    trainers to make them available at every site where they are needed.
    The solution has been for the military to become a leader in the use of
    remote instruction. There were both basic and practical research
    questions in the push to develop remote instructional capabilities. One
    of the basic questions had to do with communication. If the instructor
    is a thousand miles away and is instructing groups in five localities
    at the same time, what is the impact on the quality of instruction and
    the efficacy of the training? On the nuts-and-bolts side, the question
    of how a trainee asks a questions had to be solved. The result of
    addressing both basic and applied research questions in designing a
    remote instruction system is that the military is among the most
    advanced of institutions in employing this information-age mode of
    teaching and learning.
        One aspect of its superiority in this area is that the military has
    become a leader as well in development of curriculum architecture
    standards. The idea here is that, by adhering to software standards for
    curriculum development, the best of materials can be easily placed in
    any curriculum. There is no need to start from scratch when a new
    curriculum is needed. The best of existing materials may be pasted into
    the new course software at the points they are needed. This is a
    powerful innovation in that it eliminates the need to invent an
    inferior wheel when a superior one has already been invented.
        So, from the mating of a rudimentary aptitude test and a rapid
    training regime more than three-fourths of a century ago, there has
    developed a series of testing and training options that permits highly
    concentrated, highly targeted training to be accomplished to a high
    level of mastery in a short amount of time without the necessity of the
    trainer and the trainee being in the same State or country, let alone
    the same room. And much of what has been learned in developing the
    capability to accomplish these feats is now being adapted to the
    battlefield with the expected result that future battlefields will be
    decisively controlled by fewer troops who will be situated far more
    securely than are today's soldiers.
    Tools are only as good as the people who use them
                Benefits from human factors research
        A second large area of military behavioral/social research is
    called human factors research. Human factors research is most often
    associated with the interfacing of humans and machines. This research
    has been applied to a host of military challenges. Here are a few
    examples.
    What good is information when you can't understand it?
                Human factors and advances in cockpit instrumentation
        The technical capability to provide pilots with information about
    the environments through which they are flying, including the state of
    the aircraft, far outstrips human capability to process information.
    During the Vietnam War, many pilots were distracted enough by the
    information being fed to them by their instruments that they turned
    them off or ignored them in order to concentrate on what was happening
    around them. There has long been a strong need for engineers and
    behavioral scientists to work together to design cockpit
    instrumentation that delivers the right information in the right
    amounts in the right ways at the right point in the field of vision (or
    touch or hearing) at the right times. Knowing what is ``right'' in each
    of these instances has involved some very basic research on human
    visual, auditory, and tactile perception.
        A variety of important findings have emerged from this basic
    research: Humans have difficulty quickly adjusting attention from
    foreground to background objects, suggesting that heads-up displays
    meant to minimize distraction have the capability, instead, to
    exacerbate it; symbols chosen to convey information about such things
    as altitude, rate of ascent or descent, and proximity and identity of
    other craft can be highly confusing indicating that choices about the
    manner in which particular kinds of information will be conveyed need
    to be thoroughly tested before they are deployed in order to minimize
    human error, increase efficiency, and facilitate success in the
    mission; as pilot flight hours mount, hearing difficulties in
    frequencies related to the tonal ranges of aircraft engines begin to
    appear, and warning sounds need to be pitched at frequencies other than
    those to which pilots become deaf so that the chance that they will
    hear the warnings is maximized; it is possible to automate many parts
    of flight, but because automation decreases a pilot's opportunity to
    use certain skills, the ability of the pilot to judge when an emergency
    situation is developing, and the ability of the person to take control
    from the automated systems deteriorates, suggesting that careful,
    research-based decisions need to be made about what to automate and how
    to train pilots in the face of increasing automation.
    Knowledge is power
                Using behavioral research to strengthen communication
        How well people communicate with each other is as important to the
    success of a military mission as how machines communicate information
    to people. Often electronic devices are the mediators of human
    communication. All branches of the military have supported research on
    improving communication. Among the practical questions this research
    ultimately addresses are, How can deaths and injuries from friendly
    fire be prevented? When does strict adherence to chain of command
    endanger soldiers or non-combatants? How can meaningful communication
    be maintained under conditions of severe stress? There are many other
    basic and applied questions in communication that military behavioral/
    social research addresses, but I only want to give you a flavor for the
    important work that is done.
    Can casualties from friendly fire be stopped?
                The role of behavioral research and technical innovation
        On reducing casualties from friendly fire, a host of factors must
    be understood and manipulated including identifiability of a target,
    decision making under stress, cognitive load, and field communications.
    Electronic and visual means of making positive identification without
    giving the same information to the enemy must be tested for efficacy.
    Even when positive identification is possible to make, battlefield
    conditions, including the number of parameters that must be monitored
    simultaneously and the immediate perceived threat to the crew or
    individual making the decision to fire or refrain from firing, must be
    characterized and measured. Through research, the obstacles to sound
    decision making can be better controlled. And as with pilots who were
    overwhelmed with so much information that it became meaningless, limits
    on the ability of those in a crew to communicate with each other and
    with others who might have critical information must be understood so
    as to maximize the utility of incoming information.
        Again, basic research in perception, decision making, stress,
    information processing capabilities, and crew interaction feeds into
    the applied science of assuring that fire power is directed only at the
    enemy.
    Who knows what when makes all the difference
                Research-based modifications in the chain of command and in
                        modes of intelligence gathering lead to better
                        decisions
        We think of a chain of command as being a hallmark of military
    order. But sometimes strict adherence gets in the way of good decision
    making. A case in point was the shooting down of a commercial airliner
    by the crew of the Vincennes some years ago. Information known by some
    who were low in the chain of command could have prevented this disaster
    were it communicated to decision makers in the chain of command. But
    the distance in rank, and thus the ability to communicate between those
    who possessed critical information and those who needed it was too
    great. Behavioral and social science research has been directed at how
    communication occurs in a variety of human configurations. The aim of
    the research is to understand how best to assure that communication
    procedures permit sufficient group access to critical information.
        A second form of this problem occurred in Somalia when U.S. troops
    were ambushed and killed as they were trying to capture the leader of
    the rebel forces. Intelligence gathering for this mission had been
    carried out in a way that is standard in battlefield settings but is
    not effective in peacekeeping settings. That is, intelligence was
    gathered clandestinely rather than by developing strong lines of
    communication and trust with local townspeople. The latter mode of
    intelligence gathering is standard for civilian law-enforcement
    officers and military police, but not for combat troops. Behavioral and
    social science research is being used to determine how to adjust
    information gathering and dissemination procedures so that those
    procedures are the best fit for the context in which they will be used.
        The research includes experimentation with team procedures that
    allow critical information to reach the right level in a chain of
    command regardless of the rank of the person who possesses the critical
    information. That research is having an impact not just on the
    effectiveness of military communication but also on the way crews for
    commercial airline flights are organized and trained. The changes that
    have occurred because of the research have been credited with saving
    lives in a number of commercial airline crashes and near-crashes.
    Combat is chaotic and exhausting
                How can behavioral research do anything about these seeming
                        constants of war?
        Battlefields are often chaotic, and stress levels are very high.
    Are there ways to increase the likelihood of clear thinking, strong
    leadership, and good decisions under the extreme conditions of battle?
    Behavioral and social scientists have approached this question from
    several directions.
        One line of research has had to do with the nature of leadership
    and the configuration of organizations to make best use of leaders. The
    leadership research has led to development of ways to assess the
    qualities of individual leaders. A broad division in leadership ability
    that has emerged is that between the strategic leader and the troop
    leader. Strategic leaders are able to take account of many
    interrelations in the planning of strategies. But their decision making
    tends to be slow and highly deliberative. Troop leaders, on the other
    hand, have the ability to take in a situation as it is unfolding and
    make rapid but sound decisions on the basis of available and incomplete
    information. Both kinds of leaders have important roles to play. But
    having means to distinguish one set of leadership qualities from
    another allows for optimal placement of leaders.
        The research on organizational structure is aimed at understanding
    the best ways to arrange groups of people for particular purposes. It
    includes research on the meaning and modes of communication among
    diverse coworkers, the patterns of critical information dispersal in
    different work configurations, attitudinal research related to ethnic,
    racial and gender diversity, and the interaction of leadership styles
    with organizational structures.
        Mating the optimized configurations that emerge from the
    organizational research with the optimized placement indicators that
    emerge from the leadership research can help build military units whose
    ability to perform their functions is maximized. Application of these
    lines of research are still in their infancy, but have the potential to
    greatly improve the performance of units in all the armed services.
    Performance and survival in extreme environments
                Research to protect the warfighter without undermining
                        ability to fight
        A battlefield is, in itself, an extreme environment. But added to
    that reality is the fact that combat occurs in extremes of heat and
    cold, in the presence of toxic chemicals, at night, and under
    conditions of extreme fatigue. Behavioral and social science research
    contributes to the ability of soldiers to function and to survive in
    all of these extremes.
        Behavioral research over many years has gone into helping soldiers
    survive extremes of heat and cold. Understanding how these extremes
    affect the human body and the ability to function cognitively have been
    one aspect of the research. Related to understanding the effects of the
    extremes has been research on various forms of protection and their
    relative abilities to facilitate performance in temperature extremes.
    As new protective materials become available, the research continues
    with the dual goals of maximizing protection and minimizing loss of, or
    even enhancing, performance while using protective gear.
        Chemical warfare provides as great a challenge to researchers as
    extremes of temperature. Psychopharmacologists work to determine the
    neurotoxic effects of various chemicals, symptomatology, mode of entry
    to the body, and their speed of action. Then they work with other
    scientists and engineers to provide reliable ways to guard against or
    counteract the effects of the chemicals. As new agents are identified,
    the work to maintain protection continues.
        Apparatuses that can gather and magnify heat emissions or available
    light have given personnel the ability to see at night. But, for a
    time, night vision goggles were implicated in crashes of aircraft
    attempting to land. The problem was especially noticeable during the
    Gulf War where an unprecedented number of sorties were flown at night.
    It was behavioral scientists who discovered that the goggles provide
    inadequate distance cues, and, in fact, distort perception in such a
    way as to make some objects appear farther away than they are. Pilots
    on the landing approach were plowing into the ground because they
    perceived the ground as being farther away than it actually was. This
    discovery led to modifications of the goggles that corrected the
    distortion, made them safer to use, and improved depth perception cues.
        It is assumed that battle is as exhausting an activity as one can
    undertake. But behavioral research is showing that it is important to
    do something about that reality. The ability of individuals to function
    cognitively is severely impaired by fatigue for a much longer time than
    had been understood in the past. That knowledge has led to several
    areas of investigation aimed either at controlling fatigue or at
    overcoming at least some of the cognitive losses that result from it.
    Applications of the research are in their infancy in the military. But
    some of what has been found has been adapted for the long-haul airline
    industry. Though it is somewhat controversial, the practice of allowing
    pilot and copilot to sleep in shifts, for example, has been found
    effective in maintaining a high level of alertness for the individual
    responsible for flying the aircraft at any given time. Chemical
    interventions to prolong alertness under conditions of fatigue are also
    being investigated. The goal is to find ways to keep soldiers at
    adequate levels of alertness while they are on duty. The edge that
    these interventions give can mean the difference between survival and
    death.
    With reduced troop strength, doing more with less is an imperative
    Making machines to replace people
                Devices that will replace military personnel will need
                        specialized intelligence
                Neural network research and circuitry that learns
        A Navy goal is to reduce the number of people required to operate
    its fleet. The desire is to have robots do as much of the aboard-ship
    work as possible so as to free sailors to concentrate only on those
    things that require human activity. This will both reduce the number of
    personnel on ships and make better use of human resources.
        Achieving that goal has required research on many fronts.
    Behavioral scientists have been involved with cognitive and neural
    network research in support of the goal. The cognitive research has
    been aimed at understanding how human thought occurs. This research is
    mated with research on how the human brain functions as it thinks. This
    latter research is called neural network research. The circuitry that
    is going into machines that will do the work that people have been
    doing is imitating brain circuitry thanks to the basic research. One
    feature of some of the circuitry is parallel processing. Computers in
    use until quite recently have been serial processors. That is, they
    perform one operation at a time. The human brain is sometimes referred
    to as a massively parallel processor. That is, it is carrying on many
    functions at once. The Navy-sponsored research is leading to design of
    specialized circuitry for particular purposes and to massively parallel
    designs that can handle large volumes of information rapidly.
        Another feature of the work is to produce circuits that learn from
    experience. Early versions of this circuitry are already in use in an
    important civilian application. Learning circuits are in devices at
    airports that detect plastic explosives. The machines get better at
    their job as they are ``trained'' through presentation of many bomb
    detection scenarios. There will be a host of applications of neural
    network research throughout the military in the future. One of the most
    important early applications is in automatic recognition systems. The
    neural-network-based circuitry in these systems permits recognition and
    verification by the machine of faces, speech, and military targets. The
    importance of such technology for security, intelligence gathering, and
    precision warfare is obvious.
    Smart machines will be better partners for their fellow combatants
                Making partners of aircraft and pilots
        Air Force interest in neural network research and applications has
    also been high. The research has already led to a diversity of
    technology improvements. I mentioned earlier the difficulty pilots have
    had in the past in dealing with the overwhelming amount of information
    that it is possible to provide. One of the solutions to that problem is
    adaptive flight control systems. This is a sharing of flight
    responsibilities between neural-network-based devices and the pilot.
    The relationship is not fixed. Who/what does what at any given time
    depends on contextual need. The goal is to create and optimize a
    dynamic functional relationship between aircraft and pilot or crew.
    Smart machines will be better partners for other machines
                Linking smart machines to overcome human information-
                        processing limitations
        A related use of neural network devices is in sensor fusion for
    image display. Flight environment information already comes, in part,
    from sophisticated sensors both on board and in other locations,
    including space. What neural network devices make possible are
    synthesis of information from many previously discreet sources and
    display of the product of that synthesis in one big picture. This means
    that, increasingly, aircraft crews will not need to look at so many
    individual bits of information to make judgments about flight and
    combat. But they also won't have to forego one important kind of
    information in order to concentrate on another important kind of
    information. They will be able to look at displays that are the product
    of synthesized information. So, instead of having to personally
    synthesize information from many instruments in order to make a
    judgment about what to do next, crew members will be able to look at
    one display to get enough information to make that judgment.
        Discouragement at the lack of human capacity to process currently
    available information has prompted talk of scaling back work in future
    imagery architecture. But behavioral scientists are working to
    eliminate the source of discouragement. A main goal of work in
    behavioral analysis is to construct models of human expertise that are
    so good that they can be used for automating tasks such as information
    synthesis now performed by humans. It is this developing knowledge
    about how to give aircraft the ability to process information as a
    skilled human expert would, but to process and synthesize vastly more
    of it than a human ever could, that offers hope. The promise in this
    research is that there will be no need to sacrifice crucial information
    because there is too much of it to handle. The technology of the
    aircraft will handle all that complexity in the way that a human with
    super human analytic and synthetic abilities would, leaving the pilot
    free to do the most important thing a pilot can do--exercise, and act
    on, sound judgment. To put it another way, the plane will do the
    ``what'' so that the pilot can do the ``so what.''
        Thank you for asking for examples of the behavioral and social
    science research that is going on in the armed services and for
    examples of its applications. I haven't been exhaustive (though I've
    probably been exhausting) in answering your request, but I believe the
    information contained here begins to give an idea of the scope and
    variety of the work being done. These are the categories of work to
    which I am referring when I come before you each year to testify.
                Sincerely,
                                                 David Johnson,
                                                    Executive Director.
        Senator Stevens. Senator Inouye.
        Senator Inouye. No questions, Mr. Chairman.
        Senator Stevens. Thank you very much, Doctor. I appreciate
    your courtesy.
        The next witness is Joan Goldberg, Executive Director of
    the American Society for Bone and Mineral Research, on behalf
    of the National Coalition for Osteoporosis and Related Bone
    Diseases. Good morning, ma'am.
    STATEMENT OF JOAN GOLDBERG, EXECUTIVE DIRECTOR,
                AMERICAN SOCIETY FOR BONE AND MINERAL
                RESEARCH, ON BEHALF OF THE NATIONAL
                COALITION FOR OSTEOPOROSIS AND RELATED BONE
                DISEASES
        Ms. Goldberg. Good morning. Thank you, Mr. Chairman and
    Senator Inouye, on behalf of the National Coalition for
    Osteoporosis and Related Bone Diseases, the Bone Coalition, I
    want to thank you for this opportunity to discuss bone research
    as it relates to military readiness.
        I am Joan Goldberg, Executive Director of the American
    Society for Bone and Mineral Research. I am appearing here this
    morning to ask for your support for increased funding for the
    Department of Defense to continue its research efforts on
    osteoporosis and related bone diseases in fiscal year 2001.
        The Bone Coalition is requesting $10 million for these
    research efforts. The Bone Coalition is dedicated to educating
    the public and its elected officials about the need for Federal
    research funding for bone diseases. Men and women in the
    military are at special risk for, and affected by, bone
    diseases. Stress fractures, which are associated with low bone
    mass, are among the most frequent injuries.
        This Institute of Medicine Report, ``Reducing Stress
    Fractures in Physically Active Military Women,'' which was
    requested by the DOD, points out that stress fractures erect a
    significant barrier to the total fitness and readiness of
    military women. The incidence of stress fractures during basic
    training is substantially higher in female than in male
    recruits.
        The current stress fracture incidence for Army recruits is
    2.6 percent for men and 8.1 percent for women. This injury rate
    has a marked impact on the health of service personnel and
    imposes a significant financial burden on the Federal
    Government by delaying the training of new recruits. Such
    injuries may also lead to increased health problems and
    shortened military careers through early retirements and a
    possible relationship with the long-term risk of osteoporosis.
        The incidence of stress fractures in the U.S. military
    varies with gender and with branch of service, from 0.2 percent
    of male Navy recruits, to 4.5 percent of Marine Corps male
    recruits. The incidence among females in these same training
    programs is higher, ranging from 0.7 percent among Navy
    recruits to 9.6 percent in Marine officer candidates. The costs
    incurred due to stress fractures among 2,000 Marine recruits is
    estimated to be $1.85 million per year, with 4,120 lost
    training days. And the figure rises to an estimated $10 million
    a year in medical costs and lost duty time for the U.S.
    military as a whole.
        One of the goals of the Military Operational Medicine
    Research Program is to eliminate stress fractures in initial
    entry training in the military. Current bone research is
    already focusing on prevention and treatment of stress
    fractures, examining the role of nutrition, exercise,
    medication, and rehabilitation. Findings will lead to improved
    bone health of men and women and enhancing military readiness
    by reducing the incidence of stress fractures during physically
    intensive training.
        Given that stress fractures may be related to later
    osteoporosis, increased research attention to the initial
    problem may reduce the risk of osteoporosis and other bone
    disorders later in life. The treatment cost burden for these
    disorders to DOD programs such as Civilian Health and Medical
    Program of the Uniformed Services (CHAMPUS) should also be
    considered. Recent Navy research already demonstrates that
    thoughtful modification of physical training programs can delay
    stress fractures without compromising physical standards or
    training level.
        Other studies suggest that increased bone remodeling
    precedes the occurrence of bone microdamage and stress
    fractures. The role of remodeling in the development of stress
    fracture is being tested in a DOD project using a rabbit model.
    A drug used to treat osteoporosis, known as alendronate, will
    be used to inhibit bone remodeling and increased bone porosity
    or weakness to determine if microdamage and the severity of the
    stress fracture will be diminished.
        Another study of young female runners will assess the
    affects of oral contraceptive use on bone mineral density and
    incidence of stress fracture. Still another study is
    consolidating the knowledge we have, both published and
    unpublished, about the effects of resistance and endurance
    exercise training on bone mineral density.
        The prolonged healing time of stress fractures, which
    requires rest from weight-bearing activity, is well known, and
    averages 3 months. A DOD-funded study is comparing recovery
    times from tibial stress fractures in subjects treated with
    electric field stimulation.
        Continuing and expanding the DOD bone research program will
    help identify individuals at risk and improve their bone health
    with scientifically training and dietary and medical
    interventions. Because healthy bones are directly relevant to
    the preparedness of military personnel, I urge you to consider
    expanding the funding for the existing DOD medical research
    program on osteoporosis and related bone diseases. A funding
    level of $10 million would be cost-effective, wise and a
    greatly needed investment in military preparedness.
        Thank you.
        [The statement follows:]
                      Prepared Statement of Joan Goldberg
        Mr. Chairman and members of the Subcommittee, on behalf of the
    National Coalition for Osteoporosis and Related Bone Diseases (the Bone
    Coalition), I want to thank you for this opportunity to discuss bone
    disease research as it relates to military readiness. I am Joan
    Goldberg, Executive Director of the American Society for Bone and
    Mineral Research.
        I am appearing here this morning to ask for your support for
    increased funding for the Department of Defense (DOD) to continue its
    research efforts on osteoporosis and related bone diseases in fiscal
    year 2001. The Bone Coalition is requesting $10 million for these
    research efforts.
        The Bone Coalition is dedicated to educating the public and its
    elected officials about the need for federal research funding for bone
    diseases. The leading national bone disease organizations that
    participate in the ``Bone Coalition'' are: The American Society for
    Bone and Mineral Research; National Osteoporosis Foundation; The Paget
    Foundation For Paget's Disease of Bone and Related Disorders; and The
    Osteogenesis Imperfecta Foundation.
        A myriad of bone diseases is represented by the Bone Coalition. Men
    and women in the military are especially at risk of and affected by
    bone diseases. Stress fractures, which are associated with low bone
    mass, are among the most frequent injuries.
        An Institute of Medicine (IOM) report entitled ``Reducing Stress
    Fracture in Physically Active Military Women,'' which was requested by
    the DOD, points out that stress fractures cause a significant barrier
    to the total fitness and readiness of military women. The incidence of
    stress fractures during basic training is substantially higher in
    female than in male recruits. Current stress fracture incidence for
    Army recruits is 2.6 percent for men and 8.1 percent for women in
    similar training. This injury has a marked impact on the health of
    service personnel and imposes a significant financial burden by
    delaying the training of new recruits. Stress fractures increase the
    length of training time, program costs, and time to military readiness.
    Also, stress fractures and short-term risks to bone health may share
    their etiology with the long-term risk of osteoporosis.
        The incidence of stress fracture in male military recruits has been
    reported to range from 0.2 percent in U.S. Navy recruits to 4.5 percent
    in U.S. Marine Corps recruits. The incidence among females in these
    same training programs is higher, ranging from 0.7 percent in the Navy
    to 9.6 percent in Marine officer candidates. The cost incurred due to
    stress fractures among 2,000 female marine recruits is estimated to be
    $1,850,000 annually with 4,120 lost training days resulting in an
    extended training period for these women. Thus, it could be projected
    that the costs to the U.S. Army, a service that trains a greater number
    of recruits a year, would be much higher.
        One of the goals of the Military Operational Medicine Research
    Program is to eliminate stress fractures in initial entry training in
    the military, a problem estimated to cost the DOD in excess of $10
    million per year in medical costs and lost duty time.
        Current bone research is already focusing on prevention and
    treatment of stress fractures, examining the role of nutrition,
    exercise, rehabilitation, etc. Findings will lead to improved bone
    health of men and women, enhancing military readiness by reducing the
    incidence of stress fracture during physically intensive training.
    Moreover, given that stress fractures may be related to later
    osteoporosis, increased research attention to the initial problem may
    reduce the risk of osteoporosis and other bone disorders later in life.
    The treatment cost burden for these disorders to DOD programs such as
    the Civilian Health and Military Programs in the Uniformed Service
    (CHAMPUS) should also be considered.
        Recent Navy research demonstrates that thoughtful modification of
    physical training programs can delay the time to stress fracture
    without compromising physical standards or training level. The current
    program is expected to provide information to further reduce training
    injuries through better identification of at risk individuals,
    scientifically-based training and dietary and medical interventions.
        Other studies suggest that increased bone remodeling precedes the
    occurrence of bone microdamage and stress fractures. The role of
    intracortical remodeling in the pathogenesis of stress fracture is
    being tested in a project using a rabbit tibial model. A drug used to
    treat osteoporosis, known as alendronate, will be used to inhibit both
    bone remodeling and increased bone porosity to determine if microdamage
    and severity of stress fracture are diminished.
        Studies have also found that even a weak androgen, such as
    dehydroepiandro-stenedione (DHEA), the most important circulating
    androgen in women, may play an important role in attaining and
    maintaining high bone mineral content in women. A study of young female
    runners will assess the effects of oral contraceptive use on bone
    mineral density and incidence of stress fracture.
        A previous study of cadets at the U.S. Military Academy defined
    changes in lumbar bone density of young men and women based on biannual
    measurements during their four years at the Academy. Now, nearly ten
    years later, these subjects will be retested with special emphasis on
    case comparisons to a group of 24 men and women in the original study
    who did not demonstrate high rates of bone density increase during the
    study. Another study is consolidating existing knowledge, published and
    unpublished, of the effects of resistance and endurance exercise
    training on bone mineral density in men and women using meta-analytical
    and other novel statistical approaches.
        The prolonged healing time of stress fractures with the
    conservative but general favored treatment of rest from weight bearing
    activity is well known and averages three months. A double-blinded
    study is comparing recovery times from tibial stress fracture in
    subjects treated with active or placebo-controlled electric field
    stimulation, including evaluation of male and female responses.
    Diagnostic imaging methods such as radio-graphs, bone scan, MRI, and CT
    will be compared and a stress fracture severity grading system for each
    imaging tool developed.
        Because healthy bones are directly relevant to the preparedness of
    military personnel, I urge you to consider expanding the funding for
    the existing medical research program on osteoporosis and related bone
    diseases at the DOD. A funding level of $10 million is needed in order
    to eliminate the adverse impact of these diseases on military
    preparedness.
        Thank you for the opportunity to testify.

        Senator Stevens. I understand your emphasis on the
    military, but is not this a generic problem now that should be
    really broadened out and taken up by the National Institutes of
    Health (NIH)?
        Ms. Goldberg. It is a very big problem, and NIH has several
    institutes that are also investing money in this such as the
    National Institute of Aging (NIA), Child and Health. However,
    none of them, individually or together, are able to fund all
    the research needed to answer some of the many unanswered
    questions.
        Senator Stevens. And what coordination is there to make
    sure we do not have redundancy? NIA is into, the National
    Academy of Sciences is into it, NIH is into it, you are already
    into it in Defense.
        Ms. Goldberg. That is an excellent question. I spoke with
    Colonel Friedle, from the DOD yesterday. Who, before issuing
    the new request for proposals for the money that was funded
    last year, is coordinating with his contact at NIA and other
    institutes, to make sure that they are focusing on different
    areas and complementing each other's approach.
        Senator Stevens. I wanted to warn everybody, we were told
    yesterday that we need $1.9 billion more for 2000, for retired
    medical benefits, and it is going to go to about $3 billion in
    2001, as we understand, for the additional costs of TRICARE and
    the other approaches. We are trying to use to fulfill the
    commitments made to retired personnel now that we have closed
    so many base hospitals, and they are no longer able to use
    those hospitals. It is going to be extremely difficult,
    extremely difficult, to raise any of the items for medical
    research this year and meet those obligations to retired people
    that we made.
        So I do not want to mislead anybody. We will try our best.
    You have a real serious problem. I have talked to people out at
    Walter Reed about osteoporosis and women members of the armed
    services, and we do want to find out about the stress fracture
    problem. We will look to do as much as we can to work with you.
        Senator Inouye.
        Senator Inouye. Does the physical examination program that
    we have for recruits disclose weakness in bone structure?
        Ms. Goldberg. No, it does not. There are tests for bone
    mineral density. That is not a routine part of evaluation for
    new recruits as far as I understand.
        Senator Inouye. So we do not know anything about the
    recruit until he gets in?
        Ms. Goldberg. And part of the problem is we have what is
    called a normative database. We understand what is normal for a
    30-year-old woman. And that is the database that is used to
    test bone density for post-menopausal women who are most at
    risk for osteoporosis. We do not have enough data yet for what
    is normal for a 17-year-old, a 20-year-old, or even a child.
        Senator Inouye. Thank you.
        Senator Stevens. Just to make sure I understood this, I
    went out and took that bone scan at Walter Reed, and I know
    what it is. It is a fairly long process. I do not know how you
    could be able to give that to every recruit before they enlist.
    But there ought to be some way to get a more capable method of
    screening. If that is what your research is looking for, we
    agree with you and we will see what we can do to help you.
        Ms. Goldberg. One of the DOD-funded studies underway right
    now is looking at different imaging techniques, so that we have
    a better idea of how to predict fracture risk. The tests that
    you probably had, a dexoscan, is one of many, one of the more
    expensive tests, but it is also the gold standard. We are
    looking for more.
        Senator Stevens. I think we have got to be even more
    generic than weight and size and capability to lift. Other
    things have to be a factor in terms of enlistment of women in
    the armed services, in my opinion.
        Ms. Goldberg. Right, understanding the biomechanical
    effects is another area.
        Senator Stevens. Thank you very much, Ms. Goldberg.
        Ms. Goldberg. Thank you.
        Senator Stevens. Next is Fran Visco, President of the
    National Breast Cancer Coalition.
    STATEMENT OF FRAN VISCO, PRESIDENT, NATIONAL BREAST
                CANCER COALITION
        Ms. Visco. Good morning, Mr. Chairman, Senator Inouye.
    Thank you very much for allowing me to speak to you this
    morning. As a breast cancer survivor and head of the National
    Breast Cancer Coalition, I want to express our gratitude for
    your support of the Department of Defense peer-reviewed breast
    cancer research funding. And I would like to request continued
    level funding of that program for the coming year.
        The program continues to be an incredible success. We
    continue to have a strategic plan that is focused. The
    administrative costs continue to be less than 10 percent. It is
    one in which the Department of Defense has considerable and
    warranted pride. The strategy continues along the lines
    recommended by the Institute of Medicine, the National Academy
    of Sciences.
        And this year we once again are looking at gaps in the
    world of research, looking at things like concept reviews that
    are actually pre-idea proposals, up to and including bringing
    clinical trials as widespread as possible so that we can get
    the answers more quickly and, in the long run, save not just
    money but many more lives. So my plea this morning is for
    continued level funding of this program and, as you know, with
    the support of 62 Members of the Senate that we delivered to
    you about 1 month ago.
        I am here to answer any questions about the program, but I
    know that, Mr. Chairman, you and Senator Inouye are very
    familiar with the success of the program, how it has been
    replicated by other programs, by other countries, by other
    States, and we continue to set new ground for the way in which
    biomedical research is performed in this country. Again, I want
    to thank you very much and hope that you will agree with our
    request for continued level funding of the program.
        [The statement follows:]
                        Prepared Statement of Fran Visco
        Thank you, Mr. Chairman and members of the Appropriations
    Subcommittee on Defense for your exceptional leadership in the effort
    to increase and improve breast cancer research. As my testimony will
    describe in detail, the investment in cancer research made by you and
    this Committee is one of the contributions which has brought us closer
    than ever to the verge of significant discoveries about cancer. I am
    Fran Visco, President of the National Breast Cancer Coalition, and
    myself a breast cancer survivor.
        On behalf of the National Breast Cancer Coalition and the 2.6
    million women who are now living with breast cancer, I thank you for
    your strong past support of the Department of Defense's (DOD) Peer-
    Reviewed Breast Cancer Research Program and I urge your continued
    support of this important program with an appropriation of $175
    million--level funding--for the program for fiscal year 2001. The
    National Breast Cancer Coalition believes this program is vital to the
    eradication of breast cancer.
        As you know, the National Breast Cancer Coalition is a grassroots
    advocacy organization made up of over 500 organizations and more than
    60,000 individuals and has been working since 1991 toward the
    eradication of this disease through advocacy and action. We support
    increased funding for breast cancer research, increased access to
    quality health care for all women, and increased influence of breast
    cancer activists at every table where decisions regarding breast cancer
    are made.
        The DOD Peer-Reviewed Breast Cancer Research Program has been an
    incredible model that others have replicated. Broadly defined, the
    innovative research performed through the program has the potential to
    benefit not just breast cancer, but all cancers, as well as other
    diseases. Its success is literally changing the face of biomedical
    research in many arenas.
        This program is not only innovative, but is also incredibly
    streamlined. As you know, it is overseen by a group of distinguished
    scientists and activists, as recommended by the Institute of Medicine.
    Because there is no bureaucracy, the program is able to quickly respond
    to what is currently happening in the scientific community. It is able
    to fill gaps, with little fuss. It is responsive, not just to the
    scientific community, but also to the public.
        Since its inception, this program has matured from an isolated
    research program to a broad-reaching influential voice forging new and
    innovative directions for breast cancer research and science. The
    flexibility of the program has allowed the Army to administer this
    groundbreaking research effort with unparalleled efficiency and skill.
    In addition, an inherent part of this program has been the inclusion of
    consumer advocates at every level, which has created an unprecedented
    working relationship between advocates and scientists, and ultimately
    led to uncharted research in breast cancer.
        It is important to note that the DOD Integration Panel that designs
    this program has a plan of how best to spend the funds appropriated.
    This plan is based on the state of the science--both what scientists
    know now and the gaps in our knowledge--as well as the needs of the
    public. This plan coincides with our philosophy that we do not want to
    restrict scientific freedom, creativity and innovation. While we
    carefully allocate these resources we do not want to predetermine the
    specific research areas to be addressed. This permits us to complement
    and not duplicate other federal funding programs.
        The National Breast Cancer Coalition has been the driving force
    behind this program for many years. The success of the DOD Peer-
    Reviewed Breast Cancer Research Program has been illustrated by two
    unique assessments of the program. The Institute of Medicine (IOM)
    which originally recommended the structure for the program,
    independently re-examined the program in a report published in 1997.
    Their findings overwhelmingly encourage the continuation of the program
    and offer guidance for program implementation improvements.
        The 1997 IOM review of the DOD Peer-Review Breast Cancer Research
    Program commended the program and stated that, ``the program fills a
    unique niche among public and private funding sources for cancer
    research. It is not duplicative of other programs and is a promising
    vehicle for forging new ideas and scientific breakthroughs in the
    nation's fight against breast cancer.'' The IOM report recommends
    continuing the program and establishes a solid direction for the next
    phase of the program. It is imperative that Congress complement the
    independent evaluations of the DOD Breast Cancer Research Program, as
    well as reiterate their own high level of commitment to the Program by
    appropriating the funding needed to ensure its success. The IOM report
    has laid the groundwork for effective and efficient implementation of
    the next phase of this vital research program, now all that it needs is
    the appropriate funding.
        In addition to the IOM report, the DOD Peer-Reviewed Breast Cancer
    Research Program reported the progress of the program to the American
    people during a public meeting called the ``Era of Hope.'' It was the
    first time a federally funded program reported back to the public in
    detail not only on the funds used, but also on the research undertaken,
    the knowledge gained from that research and future directions to be
    pursued. This meeting allowed scientists, consumers and the American
    public to see the exceptional progress made in breast cancer research
    through the DOD Peer-Reviewed Breast Cancer Research Program.
        Many scientists at the ``Era of Hope'' meeting expressed their
    enthusiasm for the program and the opportunity to work substantively
    with consumers at every step of the research process. In fact, the
    scientists who have seen first hand the benefits of the DOD Peer-
    Reviewed Breast Cancer Research Program have issued a strong statement
    that in their scientific judgement the program should continue: ``. . .
    we urge that this program receive ongoing funding. This program has
    been broadly defined such that the research performed will be of
    benefit not just for breast cancer, but for all cancers and other
    diseases.''
        The ``Era of Hope'' is scheduled to meet for a second time later
    this year.
        The DOD Peer-Reviewed Breast Cancer Research Program has attracted
    bright, fresh scientific minds with new ideas and has continued to open
    the doors to how they think about breast cancer research and research
    in general.
        Developments in the past few years have begun to offer breast
    cancer researchers fascinating insights into the biology of breast
    cancer and have brought into sharp focus the areas of research that
    hold promise and will build on the knowledge and investment we have
    made. The Innovative Developmental and Exploratory Awards (IDEA) grants
    of the DOD program have been critical in the effort to respond to new
    discoveries and to encourage and support innovative, risk-taking
    research. The IDEA grants have been instrumental in the development of
    promising breast cancer research. These grants have allowed scientists
    to explore beyond the realm of traditional research and have unleashed
    incredible new ideas and concepts. IDEA grants are uniquely designed to
    dramatically advance our knowledge in areas that offer the greatest
    potential.
        IDEA grants are precisely the type of grants that cannot receive
    funding through more traditional programs such as the National
    Institutes of Health, and academic research programs. It is vital that
    these grants are able to continue to support the growing interest in
    breast cancer research--$175 million for peer-reviewed research will
    help sustain the IDEA grant momentum.
        The DOD Peer-Reviewed Program has also sought innovative ways to
    translate what is discovered under the microscope to the bedside. Most
    recently, it defined a new funding mechanism that will carve out a
    niche in clinical translational research by bringing cancer clinical
    trials into community settings.
        In addition to the fact that the DOD program provides desperately
    needed, excellent quality breast cancer research, it also makes
    extremely efficient use of its resources. In fact, over 90 percent of
    the funds went directly to research grants. The federal government can
    truly be proud of its investment in DOD breast cancer research. The
    overall structure of the system has streamlined the entire funding
    process, while retaining traditional quality assurance mechanisms.
        The National Breast Cancer Coalition is highly committed to the DOD
    program in every effort, as we truly believe it is one of our best
    chances at finding a cure or prevention for breast cancer. The
    Coalition and its members are dedicated to working with you to ensure
    the continuation of funding for this program at a level that allows
    this research to forge ahead.
        In May of 1997, our members presented a petition with over 2.6
    million signatures to the Congressional leaders on the steps of the
    Capitol. The petition calls on the President and the U.S. Congress to
    spend $2.6 billion on breast cancer research between 1997 and the year
    2000. Funding for the DOD Peer-Reviewed Breast Cancer Research Program
    is an essential component of reaching the $2.6 billion goal that so
    many women and families worked to gain.
        Once again, we are prepared to bring our message to Congress. This
    week, many of the women and family members who supported the campaign
    to gain the 2.6 million signatures were at our Annual Advocacy Training
    Conference here in Washington, D.C. More than 500 breast cancer
    activists from across the country joined us in continuing to mobilize
    behind the efforts to eradicate breast cancer. The overwhelming
    interest and dedication to eradicate this disease continues to be
    evident as people are not only signing petitions, but are willing to
    come all the way to Washington, D.C. to deliver their message about the
    importance of our commitment.
        Since the very beginning of this program, in 1993, Congress has
    stood in support of this important investment in the fight against
    breast cancer. In the years since then, Mr. Chairman, you and this
    entire Committee have been leaders in the effort to continue this
    innovative investment in breast cancer research.
        We ask you, the Defense Appropriations Subcommittee, to recognize
    the importance of what you have initiated. What you have done is set in
    motion an innovative and highly efficient approach to fighting the
    breast cancer epidemic. What you must do now is continue to support
    this effort by funding research that will help us win this very real
    and devastating war against a cruel enemy.
        Thank you again for inviting me to testify and giving hope to the
    2.6 million women living with breast cancer.

        Senator Stevens. Thank you very much.
        I know of no problem with continuing the level funding, but
    as I indicated, I am not sure about any increases. I have heard
    that some people are going to try to increase this item, and I
    just want to advise against it. We have got to meet this
    retired obligation that has been raised so heavily with us now.
    And I do not know where we are going to find the money to do
    that. And even if we find the money to do that, there just is
    not money to increase. So I thank you for presenting a level
    funding request, and I can assure you we will do our utmost to
    comply with your request.
        Ms. Visco. Thank you very much.
        Senator Stevens. The fifth witness has been cancelled. The
    next would be Joyce Raezer, Deputy Associate Director of
    Government Relations with the National Military Family
    Association (NMFA).
    STATEMENT OF JOYCE WESSEL RAEZER, DEPUTY ASSOCIATE
                DIRECTOR, GOVERNMENT RELATIONS, NATIONAL
                MILITARY FAMILY ASSOCIATION
        Ms. Raezer. Thank you, Mr. Chairman. Good morning to you
    and to Senator Inouye. NMFA is honored once again to address
    the quality of life of military families.
        We are grateful to this subcommittee and to Congress for
    the attention last year to issues important to military members
    and their families--pay, retirement, housing, and the schools
    that educate our children--but yet our recruiting and retention
    crisis continues. The crisis did not suddenly appear and will
    not disappear overnight. It is more complicated than just the
    effects of a booming economy, than just concerns about pay and
    retirement.
        The decision to join and the decision to stay is not just
    the service members. We are a family force, and the family
    joins in those decisions. To stem this recruiting and retention
    crisis, the Nation must first listen, as NMFA has done for 30
    years, to some of the frustrations expressed by today's family
    force. Then the Nation must respond to the needs of the force
    that serves it so well.
        What frustrates military families? Health care. While all
    parents are concerned about their children's health care, how
    many have to worry while on a submarine in the depths of an
    ocean whether their child can get a doctor's appointment?
    Military families are told that their health coverage is
    portable and thus seamless, but find instead a new set of rules
    governing how they must access care every time they move.
    TRICARE's 12-region structure fosters inconsistency in basic
    services, such as appointments, claims and enrollment. It is
    often anything but seamless.
        What frustrates military families? Housing. Military family
    housing on the installation is often in short supply, poorly
    maintained and too small compared with civilian standards. For
    years, military families have watched family housing repair and
    maintenance budgets shrink and family housing deteriorate. If
    they live off the installation, they absorb more housing costs
    out of pocket than the congressionally mandated limit of 15
    percent. Increases in the basic allowance for housing only seem
    to bring increases in rent, thus keeping out-of-pocket expenses
    constant.
        What frustrates military families? Worrying about the
    quality of their children's education in a succession of school
    districts. Military children must make a successful transition
    through six to eight schools during an average school career,
    often to schools whose funding base is inadequate. Funding DOD
    schools well is important, but it is not enough to relieve
    military parents' anxieties about their children's education.
    Over 75 percent of military children attend school in civilian
    school districts.
        What frustrates military families? No WIC overseas. While
    many young families depend on Government safety net programs to
    help them over rough times, military families often lose their
    access to these programs as they move, a time when they are
    most vulnerable, especially when moving overseas. Last year,
    Congress mandated that DOD begin a supplemental program similar
    to WIC, the United States Department of Agriculture's (USDA)
    Women, Infants and Children Nutrition Program.
        Families who did not know they had lost access to WIC until
    they arrived overseas greeted that mandate and the initial
    funding, although small, with joy. Unfortunately, these
    families are not only still waiting for WIC, but still waiting
    for news of WIC. We urge Congress to give DOD an implementation
    deadline and the funding it needs to get this valuable
    nutrition program to these most vulnerable of our families.
        What frustrates military families? The focus on food stamps
    rather than on the complex combination of issues affecting
    their financial stability. Many factors put and keep young
    military families on the financial edge: pay not commensurate
    with the demands of military service, frequent moves and their
    related costs, insufficient on-based housing, out-of-pocket
    housing and transportation expenses when families must live off
    the installation, the consequences of recruiting someone with a
    family and then expecting them to live on a salary more
    appropriate for a single person in the barracks, a lack of good
    financial education and counseling, poor access to affordable
    credit, and operations tempo in which deployments or the threat
    of deployment make it difficult for the military spouse to
    juggle child care and a job.
        Families hope that Congress and the Department of Defense
    can work together to address this combination of factors that
    keep them on the financial brink.
        So what frustrates military families? That the Nation does
    not seem to understand that the family drives the retention
    decision and that supporting families is a part of military
    readiness. The Nation must recognize that service members' jobs
    are not 9:00 to 5:00, and that they involve families in ways
    few other jobs do.
        What other employer recruits young people in their late
    teens and early twenties, often with families, moves them
    across the country or halfway around the world, and then sends
    the employee off somewhere else for an extended period, leaving
    the family behind? What other employer sends employees to
    places where they must fit their children with gas masks, as
    military members do in Korea? Military families have taken care
    of themselves, their children and each other for over 200
    years.
        They look to the Nation to understand that even a community
    as strong as the military community will fall apart if it is
    asked to do too much, with too little, for too long. They look
    to the Nation to understand that as more is asked of them as
    they do the Nation's work, then more must be asked of the
    Nation.
        Thank you.
        [The statement follows:]
                   Prepared Statement of Joyce Wessel Raezer
            quality of life issues for military families, april 2000
        Distinguished members of the Subcommittee, the National Military
    Family Association (NMFA) is once again honored to be able to address
    Military Family Quality of Life issues. NMFA is grateful to the
    Congress for taking a big first step last year by passing several
    measures to improve quality of life for military members and their
    families. Of particular importance were:
      --Provision of a 4.8 percent pay raise, payable January 1, 2000
      --Provision for pay increases of .5 percent above the Employment Cost
            Index for the next five years
      --Repeal of the REDUX retirement plan, providing a full cost of
            living adjustment on retired pay
      --Provision of additional funding for housing allowances.
        In our preparation for our testimony this year, we realized that
    many concerns expressed by military families persist despite the
    efforts of the Congress and the Department of Defense (DOD) to address
    quality of life. So what is different about this year? What is unique
    about military families, as we have entered the new century? NMFA
    contends that the persistent erosion of the quality of life for our
    military members has caused an increased dissatisfaction with military
    service, thus providing the impetus for their decision to leave as well
    as preventing potential recruits from considering military service. No
    one single factor is diminishing our forces. The continual erosion of
    what members and their families perceive as their quality of life is
    contributing to their decision to leave. We know these assumptions are
    valid, not only because NMFA represents family members who live the
    life we are describing, but also because we continue to hear from our
    150 plus installation representatives and military family members from
    all over the world.
        Our armed forces are facing a recruitment and retention crisis that
    is unprecedented in our peacetime volunteer forces. NMFA contends that
    the family is the most important factor driving the retention decision.
    We affirm the widely quoted statement, ``we recruit a single person,
    but we retain a family.'' According to the DOD Office of Family Policy,
    58 percent of military members are married. Research shows that spousal
    satisfaction with military life is a key factor affecting readiness and
    retention of the individual military member. The Chairman of the Joint
    Chiefs of Staff, General Hugh Shelton in his written testimony before
    the Senate Armed Services Committee on 8 February 2000, stated:

              Further, without the support of strong military families, we
            cannot sustain a force capable of meeting the demands of this
            new century. To preserve a high quality, professional military
            we must provide the quality of life that our service members
            and their families expect--deserve.

        Today, NMFA will examine some of the issues that affect military
    families' quality of life and discuss the level of commitment it
    believes servicemembers and their families deserve from the nation they
    serve.
    PERSTEMPO
        General Shelton, in his 31 January 2000 address at the 2000 TRICARE
    Conference identified DOD's ``big four'' quality of life issues: health
    care, pay and compensation, retirement benefits and housing. He failed
    to identify ``perstempo,'' which DOD defines as the time an individual
    service member spends away from their home station. NMFA believes this
    is a critical issue facing military families today. Perstempo is driven
    by the scaled down size of the services due to budget constraints
    coupled with an increase in overseas mission requirements. Secretary of
    Defense, William S. Cohen, wrote of the importance of American missions
    abroad in an op-ed piece in the Washington Post, 27 January 2000:

              Some charge that peacekeeping deployments are depleting
            military morale. Admittedly, troops can't train for a major
            theater war responsibility while deployed in Bosnia or Kosovo.
            But they gain valuable experience and leadership skills when
            deployed there, and quickly shift their training focus once
            back at home station. If improved retention rates for these
            deployed units are an indicator, morale actually goes up when
            the troops see that they can make a difference in places such
            as Tuzla and Urosevac.

        But, what about their families? A deployment that affects hundreds
    of soldiers disrupts thousands of family members. Based on data
    collected by the Military Family Resource Center (MFRC) in 1999, more
    than 630,00 service members were the parents of 1.2 million children.
    We are a young family force: 86 percent of those children were under
    the age of 14. The Army has reported that approximately 75,000 soldiers
    have served in Bosnia since 1995. That means that more than 125,000
    children have had a parent deployed to Bosnia for anywhere from six
    months to a year. Time away from the family cannot be made up in a two-
    week block leave. How do you make up for months of not reading at
    night, going over homework or just talking to your children? Children
    affected by each deployment also see the deployment's effects on the
    spouse who is left to play single parent. Some children are left
    without either parent when the single parent or dual military parents
    deploy. Education research indicates that there is a direct correlation
    between parental involvement and the educational success of children.
    Is it fair that we are handicapping a generation of our children by
    routinely deploying their parents? Certainly, servicemembers understand
    deploying is part of their profession but not on such a continuous
    basis.
        Secretary Rudy de Leon, Under Secretary of Defense, Personnel and
    Readiness, in his written testimony of March 15 before the House Armed
    Services Committee, Military Personnel Subcommittee stated, ``The
    number and frequency of deployments are increasing at a time when the
    size and permanent forward presence of the armed forces is declining.''
    In other words, we are doing more with less. We cannot continue to do
    more with less. We either need to do less with less, or do more with
    more; but this more with less is going to destroy the fabric of our
    military families.
    Family Support
        As operations, deployments, and training missions continue at a
    high pace, the military family's lifeline--its community--feels the
    strain. Family support services are important even to an installation
    not harried by a high perstempo. Family centers, military chaplains,
    and installation mental health professionals help ease the transition
    to the military environment for newly arrived families. They provide
    financial counseling, information on accessing local social services,
    parenting classes, opportunities to learn about the community, as well
    as opportunities to volunteer to help others. Military youth programs
    offered by both installation Youth Services and the chaplains provide
    meaningful activities for many military youth, especially in the
    vulnerable preadolescent years. In situations where the strain of the
    mission increases, family services become essential.
        As we have testified in previous years, NMFA remains concerned that
    some of the programs military families need most are not given the
    resources to match the demand:
                New Parent Support Program
        The New Parent Support Program's funding continues to fluctuate,
    despite its proven successes in giving young families the tools and
    education they need and decreasing the probability of family violence.
    In testimony, the Chief of Naval Personnel, Vice Admiral N.R. Ryan, Jr.
    called the program the Navy's ``primary child abuse prevention
    initiative providing early intervention home visitations that are
    designed to promote healthy functioning families, child development,
    and positive parent-child interactions.'' Because the New Parent
    Support Program remains one of the best and most productive family
    programs, NMFA urges that it be fully funded for all installations.
                Overseas Mental Health Counselors
        NMFA was concerned to hear in late 1999 about the loss of contract
    civilian mental health counselors at installations in Germany. Although
    DOD and the services have promised to restore counseling positions,
    NMFA is puzzled at how such an important asset could have been pulled
    out of overseas communities where resources ``outside the gate'' are
    limited, especially for adolescents and family counseling.
                Deployment Family Support
        When whole units--whether active duty, Reserve or Guard--deploy
    overseas to places like Kosovo and Bosnia much care is taken to build a
    strong support network for the families left behind. The Navy, with its
    Ombudsman program, and the Marine Corps, with its Key Volunteers, have
    strong networks of support for the families of their service members on
    ships. The Army's Family Support Groups provide significant help and
    links to commands for families in the deployed units.
        The services have worked hard to improve communication links
    between deployed members and their families. Almost every deployed
    service member now has access to email, and families without their own
    computers can communicate via email at family centers and installation
    libraries. When the 1st Cavalry Division deployed to Bosnia from Fort
    Hood, Texas, the division set up a family support center with video
    conferencing, email, and dedicated support personnel. Families from the
    division could access base support services, communicate with the
    deployed members, and get prompt answers to questions ranging from
    ``Why is the email down to the unit?'' to ``How do I get a doctor's
    appointment?'' to ``Where can I get help dealing with a rebellious
    teenager?'' Units deploying subsequently have followed this model
    because they saw the link between high quality family support programs
    and the readiness of the service members who are deployed. Knowing that
    their families are well taken care of enables the servicemembers to
    focus on their mission.
        Most of these wonderful support services, however, are not budgeted
    for in the cost of contingency operations. Too often, installations
    must find the money out of their own operations and maintenance
    accounts to set up the extra family programs needed when some of their
    units deploy. Since quality family support contributes to the readiness
    of the mission, NMFA believes that the cost of family support should be
    factored into the cost of the mission and appropriate amounts budgeted.
    An installation should not have to choose between providing support
    programs for families of deployed units and fixing the leaking water
    pipes in its buildings.
                Reserve Family Support
        Reserve and Guard units now shoulder a large burden for many of the
    U.S. missions abroad, carrying out tasks that were the sole purview of
    active duty troops just a few years ago. Providing support for Reserve
    Component families is a critical readiness issue; however, current
    active duty family support programs may not always meet the needs of
    Reserve Component families. Although, the perceived danger of
    deployment is a factor that compounds the stress for all families,
    Reserve Component families must often handle that stress without the
    support network available to active duty families.
        Because of geographic dispersion, Reserve Component families often
    lack the support system of peers they can turn to for commiseration and
    assistance. Many Reservist Component members may be assigned to a unit
    located several states away from their homes; their families then face
    the stress and the ``ambiguities'' of deployment not only without the
    installation support services such as family centers, chaplain
    services, and military relief societies that are available to active
    duty families, but also without the close-by support of other families
    in the unit. A website and a toll-free number can provide the link to
    vital information and logistical assistance Reserve Component families
    need, but cannot substitute for the community support system found at a
    military installation.
                What about the ``ones and twos?''
        Although family support programs have generally worked well when
    whole units are deployed, NMFA continues to hear from the families of
    the ``ones and twos''--the active duty and Reserve Component members
    deployed singly or in small groups or who are assigned overseas for a
    year-long unaccompanied tour. These families often do not have a
    readily available support network. The lucky families are those living
    on an installation, with an ongoing relationship with a local unit,
    when the servicemember deploys or leaves for an unaccompanied tour.
    Many others, however, find themselves isolated in a civilian community.
        Families have also noted the disparities between the support
    offered for the some of the ``high profile'' assignments--the places in
    the news--as opposed to the places where servicemembers have gone for
    decades. Servicemembers deployed in support of the Bosnia operation,
    for example, are allowed free ``morale calls'' via the military's DSN
    lines. On the other hand, servicemembers on unaccompanied tours to
    Korea must pay for their phone calls home.
                New Missions, New Support Strategies
        As the demands of missions change, the type of family support
    available must also change. In the Kosovo operation last spring
    aircrews could leave their home bases in Europe to fly their missions
    over Kosovo and often return home in time for breakfast or to drop the
    children off at school. Although some families could deal with the
    situation by joking about its surreal aspects--``Pick up some milk on
    your way home from the war, honey''--the strain was evident on families
    so close to the action. Special support services will be needed in
    future operations like this for the children who watch their parents go
    off daily to fight a war that is featured on the 24-hour news channels,
    for the schools who must educate these children in the midst of the
    tensions engendered by the conflict, and for the parents, both in the
    sky and on the ground, who must hold the family together.
    Military Family Financial Issues--It's More than Food Stamps!
        The military's family support programs are especially valuable for
    the young families who must handle the ups and downs of the military
    way of life while far from home, often for the first time. NMFA thanks
    the Congress for its support last year for some of the most vulnerable
    of military families--those who lose their benefits in the Women,
    Infants and Children Program (WIC) simply because the military
    transfers them to an overseas assignment. The Congressional mandate
    that DOD begin a supplemental program similar to WIC and the initial
    funding, although small, were greeted with joy by the families who
    didn't know they'd lost access to WIC until they arrived overseas; by
    the volunteers in the military spouse clubs who had been raising money
    to buy formula for infants in their communities; by the family center
    personnel who had to tell families who came to apply for WIC that ``we
    don't have WIC here;'' and by the hospital personnel who saw too many
    babies not getting the nutritional food they needed. Unfortunately, all
    those folks are still waiting for WIC. DOD has not yet implemented the
    program nor given the people in the field any indication of when it
    will be implemented. We urge the Congress to give DOD a deadline for
    implementation and the funding necessary to provide the program's
    nutritional counseling and healthy foods to the families who need it
    the most.
        Losing access to WIC just when a family is most vulnerable, during
    a military relocation overseas, only heightens the precarious financial
    position of many junior servicemembers. Headlines about ``military
    families on food stamps'' have focused attention on the financial
    plight of young military families; however, NMFA hopes that those who
    would seek to help these families will look beyond the headlines to
    address the complexities of the issue. Many families qualify for food
    stamps because they live in government housing and only cash income is
    counted when determining eligibility.
        Frequent Permanent Change of Station (PCS) moves, while creating a
    hardship for most military families, hurt the junior families
    disproportionately. Service members have not seen an increase in their
    per diem and mileage allowance for PCS moves since 1986. Gasoline
    prices are at 20-year highs, only intensifying the thirteen-year lack
    of inflation adjustments for military move costs. A study conducted
    recently by DOD found that junior enlisted members were only reimbursed
    $0.27 on the dollar and the overall average for all ranks was only
    $0.62. Given that most military families move every two to three years,
    this financial burden can take a toll on a family's financial well-
    being. Any move brings with it some emotional hardship, new schools,
    friends, jobs, and neighborhoods, but only military moves add such a
    consistent financial hardship as well.
        A variety of other factors place and keep military families on the
    financial edge:
      --out-of-pocket housing costs
      --transportation expenses, especially when living far from the
            installation
      --the consequences of recruiting someone with a family and then
            expecting them to live on a salary more appropriate for a
            single person in the barracks
      --a lack of good financial education and counseling which can make
            soldiers vulnerable to consumer scams, unable to budget or make
            the best spending and saving decisions
      --an operations tempo in which deployments or the threat of
            deployment make it difficult for the military spouse to juggle
            child care and a job
      --poor access to affordable credit.
        ``Fixing'' these military families' financial situations won't be
    easy, although the pay raises in the pipeline and DOD's proposed
    improvements in the funding of the Basic Allowance for Housing (BAH)
    will help. But, as we have testified in past years, the problems that
    put these families on the financial edge and created the recruiting and
    retention crisis did not appear overnight and won't disappear overnight
    either.
    Housing
        The military services--and military families--continue to regard
    housing as one of the quality of life pillars for military families. In
    testimony this year, Assistant Secretary of the Army (Installations and
    Environment) Mahlon Apgar stated:

              No single quality of life issue is as important as adequate
            housing for soldiers and families . . .. Families need more
            than ``quarters;'' they need a place to call ``home'' in
            communities that are safe, supportive and attractive.

        Although they still look to the installation as their source of
    ``community,'' most military families stationed in the United States
    find housing in civilian neighborhoods off the installation either by
    choice or because the type of housing they need is not available on the
    installation. They depend on the Basic Allowance for Housing (BAH) to
    acquire quality, affordable housing in safe neighborhoods (with good
    schools) at a reasonable commute from the installation. NMFA thanks the
    Congress for the additional funding added to the BAH in fiscal year
    2000. We also applaud DOD's request for funding in fiscal year 2001 to
    finally lower average out-of-pocket costs to the 15 percent standard
    mandated by Congress, as well as its additional request to fund further
    increases in BAH to eliminate out-of-pocket expenses totally by 2005.
        The elimination of servicemembers' out-of-pocket expenses for off-
    base housing in the United States is one of a three-pronged initiative
    established by the Secretary of Defense to improve military housing.
    The other components of the Secretary's plan are to increase the
    Department's reliance on the private sector through privatization and
    to maintain military construction funding.
        Since the law creating the housing privatization authorities was
    passed in 1996, NMFA has regarded the use of privatization as a useful
    means of eliminating the backlog of construction of new housing and
    renovation of substandard housing. In 1998, the Department noted that
    about 200,000 of its military-owned family housing units were old, had
    not been adequately maintained and modernized, and needed to be
    renovated or replaced. DOD estimated that it would need $20 billion and
    more than 30 years to eliminate the backlog using traditional military
    construction funding. Using the privatization authorities could help
    DOD reduce the backlog by its target date of 2010. Although it sees the
    need for the infusion of private capital to improve military housing,
    NMFA has watched the early privatization efforts with some questions:
      --How long will it take before families will move into some of this
            housing? The past year has been encouraging as large projects
            at Lackland AFB, TX and Fort Carson, CO were turned over to
            developers and new housing opened to families.
      --Where are the standards for oversight of the development process?
      --How is community input sought and used in the development process?
      --How are the projects' effects on community services such as schools
            evaluated? Are school facility and funding needs addressed
            early in the development of the plan?
      --Who makes sure maintenance is performed satisfactorily?
      --What is the role of the installation commander?
      --Who makes sure money is available for long-term maintenance and
            upgrades (i.e., the roof that needs to be replaced in 20
            years)?
      --Who is the advocate for family members living in the housing?
      --Where is the priority for preserving the things that make a
            ``military community'' strong when the military no longer
            ``owns'' the houses in that community?
        Last year, NMFA was concerned when services dropped their requests
    for most military construction funds for military housing in CONUS in
    favor of a focus on privatization. This year, however, NMFA is pleased
    that the third prong in DOD's housing initiative, military
    construction, is much healthier. Some areas, either because of the
    location, the local economy, or unique needs of the installation, will
    continue to require military construction funds to build or renovate
    family housing. It is imperative that these areas receive the funding
    they need and that the Department move at a quicker pace to identify
    the prime sites for privatization and request military construction
    funds for others.
        We also hope that the ongoing maintenance and repair needs are not
    ignored. NMFA continues to hear from families about long waits for
    routine maintenance calls, poorly done repairs, and unsafe conditions
    in some housing. Families ask that maintenance accounts not be
    continually raided to fund other programs. They know that delayed
    maintenance often creates just a more expensive problem to fix later
    on--and they do not want to be the ones to have to live with (or in!)
    that problem.
    Education
        Military children are our nation's children. Whether they attend
    Department of Defense schools or civilian school districts, they
    deserve a quality education. Today's military force is an educated
    force and a family force. Military members have high expectations for
    their children's education. More are accepting or rejecting
    assignments, or even deciding to leave the military, based on
    perceptions about the quality of education their children will receive
    at prospective duty stations.
        NMFA thanks this Subcommittee for its support of schools operated
    by the Department of Defense Education Activity (DODEA). DODEA's
    initiative to implement full-day kindergarten and reduced class size in
    the primary grades is important in ensuring that children educated in
    DOD schools are ready to learn in any school district in the United
    States. Military parents had consistently listed full-day kindergarten
    for overseas schools as a top educational priority; they are grateful
    that someone has responded to their concerns.
        More than 75 percent of military children attend civilian public
    schools. NMFA also is grateful to this Subcommittee for its support of
    quality education for these children, and their civilian classmates.
    Congressional appropriations for the DOD Impact Aid Supplemental
    Funding helps those districts most heavily-impacted by the military
    presence. We also thank the Subcommittee for the $5 million for fiscal
    year 2000 to address special education needs in Hawaii as well as for
    the $10.5 million in DOD Quality of Life enhancements to enable several
    civilian schools which almost exclusively educate military children to
    make necessary facility repairs and renovations.
    Military Family Health Care Concerns
        NMFA knows that health care is a key quality of life issue
    impacting military families. We were very encouraged by the following
    remarks by General Shelton at the 2000 TRICARE Conference on 31 January
    2000,

              This year we've got to address health care . . . The bottom
            line is that our service members and their families must be
            able to count on their health care system. Our fighting men and
            women on the frontlines of freedom need to know that their
            families are being taken care of.
                Inequities:
        While DOD considers TRICARE a program providing a uniform benefit,
    there are certain gross inequities occurring within the system. The 12
    region structure, consisting of seven contracts with five different
    contractors, contains inherent flaws that foster inconsistency in basic
    services such as appointments, claims, and enrollment.
        Because there is a variation in the TRICARE Prime services provided
    in each area (the scope of care provided by Military Treatment
    Facilities and the private sector), military families must relearn the
    system with each permanent change of station (PCS) move. They have to
    determine how to make an appointment, what percentage of their care can
    be provided at a military treatment facility (MTF) versus the portion
    of care that must be performed by civilian network providers. For those
    fortunate enough to receive care within the MTF system, care is
    provided without copayments. However, for those who must receive care
    from civilian network providers, a copayment is required. NMFA is
    pleased that the DOD proposed budget addresses this inequity by
    removing copayments for active duty beneficiaries enrolled in Prime.
        TRICARE Standard and Extra beneficiaries do not routinely receive
    any information, either a TRICARE Handbook or information from the
    contractor. Therefore, these beneficiaries are even less likely to know
    the ``rules of the road'' in a new region. In addition, without a
    network provider handbook, Standard beneficiaries are unable to
    determine who is in the network to take advantage of the TRICARE Extra
    discounts for BOTH the government and the beneficiary.
        The lack of portability and reciprocity places an undue burden on
    beneficiaries, resulting in the disruption of care to the most mobile
    of all Americans, the military. At the 2000 TRICARE Conference, General
    Shelton stated that the TRICARE requirement forcing family members to
    reenroll every time they change regions ``adds to their stress and
    frustration, and often times, their workload.''
        The 12-region system results in significant variations in the
    delivery as well as administration of benefits throughout the nation.
    The crux of the problem is that contracts vary between regions. In
    order to provide a uniform benefit, there should be one contract that
    specifies the benefit and apply that contract to all regions.
    Currently, there is one operations manual to administer the program and
    seven different versions of contractors' policy manuals dealing with
    issues such as claims processing.
        DOD should define the benefit as well as a uniform set of policies
    for contractors to use to provide the benefit. For example, DOD should
    determine when TRICARE beneficiaries need to obtain pre-authorization
    and for what procedures--not the contractor. DOD should decide what
    benefits will be paid for and when--not the contractor. TRICARE is
    DOD's health care plan. It does not belong to the contractors.
                TRICARE Prime Remote
        Perhaps the greatest inequity in service occurs for those families
    remotely assigned who do not fall within the radius of a MTF catchment
    area. These families not only face the additional hardships of
    assignments far from the support services of military bases; the only
    option they have is the more expensive Standard fee for service option.
    It is difficult in certain areas for remotely assigned families to
    locate providers who participate in the TRICARE plan. For those
    families assigned to rural areas, it is an additional hardship when
    there are few providers practicing medicine in their area. What are
    these families to do if there are few specialists in their area and the
    physicians refuse to participate in the TRICARE system? We continue to
    hear many stories from areas where the only specialist such as a
    pediatrician in town refuses to treat TRICARE beneficiaries.
        Even in populated regions, there continues to be difficulties in
    areas with few military beneficiaries, the ``ones and twos.'' These
    families tell us they often face claims processing difficulties as
    their providers, unfamiliar with the TRICARE claims processing system
    find the process tedious and time consuming, often resulting in
    additional effort on the part of the provider to process a claim where
    the reimbursement is limited.
        Physicians have told NMFA that reimbursement from TRICARE was less
    than their overhead and as a result they were losing money. In some
    areas, it is difficult for primary care physicians to refer TRICARE
    beneficiaries to specialists who also participate in TRICARE. In
    addition, physicians report difficulty in obtaining contractor approval
    for tests such as magnetic resource imagery (MRIs). Attempts to obtain
    authorization for care result in multiple long distance calls taking a
    great deal of their office personnel's time to get approvals.
        NMFA is extremely pleased to note DOD's plan to provide a Prime
    remote benefit for these families. This will do a great deal to resolve
    a gross inequity in the provision of an equitable health care benefit
    and hopefully will relieve many of the concerns of military families.
    However, NMFA is anxiously waiting for DOD to inform us of what
    benefits will be provided as TRICARE Prime Remote.
                TRICARE Business Practices
        Inefficiencies in TRICARE business practices directly influence
    military family members' quality of life. Errors resulting from a
    complex claims processing system impact beneficiaries who spend an
    exorbitant amount of time attempting to perform claims resolution
    trying to correct bills for services that are supposed to be covered as
    a TRICARE benefit.
        NMFA is grateful for the congressionally mandated standard of 95
    percent of claims processed within 30 days. However, we would like to
    note that the standard is for ``clean claims'' (error free) and it is
    the contractor who determines the error standard. It is the latter
    group that causes military spouses to inform us that they expend hours
    on the telephone with practitioners and with contractors' claims
    processing staff. This causes undue stress on the part of the
    beneficiary, especially for the families with multiple claims.
        Military families deserve a health care system that has made an
    investment in state of the art internet technology. Not only does the
    antiquated system result in claims headaches for beneficiaries; it also
    presents a disincentive for physicians to participate in TRICARE
    networks. NMFA is concerned that the cost of claims processing exceeds
    industry standards, resulting in scarce resources being diverted to an
    obsolete system rather than providing care to our beneficiaries.
        What is perhaps the most egregious problem brought to our attention
    is that military families are being turned over to collection agencies
    for non-payment of disputed TRICARE bills. This causes great distress
    to our families as it is particularly offensive not only to their
    values system, but because a letter of indebtedness can mean the end of
    a military member's career. We are especially alarmed as families tell
    us they are paying the bills to avoid a bad credit rating, either
    because they do not realize that DOD should be covering these bills or
    they are exhausted from dealing with the maze associated with the
    complex claims processing system.
                Appointments
        Military families have told us that the military providers are
    excellent, ``once you get in the door.'' The TRICARE system lacks
    customer service focus and is difficult for families to navigate a
    complex delivery system. General Shelton has said,

              Many service members' attitudes toward TRICARE stem from
            their experiences on the telephone . . .. Our service members
            and their families should not be forced to wait on the phone
            and listen to recordings for 20 minutes just to secure an
            appointment.

        Access to the system has been a chronic problem even for Prime
    enrollees who have been guaranteed appointments that meet access
    standards. There is a lack of consistency in the appointment process
    not only between regions, but within regions as well. In some regions,
    family members call either the contractor's central scheduling, the MTF
    scheduling, or the clinic directly for an appointment, often not
    knowing which call will reward them with the appointment they need.
        NMFA concurs with the Government Accounting Office (GAO) that
    families need a health care program that is more user friendly, less
    complex, more efficient, and business-like. In written testimony before
    the House Armed Services Committee on 15 March, 2000 GAO states that
    the

              . . . two most pressing issues--the difficulty of obtaining
            appointments for care; and the need to pay claims for care
            provided by civilian providers in an accurate, timely and
            efficient manner. Improving services in just these two
            dimensions would likely go a long way toward increasing
            beneficiary satisfaction.

        We believe that beneficiary satisfaction would be greatly improved
    if DOD focused on its operational problems and business practices.
    These problems are not unique to the military health system (MHS), as
    they have been addressed successfully in the private sector. Again, we
    concur with the GAO who has stated on 15 March 2000, in their written
    testimony before the House Armed Services Committee,

              . . . the military health system continues to be plagued with
            operational problems, which are a source of beneficiaries ``and
            providers'', discontent. Problems such as accessing
            appointments and processing claims, while significant, are not
            insurmountable. Increased management attention from DOD could
            go a long way toward correcting these and other deficiencies,
            and thereby increasing beneficiary satisfaction.
                Custodial Care
        We are grateful to the Subcommittee for including in last year's
    Defense Appropriations Act, a definition of custodial care that meets
    industry standards to provide medically necessary care. However, last
    year's provisions have yet to be fully implemented across all regions
    and the program is moving forward slowly. If not for the intervention
    of Congress, DOD would have continued to pursue its unique definition
    of custodial care. We strongly and respectfully request that this
    Subcommittee reiterate the will of Congress on providing medically
    necessary care in this year's Appropriations Act. We urge oversight by
    Congress to ensure that DOD implements this policy and provides this
    care. Please consider that these are the families who bear the burden
    of caring for the chronically ill, in the direst need of medical
    assistance, and have been forced by DOD policy to enroll in Medicaid.
    Where is the equitable benefit when families are transitioned from
    their federal employer's health care benefit to a state based welfare
    program? Our families deserve a plan consistent with other federal
    employees' health benefits programs.
                Exceptional Family Member Program (EFMPs)
        The TRICARE system has difficulty meeting the complex medical needs
    of its beneficiaries. Many families are told that they cannot enroll
    their EFMP children in Prime, because specialty care is often not
    available at the MTF or via the network. Families must then rely on the
    more expensive fee for service Standard option, when they would prefer
    remaining in the managed care option. As a result of being shunted into
    the Standard option, these families often cannot get access to military
    medical care for routine problems, as the system takes Prime enrollees
    first. A family member, who has been forced to keep their child in
    Standard to receive specialty treatment for a cardiac condition, is
    then unable to take that child to the MTF for treatment for an earache
    because Prime enrollees receive priority for care.
        As Standard beneficiaries, these families are subject to
    deductibles, often required to pay for treatment prior to service. Even
    with initial outlays of out of pocket costs, there is often no
    assurance that the service will be covered until the explanation of
    benefits (EOB) arrives. Participation in the Standard option results in
    families being liable for the 15 percent above Champus Maximum
    Allowable Costs (CMAC). This imposes an additional financial burden, as
    families must obtain a supplemental policy, which may have a
    preexisting condition clause precluding the beneficiary from
    participating in the plan.
                Non-availability Statements (NAS)
        Current policy regarding non-availability statements has a direct
    impact on military families' quality of life. For those who have chosen
    the Standard option, they are often forced back into the MTFs for
    treatment. The NAS denies Standard beneficiaries, those who have chosen
    a fee for service option, those who have chosen to pay greater out of
    pocket expenses, a guarantee of one of the most critical factors in
    quality care, the guarantee to continuity of care
                Travel
        It is a gross inequity when Prime beneficiaries find that specialty
    care is not available within their MTF or local network and as a
    result, families are often forced to travel great distances at their
    own expense to receive specialty care. These families not only have to
    deal with the crisis of the illness of their loved one, they must also
    bear the burden of travel expenses, because the care that is to be
    provided as a benefit is not available within their MTF or network.
        Some examples of undue travel burdens that we have heard from
    military families are:
      --Fort Polk, LA to Fort Sam Houston, TX (7 hours one way) or Lackland
            AFB, TX (8 hours one way)
      --Camp Lejeune, NC to Newport, VA (4 hours one way) or to Bethesda,
            MD (6 hours one way)
      --Fort Bragg, NC to Walter Reed (4 hours one way)
      --Port Hueneme, CA to Camp Pendelton, CA (3.5 hours) or to San Diego,
            CA (4.5 hours one way)
                Retirees
        When military retirees turn 65 (Medicare eligible); they lose all
    of their DOD funded TRICARE health care benefits other than ``space
    available'' care at military treatment facilities (MTFs). Many military
    members and their families believe they were promised ``free health
    care for life.'' The post cold war downsizing of MTFs has resulted in a
    smaller MHS with fewer military medical personnel and fewer hospitals
    and clinics. Because priority for care is provided to Prime enrollees,
    the amount of space available care is decreasing for the over 65
    retirees. Other Medicare eligible Federal employees continue to be
    covered by their employer sponsored health insurance (FEHBP) as a
    supplement to Medicare. NMFA considers this a major inequity in the
    provision of benefits.
        General Shelton has stated in written testimony before the Senate
    Armed Services Committee on 8 February 2000,

              Let me stress that the Joint Chief's commitment to quality
            healthcare for all military members, including retirees,
            remains firm. Keeping our promise of ensuring quality
            healthcare for military retirees is not only the right thing to
            do, it also is a pragmatic decision because it sends a strong
            signal to all those considering a career in uniform.

        The sons and daughters of those who have served, typically
    potential recruits, have been discouraged to pursue a military career.
    These potential recruits see the breach of faith that has occurred with
    our retirees who are their grandparents, parents, or other family
    members. As long as our society permits DOD not to honor its health
    care promises to our retiree population, it will continue to
    demonstrate that promises from the past are not honored, nor will the
    promises made to them be fulfilled.
        DOD is conducting four programs to address access to health
    services for the over 65 population. Three programs provide health care
    services: Medicare Subvention (known as TRICARE Senior Prime), the
    FEHBP Demonstration, and the TRICARE Senior Supplement Demonstration
    (TSSD). The fourth program is provision of a mail order and retail
    pharmacy benefit called the Pharmacy Pilot Project. NMFA is very
    concerned for the welfare of our retirees who have served their nation
    well. We say enough of tests! Our retirees are dying at a rate of 3,784
    per month! The veterans of World War II and Korea do not have time to
    wait for tests. They did not hesitate when our country called them to
    service. Our nation owes a debt of gratitude to our military retirees
    for our freedom and it is time that we paid back that debt.
                Reservist Family Health Care Issues
        Reserve Component families must make decisions regarding their
    health care benefits, which quite frankly is confusing enough without
    the stress of their loved one about to be placed in harm's way, or
    without the experience of working a complex system. Since the health
    care options afforded to them are relative to the length of duty and
    the majority of orders are for less than 180 days, most are eligible
    only for the Standard option. Even if their assignment is for greater
    than 180 days and unless they live within an MTF catchment area, they
    face the same Prime access challenges as remotely assigned active duty
    families. Because of their location, they cannot benefit from visits to
    TRICARE service centers or MTFs for information.
        It is a difficult decision to change providers as they may have to
    sever their relationship with their current physician if they are not a
    TRICARE provider. They may have a family member currently under
    treatment with a trusted physician. Families go through a great deal of
    angst as they have relationships and trust of their physicians. It is
    difficult to disrupt care.
        Reserve Component families face logistical issues similar to
    remotely assigned active duty families as they attempt to locate
    providers that participate in TRICARE. Claims processing poses a
    particular problem for this group who are not familiar with working the
    complex system. There are financial considerations associated with the
    health care benefit decision. The member's employer may discontinue
    paying their portion of the reservist premium. This leaves the
    beneficiary with COBRA rates that are 102 percent of the premium.
    Copays and deductibles will apply if the family is in Standard and
    deductibles maybe waived at the discretion of the Secretary of Defense.
    However, if they are not waived, this can pose an additional financial
    hardship to a family that has already met the deductibles required by
    their civilian insurance. Pre-existing conditions can prevent
    participation in a supplemental plan. In addition, these decisions are
    being made with a potential loss of income.
        Because Reserve units often draw their members from several states,
    their leadership often faces the challenge of providing the correct
    information for beneficiaries in several different TRICARE regions.
    These families need timely accurate information in order to make a
    difficult decision with far reaching implications.
    So, how are military families unique?
        Yes, military families of today are unique. While our modern
    society is a mobile one, how many families move every two years for
    twenty to thirty years of their lives? While fathers and mothers in
    civilian business travel often, how many are gone for six months at a
    clip to places most Americans can't pronounce or find on a world atlas?
    While all parents are concerned about their children's health care, how
    many have to worry whether or not their family can access timely care
    while on a submarine in the depths of the ocean? While modern parents
    juggle jobs and time with their children, how many struggle to help
    with homework before going off to fight a war that night? While others
    are in occupations that can be life threatening, how many have to fit
    their children with gas masks?

        Senator Stevens. Thank you very much.
        Senator.
        Senator Inouye. All I can say is amen to you, Ms. Raezer.
        Ms. Raezer. Thank you.
        Senator Stevens. Thank you very much.
        The next witness is Chief Master Sergeant Mark Olanoff,
    Legislative Director, The Retired Enlisted Association.
    STATEMENT OF MARK H. OLANOFF, CHIEF MASTER SERGEANT,
                U.S. AIR FORCE (RETIRED), LEGISLATIVE
                DIRECTOR, THE RETIRED ENLISTED ASSOCIATION
        Master Sergeant Olanoff. Good morning, Mr. Chairman. It is
    good to see you again. Senator Inouye, The Retired Enlisted
    Association (TREA) would like to thank you for co-sponsoring
    Senator Reid's concurrent receipt of military retired pay and
    Veterans Administration (VA) disability, and hope that you can
    work for passage this year.
        And, Senator, you probably stole a lot of our thunder this
    morning with your support of military retiree health care, but
    I am going to touch on a few issues that we believe are
    important for the next fiscal year. We are requesting funding
    for comprehensive health care fixes for our aging Medicare-
    eligible military retirees, who were promised free lifetime
    health care for 20 years or more service.
        With 3,784 military retirees dying each month, these men
    and women who drop from the military health care at age 65
    cannot wait much longer for a true health care benefit. As our
    members say, ``I will not be here to use the health care after
    all of the tests, and I think Congress is waiting for us to
    die.''
        Like pay and compensation last year, this is the year of
    health care. Our members have mobilized grassroots campaigns to
    fight for their promised health care both in bills in the House
    and in the Senate which promise lifetime health care to
    retirees and to access the Federal Employee Health Plan. The
    momentum to do something for military retirees is now. They
    cannot wait any longer.
        General Shelton went on record in November 1999 to the
    Senate Armed Services Committee to say that the Joint Chiefs
    are committed to supporting DOD's efforts to improve both the
    fact and perception of military health care for the
    beneficiaries. Those who serve or those who have served deserve
    quality medical care. The administration failed to accommodate
    those recommendations in the fiscal year 2001 budget, so it is
    up to your committee, Senator, to do that.
        Access to pharmaceuticals is a great concern to Medicare-
    eligible military retirees due to the cost and increased usage.
    TREA requests expansion of the base realignment and closure
    (BRAC) pharmacy benefit nationwide to provide a national mail
    order pharmacy benefit at an $8 co-pay, or a 20 percent retail
    pharmacy benefit for all military retirees 65 or older. If
    considered, please do not include the enrollment fees or
    deductibles that represent a significant out-of-pocket expense
    for enlisted retirees, whose average retired pay is under
    $16,000 per year. Expand the TRICARE Senior Prime nationwide by
    January 1, 2001, and test for a Medicare fee for service
    benefit.
        Chairman Warner, of the Senate Armed Services Committee,
    recently introduced legislation, the Military Health Care
    Improvements Act of 2000, to provide the BRAC pharmacy benefit
    to all Medicare-eligible military retirees. His bill also
    extends the current demonstration programs until 2005. Further,
    the Budget Committee included a provision for a $400 million
    military retiree health care reserve fund to provide additional
    funding. We ask that you completely fund Chairman Warner's
    bill.
        The Retired Enlisted Association recommends full funding
    for the Defense Health Program, including TRICARE. TRICARE
    funding should reflect the number of beneficiaries eligible for
    military health benefits, especially those requiring skilled
    nursing care or custodial care. Make TRICARE Standard a more
    attractive benefit by eliminating the 115 percent billing limit
    when TRICARE Standard is the second payer, and reducing the
    TRICARE catastrophic cap for retirees from the current $7,500
    to $3,000, and eliminating pre-authorization requirements for
    TRICARE Standard beneficiaries.
        Today, let us not forget about the medical needs of this
    Nation's aging retirees. They did not forget about this
    Nation's needs during their honorable service for this country.
        Chairman Stevens and Senator Inouye, again, The Retired
    Enlisted Association thanks you for what you have done in the
    past and we appreciate the opportunity to be here today.
        [The statement follows:]
                     Prepared Statement of Mark H. Olanoff
        The Retired Enlisted Association (TREA) would like to thank the
    chairman and distinguished members of the Senate Defense Appropriations
    subcommittee for the opportunity to come before you to discuss funding
    issues as it relates to our members needs. We extend our appreciation
    for the funding levels last year as it pertains to health care,
    retirement benefits, and pay. In addition, we are requesting increased
    levels to meet the needs of military retirees, guard and reserve as
    well as active duty and their dependents.
        TREA has 110,000 members and auxiliary representing all branches of
    the Armed Services, retired, active duty, guard and reserve whose
    continued concern over constrained funding levels for the Department of
    Defense for military personnel issues impacts their daily lives from
    the healthcare they receive at a military facility to the retirement
    check they receive in the mail. Medical care, adequate pay, inflation
    protected retired pay, survivor benefit plan, concurrent receipt and
    commissaries are concerns of the entire military community.
                                  health care
        With bases closing, military treatment facilities (MTFs) downsizing
    and demographics changing, the need to provide access to health care to
    our ever growing number of aging retirees creates anxiety with those
    that ``were promised lifetime health care.'' The fact remains that DOD
    has a responsibility to those men and women who have served in the
    uniformed services to provide a medical benefit to those retired
    military beneficiaries that were promised health care. The demographics
    have changed from the 1950's when retirees were only 7 percent of the
    military health care beneficiary population, therefore Congress needs
    to provide adequate funding to create a plan to administer a health
    care benefit to retirees. National expansion of the sites and increased
    number of enrollees in the current Federal Employees Health Benefit
    Plan (FEHBP) 65+Test program is needed and the step in the right
    direction to testing the viable health care options for retirees access
    to medical care in the future. As this committee is aware, this is only
    one part of the matrix for accessing health care, expansion of the
    current BRAC pharmacy benefit and the current test of Medicare
    subvention will help offer a complete medical benefit for Medicare
    eligible military retirees.
    Pharmacy: Pharmacy benefit for Medicare eligible retirees
        We are requesting this committee to extend the BRAC (Base
    Realignment and Closure) pharmacy benefit to include all Medicare
    eligible military retirees regardless of where they reside. The BRAC
    pharmacy program provides a National Mail Order Pharmacy (NMOP) benefit
    at a cost of an $8 co-payment for a 30-90 day prescription, as well as
    a 20 percent charge for retail pharmaceuticals at TRICARE network
    pharmacies.
        The April 29, 1999 DOD Pharmacy Benefit Report in section 2
    ``Pharmacy Redesign Approach and Results'' subsection 2.3 estimated the
    cost for a NMOP and retail pharmacy benefit for 1.4 military retirees
    over age 65 at $400 million.
        TREA was concerned after Public Law 105-261 sec. 723 (DOD pharmacy
    redesign) was passed, DOD met with military associations in meetings to
    discuss the pharmacy redesign. In January 1999, all military
    associations were dropped out of DOD discussions. It was not until
    August 1999, did DOD propose the Pharmacy Pilot Program to begin
    enrollment in April 2000, not the required date of October 1, 1999.
        The proposal included the BRAC pharmacy benefit with a $500
    enrollment fee per couple. The high enrollment fee would indeed skew
    the number of participants in Fleming, KY and Okeechobee, FL, simply
    because those who have high usage rates of pharmaceuticals would be the
    only ones that would participate, therefore increasing the overall
    enrollment cost in the future. Also, this could jeopardize the current
    BRAC pharmacy benefit that has no enrollment fee, but the same benefits
    as the Pharmacy Pilot Program with a NMOP and a 20 percent retail
    pharmacy network benefit.
        TREA with support of other Military associations went to Congress
    to request a re-evaluation of the pilot program. In response, Congress
    directed DOD to come up with a different proposal to submit to them
    changing the payment structure of the pharmacy program. On November 17,
    Dr. Sue Bailey, Asst. Secretary for Health Affairs for DOD, met with
    TREA, TROA, NMFA, NAUS, NCOA, AUSA, and FRA to state that the Pilot
    Pharmacy Program would not change and would be implemented in April
    2000.
        The $500 per year for a couple or $800 when expected co-payments
    are included, the new Pharmacy initiative represents a significant out
    of pocket expense for enlisted retirees whose average retired pay is
    under $16,000 per year. For those retirees 65 and older that can access
    a BRAC pharmacy program now, those that based their pharmaceutical
    needs on the MTF, only 17 percent of that population access the NMOP
    benefit currently. Also, If you have a pharmacy benefit through a
    Medicare HMO, employer sponsored health care, or spouse, then you
    cannot access the BRAC benefit.
        Again, I cannot stress the concern over the access of
    pharmaceuticals to our Medicare eligible military retirees due to cost
    and increasing use of drugs for our senior citizens. We are requesting
    additional funding to be allocated to expand the BRAC pharmacy benefit
    to all Medicare-eligible military retirees nationwide with no
    enrollment fees or deductibles. In addition, we are asking for complete
    funding for a pharmacy redesign to include a complete national
    formulary that addresses the drug utilization of our aging war heroes
    and heroines.
    FEHBP--65+ test program
        In order to have a fair and accurate test, we need to provide the
    opportunity for Medicare eligible military retirees to increase
    enrollment in the FEHBP 65+ test for the November 2000 open enrollment
    season. As we testified last year before this committee, we know that
    not all military retirees will enroll in this program, but we need to
    give them the option to make that choice.
        TREA is urging this subcommittee to increase the number of
    demonstration sites, as well as the number of enrollees eligible to
    participate in the FEHBP 65+ Test effective for the November 2000 open
    enrollment season. Out of the 66,000 eligible to enroll only 2,500 are
    currently covered by FEHBP as of March 16, 2000. It is absolutely
    necessary that we give these retirees an equitable benefit that is as
    good or as equal to federal civilian retirees.
        DOD did not market the program in a timely manner as seen in the
    low enrollment numbers. Education and marketing by DOD was essential to
    determining the future success of the FEHBP 65+ test. The marketing
    timeline dates set up by the Tricare Managed Activities (TMA) office
    overseeing the program were not all met. The first notification of the
    program for eligible beneficiaries was via a postcard due out on July
    15, which was not sent until August 15, 1999. Secondly, the ``Health
    Fairs'' that were sponsored by DOD were not put in place until the
    first week of November, which was a month late. These eligible
    beneficiaries in these 8 test sites were not properly marketed to on
    the FEHBP 65+ test program.
        The three year test deterred Medicare Eligible Military Retirees
    from participating in the program this year. This is a population of
    beneficiaries who cannot take risks in their health care, meaning to go
    into a three year test with no protection if the program ends. The
    continuity of health care for this senior population is not guaranteed
    in three years, therefore we request that these individual that are
    both in the program or will be enrolling in the program be
    grandfathered into the FEHBP 65+ test regardless of the success of the
    program.
        The Fiscal Year 1999 Defense Authorization Act subtitle C Section
    721 Demonstration Project to include certain covered beneficiaries
    within Federal Employees Health Benefits Programs clearly defined the
    eligibility and number of enrollees for the test program. As printed in
    legislation the total number of enrollees may not exceed 66,000, this
    was interpreted by the DOD as 66,000 total persons eligible to enroll
    in the test program. We knew that these designated 66,000 eligible
    participants would not all enroll because of the limited three year
    test program. Many of these participants may have employer provided
    insurance, Medicare Risk HMOs, Medigap policies, or have enrolled in
    TRICARE Senior Prime as in the case of the Dover, DE program. TREA
    would like to see the sites expanded nationwide and to increase the
    number of participants eligible to enroll.
        TREA and other military association representatives went on record
    at a July 1, 1999 hearing in the House Civil Service Subcommittee
    stating the above concerns of implementing a fair test. DOD
    representative responded by saying that out of the 66,000 eligible
    participants, 70 percent would enroll. Seeing by the current 2,500
    enrollment number, we feel that our arguments on implementing a fair
    test were not met. Remember that this program services a population of
    beneficiaries new to FEHBP, unlike retired Federal Employees who
    understand the program. It was essential that they knew how FEHBP works
    as a wrap health care coverage to Medicare, as well as if there were
    protections on their Medigap plans during this 3 year test. TREA feels
    that by marketing to an increased number of eligible beneficiaries,
    this committee will be able to have the data necessary to prove that
    this is a viable program for military retirees in the future.
    TRICARE Senior Prime Demonstration Program
        TREA would like to thank you for your support for the Tricare
    Senior Prime Test program, Medicare Subvention. With the favorable
    response to this program by military retirees in those six designated
    test sites, TREA is asking for nation wide implementation of TRICARE
    Senior Prime. Senator Phil Gramm (R-TX) introduced S. 915 to make the
    TRICARE Senior Prime program permanent on a phased--in basis. The bill
    would expand Senior Prime to ten additional locations with full-service
    military hospitals by January 1, 2001 and then across the remaining
    TRICARE Prime catchment areas no later than October 1, 2002. We are
    requesting that this committee provide funding to expand the Tricare
    Senior Prime Test nationwide to be effective Jan. 1, 2001. The test
    program terminates on December 31, 2000, we need legislative action for
    fiscal year 2001 to move this program forward. In addition, Senator
    John Warner (R-VA) included a provision in his bill S. 2087 to extend
    the TRICARE Senior Prime Test until 2005.
        Many of our Medicare-eligible retirees have received letters from
    hospitals stating that ``space availability'' no longer exists or is
    extremely limited due to downsizing of staff at MTFs. Allowing as many
    Medicare-eligible military retirees to use Medicare at MTFs will
    provide them with yet another option for health care. Though it should
    be understood that this is not the complete solution to the current
    problem, as it would provide health service to 33 percent of the 1.4
    million retirees over 65 now, it is an important piece to solving the
    whole health care dilemma for these beneficiaries.
        The connotation of ``TEST'' has deterred some of our members from
    enrolling in TRICARE Senior Prime, though they want to participate,
    they have a lack of trust for the MTF that turned them away years ago
    only to welcome them back again with no guarantees of health care past
    the three year test. TREA has discussed this issue with our members
    that all conclude that they support the initiative to expand this
    program nationwide. I would like to add that S. 915 would give DOD the
    option to provide a fee-for-service Medicare option at certain MTFs if
    this would be more cost effective for those facilities.
        TREA urges the support for funding from this committee to expand
    TRICARE Senior Prime to a permanent program. This committee's support
    would ensure expanding TRICARE Senior Prime to 10 additional sites by
    January 1, 2001 and national expansion on October 1, 2002 to provide a
    true health care benefit to military retirees that still reside near
    MTFs.
    TRICARE: Full funding for all military beneficiaries
        In order to ensure the viability of TRICARE for all eligible
    beneficiaries to the program, it is necessary that TRICARE funding
    reflect the number of beneficiaries eligible for military health
    benefits, not just the ever-declining number of people able to use the
    military system the previous year. The overall Defense Health Programs
    continue to have funding shortfalls, TREA urges this committee to
    provide adequate funding for military readiness as well as the current
    peacetime component. Our active duty members need assurances that
    funding will enable access to quality health care for their families,
    as well as assuring incentives for these uniformed service members to
    be recruited and retained in the military. Also, the promise of this
    health care benefit must be kept for our military retirees that are
    over and under the age of 65.
        Additional funding will be required to keep providers in TRICARE
    Prime networks as our members are experiencing physicians leaving the
    system. Most TRICARE managed care support contractors have negotiated
    TRICARE Prime reimbursement rates with network providers that are even
    lower than Medicare. Though the issue is a combination of low rates and
    physicians not being paid in a timely manner due to claims processing.
    TRICARE is giving physicians two disincentives for not signing up in
    the networks, low payment and slow payment.
        TRICARE Standard (CHAMPUS) reimbursement levels are still much to
    low to attract quality health care providers. There are also
    unreasonable delays in reimbursement for TRICARE Standard (CHAMPUS)
    claims. Members have reported that in the more rural areas, and even
    some urban areas, where providers do not depend on a military patient
    base, health care providers have become increasingly unwilling to
    accept TRICARE Standard (CHAMPUS) patients at all. TREA feels that de-
    linking the CMAC (CHAMPUS maximum allowable charge) from the Medicare
    Schedule and authorizing higher payments to providers as necessary will
    improve access to quality care for our beneficiaries. The Fiscal Year
    2000 Defense Authorization Act gave the Secretary of Defense the
    authority to go over the current CMAC rates to bring in providers into
    TRICARE networks, but TREA still see this being implemented.
        The current claims processing system for TRICARE needs to be
    revamped in order to reduce the hassles of claims payment for
    physicians and beneficiaries. The beneficiaries end up getting caught
    in the middle when they receive collection notices from their
    creditors, even after they were told the claim would be paid by the
    TRICARE subcontractor. The Fiscal Year 2000 Defense Authorization Act
    moved to allow TRICARE contractors to use electronic processing for
    claims and streamlining the information flow, this being two pieces of
    the claims puzzle to be fixed. DOD has the authority to bring the
    claims system to ``the best industry standard'', but TREA has not seen
    any proposal or plan by DOD to implement a new program. We are
    requesting some accountability by this committee to the Secretary of
    Defense.
        As we review the TRICARE program, the issues of low reimbursement
    rates and claims processing continue to be a disincentive for providers
    to sign up with a Prime network or to be a provider to accept TRICARE
    Standard. We will continue to work with this committee to address these
    issues, as well as the shortfalls in the overall TRICARE program too.
    Improvements to TRICARE Prime
        TREA appreciates your support last year on improvements to TRICARE
    prime, but there are aspects of the program that still need to be
    improved upon. Now that all 12 TRICARE regions have been up and running
    two years in June of this year, TREA requests your support to:
      --Provide Tricare Prime Remote for active duty family members.
      --Provide monetary reimbursement for transportation costs incurred by
            beneficiaries that travel over 100 miles to attain specialty
            care.
      --Eliminate co-payments for active duty personnel and their family
            members enrolled in TRICARE Prime.
      --Provide a proposal or direct the Department of Defense to give a
            proposal to create efficiencies in the payment of claims
            processing. The Fiscal Year 2000 Defense Authorization Act
            directed DOD to create a better mechanism for claim processing,
            but we have not seen any proposal or action on this issue. This
            continues to be a problem throughout the TRICARE regions,
            creating animosity for the program both from the beneficiaries
            and the providers.
      --Ensure there is adequate quality control oversight of managed care
            systems (preferably by independent parties). Quality control
            oversight should include monitoring of patient satisfaction,
            assessment of clinical outcomes, adequate oversight of provider
            networks, and adherence to access standards in addition to
            utilization management.
      --Ensure portability and reciprocity immediately for all
            beneficiaries under TRICARE Prime. We are still hearing that
            active duty family members get caught in a gap while moving
            from region to region. Therefore, greater continuity within
            contracts on the issue of portability and reciprocity is
            essential for having a seamless transition of care upon moving
            in and out of regions.
    TRICARE Standard improvements
        TRICARE Standard the fee-for-service option needs improvement to be
    at least the quality and standard of care as provided under FEHBP
    standard fee-for-service by:
      --Reduce the catastrophic cap from $7,500 to $3,000.
      --Eliminate the need for Non-availability statements (NAS) from
            military treatment facilities and clinics and completely
            eliminate the requirement for pre-authorization.
      --Eliminate the 115 percent billing limit when TRICARE Standard is
            second payer to other health insurance.
    S. 2003--``Keep Our Promises to America's Military Retirees Act''
        We ask this committee to support Senator Tim Johnson's (D-SD) bill
    S. 2003, to provide FEHBP for all military retirees over and under 65.
    S. 2003, requires Congress to pay for the entire cost of FEHBP for
    military retirees that entered active duty service on, or prior to June
    7, 1956, when a statuary law stated that military retirees over the age
    of 65 could access healthcare if ``space available'' existed at the
    MTFs. Also, this bill would enable military retirees that signed up for
    the military after June 7, 1956 to become eligible for FEHBP, TRICARE
    Standard (CHAMPUS), or TRICARE Prime upon turning age 65. Currently,
    military retirees that turn 65 are dropped from military healthcare.
    This bill gives them back the ``promise of lifetime healthcare'' to the
    men and women who chose a 20 year career in the service not only to
    honor this nation but to be provided with benefits such as healthcare
    in their senior years. Finally, H.R. 3573 enables all military retirees
    to have access to FEHBP effective upon retirement from twenty or more
    years of active duty service.
        This bill has strong grass roots support because it comes closer
    than any other pending legislation before Congress to answering the
    military health care promise to America's military retirees, especially
    her older retirees. S. 2003 has mobilized our members in grassroots
    campaigns across the nation to fight for their promised health care.
    TREA asks this committee to consider the fact that military retirees
    are dying at a rate of over 3,784 a month, our members say ``I will not
    be here to use a health care benefit after all of these tests end, I
    think Congress is waiting for us to die.'' These men and women dropped
    from military health care at 65, cannot wait any longer for a true
    health care benefit.
    Care for the disabled
        The statute which authorizes the CHAMPUS program prohibits the
    military health care system from delivering ``custodial care.'' The
    statute does not provide a definition of the term. Originally, DOD
    interpreted the exclusion in a manner consistent with other federal
    health programs and how the term is understood in the health care
    industry generally. However, eleven years after Congress created the
    exclusion with no change in the statute or related legislative history,
    DOD reinterpreted the term ``custodial care'' in a manner which
    excludes care for those with permanent disabilities from the military
    health system.
        DOD's definition excluded custodial care encompassing medically
    complex skilled care. This approach is not found in other federal
    health programs with this statutory exclusion. Further, this approach
    has been rejected by Federal courts.
        Changes in DOD's policy and regulations regarding the disabled were
    ordered by the Fiscal Year 2000 Defense Authorization Act and the
    Fiscal Year 2000 Defense Appropriations Act. As of yet, DOD has not
    fully implemented these changes, nor has it provided the public an
    opportunity to participate in redefining the ``custodial care'' term as
    required by law. There is concern that DOD will not provide meaningful
    change without further Congressional legislation and oversight.
    Therefore, this committee should require DOD to redraft the definition
    for custodial care consistent with other Federal health plans and
    related case law.
        TREA asks this committee to require DOD to, at a minimum, provide
    military families with the same amount of basic health services that
    are available through FEHBP. DOD should not continue to send dependents
    of service men and women into welfare programs in order to relinquish
    their responsibility to pay for needed skilled nursing care.
    Medicare part B waiver for military retiree 65+
        Retirees were counseled by MTF advisors not to enroll in Part ``B''
    because they resided near MTFs and would be able to access their free
    health care. These retirees should not be punished with late enrollment
    fees due to the fact that the local MTF has closed. TREA is requesting
    to authorize the waiver of the penalty for not enrolling in Medicare
    Part ``B'' for Medicare-eligible military retirees.
        TREA believes that this small investment will enable retirees to
    enroll in health care programs which require Medicare Part B for
    eligibility such as TRICARE Senior Prime and the Fee-for-Service Option
    plans in FEHBP. Currently, we have military retirees that either are
    paying a high penalty for Medicare Part B, or just cannot enroll
    because it is to costly.
    Retiree dental plan
        The Retiree Dental plan does not provide coverage of crucial
    benefits, such as bridges and crowns which are needs characteristic of
    our members. Currently, the contract is not subsidized by DOD, which
    would mean that increasing the benefit level now would make the program
    to costly to our aging retirees. Therefore, TREA is requesting funding
    for a subsidy for the DOD Retiree Dental plan's premium to expand the
    benefit schedule to military retirees.
    Other Personnel issues:
                Survivor benefits
        TREA members as well as all military retirees who have invested in
    the Department of Defense sponsored Survivor Benefit Plan (SBP), are
    frustrated by the off-set faced by survivors of military retirees once
    they reach the age of 62. Currently, a survivor of a military retiree
    would receive 55 percent of a military retirees retirement pay per
    month, if the retiree opted for full SBP. However, that amount will be
    reduced to 35 percent once the survivor becomes eligible for Social
    Security, regardless of whether or not they have earned Social Security
    from their own work experience or not. With the average enlisted
    retiree earning $16,000 per year, a Social Security-eligible survivor
    is left with only $6,600 in income from their spouses military service.
        TREA, along with several other military retiree organizations, has
    worked closely with several members of Congress recently to eliminate
    this off-set. Last year, the Senate included legislation, outlined in
    S. 763 sponsored by Senator Thurmond, which would increase the amount a
    survivor receives from the current 35 percent to 45 percent over a five
    year period. TREA strongly endorsed this language and was very
    disappointed when it was not included in the Fiscal Year 2000 National
    Defense Authorization Act Conference Report.
        We are currently working with members of both the House and Senate
    Armed Services Committees to include legislation eliminating the Social
    Security off-set, as defined in S. 2268 by Senator Smith of New
    Hampshire. It is our hope that, finally, it will be included in the
    Conference Report of the National Defense Authorization Act. We request
    that this committee appropriate the resources to implement it.
        Another issue of concern regarding SBP is the implementation of the
    paid-up SBP program. Slated to begin in 2008, this program will allow
    those retirees who have been paying into SBP for 30 years and have
    reached the age of 70 to cease making payments but still keep their
    spouses covered. While we applaud this program, it is TREA's desire to
    move the start date up to 2003, as was called for in the original bill.
    As the program is currently set up, those retirees who enrolled in SBP
    when the program started in 1972 will pay far more than 30 years. We
    are currently working with members of Congress to have the paid-up
    program begin as early as possible. However, this committee would again
    have to appropriate the necessary dollars to implement it.
                Concurrent receipt
        TREA would like to thank the members of this Committee who
    appropriated the necessary funding last year to begin the special pay
    program for the most severely disabled military retirees. This payment,
    which provides certain military retirees rated 70 percent disabled or
    higher by the Department of Veterans Affairs (VA) with a special pay
    ranging from $100-$300, will be of great assistance to these disabled
    veterans.
        TREA is grateful for this small step in addressing the fact that
    military retirees are the only class of federal retirees who have their
    retirement pay reduced when they receive VA disability compensation.
    The legislation passed last year only addresses a fraction of disabled
    retirees whose income is reduced because of their disability. We look
    forward to working with the members of this committee, as well as of
    the Armed Services Committee, to expand the number of retirees who can
    receive this special pay. Currently, disabled retirees who have served
    twenty years and those retirees who retired under early retirement
    legislation at the 15 year point are not eligible for this payment.
    Certainly, their inclusion is a matter of fairness and we look forward
    to quickly addressing this inequity.
        The ultimate goal in this issue, as defined in S. 2357, sponsored
    by Senator Reid, is complete concurrent receipt of military retirement
    pay and VA disability compensation.
                                   conclusion
        Due to the continued downsizing of MTF staff, base closures, and
    depleting dollars for DOD health care, the Medicare Eligible Military
    Retirees continue to be pushed out of military health care. We need
    solutions to these problems. And as we know, there is no one solution.
    Therefore, implementing options for those that live near MTFs or those
    residing outside the catchment areas, through the Medicare subvention
    test and FEHBP 65+ demonstration, will enable DOD to administer health
    care to its aging heroes and heroines in the future. Even with full
    Medicare Subvention, TRICARE Senior Prime, we will only be servicing 33
    percent of the overall population of military retirees over the age of
    65. Some of our retirees have employer sponsored health care, 17
    percent, and 10 percent already have Medicare Risk HMOs, leaving 32
    percent to 41 percent of the 1.4 million population to access FEHBP.
    The number of 65 and over aged military retirees will not deplete but
    continue to grow in numbers to 1.6 million in 2004.
        If this committee provides funding to expand the BRAC pharmacy
    benefit nationwide effective October 1, 2000, many Medicare eligible
    retirees will pick up this benefit first. TREA feels that providing a
    true pharmacy benefit will provide a solution to one of our members
    greatest needs, costly pharmaceuticals. Therefore, this creates a cost
    savings in the implementation of FEHBP and TRICARE Senior Prime in the
    future because the pharmacy benefit is less costly for those retirees
    that will take it as their health benefit on October 1, 2000.

        Senator Stevens. You are looking at two of the oldest
    veterans in the Senate. But I have got to tell you, as I listen
    to the pleas for retirees, there seems to be a different
    standard of what the commitment was at the time of enlistment
    among different groups. I think that is up to the Armed
    Services Committee to straighten that out; not us. We do not
    have the capability of doing that. But I do think that some
    people are saying now that the commitments that were made were
    much broader than were made back in the days when we understood
    them. We are not retirees. They are going to pound us in the
    ground feet first. We will not get retirement benefits anyway,
    I do not think so.
        But when you look at the commitments that were made to the
    people who did enlist and did serve, and served through to
    retirement, I do not think there is a standard out there that
    we understand in Congress yet. And the Armed Services Committee
    had better straighten that out. Because it is getting to be a
    difficult time.
        You will recall that these benefits were not taken out of
    the defense bill until 10 or 12 years ago. And now, as these
    requirements go up, procurement for those in the services go
    down when we are operating under a ceiling. I just hope that
    you all will work within the Armed Services Committee and get a
    total definition of what we are talking about. If you get that
    definition, we will fund it. We have never reneged on a
    commitment, to my knowledge, that we understood.
        But the difficulty in this one is I am not sure what the
    commitment really is in terms of payment of these costs now
    that the military hospitals are no longer there. The commitment
    that I understood was that, on a space available basis,
    retirees were entitled to medical health care at medical
    facilities operated by the military. Now that has been
    broadened into a commitment to provide medical care wherever
    they want to go in the United States and whatever the facility.
        Now I am not sure that we can afford that. And we have got
    to get a definition. And that is what TRICARE is supposed to be
    trying to do with senior TRICARE. And this guy really
    originated that, as I recall, the concept of trying to provide
    an umbrella system out there where there was no military
    facility.
        There is another round of base closures, Sergeant. I have
    got to tell you, it is going to get worse, not better. And we
    have not authorized the base closures because of this problem
    primarily. I do not know what we will do if we close more
    military hospitals. Because when you close them for the active
    duty, you also close them to retired people in the area. And it
    is a very difficult problem.
        Senator, do you have any comments on that?
        Senator Inouye. You have hit it all.
        Senator Stevens. We will work with you, but somewhere there
    has got to be some definition of what we are talking about.
        Master Sergeant Olanoff. Senator, we are working with the
    Armed Services Committee on the House and the Senate side to
    get more clear definitions of what we should come to you and
    ask for appropriations. But we do bring it to your attention so
    you are aware of it. Thank you, sir.
        Senator Stevens. Good. Thank you very much. I appreciate
    it.
        Dr. Wirth, President of the American Society of Tropical
    Medicine and Hygiene has cancelled.
        The next witness is Charles Queenan, Senior Vice President
    for the Juvenile Diabetes Foundation (JDF) International. Good
    morning.
    STATEMENT OF CHARLES QUEENAN, III, SENIOR VICE
                PRESIDENT, PHB HAGLER BAILLY, INC., ON
                BEHALF OF THE JUVENILE DIABETES FOUNDATION
                INTERNATIONAL
        Mr. Queenan. Mr. Chairman and Senator Inouye, good morning.
    My name is Charles Queenan, and I am pleased to appear before
    you today to speak as a volunteer for JDF, the Juvenile
    Diabetes Foundation International.
        First of all, I would like to take this opportunity to
    thank you both for your support over the years for JDF's
    efforts to find a cure for diabetes and its complications.
    Today I am seeking your support for $5 million in research
    funding to allow the Department of Defense to lead the effort
    to develop dual-use biosensor technology that would benefit the
    military as well as the 16 million Americans with diabetes.
        Before I explain how DOD research in the biosensor
    technology area can benefit both DOD and children with
    diabetes, I would like to tell you about how diabetes affects
    my family. My wife and I are blessed to be the parents of four
    young children--our daughter, Jenna, who is now 11, and three
    younger sons. On September 11, 1991, at the age of only 3,
    Jenna was diagnosed with Type I diabetes, also known as
    juvenile diabetes.
        Every day since then, Jenna has received two to three
    injections of insulin, and has tested her blood sugar by
    pricking her fingers to draw blood four to six times per day.
    Our goal is to keep Jenna's blood sugar levels as close to
    normal as possible, hoping to minimize the very substantial
    risk of complications down the road--complications like
    blindness, kidney failure, amputation, heart disease, and nerve
    disease.
        I will never forget the first months of Jenna's diabetes.
    We became experts in the life-saving regimen that Jenna will
    need to follow for the rest of her life. But this regimen of
    shots and finger pricks is not a cure. Despite the progress
    that has been made toward finding better ways to manage
    diabetes, the truth is that this regimen is still a very
    imperfect form of life support that constantly exposes Jenna to
    severe and even fatal consequences.
        Trying to keep Jenna's blood sugar levels close to a normal
    range is hard enough. Simple changes in daily routine can cause
    Jenna's blood sugar to drop dangerously low, leading to
    unconsciousness, seizure or even worse. These acute and very
    scary consequences of diabetes can occur if Jenna takes too
    much insulin, gets the flu and is unable to eat, or even if she
    simply runs around too much. Despite all of our efforts, the
    long-term outlook for Jenna and anyone with diabetes remains
    uncertain at best.
        Diabetes has very serious long-term health consequences. It
    is the leading cause of kidney failure, new adult blindness and
    amputation. It is the second most common chronic illness
    affecting children, and it affects millions of minorities and
    elderly Americans. This disease costs our economy $105 billion
    per year, and its financial impact is so severe that one out of
    four Medicare dollars and one out of 10 health care dollars are
    spent on individuals with the disease. It is also a major
    burden on the military's own health system, not to mention the
    thousands of family members of individuals in the military who
    have the disease.
        My family's story is not unique. Millions of other families
    have had similar experiences. But there is a role that you can
    play to help make a difference in improving Jenna's life and
    the lives of 16 million Americans who suffer from diabetes. The
    military and everyone who suffers from diabetes can all benefit
    if we could perfect a biosensor that would be able to monitor
    non-invasively the physiological status of an individual.
        For military personnel, such a technological device could
    help detect and treat situations involving sickness and injury.
    A biosensor could monitor metabolic products to determine
    health status, detect toxic exposure to biological and chemical
    hazards, accurately determine and deliver antidotes or drug
    treatments required by sick or injured personnel, and deliver
    nutritional supplements. Such a device would improve military
    performance and better monitor military personnel in the field.
        The military's development of the biosensor would also
    yield tremendous civilian uses. JDF is most interested in its
    applications to individuals with diabetes, where our goal is to
    closely monitor glucose levels in patients to maintain health
    and avoid long-term complications of the disease. This
    technology could be utilized in a way to monitor blood glucose
    levels accurately, constantly and non-invasively and even to
    help determine the level of insulin that should be administered
    to an individual.
        Mr. Chairman and Senator Inouye, JDF requests that the
    subcommittee appropriate $5 million to the United States Army
    Medical Research and Materiel Command for research into
    biosensor technology for the development of non-invasive
    screening devices that have dual-use applications for both the
    military and civilian sectors. Thank you very much for
    considering this request, and I would be happy to answer any of
    your questions.
        [The statement follows:]
                   Prepared Statement of Charles Queenan, III
        Mr. Chairman and Members of the Subcommittee, I am Charles Queenan
    and I am pleased to appear before you to testify as a volunteer for the
    Juvenile Diabetes Foundation International (JDF). In my professional
    life, I am Senior Vice President of PHB Hagler Bailly Inc. However, I
    devote much of my spare time to working with the JDF to help find a
    cure for my daughter who has juvenile diabetes. Today, I am seeking
    your support for $5 million in research funding to allow the Department
    of Defense (DOD) to lead the effort to develop dual use biosensor
    technology that would benefit the military as well as the 16 million
    Americans with diabetes.
        Before I explain how DOD research in the biosensor technology area
    can benefit both DOD and children with diabetes, I would like to tell
    you about how diabetes affects my family.
        My wife and I are blessed to be the parents of four young
    children--our daughter, Jenna, who is now eleven, and three younger
    sons. On September 11, 1991, at the age of three, Jenna was diagnosed
    with Type 1 diabetes, also known as juvenile, or insulin-dependent,
    diabetes. Every day since then, Jenna has received two to three
    injections of insulin per day. Every day since then, Jenna has tested
    her blood sugar by pricking her fingers to draw a drop of blood four to
    six times per day. Our goal is to keep Jenna's blood sugar levels as
    close to normal as possible, hoping to minimize the very substantial
    risk of very scary complications down the road--complications like
    blindness, kidney failure, amputation, heart disease, and nerve
    disease.
        I will never forget the first months of Jenna's diabetes. We became
    experts in the life-saving regimen that Jenna will need to follow for
    the rest of her life. But this regimen of shots and finger-pricks is
    not a cure. Despite the progress that has been made towards finding
    better ways to manage diabetes, the sad truth is that this regimen is
    still a very imperfect form of life support that constantly exposes
    Jenna to acute, severe and even fatal consequences. Trying to keep
    Jenna's blood sugar levels close to a normal range is hard enough. But,
    in addition, simple changes in her daily routine can cause Jenna's
    blood sugar to drop dangerously low, leading to unconsciousness,
    seizure or even worse. Jenna can suffer from low blood sugar and
    unconsciousness if she takes too much insulin, gets the flu and is
    unable to eat, if (as a near teen-ager!) she sleeps too long, or even
    if she simply runs around too much. Each of these are quite everyday
    occurrences for most kids.
        In fact, this has happened on several occasions. One summer at
    camp, a diabetes camp, she was a bit more active after dinner than
    usual--she was unconscious and in a diabetes seizure the next morning.
    Just last week on a Girl Scout trip, Jenna's blood sugar plummeted to
    dangerous levels, requiring immediate and prolonged attention to avoid
    unconsciousness, just because she got up two hours earlier than normal.
    Our current but imperfect protection against these conditions is the
    blood sugar test-drawing yet more blood from Jenna's fingers in the
    hope that we can detect a change in her blood sugar in time to avoid a
    serious consequence.
        This undetected low blood sugar is a risk to Jenna that profoundly
    changes the way we live. My wife has worn a pager and carried a cell
    phone every day, everywhere, since Jenna was diagnosed with diabetes.
    One of us has accompanied Jenna on every daylong school field trip,
    every Girl Scout trip, and virtually every trip away from home. As a
    parent, the courage and determination with which Jenna manages her
    diabetes inspires me. But what Jenna really wants (and those with a
    pre-teen child will know what I mean) is freedom--freedom from fear,
    freedom from restrictions--freedom that you and I take for granted,
    freedom that I so desperately want to give her as she grows and
    matures.
        Despite all of these efforts, the long-term outlook for anyone with
    diabetes remains uncertain, at best. Diabetes has very serious long-
    term health consequences. It is the leading cause of kidney failure,
    new adult blindness and amputation. It is the second most common
    chronic illness affecting children and it affects millions of
    minorities and elderly Americans. The disease costs our economy $105
    billion per year, and its financial impact is so severe that one out of
    four Medicare dollars and one out of ten health care dollars overall
    are spent on individuals with the disease. It is also a major burden on
    the military's own health system, not to mention the thousands of
    family members of individuals in the military who have the disease.
    Diabetes and the Department of Defense
        My family's story is not unique. Millions of other families have
    had similar experiences.
        But, there is a role that each of you can play to help make a
    difference in improving Jenna's life and the lives of the 16 million
    Americans who suffer from diabetes.
        The military and everyone who suffers from diabetes can all benefit
    if a technological device utilizing a biosensor can be perfected that
    would be able to noninvasively monitor the physiological status of an
    individual.
        For military personnel, such a device could help detect and treat
    situations involving sickness and injury. In these situations, a
    biosensor could monitor metabolic products to determine health status,
    detect toxic exposure to biological and chemical hazards, accurately
    determine and deliver antidotes or drug treatments that may be required
    by sick or injured personnel, and deliver nutritional supplements. Such
    a device would improve military performance and better monitor military
    personnel in the field.
        The military's development of a such a biosensor would also yield
    tremendous civilian uses; JDF is most interested in its applications to
    individuals with diabetes where our goal is to closely monitor glucose
    levels in patients to maintain health and avoid long-term complications
    of the disease. This technology could be utilized in a way to
    accurately, constantly, and noninvasively monitor blood glucose levels
    and even to help determine the level of insulin that should be
    administered in an individual.
        We can expect that the outcome of this practice in individuals with
    diabetes would be an immediate and significant increase in quality of
    life and wellness. It would also provide a significant reduction in the
    complications of diabetes and associated medical costs.
        Mr. Chairman, JDF requests that the Subcommittee appropriate $5
    million to the United States Army Medical Research and Materiel Command
    for research into biosensor technology for the development of non-
    invasive screening devices that have dual use applications for both the
    military and civilian sectors.
        Thank you very much for considering this request. I would be
    pleased to answer any of your questions.

        Senator Stevens. Thank you very much. I appreciate your
    testimony.
        The next witness is Martin Foil, Chairman, International
    Brain Injury Association.
    STATEMENT OF MARTIN B. FOIL, JR., CHAIRMAN,
                INTERNATIONAL BRAIN INJURY ASSOCIATION
        Mr. Foil. Good morning, Mr. Chairman and Senator Inouye. My
    son who is here with me just gave up a very lucrative job as a
    computer programmer to help take care of his younger brother
    and to help people with brain injury. His mom and I are real
    proud of him.
        Thank you for letting me be here today. As you know, I am
    here as the father of Philip, a young man with a severe brain
    injury, to request your support for a $3.5 million plus-up for
    the Defense and Veterans Head Injury Program (DVHIP), which
    would provide a total of $10.5 million for fiscal year 2001. It
    is not really a plus-up if we get the money from DOD research
    and development (R&D), it is really level funding.
        I am the past Chairman of the Brain Injury Association
    (BIA) and now serve as voluntary Chairman for the Institute for
    Brain Injury (IBIA). My real job is head of a yarn
    manufacturing facility in Mount Pleasant, North Carolina. I
    receive no compensation for these other programs. Rather I
    contribute money of my own simply because, gentlemen, I care. I
    care for the 6\1/2\ million people, like my son, living with
    the effects of brain injury.
        It is the leading cause of death and disability of young
    Americans: two million each year, 90,000 of which leads to
    long-term disability. Males 14 to 24 have the highest
    incidence. It is a collaborative project among DOD, the
    Veterans Administration (VA), the BIA, and IBIA, which not only
    serves active duty but veterans. It provides information and
    resources to retirees, civilians and families. It truly is an
    exemplary case of dual-use funding. It does pay dividends.
        We boast a 67 percent rate of return to active duty for our
    military people who are hurt. Actually, by doing that, we
    improve the efficiency and the reach of the medical services,
    and DOD receives significant savings in retirement and medical
    expenses. It is an important contribution to our combat
    readiness.
        It has three major components: clinical treatment, clinical
    research and clinical training. For instance, we do a combat
    training and sports program which seeks to identify the impact
    of a brain injury on performance and to develop treatments to
    minimize effects. We have active programs in West Point, Camp
    Pendleton, and Fort Bragg, where we have 2,500 paratroopers
    participating.
        These collaborators are using a ground-breaking combination
    of modern computer technology--for instance, Palm Pilots--as
    cognitive prosthetics; virtual reality approaches for assessing
    one's return to active duty. This model stands to revolutionize
    rehabilitation in the military, allowing clinicians to reach
    patients easily in remote locales, providing treatment
    interventions around the clock whenever and wherever they are
    needed.
        Already it has had tangible results, allowing a brain
    injured Vietnam veteran, who has not been able to speak for 35
    years, to communicate with his family via E-mail, to go
    shopping and to go to school via the Internet. So he is once
    again active and is a contributing member of society. My
    written testimony highlights the stories of two active duty
    personnel who sustained moderate to severe injuries, both of
    whom had been referred to medical retirement if it had not been
    for our intervention. Consequently, they are both back to
    active duty today.
        In conclusion, it is a major national problem. It affects
    all of our men and women in the service. As we face new
    security challenges, declining retention rates, competition,
    and a robust economy for people, DOD's investment in personnel
    is all the more valuable. It is critical that we give every
    veteran the opportunity, and military personnel, the
    opportunity to remain on active duty, even after experiencing
    an injury. With proper medical care and rehabilitation, they
    can.
        It strengthens our military readiness by helping service
    members get appropriate care and the ability to return to duty.
    So I respectfully request your support for this $3.5 million of
    appropriations for a total of $10.5 million. And I thank you.
    It is a pleasure to be here. And may I say in closing, you all
    have got a really difficult job. I appreciate that, and I
    appreciate what you do.
        [The statement follows:]
                   Prepared Statement of Martin B. Foil, Jr.
                               executive summary
        Established in 1992, the Defense and Veterans Head Injury Program
    (DVHIP) is an integrated disease management system representing a
    unique collaboration among the Department of Defense, Department of
    Veterans Affairs, the Brain Injury Association and the International
    Brain Injury Association.
        Brain injury is the leading cause of death and disability in young
    Americans. Each year 2 million brain injuries occur, and there are now
    5.3 million Americans living with long term severe disability as a
    result of brain injury. Each year, over 7,000 military personnel are
    admitted to military and veterans hospitals because of brain injury.
    This number does not include personnel who experienced mild brain
    injury, concussions, or those receiving emergency room treatment and
    early release. The cost to the military is conservatively estimated at
    $30 million annually in military retirement payments alone.
        The underlying goal of the DVHIP is to ensure that military
    personnel and veterans with brain injury receive the best evaluation,
    treatment and follow-up. At the same time, DVHIP collects and compiles
    standardized outcome data, allowing for comparison of the relative
    efficacy and cost of various brain injury treatments and rehabilitation
    strategies. These clinical findings assist DVHIP in defining optimal
    treatment methods for individuals with brain injury.
        The DVHIP is not a research project that could be funded by some
    other entity. It is a means of providing state of the art care to
    active duty military personnel to get them back to work as soon as
    possible. Military retirees and veterans are also treated by the
    program with the similar goal of enhancing each individuals recovery so
    they can return to their lives and continue to be productive citizens.
        In one study, the DVHIP boasts a 90 percent return to work rate and
    67 percent return to active duty rate, of service personnel with
    moderate to severe injuries.
        The work of the DVHIP is a significant contribution to the health
    and readiness of the United States military and veteran populations.
    The three major components of the program are clinical treatment,
    clinical research, and clinical training. The work of the DVHIP has
    resulted in better care for military personnel and has optimized their
    chances of returning to active duty, thus saving the Department of
    Defense significant medical and retirement costs.
        As the United States military faces new national security
    challenges, sagging retention rates, competition for new recruits with
    a robust economy in the private sector, DOD's investment in its
    personnel becomes all the more valuable. It is critical that military
    personnel be given every opportunity to remain in active duty, even
    after experiencing injury.
        An additional $3.5 million is sought over the $7 million included
    in the Department of Defense's budget, for a total of $10.5 million in
    fiscal year 2001.
        Dear Chairman Stevens and Members of the Senate Appropriations
    Subcommittee on Defense: My name is Martin B. Foil, Jr. and I am the
    father of Philip Foil, a young man with a severe brain injury. I am
    past Chairman of the national Brain Injury Association (BIA),\1\ and I
    currently serve as voluntary Chairman of the International Brain Injury
    Association (IBIA) \2\ and as a member of the Board of Directors of the
    John Jane Brain Injury Center at Martha Jefferson Hospital in
    Charlottesville, Virginia. Professionally, I am the Chief Executive
    Officer and Chairman of Tuscarora Yarns in Mt. Pleasant, North
    Carolina.
    ---------------------------------------------------------------------------
        \1\ BIA is a national, non-profit organization dedicated to
    creating a better future through prevention, education, research and
    advocacy. BIA serves persons with brain injury, their families and
    caregivers in all 50 states and the territories.
        \2\ IBIA is a non-profit organization dedicated to the support and
    development of medical and clinical professionals and others who work
    to improve opportunities and successes for persons with brain injury.
    IBIA is the only international association representing and convening
    brain injury professionals and specialists throughout the world.
    ---------------------------------------------------------------------------
        I appreciate the opportunity to provide testimony regarding the
    Defense and Veterans Head Injury Program (DVHIP), a collaborative
    effort among the Departments of Defense (DOD) and Veterans Affairs
    (DVA), BIA and IBIA. The DVHIP is a disease management system based on
    a ``learn as we treat'' principle, that integrates clinical care and
    clinical follow-up, with applied research, prevention, education and
    family support information. Before the DVHIP, there had been no overall
    systemic program for providing brain injury specific care and
    rehabilitation within DOD or DVA. Because of the DVHIP, our service men
    and women are now receiving brain injury care and rehabilitation second
    to none in the nation.
        DVHIP is a prime example of a dual use project that contributes
    significantly to U.S. military readiness. It not only treats over 7,000
    active duty military personnel who sustain brain injuries each year and
    helps them return to duty (see attached two stories of returning to
    duty), but the DVHIP serves as an important resource to veterans and
    the civilian population as well.
        On behalf of the DVHIP, I respectfully request that $3.5 million be
    added to DOD Health Affairs for Operation and Maintenance, for brain
    injury treatment and services of the DVHIP. As this would be in
    addition to the $7 million provided in DOD's budget, DVHIP funding
    would total $10.5 million for fiscal year 2001.
        The following abbreviated explanation of the program focuses on the
    prevalence of brain injury in the United States and in the U.S.
    military, the treatment of military personnel by the DVHIP, and the
    assistance provided by IBIA and BIA.
    The Incidence and Prevalence of Brain Injury
        Traumatic brain injury (TBI) is the leading cause of death and
    disability among young Americans in the United States. Young men ages
    14 through 24 have the highest rates of injury. However, it is often
    known as the ``silent epidemic''--traumatic brain injury can strike
    anyone at any time. TBI is defined as an insult to the brain caused by
    an external force that may produce a diminished or altered state of
    consciousness and which often results in an impairment of cognitive
    abilities or physical functioning. TBI can also result in the
    disturbance of behavioral or emotional functioning.
        Nationwide, there are 2 million brain injuries per year, with an
    estimated societal cost of over $48 billion per year, including direct
    care and loss of productivity. There are now 5.3 million Americans
    living with long term disability as a result of brain injury and some
    6.5 million individuals with some form of residual effects of such
    injury.
        In the U.S. military, there are over 7,000 peacetime TBI admissions
    to DOD and DVA hospitals each year. In addition to the costs of acute
    and long-term care, a conservatively estimated $30 million in obligated
    medical retirement payments is added each year in the military alone.
    DVHIP Clinical Treatment, Research and Training
        In addition to supporting and providing treatment, rehabilitation
    and case management at each of the 7 primary DVHIP TBI centers,\3\ the
    DVHIP includes a regional network of additional secondary veterans
    hospitals capable of providing TBI rehabilitation, and linked to the
    primary lead centers for training, referrals and consultation. This is
    coordinated by a dedicated central DVA TBI coordinator and includes an
    active TBI case manager training program.
    ---------------------------------------------------------------------------
        \3\ Walter Reed Army Medical Center, Washington, DC; James A. Haley
    Veterans Hospital, Tampa, FL; Naval Medical Center San Diego, San
    Diego, CA; Minneapolis Veterans Affairs Medical Center, Minneapolis,
    MN; Veterans Affairs Palo Alto Health Care System, Palo Alto, CA;
    Hunter McGuire Veterans Affairs Medical Center, Richmond, VA; Wilford
    Hall Medical Center, Lackland Air Force Base, TX.
    ---------------------------------------------------------------------------
        An important goal of the DVHIP is to address basic questions
    relating to military TBI, including acute care and the combat casualty
    care process as well as the effects of mild TBI on combat performance.
    The DVHIP continues to work on:
      --Basic combat casualty care protocols that can ensure treatments for
            brain injury are available in the field;
      --A combat training and sports TBI program which seeks to identify
            the impact of mild TBI on military performance and develop
            treatments to minimize its effects. Active programs are
            currently ongoing at Fort Bragg, North Carolina; West Point
            U.S. Military Academy, New York; and Camp Pendleton,
            California. The Fort Bragg program involves pre-injury baseline
            testing of about 2,500 paratroopers and more extensive post-
            injury evaluation of about 400 persons. Over 2,000 baseline
            evaluations have been completed to date.
      --A multidisciplinary evaluation and workplace follow-up study for
            service members with symptomatic mild traumatic brain injury at
            San Diego Naval Medical Center.
      --A DVHIP central referral case manager for health care providers,
            including a toll-free referral number for caregivers in DOD and
            DVA facilities.
      --A TBI treatment and referral algorithm designed to assist primary
            caregivers in the management and referral of their patients
            with TBI. This now has been implemented at DVHIP sites and is
            being disseminated throughout the DVA medical system.
      --In close collaboration with CHAMPUS/TRICARE, TRICARE demonstration
            projects DVHIP provides specialized treatment reimbursement and
            rehabilitation of military beneficiaries at the four DVHIP lead
            veterans sites. It is hoped that this agreement will serve as a
            model for future interagency collaboration in other medical
            specialty areas.
      --DVHIP maintains DOD/DVA peacetime and combat traumatic brain injury
            patient registries at each of the primary and secondary
            centers, assisted by BIA Family Helpline personnel and state
            associations. While the DVHIP registry presently includes
            mostly participants from DVHIP centers, one goal of the program
            is to expand it to the entire military and veterans medical
            systems.
        Clinical rehabilitation research treatment trials utilizing a
    randomized, controlled design are currently being conducted by the
    DVHIP, including:
      --A prospective randomized controlled study of home treatment versus
            an intensive, 8-week institutional cognitive rehabilitation
            program involving 120 service members with moderate to severely
            brain injuries at Walter Reed Army Medical Center. Analysis of
            results has now been completed (and widely disseminated),
            showing a 90 percent return to work rate and 67 percent back to
            active duty.
      --A second multicenter randomized controlled study is comparing in-
            hospital cognitive therapy to in hospital functional
            rehabilitation for individuals with more severe TBI at the
            DVHIP lead veterans' centers. The primary outcome measures are
            return to work and level of independence at one year post
            injury.
      --A third randomized trial now starting at Wilford Hall Air Force
            Medical Center will target military personnel with acute mild
            TBI. It will compare a program of counseling and rest on
            convalescent leave plus graded return to work, versus
            counseling and graded return to work alone. Primary outcome
            measure will be post-concussion symptoms and work supervisor
            ratings.
      --DVHIP has developed a protocol for a Phase III follow-up of Vietnam
            War Head Injured veterans,\4\ many of whom have returned to
            meaningful and often very productive lives. This study provides
            a unique opportunity to study TBI and the aging process.
    ---------------------------------------------------------------------------
        \4\ Of the 58,000 U.S. combat fatalities in the Vietnam war,
    approximately 23,000 or 40 percent were due to head and neck wounds.
    Overall, about 19 percent of battle casualties and 14 percent of
    survivors sustained a head injury during that war.
    ---------------------------------------------------------------------------
      --Based on exciting findings by the DVHIP, it has developed three
            neuroprotective trials for service men and women with both
            severe and mild TBI. Including combat training injury in
            Marines at Camp Pendleton, these studies will utilize safe and
            inexpensive compounds--pyruvate and niacinamide--to protect
            energy metabolism in the injured brain.
    IBIA Collaboration with DVHIP
        Unlike research projects funded by the National Institutes of
    Health, DVHIP research is treatment oriented, showing immediate results
    in the real world. IBIA, through the John Jane Brain Injury Center at
    Martha Jefferson Hospital in Charlottesville, Virginia assists in the
    three major components of the DVHIP: clinical treatment, clinical
    research and clinical training:
      --IBIA/DVHIP supports research and treatment to address
            neurobehavioral problems that affect return to work and fitness
            for duty rates.
      --The IBIA is sponsoring the development of universal guidelines for
            the treatment of mild traumatic brain injury, penetrating head
            injury, and pediatric brain injury, along with practice
            guidelines development for neurobehavioral problems and bowel
            and bladder dysfunction following brain injury. These projects
            raise the standards of care worldwide.
      --The John Jane Brain Injury Center is moving brain injury
            rehabilitation into the twenty-first century, using a
            groundbreaking combination of modern computer technologies,
            virtual reality approaches for assessing military personnel's
            ability to return to work and other uses. This model stands to
            revolutionize rehabilitation in military and civilian settings,
            allowing clinicians to reach patients easily in remote locales,
            providing treatment interventions around the clock, wherever
            they are needed.
      --IBIA/DVHIP conducts collaborative outcomes research utilizing
            functional Magnetic Resonance Imaging (fMRI) to identify brain
            lesion location and create diagnostic criteria for mild and
            moderate brain injuries which are significant problems in the
            military; this research is valuable to maintaining readiness by
            discerning who is capable of returning to active duty.
      --IBIA/DVHIP conducts studies on executive dysfunction and decision
            making in persons with mild TBI (mild TBI is the single most
            important reason for failure to return to active duty, work or
            school); this study complements efforts to improve military
            readiness.
      --Active duty military personnel have benefited from an intensive 15-
            session treatment intervention for mild traumatic brain injury.
            This program, which focuses on life skill training and
            cognitive prosthetics, has drastically shortened disability
            times for the participants.
      --Already this nascent research is paying off with tangible results,
            allowing a brain injured Vietnam veteran in Charlottesville,
            Virginia, a man who has not been able to produce articulate
            speech for 35 years, to communicate with his family via email
            and to learn to shop and go to school via internet. He is once
            again a productive citizen.
    BIA Services--Information and Resources, Prevention and Education
        The Brain Injury Association serves an important role in the
    program by providing information and resources to any and all active
    duty military personnel, retirees, veterans and family member seeking
    assistance for brain injury treatment, placement, rehabilitation, and
    general information.
        In particular, BIA does the following:
      --Maintains a nationwide 1-800 help line, staffed by trained
            specialists;
      --Established the American Academy for the Certification of Brain
            Injury Specialists (AACBIS) and develops and disseminates
            materials used to train staff working in brain injury programs
            at DVHIP sites. Materials include the AACBIS Clinical Examiner
            Manual, AACBIS Brochure and Training Manual Level I. Initial
            work on Level II standards and curriculum began in 1999.
      --Produced and distributed a revised version of the DVHIP Case
            Manager's Manual, and reprinted the DVHIP Information Brochure;
            Road to Rehabilitation; ``Causes, Consequences and Challenges
            of Brain Injury'' Brochure and an Information and Resource
            Manual.
      --The Information and Resources Department of BIA acts as a
            clearinghouse of community service information and resources
            for military personnel, veterans and civilians and responds to
            tens of thousands of inquiries for assistance through its free
            Family Help Line. Through BIA's state affiliates, some 50,000
            calls for assistance are answered each year, and hundreds of
            thousands of informational brochures, pamphlets, books, videos,
            and other material are distributed.
      --BIA/DVHIP educational brochures feature background information on
            brain injury, the DVHIP, and the lead and network DVHIP sites.
            They are available at any one of the military or Department of
            Veterans Affairs Medical Centers, and are also provided to
            referral sources in both military and civilian sectors in an
            effort to increase awareness of the DVHIP and to increase
            accessions to the research protocol.
      --BIA publishes a bimonthly newsletter, TBI Challenge! with a
            circulation of over 30,000, and a full color quarterly magazine
            for professionals, Brain Injury Source with a circulation of
            over 20,000. Each issue of the Source features a regular column
            entitled ``Military Zone'' which is written by staff members
            from DVHIP sites. The Fall 1999 issue of the Source was
            dedicated solely to the DVHIP.
      --BIA's Brain Injury Resource CenterTM (BIRC), provides
            easy access to a multi-media computer library through a touch-
            screen monitor and program that allows users to learn about
            brain injury at a personalized pace. The BIRC is available in
            over 60 locations across the country, including 18 DOD and VA
            hospitals.\5\
    ---------------------------------------------------------------------------
        \5\ Central Arkansas Veterans Health Care Network, North Little
    Rock, AR; Darnall Army Community Hospital, Ft. Hood, TX; Denver
    Veterans Affairs Medical Center, Denver, CO; Hines Veterans Affairs
    Medical Center, Hines, IL; James A. Haley VA Medical Center, Tampa, FL;
    Madigan Army Medical Center, Takoma, WA; Minneapolis VA Medical Center,
    Minneapolis, MN; National Naval Medical Center, Bethesda, MD; Palo Alto
    VA Medical Center, Palo Alto, CA; Portsmouth Naval Medical Center,
    Portsmouth, VA; Richmond VA Medical Center, Richmond, VA; San Diego
    Naval Medical Center, San Diego, CA; San Juan VA Hospital, San Juan,
    Puerto Rico; Seattle Veterans Affairs Medical Center, Seattle, WA;
    Tripler Army Medical Center, Hawaii; Walter Reed Army Medical Center,
    Washington, DC; Wilford Hall Air Force Medical Center, San Antonio, TX;
    Womack Army Medical Center, Fort Bragg, NC; VA Medical Center,
    Albuquerque, NM.
    ---------------------------------------------------------------------------
      --BIA developed DVHIP's website and continues to work on providing
            DVHIP resources and information.
      --BIA/DVHIP continues its Violence and Brain Injury Project (VBIP),
            which is based on the premise that brain injury is a
            significant risk factor for violent behavior. VBIP addresses
            various aspects of violent behavior, including causes,
            prevention and education.
      --The VBIP is responsible for integrating prevention education
            curricula into DOD and civilian schools and military
            communities. The HeadSmart Schools Program is
            currently being used in over 120 schools nationwide including
            26 military dependent schools, affecting the education of over
            100,000 students. In addition, there are HeadSmart
            Military Communities in 7 military facilities.\6\
    ---------------------------------------------------------------------------
        \6\ Fort Bragg, NC; Fort Knox, KY; Fort Campbell, TN; Fort Bliss,
    TX; Fort Sam Houston, TX; West Point, NY; Wright Patterson Airforce
    Base, OH.
    ---------------------------------------------------------------------------
    Conclusion
        The work of the DVHIP is a significant contribution to the health
    and readiness of the United States military and veteran populations.
    The three major components of the program are clinical treatment,
    clinical research, and clinical training. The work of the DVHIP has
    resulted in better care for military personnel and has optimized their
    chances of returning to active duty, thus saving the Department of
    Defense significant medical and retirement costs.
        As the United States military faces new national security
    challenges, sagging retention rates, competition for new recruits with
    a robust economy in the private sector, DOD's investment in its
    personnel becomes all the more valuable. It is therefore critical that
    military personnel be given every opportunity to remain in active duty,
    even after experiencing injury.
        DVHIP is in a unique position to combine the treatment of military
    personnel and veterans with the program's education, information and
    support services. This synergy allows DOD and VA, in partnership with
    BIA and IBIA, to help prevent and treat this ``silent epidemic'' and
    for the DVHIP program to lead the nation in providing state of the art
    care to all active duty military personnel and veterans with brain
    injury.
        We respectfully request funding of $10.5 million for fiscal year
    2001 to continue this important program.
                                   attachment
    L.C., AD USAF E5
        This 26-year old woman was involved in a motor vehicle accident
    when her car ran off the road in August of 1996. She was transferred to
    a local university hospital, was unconscious for approximately 24 hours
    and was monitored in the Intensive Care Unit on a respirator. Upon
    awakening she was taken off the respirator and appeared ``drowsy and
    confused.'' She would become easily agitated and required close
    observation. Her speech was slurred and difficult to understand. She
    slowly became oriented to person and place by the 10th day after her
    injury when she was transferred to the WRAMC Defense and Veterans Head
    Injury Program (DVHIP). An MRI of her brain revealed multiple punctate
    lesions in the right and left frontal white matter, the right and left
    thalamus, and bilaterally in the cerebellar hemispheres consistent with
    shear injuries (micro tears of the brain matter) from the accident.
        While at DVHIP this patient was evaluated and found to have
    difficulties in the areas of memory, low mood, organization and
    planning (executive function), attention, and written and spoken
    language comprehension. After receiving several weeks of
    rehabilitation, she returned to duty and did not fare well. Readmission
    to the DVHIP was undertaken, and the patient was reevaluated and
    additional treatments were prescribed. She again returned to limited
    duty, and over the next 12 months demonstrated gradual improvement in
    her many symptoms and progressed to working at duty full time as an Air
    Force NCO. Approximately one year after her injury, and after
    participating in the DVHIP rehabilitative effort, this individual was
    able to enter officer's basic school (as she had intended prior to her
    accident) and successfully graduated in the middle of her class. She is
    currently a 2LT and performing well at her duty station.
        This individual is an excellent example of a soldier who suffered a
    significant brain injury and might easily have been medically retired
    within the first 3 to 6 months after her injury, particularly after
    failing to succeed initially back at duty. With the support and
    expertise of the DVHIP she was able to successfully return to duty and
    perform in an outstanding manner.
    R.W., AD USA E5
        This 27-year old man was thrown from his car during an auto
    accident while stationed in Germany in March of 1994. He suffered a
    traumatic brain injury and was unconscious and on a respirator in a
    German hospital for the first 10 days after his accident. He also
    suffered a number of other non-life threatening facial and soft tissue
    injuries. He was transferred to the WRAMC DVHIP from Germany
    approximately one month after his accident. He had no recollection of
    his accident of stay in Germany, and little appreciation for his
    difficulties while in the hospital. He was easily agitated and demanded
    release from the hospital, to the point where urgent psychiatric
    consultation was required to manage his aggressive behavior medically.
    On evaluation at the DVHIP, this soldier displayed a number of
    difficulties in the areas of problem solving, error detection,
    completing complex tasks, or maintaining his attention. An MRI of his
    brain revealed contusions of both of his frontal lobes. He continued to
    show a dense amnesia, but began to show he could lay down new memories.
    He was enrolled in the DVHIP eight-week rehabilitation program. Upon
    completion of the program, he was returned to limited duty. With the
    support of the DVHIP staff and his local command he made an excellent
    recovery, completing Ranger School approximately 18 months after his
    injury. Two and a half years after his injury, this soldier displayed
    continued good duty performance as a mechanic for the Army.
        Once again, due to the nature of his injury, the long period of
    unconsciousness and behavioral discontrol, this soldier would have been
    referred for medical retirement without the intervention and ongoing
    support of the DVHIP.

        Senator Stevens. Thank you very much. We appreciate your
    coming. Nice to have you with us.
        Our next witness will be retired Commander Mike Lord,
    testifying for The Military Coalition. Good morning.
    STATEMENT OF MIKE LORD, COMMANDER, JAGC, U.S. NAVY
                (RETIRED), EXECUTIVE DIRECTOR, COMMISSIONED
                OFFICERS ASSOCIATION, U.S. PUBLIC HEALTH
                SERVICE, INC., CO-CHAIR, THE MILITARY
                COALITION HEALTH CARE COMMITTEE
        Commander Lord. Good morning, Mr. Chairman, Senator Inouye.
    It is an honor to have the opportunity to address this
    subcommittee today. And as the Executive Director of the
    Commissioned Officers Association of the U.S. Public Health
    Service and Co-Chair of The Military Coalition's Health Care
    Committee, I am pleased to represent our views.
        I think our written statement adequately represents these
    views, and I would simply want to elaborate a bit today on the
    comments we have already made concerning the health care issues
    surrounding Medicare-eligible beneficiaries. As Mark Olanoff
    mentioned, your comments about funding in fiscal years 2001 and
    2002 the health care benefit for retirees, those comments
    somewhat stole his thunder, I think your comments after Mr.
    Olanoff finished probably stole the rest of the thunder that
    was left for me. But I do have a couple of comments concerning
    our view toward what the solution might be in terms of health
    care for retired Medicare benefits.
        Senator Stevens. You know that when we looked at that we
    found that the Department had not requested the money to pay
    for the contractors providing TRICARE. And when we did get the
    request, it was about 40 percent of the bills that had actually
    been presented at the time.
        Commander Lord. Right.
        Senator Stevens. And now we are looking to try to keep that
    level up for the next year, with $1.5 billion plus, and looking
    at it in terms of the bills from prior years and this year. It
    is almost impossible to figure out how we are going to handle
    that in the next year. And I think that is the toughest problem
    that the Defense Department faces this year is to find a way to
    pay the bills that it has incurred already. And God only knows
    how big they are going to be in the years after this. So we
    have got to get a handle on it, and I would appreciate whatever
    your Coalition can do to help us.
        Commander Lord. We agree with you, Mr. Chairman. And as our
    written comments reflect, we are concerned by the constant
    annual underfunding of the defense health budget, which creates
    the problems that you are trying to face and fix this year.
        With respect to the Medicare-eligible beneficiaries, just
    very quickly, we think there is a three-part approach to the
    fix. One is the initiative by Senator Warner that was
    introduced just this week, S. 2486, with many cosponsors from
    the Senate, providing the BRAC pharmacy benefit to Medicare-
    eligible beneficiaries. We think this is going to solve a lot
    of the problems regarding the retiree, over-65 health care
    problems that we are trying to fix at this point.
        Senator Stevens. Well, it would solve it if he tells me
    where he finds the money.
        Commander Lord. I wish I could, Mr. Chairman.
        Senator Stevens. I wish he could, too.
        Commander Lord. The second issue, TRICARE Senior Prime,
    which is already successfully being demonstrated at six sites,
    works. Beneficiaries are pleased. We are in the demonstration
    phase, and we are at the point now where we need to move beyond
    demonstrations and onto nationwide implementation, perhaps on a
    phased-in basis.
        Finally, the Federal Employees Health Benefits Program
    (FEHBP) is in a demonstration mode at this point, and the data
    still is being collected in that regard. However, we think this
    still has lots of potential, and it is a fix. And we think the
    problems we are experiencing at this point with dismal
    participation have to do largely with lack of education on the
    part of the beneficiaries and the fear of the unknown. And we
    would urge continued effort by DOD to provide greater education
    so that people are willing to participate in what would be a
    very excellent benefit for them. We are pleased that DOD has
    seen fit to expand the demonstration area.
        A couple of comments in closing, Mr. Chairman. We
    appreciate that problems are involved in trying to draft
    comprehensive health care education for over-65 beneficiaries.
    We recognize that enactment of the legislation needed to
    provide retired service members with health care does not come
    without cost. When we explain what is needed and why, including
    up here on the Hill, we regularly receive nods of agreement,
    followed by, ``How are we going to pay for it?'' as you and I
    just exchanged a moment ago. And I know you have unique
    concerns in that regard.
        We believe, however, that it is not just a nice thing to
    do. It is an obligation. It is a debt owed to retirees. And we
    would submit that these retirees, who were responsible for
    safeguarding the freedoms that we Americans experience, deserve
    what was promised to them many years ago. In this case, the
    price of having this service, this comprehensive health care,
    these Americans cannot wait. As I think Mark Olanoff mentioned,
    they are dying at a rate approaching 100 every day. They need
    to have their needs met now.
        Thank you, once again, Mr. Chairman and Senator Inouye. It
    is a pleasure being here before you, and I would be happy to
    answer any questions you might have.
        [The statement follows:]
                      Prepared Statement of CDR Mike Lord
        Mr. Chairman and distinguished members of the committee: On behalf
    of The Military Coalition, we would like to express appreciation to the
    Chairman and distinguished members of the Senate Appropriations
    Committee's Subcommittee on Defense for holding this important hearing.
    This testimony provides the collective views of the following military
    and veterans organizations which represent more than 5 million members
    of the seven uniformed services, officer and enlisted, active, reserve,
    National Guard, veterans and retired plus their families and survivors.
      --Air Force Association
      --Air Force Sergeants Association
      --Army Aviation Association of America
      --Association of Military Surgeons of the United States
      --Association of the United States Army
      --Chief Warrant Officer and Warrant Officer Association, United
            States Coast Guard
      --Commissioned Officers Association of the United States Public
            Health Service, Inc.
      --Enlisted Association of the National Guard of the United States
      --Fleet Reserve Association
      --Gold Star Wives of America, Inc.
      --Jewish War Veterans of the United States of America
      --Marine Corps League
      --Marine Corps Reserve Officers Association
      --Military Chaplains Association of the United States of America
      --Military Order of the Purple Heart
      --National Guard Association of the United States
      --National Military Family Association
      --National Order of Battlefield Commissions
      --Naval Enlisted Reserve Association
      --Naval Reserve Association
      --Navy League of the United States
      --Reserve Officers Association
      --Society of Medical Consultants to the Armed Forces
      --The Retired Enlisted Association
      --The Retired Officers Association
      --United Armed Forces Association
      --United States Army Warrant Officers Association
      --United States Coast Guard Chief Petty Officers Association
      --Veterans of Foreign Wars
      --Veterans' Widows International Network, Inc.
        The Military Coalition does not and has not received any federal
    grants, and does not have nor has had any contracts with the federal
    government.
                                  introduction
        The Military Coalition is very grateful that through this
    Subcommittee's efforts, the last two years have seen significant
    breakthroughs in our mutual efforts to secure health care equity for
    all uniformed services beneficiaries, particularly with respect to the
    Medicare-eligibles who have been increasingly locked out of the
    military health care system. This Subcommittee's efforts to upgrade the
    overall TRICARE program, oversee the implementation of the redesign of
    the pharmacy system, and ensure the implementation of the test of
    enrolling Medicare-eligibles in the Federal Employees Health Benefits
    Program (FEHBP-65) were major highlights of the first session of the
    106th Congress.
        But all of us appreciate that many of these initiatives are only
    the first steps, albeit critical ones, on the road to providing the
    kind of health care coverage uniformed service beneficiaries have
    earned and deserve. Much remains to be done, both to ensure
    demonstration programs already approved are implemented fairly and
    successfully and to take the further steps that will be necessary to
    achieve our mutual goals in this extremely important area.
         restore health care equity for medicare eligible beneficiaries
        Before we turn our attention to our continuing concerns with
    TRICARE, we would first like to thank the Subcommittee for its role in
    enacting legislation in the last two years for two demonstration
    programs aimed at restoring equitable health care benefits for
    Medicare-eligible uniformed services beneficiaries. These two tests--
    TRICARE Senior Prime, and FEHBP-65--will go a long way toward restoring
    the commitment to lifetime health care made to these older individuals
    when they entered the service as young recruits, and reiterated time
    and again as an inducement to serve until retirement.
        Pharmacy Redesign Pilot Program.--In the fiscal year 1999 and
    fiscal year 2000 Defense Authorization Acts, Congress passed
    legislation directing the Defense Department to redesign its pharmacy
    programs. One of the goals of the pharmacy redesign was to expand the
    retail and mail-order pharmacy benefit to all Medicare-eligible
    uniformed services beneficiaries regardless of where they reside. As a
    precursor to the eventual nationwide expansion of this benefit,
    Congress mandated that DOD implement a pilot program at two sites to
    allow Medicare-eligible uniformed services beneficiaries to participate
    in DOD's TRICARE retail and National Mail-Order Pharmacy programs. The
    Coalition has worked closely with DOD in the past year on the pharmacy
    redesign and pilot program, and has had the opportunity to provide
    input into how the pharmacy benefit should be structured, particularly
    for those who are Medicare-eligible. The Coalition applauds DOD's
    efforts in this regard and realizes this has not been an easy task. We
    are, however, disappointed that DOD will fail to seize on the
    opportunity to realize significant savings in its pharmacy redesign.
    Unaccountably, DOD believes it must charge an annual enrollment fee of
    $200 per person ($400 for a family if both are Medicare-eligible) for
    those who enroll in the Pilot Program.
        While the Coalition understands DOD concerns about cost if the
    Pilot Program were expanded nationwide, we believe that in this
    instance, DOD may be ``penny wise, and pound foolish'' since even a
    $200 enrollment fee creates a major disincentive for beneficiaries to
    participate in the program, and significantly increases the likelihood
    that the program will not be successful because:
      --It will deter participation by significant numbers of enlisted
            families and survivors (we know from experience with the
            Survivor Benefit Plan that payments of approximately $50 per
            month deter many junior enlisted retirees from participating);
      --The substantial premium will result in adverse selection, whereby
            only those with substantial medication costs are likely to
            enroll--which will increase the per-person cost to DOD and
            provide misleading data on the cost of expanding the pilot
            worldwide.
      --It makes the prescription drug option, in terms of value received
            for dollars expended, a poor third choice compared to TRICARE
            Senior Prime and FEHBP-65, especially since those who desire to
            take advantage of the prescription benefit will still consider
            it necessary to purchase a Medicare supplemental insurance
            policy.
        Most importantly, the Coalition believes that many Medicare-
    eligible service beneficiaries would be satisfied with the restoration
    of the pharmacy benefit they lost when they lost their eligibility for
    TRICARE. Provision of the pharmacy benefit is the least expensive
    option for DOD, compared to TRICARE Senior Prime or FEHBP, and the more
    beneficiaries who elect that benefit, the less it will cost DOD to
    fulfill the promise of lifetime health care under other options. Under
    this scenario, we question DOD's decision to implement a $200
    enrollment fee which could make the least expensive option to DOD the
    most unattractive to beneficiaries. The Coalition strongly believes
    that if the BRAC pharmacy benefit (which includes both the National
    Mail-Order and TRICARE retail pharmacy programs) were expanded
    nationwide by October 1, 2000, far fewer beneficiaries would
    subsequently seek the more costly FEHBP or TRICARE Senior Prime
    options. Expansion of the BRAC benefit, without an enrollment fee,
    beginning in fiscal year 2001 is certainly feasible since it would only
    require a one-time contract adjustment.
        The Coalition requests that this Subcommittee appropriate the
    additional funds necessary to expand the BRAC pharmacy benefit (which
    includes both the National Mail-Order and TRICARE retail pharmacy
    program) with no deductible or enrollment fee to ALL Medicare-eligible
    uniformed services beneficiaries by October 1, 2000.
        TRICARE Senior Prime.--The Budget Reconciliation Act of 1997
    provided for a demonstration program to test the concept of Medicare
    subvention, now called TRICARE Senior Prime. Under this test, Medicare-
    eligible uniformed services beneficiaries in six demonstration areas
    were given the opportunity to enroll in a health maintenance
    organization (HMO) type plan, similar to TRICARE Prime, with some of
    the cost of their care being reimbursed to DOD by Medicare.
        This test has been successfully implemented in all of the
    demonstration sites and, by all accounts, has been very well received
    by eligible beneficiaries at each site. A recent survey conducted by
    The Retired Officers Association (TROA) indicates that over 90 percent
    of the Senior Prime enrollees are satisfied with the program and 90
    percent reported they would remain in the program through December 2000
    (when current authority for this demonstration expires).
        The Department of Defense has expressed a strong desire to expand
    this program to other sites across the country, but is reluctant to do
    so until they can resolve concerns about the level of effort and
    reimbursement rates from the Health Care Financing Administration
    (HCFA). The Military Coalition supports expansion of this test, and
    would like to take the additional step of making TRICARE Senior Prime a
    permanent program as soon as possible.
        There is strong legislative support in Congress for expansion of
    this program. Last year, Senator Phil Gramm (R-TX) introduced S. 915 to
    make the TRICARE Senior Prime program permanent on a phased basis. S.
    915 would provide authority to expand TRICARE Senior Prime to 10
    additional locations in calendar year 2000 and then to the remaining
    TRICARE Prime catchment areas where feasible after October 1, 2002.
    Senator Gramm's legislation also would authorize non-enrollees to use
    TRICARE Senior Prime services on a fee-for-service basis. And Senator
    McCain's bill--S. 2013 would also accomplish the same objective. The
    Military Coalition believes this would be particularly useful, for the
    Department of Defense as well as beneficiaries, at some of the smaller
    facilities with little or no inpatient capability. At such facilities,
    most specialty and inpatient care would have to be purchased from
    civilian sources, thus making it operationally and financially
    difficult to implement a Medicare HMO program.
        The Military Coalition urges the Subcommittee to work with the
    Senate Armed Services Committee to enact legislation (such as S. 915
    and S. 2013) to expand TRICARE Senior Prime to an additional 10 sites
    by January 1, 2001 and make the program permanent. (At the very
    minimum, the TRICARE Senior Prime at the current sites should be
    extended for at least another year.) The Coalition also urges this
    Subcommittee to support legislation to authorize at least a test to
    allow non-enrollees to use TRICARE Senior Prime services on a fee-for-
    service basis.
        FEHBP-65 Demonstration.--The Military Coalition was pleased with
    the provision passed in the Fiscal Year 1999 Defense Authorization Act
    requiring a test to allow up to 66,000 Medicare-eligible uniformed
    service beneficiaries to enroll in the Federal Employees Health Benefit
    Program (FEHBP-65) at six to ten sites around the country. The
    Coalition appreciates the hard work that DOD did to choose the sites,
    and finish all preparations in time for the open enrollment period last
    November.
        However, the Coalition has been extremely disappointed with the
    dismal enrollment results, which remain low even after DOD extended the
    open enrollment period to 60 days and redoubled its efforts to notify
    and educate eligible beneficiaries in the test sites. The Coalition
    believes the extremely low participation rate--2,550 beneficiaries or
    approximately four percent of the 66,000 enrollees authorized by the
    Fiscal Year 1999 Defense Authorization Act--is attributable to
    beneficiary inertia, aggravated by:
      --Lack of timely delivery of accurate and comprehensive information
            about the FEHBP-65 test to eligible beneficiaries;
      --Fear of venturing into uncharted waters with the worry they would
            have to change plans again when the test authority expires in
            2002;
      --Concerns about pre-existing medical conditions if the test
            terminates and they need to resume their Medigap coverage;
      --A lack of understanding about FEHBP including the potential cost
            savings over their existing Medicare supplementals if they were
            to opt for this alternative;
      --Uncertainty about the benefits provided under the various FEHBP
            plans to beneficiaries who are also enrolled in Medicare Part
            B.
        To illustrate, DOD marketing materials for the FEHBP-65 test failed
    to adequately highlight that copays and deductibles are waived for fee-
    for-service plans for Medicare-eligibles enrolled in Medicare Part B.
    This is a real shortcoming given that virtually all of the potential
    enrollees are enrolled in Medicare Part B.
        As the initial participation has been so low, and thus the
    financial impact of the test has been much less than anticipated, the
    Coalition would like to thank DOD for selecting two additional sites
    with large beneficiary populations of 25,000 in each site for inclusion
    in the test next year. However, the Coalition would also like to
    recommend that the zip codes applicable to the current sites be
    expanded to reach additional potential enrollees.
        Finally, the Coalition strongly recommends that DOD continue to
    increase efforts to communicate and explain fully the benefits
    available under the FEHBP test, including the option to revert to a
    Medigap policy without pre-existing illness restrictions should the
    test be terminated. These efforts should include ensuring that all
    eligible beneficiaries in each site receive notification of this test.
    DOD itself admitted there was a 10 percent error rate in its first
    mail-outs, but to date has made no effort to correct the database.
    Further DOD apparently will make no effort to notify those who will be
    turning 65 during the test period they would be eligible to enroll in
    the FEHBP-65 test. The Coalition would like to pause at this point and
    thank Senator Christopher ``Kit'' Bond (R-MO) for his letter to the
    Assistant Secretary of Defense emphasizing the increased and continued
    need to educate beneficiaries about the FEHBP program.
        To move toward this objective, the Coalition supports S. 2013,
    introduced by Senator John McCain, which would expand and make
    permanent the demonstration program allowing Medicare-eligible
    uniformed services beneficiaries to enroll in FEHBP-65. S. 2013 limits
    the program to 275,000 beneficiaries--a number we believe will
    accommodate worldwide enrollment in FEHBP--and thereby limits the cost
    of this initiative to approximately $600 million per year in current
    dollars, beginning in 2003. The cost in 2002--the first year the
    expanded program could be implemented would be approximately $130
    million less because current law already authorizes 66,000 enrollees.
        The Coalition strongly recommends that this Subcommittee support
    efforts to expand the FEHBP-65 program worldwide as quickly as feasible
    and make it a permanent program.
        Initial expansion of the test this year, guaranteed enrollment
    beyond the test date, and an aggressive educational program are the
    only ways that a fair assessment can be made of the propensity of
    uniformed services beneficiaries to enroll in the program, the
    resultant government cost, and the success or failure of FEHBP as an
    option to honor the lifetime health care commitment.
        Finally, S. 2003, The Keep Our Promises to America's Military
    Retirees Act, introduced by Senator Tim Johnson (D-SD) and S. 2013,
    ``Honoring Health Care Commitments to Servicemembers Past and Present
    Act of 2000'', are landmark proposals because they recognize that those
    who entered the service before June 7, 1956, were promised free health
    care for life and should not be penalized by a subsequent change in
    statute. The strength of this commitment was most eloquently described
    by Judge Roger Vinson when he ruled in the Federal District Court in
    Florida that ``that the plaintiffs certainly have a strong equitable
    argument that the government should abide by its promises. Regrettably,
    the law does not permit me to order the United States to do so. Under
    the Constitutional separation of powers, relief for the plaintiffs must
    come from Congress and not from the Judiciary.''
        With a burgeoning budget surplus, including an additional $40
    billion announced last week, our older uniformed services beneficiaries
    cannot accept lack of funding as a valid reason for Congress' failure
    to meet its obligation to them. In its self-proclaimed ``Year of Health
    Care,'' DOD had a major opportunity to take the lead in keeping
    commitments to servicemembers and start erasing the skepticism and
    distrust that years of broken health care promises have engendered
    among the retired population. Putting these initiatives in the
    President's budget would have made them much easier for Congress to
    enact. But once again, the Administration has chosen to punt its moral
    responsibilities to the Legislative Branch. Please don't compound the
    Administration's inaction by punting these responsibilities to a new
    Congress.
        Defense's civilian leadership has apparently chosen to ignore how
    directly this continuing abrogation affects military readiness. Today's
    active duty members are tomorrow's retirees, and they are well aware of
    how their predecessors are being treated. More and more, the retirees
    who were the Services' best recruiters are reluctant to recommend a
    service career to their children and those of their friends and
    neighbors. This is not only an issue of equity and employer obligation.
    It's a readiness issue as well.
        The Military Coalition urges this Subcommittee to work with the
    Senate leadership to find the necessary funding offsets to enact S.
    2003 or S. 2013.
                            improvements in tricare
        The Coalition is pleased that great strides were made in the Fiscal
    Year 2000 Defense Authorization Act to fix some of the more egregious
    problems with TRICARE, and thanks the Subcommittee for its role in
    appropriating the necessary resources for the following provisions:
      --Permitting the Secretary of Defense to increase TRICARE
            reimbursement levels where necessary to attract quality health
            care providers;
      --Requiring DOD to expedite and improve the claims reimbursement
            process and provide incentives for health care providers to
            participate in Prime networks;
      --Requiring DOD to identify and implement other administrative
            efficiencies such as greater use of the Internet to further
            streamline claims processing, enrollment procedures, etc.
      --Ensuring that DOD promptly implements portability and reciprocity
            for TRICARE Prime enrollees.
        However, the Coalition remains concerned about other problems that
    continue to crop up on a consistent basis.
        Adequate Funding for TRICARE.--The Military Coalition continues to
    hear each year of funding shortfalls in the overall Defense Health
    Program which are passed down to each of the Services' health care
    budgets. However, it appears that fiscal year 2001 is off to a good
    start with DOD proposing an additional $350 million to cover the
    increased pharmaceutical costs; higher than anticipated costs of the
    TRICARE managed care support contracts; and the new custodial care
    benefit addressed by Congress last year.
        The Coalition remains concerned, however, this is not enough to
    address future funding shortfalls that might occur as a result of
    unanticipated medical readiness operations. And even DOD has admitted
    the increase in Defense Health spending may not cover the increase in
    TRICARE managed care support contract costs since DOD has not yet
    identified and paid all of the contractor claims for increased cost.
        Congress, and the Defense Department, must be willing to budget
    adequate resources for the Defense Health Program, not just for medical
    readiness operations, but also for the peacetime health care component.
    The Coalition believes that an adequately funded health care benefit is
    just as important to recruitment and retention of qualified uniformed
    services personnel as are pay and retirement benefits. Further, the
    promise of this health care benefit into retirement must be kept if
    servicemembers are to be convinced that serving 20 or more years in
    uniform is in their best interests.
        The Military Coalition recommends, therefore, that this
    Subcommittee appropriate sufficient funding for the Defense Health
    Program, not just for military medical readiness, but also for DOD
    peacetime health care operations, including the TRICARE program and
    initiatives for Medicare-eligible uniformed service retirees.
        TRICARE Prime Equity Innovations.--The Coalition continues to hear
    from families of servicemembers assigned to remote areas where there is
    no TRICARE Prime option. These families are being unfairly burdened by
    having to pay much higher copayments for care than their counterparts
    assigned to areas where they can enroll in TRICARE Prime if they so
    choose. Although this problem was addressed two years ago in the Fiscal
    Year 1998 Defense Authorization Act, which authorized the Secretary of
    Defense to waive deductibles and copayments for active duty personnel
    assigned to duty locations more than 50 miles from a military hospital,
    this provision did not address health care costs for family members.
        The Coalition was therefore delighted to hear that the Secretary of
    Defense included approximately $80 million to the fiscal year 2001
    Defense Health Budget request to waive all TRICARE Prime copayments and
    to provide TRICARE Prime Remote to family members of active duty
    service members stationed in remote locations away from military
    medical facilities. However, the Coalition believes that additional
    funds must be provided to extend TRICARE Prime Remote to retirees as
    well.
        The Military Coalition strongly supports waiving all copayments for
    active duty family members, retirees and their family members and
    survivors enrolled in PRIME. The Coalition, therefore, urges this
    Subcommittee to provide funding for these long overdue initiatives. The
    Coalition also urges this Subcommittee to appropriate sufficient funds
    to ensure that health care costs for active duty family members, and
    retirees, who reside in areas not served by TRICARE Prime, do not
    exceed the co-payments of family members who participate in TRICARE
    Prime.
        Fix Problems with new TRICARE 3.0 Contract.--The Coalition is
    concerned about several aspects of the new TRICARE 3.0 managed care
    support contract which is due to be implemented this year beginning in
    TRICARE Region 11. For example, the new 3.0 contract incorporates
    enrollment-based capitation funding for military medical treatment
    facilities (otherwise known as alternative financing). And yet Sect.
    744 of the Fiscal Year 1999 Defense Authorization Act required DOD to
    conduct a study on the implications of the alternative financing before
    applying it nationwide. This report was to have been submitted by March
    1, 1999, yet, to the Coalition's knowledge, DOD never initiated the
    required study.
        The Coalition is also concerned that the TRICARE 3.0 contract will
    provide too much latitude for contractors to implement their own
    policies and processes for managing the TRICARE managed care program.
    While the Coalition applauds innovations by the contractors to improve
    the TRICARE program, the Coalition is also aware that there are some
    contractors who have implemented procedures that have only made the
    program more difficult for the beneficiaries. For example, TRICARE
    contractors have interpreted requirements for preauthorization for care
    very differently from Region to Region. In Region 1, the managed care
    contractor, Sierra Military Health Services, requires preauthorization
    for all inpatient care regardless of the beneficiary's enrollment
    status (Prime or Standard) or residence (in or out of the catchment
    area of an MTF). The Coalition is dismayed that pre-authorization is
    even required for TRICARE beneficiaries when they have other health
    insurance that pays first. This blanket requirement for
    preauthorization is creating havoc among beneficiaries in this Region.
    Conversely, in the TRICARE Central Region, the managed care contractor,
    Tri-West, has relaxed its preauthorization requirements. Tri-West
    adopted the more efficient approach of pinpointing certain procedures
    that should be more closely scrutinized for preauthorization and
    eliminated preauthorization requirements for the rest. This is just one
    example of how different contractors can apply ``best industry
    practices'' in dramatically different ways, in effect creating a
    completely different TRICARE Prime program. The Coalition believes that
    the new 3.0 contract further encourages such variances, with the
    potential result being 6 different TRICARE Programs in 12 different
    TRICARE Regions. Such variance would be devastating for the
    beneficiaries.
        The Coalition strongly recommends that the Subcommittee prohibit
    the use of appropriated funds to implement the new TRICARE 3.0 contract
    until DOD completes the Congressionally mandated study on the
    enrollment based capitation funding methodology and until DOD finds a
    way to ensure that ``best industry practices'' can be applied in such a
    manner as to keep the TRICARE program uniform in benefits, practices
    and procedures in the different Regions.
        Fully Implement Portability and Reciprocity.--Although DOD has
    issued a policy memorandum stating that TRICARE Prime enrollees in one
    region will be able to receive services from Prime in another region
    (reciprocity) and will be able to transfer their enrollment when they
    move (portability), this policy still has yet to be fully implemented
    in all existing TRICARE regions. Enrollees are still experiencing a
    disruption in enrollment when they move between regions and are still
    not able to receive services from another TRICARE Region. The lack of
    reciprocity is presenting particular difficulties for TRICARE
    beneficiaries living in ``border'' areas where two TRICARE regions
    intersect. In some of the more rural areas, the closest provider or
    pharmacy may actually be located in another TRICARE region, and yet due
    to the lack of reciprocity, these beneficiaries cannot use these
    providers or pharmacies. This situation must be rectified immediately.
    TRICARE must become a seamless system to truly serve a beneficiary
    population that is the most mobile in the country.
        The Coalition urges immediate implementation of portability and
    reciprocity to minimize the disruption in TRICARE Prime services for
    beneficiaries.
        Uneven Benefit under TRICARE Prime.--Sometimes TRICARE Prime
    enrollees, particularly those enrolled in the Exceptional Family Member
    program, or those with complicated health care problems, moving from
    one TRICARE region to another find that care authorized or covered in
    one Region is not authorized or covered in the new Region. Often
    specific specialty care is promised in the new Region, and then upon
    arrival, the family is told to disenroll the beneficiary from Prime in
    order to continue with that care. Although this may affect only a small
    number of beneficiaries, these are the very beneficiaries who direly
    need continuity of care and cannot afford the higher costs under
    TRICARE Standard.
        The Coalition strongly recommends that care for these exceptional
    cases be effectively managed in an integrated manner across all TRICARE
    regions. Beneficiaries requiring specific specialty care should not be
    shunted into Standard simply because the managed care contractor is not
    able to provide that particular specialty within the Prime network.
        TMC is particularly grateful to this Subcommittee for including in
    last year's Defense Appropriations Act a definition of Custodial Care
    that meets industry standards. While the requirement has not been fully
    implemented across all TRICARE Regions, it is slowly being put into
    place. Without this Subcommittee's intervention, DOD would have
    certainly continued implementing its ``unique'' definition of medically
    necessary care for those beneficiaries considered custodial patients.
    The result would have meant either cost shifting to Medicaid, or a loss
    of medically necessary care for the most vulnerable of the DOD
    beneficiary population or both.
        The Coalition further implores this Subcommittee to again include
    in the Appropriations Act the provision protecting the medically
    necessary care for custodial patients.
        Access standards for TRICARE Prime.--The Coalition continues to
    document numerous instances in most TRICARE Regions where access
    standards for time and for distance have not been met. Interestingly
    enough, these reports now seem to be focused on military hospitals not
    meeting access standards rather than managed care support contractors.
    While the Coalition applauds the progress made by the civilian
    contractors in addressing this problem, this is only half of the story.
    Military hospitals must also be held accountable to the very same
    access standards that must be adhered to by the civilian contractors.
        The Coalition strongly recommends that this Subcommittee hold
    military hospitals accountable to the same access standards that are
    now being met, apparently successfully, by managed care contractors,
    particularly if DOD is to be allowed to continue to bring as much
    health care as possible back into military treatment facilities.
        The Coalition also wants to address one more issue concerning
    access to care under TRICARE Prime. In areas where specialty care is
    not available, Prime enrollees have been forced to travel great
    distances from their MTFs to receive this care. Such travel places an
    undue burden on beneficiaries who travel at their own expense.
        The Coalition strongly recommends this Subcommittee appropriate
    additional funds for TRICARE to cover the expenses of Prime enrollees
    who have to travel more than 100 miles to get specialty care.
        115 percent Billing Limit Under TRICARE Standard.--In 1995, DOD
    unilaterally reinterpreted the 115 percent billing limit in cases of
    third party insurance so as to substantially reduce TRICARE's
    reimbursement to beneficiaries. While providers may charge any amount,
    TRICARE only recognizes amounts up to 115 percent of the TRICARE
    ``allowable charge'' for a given procedure. Under DOD's previous
    interpretation, any third party insurer would pay first, then TRICARE
    (formerly CHAMPUS) would pay any balance up to 75 percent of the
    allowable charge (80 percent for active duty dependents).
        Since the reinterpretation, TRICARE will not pay anything at all if
    the third party insurer pays an amount equal to or higher than the 115
    percent billing limit.
        DOD's shift in policy unfairly penalizes beneficiaries with other
    health insurance plans, by making them pay out of pocket what TRICARE
    previously covered. In other words, they reduce TRICARE's costs, but
    may forfeit their entire TRICARE benefit because of private sector
    employment or some other factor that provides them private health
    insurance. In practice, despite statutory intent, these individuals
    have no TRICARE benefit.
        The Military Coalition urges the Subcommittee to support
    elimination of the 115 percent billing limit when TRICARE Standard is
    second payer to other health insurance.
        Requirements for Non Availability Statements under TRICARE
    Standard.--The Military Coalition continues to believe that all
    requirements for a Non Availability Statement (NAS) should be
    eliminated for those beneficiaries choosing to participate in TRICARE
    Standard. By choosing to remain in Standard, beneficiaries are
    voluntarily accepting higher copayments and deductibles in return for
    having the freedom to choose their own providers. The Coalition
    appreciates that the intent of NAS system, when CHAMPUS was an evolving
    program, was to maximize the use of military treatment facilities.
    However, when TRICARE was created, it offered beneficiaries a choice in
    how to exercise their health care benefit. DOD should allow
    beneficiaries this choice, and not insist that Standard beneficiaries
    jump through hoops to exercise this choice, particularly since most
    care in military hospitals and clinics is being given on a first
    priority basis to Prime enrollees anyway. More importantly, this
    capricious policy frequently denies TRICARE Standard beneficiaries one
    of the most important principles of top quality health care--continuity
    of care.
        The Coalition strongly recommends that all requirements for Non
    Availability Statements be removed from the TRICARE Standard option.
        Catastrophic Cap under Standard.--The TRICARE Standard (CHAMPUS)
    catastrophic cap on out of pockets is still $7,500 for retirees. This
    is much higher than other civilian fee-for-service plans which
    traditionally set limits between $2,000 if preferred providers are seen
    and $3,750 if non-preferred providers are used. The current
    catastrophic cap of $7,500 imposes an extraordinary financial burden on
    beneficiaries in TRICARE Standard and severely disadvantages them
    compared to active duty families and those enrolled in TRICARE Prime.
        The Coalition strongly recommends that as a matter of equity, this
    cap be reduced to a maximum of $3,000.
                                   conclusion
        The Military Coalition would like to reiterate its profound
    gratitude for all of the hard work this Subcommittee has done in the
    last two years to provide the resources necessary to promote health
    care equity for all uniformed services beneficiaries, particularly
    those who are Medicare-eligibles. The Subcommittee's efforts to
    authorize the implementation of the TRICARE Senior Prime and the FEHBP-
    65 tests are important steps toward honoring the lifetime health care
    commitment. However it is now time to take further steps to fully
    restore this promise by expanding the BRAC Pharmacy benefit nationwide
    by October 1, 2000; expanding TRICARE Senior Prime to 10 additional
    sites by January 2001 and nationwide in 2002; and expanding the FEHBP
    program to two additional sites starting this November, and then
    nationwide by January 2002.
        The Coalition also recommends that special consideration be given
    to individuals who entered the service before June 7, 1956 as proposed
    in S. 2003 and S. 2013. As George Washington said in a March 18, 1783,
    letter to Continental Congress pleading that those who put their lives
    at risk for the betterment of all their countrymen should not have
    their sacrifices be met by the empty promises of an ungrateful nation
    ``For if, besides the simple payment of their Wages, a further
    compensation is not due to the sufferings and sacrifices of the
    Officers, then I have been mistaken indeed. If the whole Army have not
    merited whatever a grateful people can bestow, then have I been
    beguiled by prejudice, and built opinion on the basis of error. If this
    Country should not in the event perform every thing which has been
    requested in the late memorial to Congress, then will my belief become
    vain, and the hope that has been excited void of foundation. . . . But
    I am under no such apprehension, a Country rescued by their Arms from
    impending ruin, will never leave unpaid the debt of gratitude.''
        Much work also remains to be done with the TRICARE program.
    Immediate efforts must be undertaken, both by Congress, and by DOD to:
    ensure adequate funding for TRICARE to attract and retain quality
    health care providers; implement Congressionally mandated fixes to the
    claims processing system in a timely manner; reduce or eliminate
    preauthorization and NAS requirements; reduce the TRICARE Standard
    catastrophic cap to $3,000; waive Prime copayments and implement Prime
    Remote for all enrollees; and fix the new TRICARE 3.0 managed care
    contract to ensure TRICARE delivers a uniform health care program
    across the different regions.

        Senator Stevens. To your last comment, I just returned from
    my 50th anniversary at law school. I want you to know that my
    generation is dying every day without regard to the health care
    problems. Let us not mix the two up.
        Thank you.
        Questions, Senator Inouye.
        Senator Inouye. No, Mr. Chairman.
        Senator Stevens. Thank you very much. I should say our
    generation.
        Our next witness is Ronald Violi, of the Children's
    Hospital of Pittsburgh, along with Dr. Sven Bursell, of the
    Joslin Diabetes Center.
    STATEMENT OF RONALD L. VIOLI, CHILDREN'S HOSPITAL OF
                PITTSBURGH
    ACCOMPANIED BY SVEN BURSELL, M.D., JOSLIN DIABETES CENTER

        Mr. Violi. Mr. Chairman, Senators, thanks for the
    opportunity to be here today. I am here today to talk about a
    cure for juvenile diabetes.
        Last year, you provided both Joslin and Children's the
    opportunity to establish the Joint Diabetes Project, which
    allows each of us to contribute our unique strengths for
    treating and researching diabetes. Our principal investigator,
    Dr. Massimo Trucco, who is here with us today, has found a link
    behind common childhood viruses and juvenile diabetes. We
    believe this virus triggers the onset of juvenile diabetes in
    children who are genetically at risk for developing this
    disease. This research, which is being conducted in
    collaboration with the Army and specialists at Walter Reed
    Hospital, will ultimately help to develop a diabetes vaccine.
        In addition, as part of our first year 2000 proposal, we
    are collaborating with scientists at Carnegie Mellon University
    and with experts in Germany to access and develop the expertise
    in using advanced technology for gene and antibody screening.
    Ultimately, these studies will allow us to screen larger
    populations of children more cost effectively so we can better
    identify children at risk for developing diabetes.
        Once these children have been identified, they can be
    followed more closely and vaccinated against this disease. Last
    year, the Diabetes Research Working Group identified both
    immune therapy and eyelet cell transplantation as offering the
    greatest potential benefit for the cure and treatment of
    diabetes.
        With our request for an additional $7 million in funding
    for fiscal year 2001, we plan to focus our research on three
    core objectives that will encompass these protocols. First, we
    intend to recruit scientists with expertise in improving the
    transplantation of insulin-producing cells to eliminate the
    need for anti-rejection medication. Second, we will transfer
    some of our successful protocols into human clinical trials.
    And, finally, using in vitro techniques, we will take stem
    cells from the pancreas or bone marrow of the diabetic patient,
    manipulate them in the lab, and return them to the patient with
    the intent of generating new insulin-producing cells.
        We fully recognize that funding for these efforts cannot
    come from only one source. Next week we will be formally
    announcing the fact that Dr. Trucco has recently been awarded a
    5-year, $10 million grant from the Juvenile Diabetes Foundation
    for a complementary study.
        We look forward to continuing our work with our colleagues
    from Joslin and concentrating our collective efforts on finding
    a cure for this disease. However, a substantial Federal
    commitment to diabetes research remains critical to our
    success. And we hope that you will consider our request. We
    appreciate your support. And to all members of the
    subcommittee, thank you so very much.
        Senator Stevens. Dr. Bursell.
        Dr. Bursell. Yes, Mr. Chairman, Senator Inouye, thank you
    for the opportunity to present our project today. The Joslin
    Diabetes Center Project focuses on providing eye health care to
    all diabetic patients within the DOD health care system,
    including dependents of DOD personnel. Unfortunately, we know
    that only about half of our diabetic patients receive
    appropriate eye care, despite the fact that a program of eye
    care with annual assessment of the retina produces significant
    personal savings, reductions of risks of other diabetes-related
    complications, as well as a saving of available health care
    dollars.
        As you will recall, the Joslin Vision Network (JVN) is a
    telemedicine platform that facilitates remote acquisition of
    retinal images taken without the need of pupil dilation and
    centralized resources at diabetes-related centers of
    excellence, providing retinal assessments, treatment and
    education plans. Furthermore, we have shown that this program
    provides diagnoses that are equivalent in accuracy to the
    current clinical gold standard for retinal assessment.
        At the end of the current year of funding, we will have
    deployed JVN image acquisition sites in Hawaii, at the Tripler
    Army Medical Center and at the Honolulu VA, in the New England
    area, in Alaska, at Elmendorf Air Force Base, and at the Walter
    Reed Army Medical Center, in Maryland. Additionally, the
    development efforts resulting from the current funding will
    result in an application that is totally compliant with
    existing DOD medical information infrastructure. This will
    allow us to realize an application for diabetic eye care that
    is cost sensitive and resource efficient.
        Further, the application architecture will provide the
    platform for a seamless integration into the Internet
    environment to support a comprehensive interactive diabetes
    care program. This diabetes health care application within the
    current jurisdiction will be available to any patient within
    the DOD health care system, and will provide early detection
    technology and superior eye care capability.
        For the fiscal year 2001, we are requesting level funding
    of $7 million. These funds will allow us to continue to provide
    these services and to refine the application with the
    development of interactive, Internet-based modules focusing on
    collaborative, comprehensive diabetes management systems that
    also incorporate the JVN eye health care and diabetes health
    care and self-management and education module. It is
    anticipated that these refinements will broaden the scope and
    availability of diabetes detection, care and prevention within
    the DOD health care environment.
        Additionally, we anticipate an accelerated deployment over
    the next year of new sites, including new remote sites in the
    Alaska area. And on the academic side, we currently have two
    papers that have been accepted in peer-review journals and two
    papers that are currently under review, one of them was
    actually spearheaded by the research group at the Tripler Army
    Medical Center.
        Conversations with program officials within the DOD applied
    research and defense health programs have indicated that 2 more
    years of operational application of this technology will be
    required before DOD adopts the JVN application as a standard
    component within the defense health care protocol. Finally, of
    the $7 million requested, 49 percent, or $3.4 million, would be
    allocated to DOD and VA participation, and costs associated
    with program implementation. We respectfully request
    continuation of funding at the level of $7 million for the
    Joslin Diabetes Center Project and to fully fund the $14
    million for the combined project.
        Thank you, Mr. Chairman and Senator Inouye, for your
    continued support of this very exciting project that represents
    a ground-breaking paradigm for providing diabetes health care
    to all diabetic patients. Thank you, Senators.
        [The statement follows:]
                       Prepared Statement of Ronald Violi
    Introduction
        Mr. Chairman and members of the Committee, I would like to thank
    you for the opportunity to appear before you. I am Ronald Violi,
    Chairman and Chief Executive Officer of Children's Hospital of
    Pittsburgh. Joining me today to present an update on the Joint Diabetes
    Project is Dr. Sven Bursell of the Joslin Diabetes Center. We are here
    to provide information on our work with the Departments of Defense and
    Veteran's Affairs to address the growing health concerns and emotional,
    financial and physical costs related to diabetes. In the United States,
    there are 10.3 million people diagnosed with diabetes, and a new case
    is diagnosed every 40 seconds. It is estimated that there are 16
    million Americans who have diabetes. Many of those affected are the
    families and children of current and former members of the armed
    services.
        The establishment of the Joint Diabetes Project has allowed each of
    our institutions to contribute its unique strengths and extraordinary
    scientific and patient care talents to this partnership. Last year, you
    provided us with the opportunity to combine our resources to offer the
    most advanced detection, treatment, prevention and basic and applied
    research approaches in the world to manage diabetes and its resulting
    complications. Our proposal for second year funding will allow us to
    continue to provide the most balanced approach available to address
    Type 1 and Type 2 diabetes (or juvenile and adult onset diabetes,
    respectively).
    Children's Hospital of Pittsburgh Plan for Fiscal Year 2001
        Although we have just submitted our proposal for current year
    funding, we anticipate being able to move forward with our aggressive
    juvenile diabetes vaccine research program. In fiscal year 2001,
    Children's Hospital of Pittsburgh (CHP) will continue to focus upon the
    autoimmune response involved with Insulin-Dependent Diabetes Mellitus
    (IDDM). The collaboration between CHP and the University of Pittsburgh
    Medical Center and its research resources will facilitate the study of
    diabetes from a variety of juvenile and adult perspectives, making
    possible the development of preventive and transplantation protocols
    for intervention. Last year, both of these approaches (immunotherapy
    and islet transplantation) were designated by the congressionally
    established Diabetes Research Working Group to offer the greatest
    potential benefit.
        Under the direction of our principal investigator, Dr. Massimo
    Trucco, Head of the Division of Immunogenetics of the Department of
    Pediatrics and Director of a new diabetes center sponsored by the
    Juvenile Diabetes Foundation International (JDFI); and through our work
    with the Army's Telemedicine and Advanced Technology Research Center
    (TATRC), groundbreaking research will continue to be studied regarding
    the link between Coxsackievirus B or CVB, a common childhood virus,
    which we believe may trigger the onset of juvenile diabetes in children
    who are genetically predisposed. As a component of our fiscal year 2000
    funding, we have proposed to continue our work with Army medical
    personnel at Fort Detrick and with specialists in Endocrinology at
    Walter Reed Army Medical Center. This important research is aimed at
    developing a vaccine, which will prevent genetically at-risk children
    from developing diabetes.
        This work involves extensive collaboration between scientists at
    CHP and experts in flourochromes and robotic devices at the National
    Science Foundation's Science and Technology Center located at Carnegie
    Mellon University in Pittsburgh, along with experts in microarray
    technology at the University of Tuebingen in Germany. This combined
    expertise will allow for the screening of an exceptionally high number
    of parameters, such as genetic and immunologic diabetes risk markers,
    in a very limited amount of time (less than 30 minutes) which could
    then serve a larger population at a very reduced cost.
        This use of existing advanced technology and rapidly developing new
    technology will allow scientists to improve the ability to predict
    those individuals who are susceptible to the disease and to allow them
    to design safe protocols of intervention for those at high-risk for
    developing the disease.
    Fiscal Year 2001 Program Overview
        For fiscal year 2001, we have defined the following goals and
    related activities that will expand upon the initial juvenile diabetes
    research program funded by Congress through the Department of Defense
    in fiscal year 2000:
      --Recruit new scientists with expertise in establishing and testing
            new tolerogenic approaches aimed at eliminating the need for
            immune suppression regimens to prevent pancreatic islet graft
            rejection.
      --Transfer some of the proposed successful protocols of therapy from
            the animal model to human clinical trials.
      --Exploit the characteristics of pluripotent cells still present in
            the pancreas and bone marrow of the adult patient to generate
            new, non-autoimmune-prone, insulin-secreting pancreatic beta-
            cells useful to replace the lost ones without any rejection
            problems.
    Fiscal Year 2001 CHP/Diabetes Institute of Pittsburgh Funding Request--
            $7,000,000
        The CHP/Diabetes Institute of Pittsburgh has been established
    through the creation of a successful public-private partnership. Our
    ability to secure support for this project from the federal government
    has helped to provide the crucial leverage that recently resulted in a
    diabetes research grant from a private donor. This is in addition to
    the $6 million in seed money that has been provided by CHP and UPMC to
    create the Institute. We continue to seek funding from the National
    Institutes of Health and although it has not yet been publicly
    announced, Dr. Trucco has recently learned that the national Juvenile
    Diabetes Foundation has awarded him a 5-year, $10 million grant focused
    on making the cells in the islet of the pancreas more resistant to
    rejection once transplanted into the patient to cure diabetes. This
    grant will enhance the current research that has been undertaken with
    the Department of Defense by providing funding for another diabetes
    research program with a complementary focus within the Institute. This
    public-private partnership has been developed to create a world-class,
    state-of-the-art research center that will have a tremendous impact at
    both the regional and national levels.
    CHP/Diabetes Institute of Pittsburgh Expenses
        The proposed budget will consider expenditures associated with the
    isolation, genetic modification, expansion and transplantation of
    animal and human pancreatic islet cells.
        Renovation of additional laboratory space to house a state-of-the-
    art endocrine cell isolation core facility and expansion of the animal
    facilities will use part of the financial support. The remainder of the
    support will be used to recruit appropriate personnel and to purchase
    required equipment and reagents necessary to reach the proposed goals.
    Fifteen percent (15 percent) will be used for the Department's
    administration fee.
        Total CHP/Diabetes Project Costs--$7,000,000.
    Joslin Diabetes Center Plan for Fiscal Year 2001
        The Joslin diabetes detection, care and treatment project, which
    includes the Joslin Vision Network (JVN) telemedicine initiative and
    the Diabetes Outpatient Intensive Treatment Program (DOIT), is a
    coordinated effort in the diagnosis, management, and treatment of
    diabetes and diabetic retinopathy. Joslin Diabetes Center, the
    Department of Defense and the Department of Veterans' Affairs have
    joined in a cooperative effort to deploy and evaluate this disease
    management healthcare model.
        Following an implementation planning workshop involving all
    identified participants, systems have been deployed at DOD sites in
    Hawaii and VA sites in Hawaii and sites in the New England VISN1
    region. Training at Joslin Diabetes Center in Boston, instruction
    manuals for image acquisition and image review and manuals of operation
    for the JVN/DOD/VA clinical studies were authored and disseminated to
    project participants.
        Patient recruitment into the initial clinical trials was initiated
    following Investigational Review Board approval from the various
    participating sites. It is anticipated that patient recruitment for
    these clinical studies will be completed by June 2000 at which point
    the data collected will be analyzed by the identified participants of
    the Data Analysis Committee with respect to the primary and secondary
    outcomes detailed in the project Manual of Operations.
        Additionally, the JVN image validation study is currently
    undergoing peer review for publication in Ophthalmology. The results
    from this study demonstrated the equivalence between the JVN undilated
    digital video retinal images and the current ``gold standard'' Early
    Treatment Diabetic Retinopathy Study dilated 7 standard field 35 mm
    retinal photography with respect to diagnosis of clinical level of
    diabetic retinopathy and appropriate referral to specialty
    ophthalmology services.
        The results from the image validation study and preliminary results
    from the proposed clinical studies have been presented at the annual
    American Telemedicine Association, Association for Research in Vision
    and Ophthalmology, American Diabetes Association and American Academy
    of Optometry annual meetings.
        The prototype JVN system with electronic medical record templates
    designed specifically for the proposed clinical studies were
    successfully deployed at Tripler Army Medical Center (TAMC), Honolulu
    VA, VISN1 (Brockton VA and Jamaica Plain VA) and at the Joslin Diabetes
    Center. Images are being transmitted daily from all remote sites to the
    Reading Center at Joslin. TAMC has imaged and transferred over the
    Internet to the Reading Center at Joslin more than 220 patients
    initially as part of their certification process and more recently as
    part of the randomized clinical trial. The VISN1 sites have also imaged
    and transferred over 400 patients to Joslin as part of the same
    process.
        As part of the DOIT program proposed for this project, the 2 VISN1
    sites have randomized 42 patients into the DOIT intervention arm of
    program, the experimental study cohort, and 35 into the Edu Post
    program, the control cohort consisting of patients receiving only the
    current standard of care. In Hawaii, TAMC has enrolled and randomized
    49 patients into the DOIT intervention arm and 42 into the control Edu
    Post arm of the study.
        By jointly developing and implementing these research protocols for
    the JVN Diabetes Health Care system, we are in a position to move
    forward with a phased implementation of an evidence based practice
    model that can be scaled for high volume deployment in a resource
    efficient and cost effective manner at any identified site.
    Fiscal Year 2000-Fiscal Year 2001 Objectives
        The clinical research objectives are to complete the present
    randomized clinical trials, to enroll the identified sites where JVN
    will be deployed for this funding year into the clinical trials
    studies, and to provide service and support for these sites.
        The use of the JVN equipment and expansion of screening
    opportunities are a major focus for fiscal year 2000 activities.
    Expansion of this pilot demonstration project will entail the planning
    and implementation of new deployments that currently being considered
    for Walter Reed Army Medical Center (WRAMC), Elmendorf Air Force Base
    in Alaska, and VISN-1 sites in Togus, Maine, and West Haven,
    Connecticut. The actual number of sites deployed to will depend on the
    telecommunications infrastructure at the identified sites and the ease
    and costs associated with interfacing the JVN technology into the
    existing infrastructure.
        An equally important concentration of resources in fiscal year 2000
    is focused on refining the technical core using outcomes based medical
    and case management scenarios to develop a diabetes healthcare model
    that is modular, customizable and that can be seamlessly integrated
    into the existing DOD and VA telemedicine systems. The overarching
    vision for the DOD/VA/JVN project is a web-based comprehensive diabetes
    health care system that can be interactively used by both patients and
    providers, that incorporates diagnosis specific education and training
    modules for patients and providers and that incorporates software
    applications that allow outcome measures to be statistically assessed
    and individual treatment programs to be interactively adjusted based on
    these outcome measures. The JVN Eye Health care system exists as a
    component of a comprehensive diabetes management system that relies on
    leveraging the current WRAMC Cardiology Outcomes Project (CADRE) and
    incorporating other clinical disciplines such as endocrinology,
    vascular surgery and internal medicine.
        In order to make the above vision a reality we will expend
    considerable effort in migrating the JVN demonstration technology
    platform into an application that is totally compliant with existing
    DOD medical informatics infrastructures and the existing VISTA
    infrastructure of the VA system. This will encompass the integration of
    hardware and software in close collaboration with available resources
    from the VA VISTA program and the DOD DINPACS program to ensure DICOM
    and HL7 compliancy that will allow a highly scaleable transparent
    integration of the JVN Diabetes Eye Health Care system into the
    existing health informatics infrastructures of the DOD and VA systems.
    The proposed development effort for Y2000 will result in an application
    that is cost sensitive and resource efficient with respect to support
    and maintenance of the JVN component for an accelerated deployment in
    the future and will support an Internet based application that will
    provide Diabetes Outpatient Intensive Training in a virtual
    environment.
        For the fiscal year 2001 project phase, we have established the
    following tasks, targets, and activities:
      --Deployment of a viable, sustainable, and refined operating JVN
            Diabetes Eye Health Care model which is currently being
            developed for this cooperative telemedicine project.
      --Develop a modularized medical outcomes based telemedicine diabetes
            intensive treatment program in collaboration with the DOD and
            VA with outcome measures incorporated into software based on
            clinical results and research experiences of the Y2000 efforts.
      --Develop curriculum based patient and provider educational modules.
      --Plan and develop a web-based comprehensive Diabetes Management
            System.
      --Technical core activities will include:
        --Medical record migration into the Internet environment using
                existing transaction engines with the goal of ultimately
                providing a universal medical record platform
        --Secure telecommunication infrastructure
          --LInternet based Virtual Private Network
        --Interactive healthcare portals
          --LInternet transaction engines for interactive diabetes
                management that empowers both the provider and the patient
                into appropriate evidence based clinical management on the
                provider side and improved self management on the patient
                side that will potentially result in significant risk
                reductions of diabetic complications and an improved
                quality of life for all diabetic patients
      --The three Hawaii DOD/VA sites will complete validation studies and
            expand their JVN/intensive treatment demonstration projects
            with respect to integration of the program into the virtual
            environment leveraging the Internet based application efforts.
            This will require further randomized clinical trials to
            validate the value of the interactive Internet based diabetes
            care intervention program.
      --Elmendorf Air Force Base will become operational as an image
            acquisition, image review, and intensive treatment site. Plans
            are underway for the deployment and field testing of mobile JVN
            image acquisition units which will serve as a prototype for
            widespread outreach of the Joslin Diabetes Eye and Health Care
            system in a truly remote area.
      --WRAMC will become fully operational with respect to the JVN image
            acquisition for retinopathy assessment with plans for JVN
            reading center certification.
      --VISN-1 will develop the infrastructure for a fully certified and
            operational JVN Reading Center to support the Brockton, West
            Roxbury, Togus and West Haven image acquisition/image review
            sites.
      --Boston area VA sites will complete validation studies and expand
            their patient population for further randomized clinical trials
            using the interactive Internet based diabetes care intervention
            program.
      --Refine the concept of the Web-based Comprehensive Diabetes
            Management system that will integrate applications involving
            not only the JVN but also applications based on endocrinology,
            cardiology, vascular surgery and internal medicine.
      --Fiscal year 2001 Joslin Diabetes Center level funding request--
            $7,000,000
        --DOD/VA Program Participation Costs--$2,560,000
        --DOD Management and Administration Fees--$840,000
        --Joslin Diabetes Center Costs--$3,600,000
        Level funding for the overall project in fiscal year 2001 provides
    for the continued implementation and development of the existing
    demonstration project sites; completion of important validation and
    certification studies; integration of refined, sustainable technology;
    and the planning and development of an Internet based interactive
    comprehensive diabetes management system that incorporates the JVN/DOIT
    interactive diabetes health care system.
        With the continued successful implementation of this groundbreaking
    Joslin/DOD/VA telemedicine project representing a unique partnership
    between a government agency and an academic institution, we envision a
    phased integration into regular clinical and budget operations
    beginning in fiscal year 2002.
        Following the sustained implementation of this validation phase of
    the project, Joslin will provide scientific, technical, clinical and
    management assistance in the ongoing planning development, monitoring
    and evaluation of the JVN diabetes health care system as an integral
    component of the envisioned Comprehensive Diabetes Management System.

    Joslin funding summary

    DOD/VA Program Participation Costs (current)..................$2,560,000
    DOD Management and Administration Fees........................   840,000
    Joslin Diabetes Center Expenses............................... 3,600,000
                        --------------------------------------------------------------
                        ____________________________________________________

          Total, Joslin project cost.............................. 7,000,000
    Joslin Diabetes Center Funding Justification
        The budget that Joslin is submitting for fiscal year 2001 again
    addresses all known expense items and Federal agency participation
    costs. The DOD standard management and administration fee has been
    approximately 12 percent for each of the past two years. These fees are
    spread across several agencies within DOD, which is apparently a
    standard practice for extramural contracts. In addition, an across the
    board cut of 1.5 percent, or $80,000, was also levied against fiscal
    year 2000 project funding.
        We have taken those elements into consideration and budgeted
    accordingly. Of the total of $7 million related to the Joslin Diabetes
    Center pilot program, $2,560,000 of this amount would be split among
    DOD and VA for their program costs associated with this project. Of the
    remaining funds, we estimate that $840,000 would be levied by DOD
    against the project. Therefore, the remaining $3,600,000 would be used
    for continued JVN development and purchase of equipment, supplies,
    travel and Joslin personnel to carry out the program objectives
    outlined in this statement.
        I would like to point out that the Departments of Defense and
    Veterans Affairs are gaining expertise and expanding their sites using
    Joslin's technology, that Joslin's direct receipt of Federal funds is
    declining. This is by Joslin's design. In fiscal year 2000, Joslin
    actually will receive $4 million of the $7 million apportioned for this
    project, or approximately 57 percent of the total. In fiscal year 2001,
    of the $7 million we are requesting, Joslin's share declines to
    $3,600,000, or slightly over 50 percent of the total. The balance of
    funds will be used by DOD and VA for program and administrative
    management of this expanding project.
    Summary
        Fiscal year 2001 federal funding for the Joint Diabetes Project
    will allow this collaborative initiative to improve the diagnosis and
    treatment of diabetes to benefit the dependents of employees and
    enlisted personnel through the concentration of efforts to identify
    advanced treatment protocols and cutting-edge research to ultimately
    identify a cure for the disease.

    Summary--Joint Diabetes Project, Fiscal Year 2001 Funding

    Joslin Diabetes Center..................................     $7,000,000
    (DOD and VA Costs, DOD Administration and Management
        Fees)...............................................     (3,400,000)
    Children's Hospital of Pittsburgh.......................      7,000,000
    (DOD Administration and Management Fees)................       (980,000)
                        --------------------------------------------------------
                        ____________________________________________________
          Total Program.....................................     14,000,000

        Mr. Chairman, we are pleased to be a part of this project with the
    Department of Defense and appreciate the support that your Committee
    provided to us last year, and we would be appreciative of your
    continued support again this year. We would be pleased to answer any
    questions from you or any other Members of the Committee.

        Senator Stevens. Thank you very much. Did you make a
    request to the Health and Human Services Subcommittee this year
    for funding through NIH?
        Dr. Bursell. We have not made a request for funding through
    NIH at this point. What we anticipate doing is using the
    results that we develop from this demonstration program to
    actually move forward with formal NIH funding.
        Senator Stevens. Mr. Violi, have you requested funds
    through the other subcommittee?
        Mr. Violi. Yes, we have.
        Senator Stevens. How much did you request there?
        Mr. Violi. I do not know. Dr. Trucco might be able to
    answer that.
        Dr. Trucco. Out of different grants of $150,000 to
    $200,000, we have a total of five.
        Senator Stevens. What is the total you requested from that
    subcommittee?
        Mr. Violi. From NIH.
        Dr. Trucco. I would say that it totals $1.5 million.
        Ms. Visco. $1.5 million, Senator.
        Senator Stevens. Thank you very much.
        Senator Domenici. Mr. Chairman.
        Senator Stevens. Yes, Senator Domenici.
        Senator Domenici. I wonder if you would do me a favor. When
    you get to the 21st witness, would you insert my statement?
        Senator Stevens. I would be very pleased to do that.
        Do you have any questions at this time?
        Senator Domenici. First, I want to commend you, Mr.
    Chairman, and the distinguished ranking member, Senator Inouye,
    for your hard work on Indian Affairs. I think we all have come
    to realize, in terms of the population of the United States
    that is most vulnerable to diabetes, that it is the Indian
    population.
        That is not to degrade these funding requests, but, we have
    groups of Native Americans, the largest group being the Navajo
    Tribe, where the propensity for diabetes is so high that some
    statisticians would indicate that if we do not turn it around,
    this disease could actually eliminate the Navajo people in a
    period of 30 or 40 years.
        In the 1997 Balanced Budget Act, we established two
    programs with mandatory funding of $30 million a year each for
    diabetes. One program focused on the national diabetes problem,
    and one focused on Indian diabetes. I hope both programs are
    working in the direction of alleviating some of the problems
    and getting some prevention in existing programs.
        I want to commend our witness in particular on the Juvenile
    Diabetes Association. We work with your program in New Mexico
    and elsewhere. You have the most fantastic citizens involved at
    the ground level working with the young people. It makes sense
    to do what we can in every appropriations bill, and to the
    extent that I can, I want you to know that I support diabetes
    efforts.
        Thank you, Mr. Chairman.
        Mr. Violi. Thank you, Senator. I think it is important to
    point out that most folks today are talking about treatment of
    diabetes. And that is certainly important. We at Children's
    Hospital, in Pittsburgh, today are talking about a cure for
    juvenile diabetes. We are very excited about what we are doing
    and where we are going.
        This is a first. It has been a long time coming. Dr. Trucco
    is a world-renown expert in this. We are collaborating with
    people all over the world and throughout the United States. We
    really think we have something here. And we think, at the end
    of the day, it will be the answer.
        Senator Stevens. Thank you very much. We have to move on. I
    want you to know I am disturbed about the amount of the DOD and
    VA administrative costs and management fees. I intend to ask
    the GAO to examine the management fees that are being charged
    by the various departments, as they merely write checks to
    various entities that we have urged them to work with in terms
    of these research programs. The total management fee in your
    request is $4 million out of $14 million.
        We can get cheaper managers than the Department of Defense
    if they do not wake up. We will put it somewhere else. I do
    hope you talk to them about the level of these management
    administrative costs, that it is too high, much too high. And I
    think the GAO should tell us what is a reasonable figure for
    managing money that we allocate to specific projects such as
    yours. We thank you very much.
        Mr. Violi. Thank you, Senator.
        Dr. Bursell. Thank you, sir.
        Senator Stevens. Our next witness is Dr. Genevieve Ames, on
    behalf of the Research Society on Alcoholism.
        Good morning, Doctor.
    STATEMENT OF GENEVIEVE M. AMES, PH.D., ASSOCIATE
                DIRECTOR AND SENIOR RESEARCH SCIENTIST,
                PREVENTION RESEARCH CENTER/PACIFIC
                INSTITUTE FOR RESEARCH AND EVALUATION, AND
                PROGRAM DIRECTOR, NIAAA PRE AND POST
                DOCTORAL TRAINING PROGRAM, PREVENTION
                RESEARCH CENTER AND SCHOOL OF PUBLIC
                HEALTH, AND ADJUNCT PROFESSOR, DIVISION OF
                PUBLIC HEALTH BIOLOGY AND EPIDEMIOLOGY,
                SCHOOL OF PUBLIC HEALTH, UNIVERSITY OF
                CALIFORNIA, BERKELEY
        Dr. Ames. Good morning, Mr. Chairman and members of the
    subcommittee. Thank you for giving us an opportunity to testify
    here today.
        I am a Research Scientist from the Prevention Research
    Center in University of California School of Public Health in
    Berkeley, and I am pleased to talk to you today about funding
    for research on alcoholism and alcohol abuse. I am sorry the
    Senator from New Mexico just left, because I wanted to
    mention--he said 50 percent of Native American and aboriginal
    people are diabetic. On some reservations in the United States,
    50 percent of the people are also alcoholics.
        I would like to make several points today about drinking in
    the military and our request for more funding to go to research
    that will focus specifically on the military. Heavy drinking
    among military men is over 40 percent more prevalent than in
    the civilian sector and, among young men aged 18 to 25, the
    rate of heavy alcohol use is about 1.8 times higher for the
    military than for civilians; and one in four men aged 21 to 25
    engage in heavy drinking.
        The prevalence of heavy drinking is particularly high among
    service men that are not married in the Marine Corps and in the
    Army. And for all personnel in the E-1 through E-3 pay grades,
    it is 26 percent in those grades who are heavy drinkers.
    Alcohol abuse costs the Nation at large approximately $167
    billion annually. About one-tenth of this pays for treatment,
    the rest is the cost of lost productivity, accidents, violence,
    driving while intoxicated (DWI) and premature death due to
    alcohol-related illnesses.
        In the military, it is unknown what the cost of alcoholism
    and alcohol abuse is, but it is likely to be enormous. We do
    know that among personnel in the lowest pay grades, E-1 to E-3,
    about one in five experiences productivity loss due to
    drinking. One in six reports serious consequences of drinking.
    One in 10 reports symptoms of alcohol dependence. And, finally,
    heavy drinkers are more likely to report a higher number of
    days each month with mental health problems and the need for
    evaluation of depression.
        Although heavy alcohol use in the military has declined
    significantly since 1980, the rates have remained relatively
    stable in recent years, and there has been no decline since
    1995. These findings stand in striking contrast to the dramatic
    decline in rates of illicit drug use in the military over the
    same period. There has been a 90-percent decrease in drug use
    between 1980 and 1998, which is very positive.
        The unchanging high levels of heavy drinking and negative
    alcohol-related consequences highlight the critical need for
    more research and programmatic programs. So what research
    advances have been made that are useful for the military? Well,
    we are poised at this time with unprecedented opportunities in
    biomedical and behavioral alcohol research. Genetic research
    will improve our understanding of the interaction between
    heredity and the environment in the development of alcoholism.
        The field of neuroscience is a promising area. We are
    developing more effective drug therapies for alcoholism. And
    this requires an improved understanding of how alcohol changes
    the brain function to create craving, loss of control,
    tolerance, and the alcohol withdrawal syndrome.
        Clinical trials of various treatment approaches are in
    process. For example, Naltrexone, which is a drug that blocks
    the brain's natural opiates, has shown to reduce craving for
    alcohol. And that research is still being carried out.
        Most importantly, scientists are exploring ways to develop
    new programs for primary prevention of problems associated with
    alcohol. And for the military, in my view, and other members of
    the Research Society on Alcoholism, this is an important
    approach. Prevention is important because it intervenes with
    problems before they occur as opposed to after the damage is
    done. When we speak of costly alcohol-related problems, we are
    talking about accidents, injuries, violence, lowered
    productivity, lowered safety, increased illness, and disrupted
    family and community life.
        We are making forward progress in all of these areas and,
    as you know, the National Institute on Alcohol Abuse and
    Alcoholism and the Department of Veterans Affairs is severely
    underfunded. Moreover, few studies focus on prevention and
    treatment approaches that are specific to the needs of the
    military. I myself am doing research on the military. And, to
    my knowledge, I am the only one that I know of at this time in
    all of the National Institute on Alcohol Abuse and Alcoholism
    (NIAAA) that is conducting studies that focus specifically on
    drinking in the military.
        So we are asking that the DOD contribute $10 million--the
    Research Society on Alcoholism is asking that. We urge the
    Department of Defense to allocate this amount out of the next
    fiscal budget to go toward alcohol research. And these funds
    could be administered directly by the Department of Defense, as
    they were last year, alone, or they could be jointly with VA
    and NIAAA. This would allow the military to be a part of the
    advance of opportunities to research into the causes,
    consequences, prevention, and treatment of alcohol abuse and
    alcoholism.
        Thank you.
        [The statement follows:]
                    Prepared Statement of Genevieve M. Ames
        The Research Society on Alcoholism (RSA), is a professional
    research society whose 1,200 members conduct basic, clinical, and
    psychosocial research on alcoholism and alcohol abuse.
        In recent years, our organization has submitted testimony to this
    subcommittee about alcoholism in the military, a serious problem that
    compromises national preparedness and the defense of the nation. We are
    deeply grateful that the Congress recognized this problem by providing
    additional funding for medical research in the Defense health program
    in recent years. We are particularly pleased that alcohol research has
    been specifically mentioned as one area to be funded. Furthermore, we
    are pleased to report that more than one-third of the proposals
    submitted to the Department of Defense (DOD) for the fiscal year 1999
    biomedical research funds were for alcoholism research. You will recall
    that Congress appropriated $19.5 million in fiscal year 1999 to DOD to
    cover research in 15 areas, including alcoholism research. We believe
    that this demonstrates a clear need for more research in this area and
    would like to propose that additional funds be directed towards
    research that will address the problem of alcoholism and alcohol abuse
    in the military.
        Alcoholism is a tragedy that touches all Americans. One in ten
    Americans will suffer from alcoholism or alcohol abuse and their
    drinking will impact on their family, their community, and society as a
    whole. Recent research indicates that alcoholism and alcohol abuse cost
    the nation approximately $167 billion annually. One tenth of this pays
    for treatment; the rest is the cost of lost productivity, accidents,
    violence, and premature death.
        In the military, the costs of alcoholism and alcohol abuse are
    likely to be enormous. Heavy drinking among military men is over 40
    percent more prevalent than in the civilian sector. Among young men
    aged 18 to 25, the rate of heavy alcohol use is about 1.8 times higher
    for the military than for civilians. According to the 1998 Department
    of Defense Survey of Health Related Behaviors Among Military Personnel,
    one in four young military men engages in heavy drinking, defined as
    having five or more drinks at least once a week. The prevalence of
    heavy drinking is particularly high among service men that are not
    married (23.9 percent), those in the Army (17.2 percent) and Marine
    Corps (23.0 percent), and for personnel in the E1-E3 pay grades (25.9
    percent). Further, among personnel in the lowest pay grades (i.e., E1
    to E3), about 1 in 5 experiences productivity loss due to drinking
    (20.7 percent), 1 in 6 reports serious consequences of drinking (15.2
    percent), and 1 in 10 reports symptoms of alcohol dependence (10.2
    percent). Because these negative effects are most prominent among the
    junior enlisted personnel, the absolute numbers of personnel
    experiencing drinking problems are quite large. Finally, heavy drinkers
    are more likely to report a higher number of days each month with
    mental health problems and the need for evaluation of depression.
        Importantly, although heavy alcohol use and associated negative
    effects have declined significantly since 1980 (the first DOD Health
    Survey), rates have been relatively stable over the past decade and
    there was no decline from 1995 to 1998. These findings stand in
    striking contrast to dramatic declines in rates of illicit drug use
    among military personnel over the same period, with a decrease of over
    90.2 percent between 1980 and 1998. The unchanging, high levels of
    heavy drinking and negative alcohol-related consequences highlight the
    critical need for more programmatic effort and resources directly
    targeting alcohol use in the military. Many talented and dedicated
    people in the Department of Defense are working hard to reduce heavy
    drinking in the military, but current prevention and treatment programs
    are simply not good enough. In the 1998 DOD survey, a substantial
    proportion of current heavy alcohol drinkers had a history of alcohol
    treatment since entering the military, indicating that they are at high
    risk for future alcohol-related problems and additional treatment
    episodes.
        Research holds the promise of developing a better understanding of
    the etiology of alcoholism, more effective prevention programs and new
    and better methods for the treatment of alcoholism. Unfortunately,
    alcohol research, which is conducted primarily at the National
    Institute on Alcohol Abuse and Alcoholism (NIAAA) at the National
    Institutes of Health and in the Department of Veterans Affairs (DVA),
    is severely underfunded. Moreover, few studies funded by the NIAAA and
    the VA focus on prevention and treatment approaches that are specific
    to the needs of the military. Little is known about how prevention
    measures should be implemented in the unique social context of military
    work and life. The Research Society on Alcoholism urges the Department
    of Defense to fund research into the causes, consequences, prevention,
    and treatment of alcohol abuse and alcoholism.
        We are poised at a time of unprecedented opportunities in alcohol
    research. Scientists are exploring new ways to prevent alcohol-
    associated accidents and violence, and prevention trials are developing
    methods to address problem use. For the first time scientists have
    identified discrete regions of the human genome that contribute to the
    inheritance of alcoholism. Genetic research will accelerate the
    rational design of drugs to treat alcoholism and improve our
    understanding of the interaction between heredity and environment in
    the development of alcoholism. The field of neuroscience is another
    promising area of alcohol research. The development of more effective
    drug therapies for alcoholism requires an improved understanding of how
    alcohol changes brain function to produce craving, loss of control,
    tolerance, and the alcohol withdrawal syndrome. This knowledge is
    starting to bear fruit. Naltrexone, a drug that blocks the brain's
    natural opiates, reduces craving for alcohol and helps maintain
    abstinence. Ongoing clinical trials will help determine which patients
    benefit most from Naltrexone and how the drug can best be used. Other
    promising treatment agents are currently undergoing evaluation in the
    United States. The military needs to be part of this effort.
        Alcohol abuse and alcoholism are devastating problems of national
    importance. The high rates of heavy drinking and associated problems
    among military personnel demand immediate and increased attention.
    Rates of alcohol use have remained unacceptably high for the last
    decade while most other health indicators in the military have shown
    substantial and clinically significant improvements.
        Alcohol research has now reached a critical juncture, and the
    scientific opportunities are numerous. With the support of this
    subcommittee and the Congress, we believe that we can produce
    significant advances in alcohol research and aid in understanding and
    reducing the problem of alcoholism and alcohol abuse in the military.
        Recommendation: The Research Society on Alcoholism urges that $10
    million be allocated to research on alcohol abuse and alcoholism. These
    funds could be administered by the Department of Defense alone or
    jointly with the VA and NIAAA. This request balances the increased
    morbidity, mortality, lost productivity, accidents, and an overall
    reduction in readiness caused by the high rate of alcohol abuse and
    alcoholism in the military with the abundance of research opportunities
    to more effectively prevent and treat alcohol dependence and alcoholism
    among the men and women serving in our armed forces.

        Senator Stevens. Thank you very much.
        At the request of the chairman of the House Defense
    Appropriations Committee last year, we did initiate a program
    of $7 million annually for alcoholism research. And we will
    work with him again this year. He showed a great initiative in
    that area, and we intend to talk to him again this year to see
    what he wants to do in this area.
        We thank you very much, Doctor.
        Dr. Ames. Thank you.
        Senator Stevens. The next witness is retired Colonel
    Partridge, on behalf of the National Association for Uniformed
    Services.
    STATEMENT OF COL. CHARLES C. PARTRIDGE, U.S. ARMY
                (RETIRED), LEGISLATIVE COUNSEL, NATIONAL
                ASSOCIATION FOR UNIFORMED SERVICES
        Colonel Partridge. Good morning, Chairman Stevens, Senator
    Inouye.
        Senator Stevens. Good morning. Nice to see you again.
        Colonel Partridge. Good to see you again, Mr. Chairman. I
    am going up this weekend to talk to retirees at Fairbanks. I am
    looking forward to getting back up to Alaska and to seeing a
    group of those hardy Alaskans.
        Senator Stevens. You are one of these spring birds that
    comes in after it thaws out, Colonel.
        Colonel Partridge. That is exactly right.
        We were excited when the Chairman of the Joint Chiefs of
    Staff and the Secretary of Defense and other senior officials
    publicly stated that this was the year to fix health care.
    However, when the budget came over this year, it was short. It
    was short, in our estimate, by about $600 million. This means,
    then, that the Congress has to make up that shortage and then
    look for money to make any improvements.
        That is the reason that S. 2003 and similar bills have such
    strong support throughout the country around the military
    community. They would like to see some sort of permanent fix to
    this problem. We believe, in the long term, that setting up an
    accrual accounting system, similar to what is being done to
    military retired pay to Federal retired and Federal civilian
    health care, is the solution. But, for now, we want to ask your
    support for funding of Senator Warner's bill, which was
    introduced last Monday, and which would take care of several
    problems, the most critical of which is the prescription drug
    benefit.
        Senator Stevens. Is not a major problem failure to pay the
    accumulated bills to date, Colonel? Have you seen that list of
    the accumulated bills that have not been paid?
        Colonel Partridge. I have not seen the details, but I know
    that they are talking somewhere between $800 million and over
    $1 billion in unpaid bills that they did not send a request
    over for.
        Senator Stevens. The contractors came in to see us
    yesterday, and it was well over $1 billion in past bills that
    had been presented which had not been paid.
        Colonel Partridge. Yes, sir, I understand that. And the
    shortage I was talking about was over and above that.
        Senator Stevens. I understand that. I am glad you
    understand that. Thank you.
        Colonel Partridge. Yes, that is the problem. Of course, our
    concern is that they are going to pay for those bills at our
    expense. That is our concern.
        The administration has been making major changes to the
    military health system since 1988, and we still have not solved
    the problem. But, as I was saying, the prescription drug
    benefit is going to be a big step. We have a group of retirees
    out in Oregon, a retired Navy chief, organized a bus--they paid
    $40 a head, spent 7 hours on that bus, to go get prescription
    drugs. And we believe this bill by Senator Warner and 23 other
    Senators is going to stop those buses and allow these people to
    order their drugs at the same price that the others do--$8 for
    a 90-day supply. And if it is not there, they can buy it
    downtown with 20 percent co-pay. We think that is a great step
    in the right direction.
        We are also supporting expanding the Federal Employees
    Health Benefit test because there are going to be more base
    closures. When these bases close, the hospitals close; what are
    we going to do then? The TRICARE Senior Prime program and some
    of these other programs are not going to work where there are
    not major military hospitals.
        Senator Stevens. You guys are going to have to tell them
    over at the Department of Defense that that is a cost of
    closing bases. They tell us how much money we are saving by
    closing bases. They never take into account the added cost for
    retirees and even for the individuals still in the service to
    obtain health care outside of those base hospitals. It is
    really bad.
        Colonel Partridge. We agree with you, Mr. Chairman. And we
    have been telling them they have got to put that in the mix,
    the cost of providing care, plus the increased cost of Medicare
    when they close them. They do not like to address that issue
    either.
        We appreciate your holding these hearings each year. We
    appreciate the opportunity to present our views. And we want to
    work with this committee and of course with the Armed Services
    Committee to make sure that this problem is solved and solved
    promptly.
        Thank you, Mr. Chairman.
        [The statement follows:]

                   Prepared Statement of Charles C. Partridge

        Mr. Chairman and distinguished members of the Committee, the
    National Association for Uniformed Services (NAUS) and the Society of
    Military Widows (SMW) would like to express their appreciation to you
    for holding these important hearings. The testimony provided here
    represents the collective views of our members.
        The National Association for Uniformed Services represents all
    seven of the uniformed services and is the only military association
    that represents all ranks, all grades, all components, family members
    and survivors. The Society of Military Widows became affiliated with us
    in 1984. Together our nation-wide membership stands at 160,000 that
    when added to our supporters and friends puts our effective strength at
    over half a million.
        Medical care is one of the top concerns of the military community
    and the top concern of NAUS and SMW. With base and hospital closures
    and the continual downsizing of medical personnel and military
    treatment facilities, the increasing lack of available health care
    continues to be a major concern to active and retired personnel alike.
        We at NAUS want to thank the committee for its long standing
    interest in Military Health Care and we hope that significant
    improvements can be made this year.
                                   background
        The Military Health System has several missions, first and foremost
    is caring for active duty troops and maintaining military medical care
    readiness, readiness training and contingency operations as well as
    providing care for active duty family members; continuing to provide
    promised, lifetime medical care to military retirees, and their family
    members. To carry out these missions, top quality personnel to staff
    military medical units, hospitals and clinics are essential. These
    personnel are attracted to military medicine through the Uniformed
    Services University of the Health Sciences, the U.S. Health Profession
    Scholarship Program and quality graduate medical education programs
    sponsored by the various military medical services. Each is an
    important element of the system and are all linked together.
    Additionally, as we are seeing today with the recruiting shortages in
    all services except for the Marine Corps, keeping faith with the
    retirees by keeping the medical health care promise is vital to our
    strong all volunteer force and to our national defense. In a 1999
    Christian Science Monitor article addressing recruitment problems,
    Major General Evan Gaddis, the commander of the Army's Recruiting
    Command headquartered in Fort Knox made special note of the fact that
    ``military retirees, upset over a steady erosion of benefits like
    health care and pensions, aren't talking up military careers to young
    adults as they might once have.''
        Earlier this year, Defense Secretary Bill Cohen and the Chairman of
    the Joint Chiefs of Staff, General Henry Shelton, testified before the
    Senate Armed Services Full Committee. Secretary Cohen had this to say:
        ``We have made a pledge, whether it's legal or not, it's a moral
    obligation that we will take care of all of those who served, retired
    veterans and their families, and we have not done so. There are big
    bills involved in this. This is no small matter.''
        In response to a question concerning retiree health care from
    Senator Chuck Robb, General Shelton said:
        ``Sir, I think the first thing we need to do is make sure that we
    acknowledge our commitment to the retirees for their years of service
    and for what we basically committed to at the time that they were
    recruited into the armed forces.
        We've got--we've got actual recruiting posters that very vividly
    state that not only would they be taken care [of], but that their
    families would be taken care of. And of course, in their minds they--we
    have broken that commitment. And I think we have.''
        A military medical system is necessary to support not only the
    present active forces but also to meet future requirements. To attract,
    maintain and properly certify highly qualified medical professionals
    requires assuring them that they will have a complete range of patients
    with varied health problems to include older retirees. They can't be
    adequately trained treating only young (average age 23) service members
    and young family members. This means it is imperative to maintain a
    strong, vibrant, capable direct care system.
        The Defense Health System has undergone a significant downsizing in
    the past 10 years and continues to shrink. The number of normal beds
    has decreased by 41 percent (12,000), expanded beds have decreased by
    46 percent (20,000), the number of hospitals has decreased by 35
    percent (58) and the number of medical centers has decreased by 33
    percent (6). Additionally, military medical personnel have decreased by
    13 percent while civilian medical personnel have decreased by 22
    percent. Please contrast these reductions with the 10 percent reduction
    in the eligible serviced population (867,000) during the past 10 years.
    According to the Department of Defense ``demand continues to exceed
    supply, especially among retirees'' all the while, the ``Medicare
    eligible population (is) growing 4 to 5 percent annually''. And the
    various DOD medical departments continue to decrease their uniformed
    officer medical personnel.
                             naus health care plan
        The NAUS plan is founded upon strong, fully-funded and fully-
    staffed military treatment facilities (MTFs). Branching out from the
    MTF foundation, the NAUS plan supports a high quality TRICARE Standard
    (CHAMPUS) benefit for life. Complementing and completing the plan for
    military beneficiaries who do not have access to or for whom the MTF/
    TRICARE program does not meet their needs, NAUS supports the option of
    the Federal Employees Health Benefits Program (FEHBP).
              tricare: full funding for all military beneficiaries
        In order to ensure the viability of TRICARE for all eligible
    beneficiaries to the program, it is necessary that TRICARE funding
    reflect the number of beneficiaries eligible for military health
    benefits, not just the ever-declining number of people able to use the
    military system the previous year. The overall Defense Health Program
    continues to have funding shortfalls, NAUS urges this committee to
    provide adequate funding for military readiness as well as the current
    peacetime component. Our active duty members need assurances that
    funding will enable access to quality health care for their families,
    as well as assuring incentives for these uniformed service members to
    be recruited and retained in the military. Further, the promise of this
    health care benefit must be kept for our military retirees that are
    over and under the age of 65.
        Additional funding will be required to keep providers in TRICARE
    Prime networks as our members are experiencing physicians leaving the
    system. Most TRICARE managed care support contractors have negotiated
    TRICARE Prime reimbursement rates with network providers that are even
    lower than Medicare. The issue however is a combination of low rates
    and physicians not being paid in a timely manner due to claims
    processing. TRICARE is giving physicians two disincentives for not
    signing up in the networks, low payment and slow payment. Members have
    reported that in the more rural areas, and even some urban areas, where
    providers do not depend on a military patient base, health care
    providers have become increasingly unwilling to accept TRICARE Standard
    (CHAMPUS) patients at all. NAUS feels that de-linking the CMAC (CHAMPUS
    maximum allowable charge) from the Medicare Schedule and directing
    higher payments to providers as necessary will improve access to
    quality care for our beneficiaries. The fiscal year 2000 Defense
    Authorization Act gave the Secretary of Defense the authority to go
    over the current CMAC rates to bring providers into TRICARE networks,
    but NAUS has not seen this implemented. When CHAMPUS, now TRICARE
    Standard was enacted in 1966, the standard DOD used was a benefit at
    least equal to FEHBP high option Blue Cross/Blue Shield, without
    imposing a premium. Over the years this benefit has been decimated. It
    is time to fix it.
        Please note that the administrative expenses associated with other
    federal health programs were computed and provided to the National
    Bipartisan Commission on the Future of Medicare by the General
    Accounting Office. GAO reported that the administrative expenses for
    Medicare, FEHBP and Medicaid were each 1 tenth of one percent of the
    total expenditures of the respective programs, whereas the Department
    of Defense's expenses were ``not available''.
        Members of this Committee, if we do not address these health care
    needs the response will be continued reduction in retention and
    recruiting.
        MTF Funding: The Department of Defense has directed that the
    military treatment facilities (MTFs) draw patients back into the
    military system to improve cost-effectiveness and to ensure medical
    readiness. To accomplish this, improved infrastructure and staffing
    additional funds are needed. Walter Reed Army Medical Center (WRAMC),
    the US Army's flagship medical center, is an ideal location to initiate
    a pilot program implementing this initiative. Savings from this effort
    can be significant. Funding for the necessary infrastructure
    improvement and increased staffing are needed and could begin by
    authorizing $20 million for WRAMC for this purpose.
                            tricare fraud and abuse
        According to GAO Report HEHS-99-142, July 30, 1999, ``There is
    general consensus in DOD and the health care industry that fraud and
    abuse could account for 10 to 20 percent of all health care costs.
    Given TRICARE managed care contract expenditures of $5.7 billion
    between 1996 and 1998, DOD could have lost over $1 billion to fraud and
    abuse during this period . . .'' Of the approximately 50 million claims
    processed between 1996-1998, the responsible contractors referred only
    101 potential fraud cases for investigation by DOD. This low level of
    fraud identification has occurred because DOD contracts do not require
    contractors to aggressively identify and prevent fraud and abuse.
        By acting immediately to solve this problem, some $1 billion can be
    made available to improve military health care for fiscal year 2001 and
    beyond.
                   medicare subvention: tricare senior prime
        With the favorable response to TRICARE Senior Prime by military
    retirees in six designated test sites, NAUS is asking for nation wide
    implementation of TRICARE Senior Prime. Senator Phil Gramm (R-TX)
    introduced S. 915 to make the TRICARE Senior Prime program permanent on
    a phased-in basis. The bill would expand Senior Prime to ten additional
    locations with full-service military hospitals by January 1, 2000 and
    then across the remaining TRICARE Prime catchment areas no later than
    October 1, 2002. We are requesting that Congress require DOD to expand
    the Tricare Senior Prime Test nationwide to be effective Jan. 1, 2001.
    The test program terminates on December 31, 2000, we need funding in
    fiscal year 2001 to move this program forward.
        In the meantime, there are other looming difficulties with the
    TRICARE Senior Prime program. The Health Care Financing Administration
    (HCFA) has provided $43 million in interim payments to DOD and DOD will
    be allowed to retain $6 million despite the fact that DOD has already
    paid out $40 million in claims. In our opinion, the reimbursement rates
    and rules between HCFA and DOD should be renegotiated. Also, at the
    present time, DOD hospitals are providing services of $187 more per
    enrollee per month than they are receiving in HCFA reimbursements. With
    over 30,000 enrolled retirees and their family members, this is over
    $5.6 million per month. The simple fact of the matter is that if health
    care is to be provided to military retirees, dollars must be provided
    to MTFs from HCFA and the Defense Health Program. Since care provided
    in MTFs is less expensive than in the civilian sector, this is a good
    investment and is good for the taxpayer.
                      fee-for-service medicare subvention
        We would like to see another Medicare reimbursement option added on
    a fee-for-service basis. Senator Gramm's bill, S. 915, would give DOD
    the option to provide a fee-for-service Medicare option at certain MTFs
    if this would be more cost effective for those facilities. This would
    allow Medicare eligible military beneficiaries to keep their standard
    Medicare benefit, and when using the MTFs ``ON A SPACE AVAILABLE
    BASIS'' to present their Medicare Card to the MTF. The MTF would bill
    Medicare as other providers do, except that it would be on a discounted
    basis to reflect the lower cost of care provided by the MTFs.
        This would save Medicare Trust funds while making more efficient
    use of MTFs and use capacity that otherwise would not be used. This
    also supports our contention that Medicare eligible military medical
    beneficiaries earned the promised lifetime medical care for themselves
    and their eligible family members in MTFs and they paid for Medicare
    Part A coverage through mandatory deductions from their military and
    civilian pay checks. The combined earned and paid for health care
    access is clear justification for this fee-for-service option.
                                  fehbp option
        In order to have a fair and accurate test, we need to provide the
    opportunity for Medicare eligible military retirees to increase
    enrollment in the FEHBP test for the November 2000 open enrollment
    season. As we testified last year before this committee, we know that
    not all military retirees will enroll in this program, but we need to
    give them the option to make that choice in order to determine the
    future of providing care for those that have served in the military.
    NAUS is urgently requesting this subcommittee's support for necessary
    funding to increase the number of demonstration sites, as well as the
    number of enrollees eligible to participate in the program effective
    for the November 2000 open enrollment season. We feel that S. 2087
    gives DOD authority to expand the sites, but does not direct and make
    them accountable to open up additional sites. It is absolutely
    essential that we give these retirees an equitable benefit that is as
    good or as equal to federal retirees.
                                pharmacy issues
        We are requesting extension of the BRAC (Base Realignment and
    Closure) pharmacy benefit to include all Medicare eligible military
    retirees regardless of location. The BRAC pharmacy program provides a
    National Mail Order Pharmacy (NMOP) benefit at a cost of an $8 co-
    payment for a 90 day prescription (30 days for certain controlled
    drugs), as well as a 20 percent co-payment for retail pharmaceuticals
    at TRICARE network pharmacies.
        The April 29, 1999 DOD Pharmacy Benefit Report in section 2
    ``Pharmacy Redesign Approach and Results'' subsection 2.3 estimated the
    cost for a NMOP and retail pharmacy benefit for 1.4 military retirees
    over age 65 at 400 million dollars. We understand DOD has since
    increased that estimate by $100 million.
    s. 2003 and h.r. 3573, keep our promises to america's military retirees
                                      act
        These bills have strong grass roots support because they come
    closer than any other pending legislation before Congress to answering
    the military health care promise to America's military retirees,
    especially her older retirees. Today H.R. 3573 has over 280 cosponsors
    and S. 2003, has 27 cosponsors. Both S. 2003 and H.R. 3573 have been
    pushed to the forefront by a huge wave of grass roots support that
    continues to grow. Mr. Chairman and members of the Committee, we ask
    you to consider the fact that the World War II era military retirees
    are dying at a rate of over 3,300 a month. Continued testing and
    demonstrations will not assist most military retirees. S. 2003/H.R.
    3573 would provide retirees a choice--the Federal Employees Health
    Benefits Program to military retirees, at no cost to those who entered
    the service before June of 1956, and at the same subsidized rate for
    those who entered after. It would also extend the current TRICARE
    program to Medicare eligible retirees and their families. These older
    retirees and their families have no guaranteed DOD health benefit once
    they reach age 65, the only federal employees who lose their health
    care once they become Medicare eligible. As mentioned earlier in this
    testimony, the Defense Health Program is on life support with few signs
    of improvement because of continued under-funding and other factors. We
    urge Congress to solve the health care crisis this year.
    h.r. 3697, ``the retired military pharmacy benefits improvement act of
                                    2000.''
        This bill was introduced on 16 February 2000 and would allow all
    eligible retired members of the Uniformed Services and their family
    members to receive prescription drug benefits presently available only
    to Medicare-eligible retirees living near base closure sites or in a
    TRICARE Senior Prime demonstration area. In effect, it opens the
    National Mail Order Pharmacy Program and the TRICARE pharmacy network
    to all military retirees, regardless of age or location.
                     s. 2087: military health care act 2000
    Key Provisions
      --Demonstration Programs for Medicare Eligible Retirees (TRICARE
            Senior Prime and FEHBP) are extended through 31 December 2005
            and expanded.
      --Military Pharmacy Programs--Expands the National Mail Order
            Pharmacy Program (NMOP) to Medicare eligible beneficiaries with
            a $150 deductible per year. (The approximate cost is $300
            million per year). For the Pharmacy Pilot Program--Direct
            reduced pharmacy enrollment fee, implementation of deductible,
            quarterly/monthly payments. The fee schedule is not contained
            in the legislation.
      --TRICARE Prime--Several major improvements to TRICARE Prime Remote
            and TRICARE Prime for the active duty as well as for improved
            business practices and custodial care.
      --DOD/VA Cooperative Program--For patient safety, directs DOD and VA
            to perform two studies for record and pharmacy tracking between
            the two activities.
      --Accrual Financing of Military Retirement Health Care--Initiate two
            studies to assess the feasibility and desirability of financing
            the military health care program for retirees on an accrual
            basis. ($2 million)
        NAUS appreciates the work from the Senate and House Armed Services
    Committees to address the needs of Active Duty members and their
    dependents. Providing TRICARE Prime Remote and eliminating TRICARE co-
    payments for active duty family members is essential and needed.
    Increasing the funding level for custodial care to 100 million dollars,
    60 million more than the budget request, is greatly appreciated by
    those military families.
        As just mentioned in our discussion of the pharmacy benefit, we
    strongly support expanding the BRAC pharmacy benefit with no
    deductibles or enrollment fees. In addition, the expanded BRAC pharmacy
    benefit should include access to the retail pharmacy networks with the
    20 percent copayment. This is part of the current BRAC pharmacy benefit
    and should be part of the be pharmacy benefit for all beneficiaries.
        We also support multi year extensions of the demonstration programs
    as proposed in S. 2087 so long as more beneficiaries are allowed to
    participate. There is no reason to limit the FEHBP to 8 or 10 areas--
    these boundaries should be removed and the cost controlled by capping
    the number of participants. Nevertheless, the cap should be increased
    beyond 66,000.
        NAUS is continually concerned for the over 65 military retirees
    that are dropped by military health care. The message from our members
    continues to be that they will never see the benefit of a test program
    if they are not here to use it. The result of extending these tests for
    an additional two to three years creates anxiety with our members that
    may not live to see a true benefit being implemented nationwide. The
    pharmacy benefit will meet the needs of those beneficiaries without any
    coverage for their drugs, but this committee must understand that the
    need for acute drugs purchased in the retail pharmacy are needed too.
    The pharmacy redesign project should be no less generous than the BRAC
    benefit.
                             care for the disabled
        The Department of Defense (DOD) has routinely promulgated
    regulations and policies which have the affect of baring the
    permanently disabled from the Military Health System. When challenged
    before either Congress or a Federal Court DOD's actions have been over
    turned, and the department has been expressly ordered to deliver care
    to the disabled.
        Changes in DOD's policy and regulations regarding the disabled were
    ordered by The Defense Authorization Act for fiscal year 2000 and the
    Defense Appropriations Act for fiscal year 2000. However, the
    Department has yet to fully implement these changes, nor has it
    provided the public an opportunity to participate as required by law.
    There is concern, grounded in the Departments' previous treatment of
    the disabled, that meaningful change is unlikely without further
    Congressional oversight, directives and remedial legislation.
        The recently proposed S. 2087 appears to be a good first step,
    inasmuch as it continues Congresses objections to the transition of the
    disabled out of the Military Health System. However, more work is
    necessary. Congress should require DOD to redraft its custodial care
    definition in a manner consistent with other federal health programs
    and related case law. Congress should require DOD to, at a minimum,
    provide military families with the same amount of basic health services
    that are available through the FEHBP. DOD should be prohibited from
    sending Military families to welfare programs by gaming technical
    provisions. Congress must assure that those categories of beneficiaries
    for whom disability is the basis of eligibility in the military health
    system have access to a meaningful benefit.
              uniformed services university of the health sciences
        NAUS thanks this committee for its strong support for providing
    necessary funding for the continued operations of the Uniformed
    Services University of the Health Sciences. Study after study has shown
    that when all factors are considered USUHS is more cost effective than
    the US Health Profession Scholarship Program. We urge you to continue
    your support for this school which is a national resource.
        There is currently an $8.3 million Navy Military Construction
    Project request to construct academic facilities to redress the
    overcrowding of the existing small class room facilities and to meet
    current and projected demands for specialized educational support and
    the associated administrative spaces necessary to conduct accredited
    graduate-level medical education. This Committee's support in adding
    those funds to the MILCON portion of the Defense Health Program's
    budget would be greatly appreciated. The ability of the University to
    maintain its accreditation and unique commitments to the TRISERVICE
    healthcare community will continue to be negatively impacted by
    temporary, inefficient, and costly space fixes which fail to deliver
    students, faculty, and staff unfettered access to the primary assets of
    the University, its people and interactions available on campus.
                medicare part b waiver for military retiree 65+
        Retirees were counseled by military health benefits advisors not to
    enroll in Part ``B'' because they resided near MTFs and would be able
    to access their free health care. These retirees should not be punished
    with late enrollment fees due to the fact that the local MTF has
    closed. NAUS has requested the waiver of the penalty for not enrolling
    in Medicare Part ``B'' for Medicare-eligible military retirees
        NAUS believes that this small investment will enable retirees to
    enroll in health care programs which require Medicare Part B for
    eligibility such as TRICARE Senior Prime and the Fee-for-Service Option
    plans in FEHBP. Currently, we have military retirees that are either
    paying a high penalty for Medicare Part B, or just cannot enroll
    because it is to costly.
                             retiree dental program
        The Retiree Dental plan does not provide coverage of crucial
    benefits, such as bridges and crowns which are needs characteristic of
    our members. Currently, the contract is not subsidized by DOD, which
    would mean that increasing the benefit level now would make the program
    to costly to are aging retirees. Therefore, NAUS has requested funding
    for a subsidy for the DOD Retiree Dental plan's premium to expand the
    benefit schedule to military retirees.
                                   conclusion
        Every one of these problems cited here has a common thread--save
    money by eliminating or reducing care provided. The fewer beneficiaries
    served means the fewer DOD dollars needed to provide health care and
    increases the dollars available for equipment and weapons systems.
    Regardless of the promises made and of all the intentions of this
    Congress, health care for military retirees is not treated as a benefit
    and it certainly is not treated as an entitlement. Health care for
    military retirees, their families and their survivors is merely a line
    item expense in the DOD budget to be squeezed for more pressing needs
    by comptrollers and budget analysts who do not rely on the Defense
    Health Program for their health care.
        A solution recommended by NAUS to partially address this concern is
    to make the funding mechanism for military retiree health care the same
    as it is for other federal retirees--adding it to the entitlement's
    portion of the budget--and to stop making retiree health care compete
    for the same Defense dollars used in weapons programs, research and
    development or operations and maintenance.

        Senator Stevens. Thank you, Colonel. We look forward to
    working with you on this. This is our number one issue this
    year, too. We will work it out with you. Before we are
    finished, we will consult with you to make sure that we do it
    so that you understand what we are doing.
        Do you have any questions, Senator?
        Senator Inouye. No, Mr. Chairman.
        Senator Stevens. Thank you very much.
        Colonel Partridge. Thank you, sir.
        Senator Stevens. We are going to skip witness 16 and go to
    witness 17, Mr. Van Nest, from the American Association of
    Nurse Anesthetists, Federal Government Affairs Office. We will
    get to the other witness here in just a minute. We had a
    request for a Senator to be present when the other witness
    testified.
    STATEMENT OF RONALD VAN NEST, CERTIFIED REGISTERED
                NURSE ANESTHETIST, FEDERAL GOVERNMENT
                AFFAIRS OFFICE, AMERICAN ASSOCIATION OF
                NURSE ANESTHETISTS (AANA)
        Mr. Van Nest. Mr. Chairman, Senator Inouye, thank you for
    the opportunity to testify before this committee today. My name
    is Ronald Van Nest, and I am a Certified Registered Nurse
    Anesthetist (CRNA). I served in the United States Navy for 30
    years. I was the CRNA consultant to the Navy's Surgeon General
    when I was a member of the American Association of Nurse
    Anesthetists Federal Services Committee.
        I am testifying today on behalf of the American Association
    of Nurse Anesthetists, which represents more than 28,000
    CRNA's, including over 600 that served in the armed forces.
    While I would ask that my written remarks be submitted for the
    record, I hope to inform you today about the impending nursing
    shortage facing this country and how this committee may help
    the Department of Defense face that crisis.
        There has been a chronic shortage of CRNA's in the military
    in recent years, which may only be exacerbated by the impending
    critical shortage of nurses nationwide. It has been reported
    that as many as 59 percent of civilian institutions are
    recruiting to fill CRNA positions. This creates a competitive
    hiring market that is difficult for the military to compete in.
    Yet recruitment and retention of CRNA's must remain of utmost
    importance in order to ensure that our Federal services can
    meet their medical mission.
        This committee can and has assisted in this effort. We
    would like to thank the members of this committee for their
    continued support of funding of the incentive special pay and
    the board certification pay for nurse anesthetists. These
    special pays help the military to remain competitive in the job
    market, and assist them in presenting military nurse anesthesia
    as an attractive professional choice.
        We believe that more appropriate utilization of its
    anesthesia providers could benefit the Department of Defense
    even more. In many military missions today, CRNA's are the ones
    who are deployed with combat units or aboard aircraft carriers
    as the sole anesthesia providers, with no anesthesiologists
    present. Currently, in both Kosovo and Macedonia, there is a
    single nurse anesthetist that is providing all of the
    anesthesia care in these locations. Again, no anesthesiologists
    present.
        If such practice models are acceptable for deployed
    situations, there is no reason they should not be accepted in
    urban military treatment facilities. Yet there are some service
    branches that require multiple anesthesia providers to do the
    same job that has been performed safely and effectively for
    over 100 years by CRNA's alone.
        Of all the branches, the Navy is doing a very good job of
    utilizing providers more effectively. In fact, last month, Rear
    Admiral Kathleen Martin, Director of the Navy Nurse Corps,
    testified before this committee. To quote from her testimony:

        Our advanced practice nurses all practice to the fullest
    extent of their competency and practice scope to ensure that
    the right provider delivers care to the right patient based on
    their health requirements. In this manner, we maximize our
    provider assets while allowing them to maintain those critical
    practice competencies needed for wartime roles. We recommend
    that this committee direct all branches of the Department of
    Defense to utilize their anesthesia providers in the most cost-
    effective manner, prohibiting supervision requirements in urban
    facilities that only drive up the cost while doing nothing to
    enhance the quality of care.

        In conclusion, the AANA thanks this committee again for its
    support of military nurse anesthetists through the incentive
    special pay and the board certification pay. AANA believes that
    more appropriate utilization of CRNA's in the military is of
    critical concern, and is an area that could be examined for
    increased cost savings. I thank the committee members for your
    consideration of these issues, and I will be very happy to
    answer any of your questions.
        [The statement follows:]
                     Prepared Statement of Ronald Van Nest
        The American Association of Nurse Anesthetists (AANA) is the
    professional association that represents over 28,000 certified
    registered nurse anesthetists (CRNAs) in the United States, including
    over 600 CRNAs in the military services. The AANA appreciates the
    opportunity to provide testimony regarding CRNAs in the military. We
    would also like to thank this committee for the help it has given us in
    assisting the Department of Defense (DOD) and each of the Services to
    recruit and retain CRNAs.
            background information on nurse anesthetists in the dod
        The practice of anesthesia is a recognized specialty within both
    the nursing and medical professions. Both CRNAs and anesthesiologists
    (MDAs) administer anesthesia for all types of surgical procedures, from
    the simplest to the most complex, either as single providers or in a
    ``care team setting.'' Patient outcomes data has consistently shown
    that there is no significant difference in outcomes between the two
    providers. CRNAs and MDAs are both educated to use the same anesthesia
    processes in the provision of anesthesia and related services.
        Nurse anesthetists have been the principal anesthesia providers in
    combat areas in every war the U.S. has been engaged since World War I.
    Military nurse anesthetists have been honored and decorated by the U.S.
    and foreign governments for outstanding achievements, resulting from
    their dedication and commitment to duty, and competence in managing
    seriously wounded casualties. In World War II, there were 17 nurse
    anesthetists to every one anesthesiologist. In Vietnam, the ratio of
    CRNAs to physician anesthetists was approximately 3:1. Two nurse
    anesthetists were killed in Vietnam and their names have been engraved
    on the Vietnam Memorial Wall. During the Panama strike, only CRNAs were
    sent with the fighting forces. Nurse anesthetists served with honor
    during Desert Shield and Desert Storm. Military CRNAs continue to
    provide critical anesthesia support to humanitarian missions around the
    globe in such places as Somalia, Haiti and Bosnia. Currently a single
    CRNA is providing all the anesthesia care to our servicemen and women
    in Kosovo and Macedonia. No anesthesiologists are assigned to these
    missions.
        nursing shortage predicted: how this committee can help the dod
        In all of the Services, maintaining adequate numbers of active duty
    CRNAs is of utmost concern. For several years, the number of CRNAs
    serving in active duty has consistently fallen short of the number
    authorized by DOD as needed providers. This is further complicated by
    the predicted national nursing shortage that has been well publicized
    in the press and professional journals. Enrollments in nursing programs
    continue to decline and the nursing workforce continues to age and
    retire. Recruitment of nurse anesthetists for the military becomes
    increasingly difficult when the civilian sector faces such critical
    shortages. According to a recent survey by the AANA Administrative
    Management Committee survey, as many as 59 percent of civilian
    institutions in the country are also actively recruiting CRNAs. This
    means that the military must work even harder at recruiting and
    retaining nurse anesthetists. This Committee can greatly assist in the
    effort to attract and maintain essential numbers of nurse anesthetists
    in the military by their support of special pays.
    The Incentive Special Pay for Nurses
        As recently as March 8, 2000, Brigadier General Barbara C. Brannon,
    Director of Medical Readiness and Nursing Services, Department of the
    Surgeon General for the Department of the Air Force, testified before
    the Senate DOD Appropriations Committee that ``[t]o attract the right
    nurses with the right skills, recruiting incentives are essential.'' We
    couldn't agree more. Special pays for nurse anesthetists have become a
    crucial component in recruiting and retaining adequate numbers in the
    military.
        According to a March, 1994 study requested by the Health Policy
    Directorate of Health Affairs and conducted by DOD, a large pay gap
    existed between annual civilian and military pay in 1992. This study
    concluded that ``this earnings gap is a major reason why the military
    has difficulty retaining CRNAs.'' In order to address this pay gap, in
    the fiscal year 1995 Defense Authorization bill Congress authorized the
    implementation of an increase in the annual Incentive Special Pay (ISP)
    for nurse anesthetists from $6,000 to $15,000 for those CRNAs no longer
    under service obligation to pay back their anesthesia education. Those
    CRNAs who remain obligated receive the $6,000 ISP.
        There has been no change in the ISP since the increase instituted
    in fiscal year 1995, while it is certain that civilian pay has
    continued to rise during this time. In addition, those CRNAs under
    obligation who are receiving only $6,000 suffer from an even larger pay
    gap. It would seem that the basic principle uncovered by the 1994 DOD
    Health Affairs study would still hold true today--that a large earnings
    gap contributes greatly to difficulties in retaining CRNAs.
        Colonel Deborah Gustke, Assistant Chief of the Army Nurse Corps,
    testified on March 8, 2000 that ``Your support of nursing specialty pay
    is enabling us to recruit specialty nurses in a competitive hiring
    environment.'' Again, we strongly concur. Therefore, it is vitally
    important that the Incentive Special Pay for CRNAs be maintained and
    even increased as we enter this period of a severe nursing shortage.
        AANA thanks this Committee for its support of the annual ISP for
    nurse anesthetists. AANA strongly recommends the continuation, and even
    an increase in the annual ISP for CRNAs, which recognizes the special
    skills and advanced education that CRNAs bring to the DOD health care
    system.
    Board Certification Pay for Nurses
        Included in the fiscal year 1996 Defense Authorization bill was
    language authorizing the implementation of a board certification pay
    for certain non-MD health care professionals, including advanced
    practice nurses. AANA is highly supportive of board certification pay
    for all advanced practice nurses. The establishment of this type of pay
    for nurses recognizes that there are levels of excellence in the
    profession of nursing that should be recognized, just as in the medical
    profession. In addition, this pay may assist in closing the earnings
    gap, which may help with retention of CRNAs.
        While many CRNAs have received board certification pay to date,
    there are many that remain ineligible. Since certification to practice
    as a CRNA does not require a specific master's degree, many nurse
    anesthetists have chosen to diversify their education by pursuing an
    advanced degree in other related fields. But CRNAs with masters degrees
    in education, administration, or management are not eligible for board
    certification pay since their graduate degree is not in a clinical
    specialty. Many CRNAs who have non-clinical master's degrees either
    chose or were guided by their respective services to pursue a degree
    other than in a clinical specialty. Many feel that diversity in
    education equates to a stronger, more viable profession. CRNAs do
    utilize education and management principles in their everyday practice
    and these skills are vital to performance of their duties. To deny a
    bonus to these individuals is unfair, and will certainly affect their
    morale as they work side-by-side with their less-experienced
    colleagues, who will collect a bonus for which they are not eligible.
    In addition, in the future this bonus will act as a financial
    disincentive for nurse anesthetists to diversify and broaden their
    horizons.
        AANA encourages DOD and the respective services to reexamine the
    issue of awarding board certification pay only to CRNAs who have
    clinical master's degrees.
                 effective utilization of providers is crucial
        In light of the fact that it costs less to educate CRNAs, that
    nurse anesthetists draw minimal bonuses compared to physician
    anesthesiologists, and that numerous studies show there is no
    significant differences in outcomes between anesthesia providers, it is
    clear that CRNAs are a cost-effective anesthesia provider for the
    military. From a budgetary standpoint, it is vitally important to
    utilize these high quality, cost-effective anesthesia providers in
    appropriate ratios with their physician anesthesiologist counterparts.
    ``Over-supervision'' is not only unproductive, it is financially
    wasteful and unnecessary.
        The U.S. military services do not require anesthesiologist
    supervision of CRNAs. There are many military medical treatment
    facilities throughout the world which have military CRNAs as their sole
    anesthesia providers, and this practice arrangement has not had a
    negative impact on the quality of anesthesia care. Increasing numbers
    of anesthesiologists in the military has resulted in practice models
    with wasteful practice ratios. There continues to be proposals in
    various branches of the military for increased supervision of CRNAs,
    with attempts by physician anesthesiologists to place unnecessary
    supervision language into local military treatment facility policies
    which would require strict adherence to a practice model of one CRNA to
    every one anesthesiologist.
        A practice model requiring one anesthesiologist for every nurse
    anesthetist would be financially wasteful. Even a requirement of having
    one anesthesiologist to every two or three CRNAs is also wasteful. But
    even more importantly, the Services would lose mobilization
    effectiveness by requiring multiple anesthesia providers where
    autonomous CRNAs have previously provided anesthesia safely and
    effectively for over 100 years. This military standard is based on the
    need of the Services to provide a wide range of health care with as few
    providers as necessary during mobilization to remote or isolated
    locations. Historically, CRNAs have always worked independently at such
    locations; therefore, there is no basis for requiring supervision of
    CRNAs when they then return to more urban facilities. A predetermined
    ratio of supervision should not become part of the practice
    environment. The supervision of CRNAs should be based on the experience
    of the anesthesia care providers (both CRNA and anesthesiologist), the
    mission of the medical treatment facility, and the complexity and type
    of surgical procedure. Rear Admiral Kathleen Martin, Director of the
    Navy Nurse Corps, testified:

              Our advanced practice nurses--all practice to the fullest
            extent of their competency and practice scope to ensure the
            right care provider delivers care to the right patient based on
            their health requirements. In this manner, we maximize our
            provider assets while allowing them to maintain those critical
            practice competencies needed for wartime roles.

        The ability to function autonomously in remote locations is
    required of all military CRNAs. It is the promise of this independence
    that draws many to military anesthesia service. Therefore, any attempt
    to adopt an anesthesia practice standard that would require that an
    anesthesia care team consisting of a CRNA and a supervising
    anesthesiologist to deliver all anesthesia would not only undermine
    mobilization effectiveness, but it would also prove detrimental to the
    morale of military CRNAs and would undermine attempts by the Services
    to recruit highly motivated individuals.
        AANA recommends that this Committee direct DOD to maintain the
    mobilization effectiveness of CRNAs by enforcement of the current
    practice standard of autonomous anesthesia care by CRNAs in all
    locations.
                                   conclusion
        In conclusion, the AANA believes that retention and the appropriate
    utilization of CRNAs in the Services is of critical concern. Many
    military facilities are suffering from ineffective practice models, and
    therefore inefficient use of provider services. The efforts detailed
    above will assist the Services in maintaining the military's ability to
    meet its peacetime and mobilization medical mission in a cost-effective
    manner without sacrificing quality of care. We thank the Committee for
    its support of CRNAs. For further information, please contact Greta
    Todd, AANA Associate Director of Federal Government Affairs, at 202/
    484-8400.

        Senator Inouye (presiding). I just wanted to say that I
    agreed with your testimony. If the anesthesiologists are so
    concerned about the activities of your organization, they
    should go to Bosnia also.
        Mr. Van Nest. Thank you, sir.
        Senator Inouye. Thank you very much.
        May I now call upon Dr. Philip Boudjouk, Professor of
    Chemistry and Vice President of Research at North Dakota State
    University, and Chairman of the Board of the Coalition of the
    EPSCoR States.
        Senator Dorgan. Mr. Chairman, let me just welcome Dr.
    Boudjouk. I have been at another hearing this morning, but I am
    happy to be able to come by. He is, as you indicated, Chairman
    of the Board of the Coalition of EPSCoR States, which is a very
    important program for not only North Dakota but also for Alaska
    and other States. We welcome Dr. Boudjouk here.
        Senator Inouye. Doctor.
    STATEMENT OF PHILIP BOUDJOUK, PH.D., PROFESSOR OF
                CHEMISTRY AND VICE PRESIDENT OF RESEARCH,
                NORTH DAKOTA STATE UNIVERSITY, AND CHAIRMAN
                OF THE BOARD, COALITION OF EPSCoR STATES
        Dr. Boudjouk. Thank you, Senator. Mr. Chairman and members
    of the subcommittee, I thank you for the opportunity to submit
    this testimony regarding the Defense Department's basic
    scientific research program and the Defense Experimental
    Program to Stimulate Competitive Research (EPSCoR).
        I would like to say a special thanks to Senator Dorgan, for
    his leadership in supporting the EPSCoR program at the
    Department of Defense and several other agencies.
        As you know, my name is Philip Boudjouk. I am Professor of
    Chemistry and Vice President for Research at North Dakota State
    University. In addition, I am Chairman of the Board of the
    Coalition of EPSCoR States. I am here today to speak in support
    of funding for the Defense Department's Experimental Program to
    Stimulate Competitive Research. This statement is submitted on
    behalf of the 19 States and Puerto Rico that participate in
    EPSCoR. I am especially pleased to report that Alaska is the
    most recent State designated by the National Science Foundation
    as eligible to participate in the EPSCoR program.
        The Coalition of EPSCoR States supports the Defense
    Department's request of $9.9 million for the Defense EPSCoR
    program. But we respectfully urge the subcommittee to
    appropriate an additional $15 million for this productive
    program. The Coalition also supports the Department's budget
    request for basic research, of which the Defense EPSCoR program
    is but a small part.
        Based on the positive results of the National Science
    Foundation (NSF) program, Congress created EPSCoR programs in
    six additional Federal agencies. One of these is the Defense
    Department. The Defense Experimental Program to Stimulate
    Competitive Research (DEPSCoR) program, as it is known, for the
    Department of Defense, contributes to the States' goals of
    developing and enhancing their research capabilities while
    simultaneously supporting the Defense Department's research
    goals.
        In my own experience, DEPSCoR has motivated me to establish
    contacts and collaborative relationships with DOD researchers
    on two important projects: Navy-sponsored research on
    nanomaterials, that is, those particles smaller than one-
    billionth of a meter; and Air Force sponsored research on
    corrosion. Because of these initial contacts, I was able to
    develop meaningful relationships with other researchers in
    academia and in industry that have helped me establish my
    research in both areas. The initial investments have paid off
    in North Dakota.
        Several DOD-supported researchers, with critical help from
    DEPSCoR, have formed a center that focuses its efforts on
    corrosion, targeting specifically corrosion problems of
    aluminum alloys found in the KC-135 transport and F-22 fighter
    planes. This center now enjoys considerable support from the
    Department of Defense and private industry--both through
    competitive means I might add. We are now marshalling our
    resources to form a center that is directed to advancing the
    knowledge base and applications of nanomaterials.
        Last year, the Defense Department issued an announcement of
    competition under the aegis of the Defense EPSCoR program. A
    total of 256 projects were received from the 18 States eligible
    to participate in DEPSCoR.
        Let me now tell you something about our program in North
    Dakota. Twenty-three DEPSCoR projects have been funded in North
    Dakota since 1994. The projects were developed by North Dakota
    science and engineering researchers, in collaboration with DOD
    program officers, to address topics critical to defense
    readiness and capabilities. The program is a true partnership
    between DOD, the State of North Dakota and the universities
    involved.
        The research topics cover a wide spectrum of issues
    important to the DOD mission. We have DOD-sponsored efforts in
    logistics, database development, encryption science, and a
    variety of materials-based programs. For example, one of my
    projects has led to a very safe and low-temperature method of
    production of semiconductor materials such as gallium arsenide,
    tin sulfide, and tin selenide in a new and useful form--quantum
    dots--that is, less than one-billionth of a meter in size.
    Semiconductors in this form open the door to a broad range of
    useful properties. You shall be seeing these nanomaterials in
    all phases of our lives where electronic equipment is
    important, from very sensitive optical detectors, to
    microlaser, to vanishingly small transmitters.
        In North Dakota, we are now embedding these incredibly
    small particles in polymers to develop an entirely new class of
    polymeric materials. The sky is the limit here. One could say
    that the smaller the particle, the larger the potential for
    scientific and technical advances.
        Mr. Chairman, this is a very exciting new area of
    scientific research. It can really change the way our world
    will be in the future, and it will provide our military with
    significant new warfighting capabilities for the 21st century.
    The Department of Defense is at the forefront of this research,
    and DEPSCoR-supported researchers are playing an important role
    in maintaining our Nation's leadership in this vital area.
        An important area of research supported by the Defense
    Department's EPSCoR program, corrosion science, is one in which
    several of our researchers have made significant advances in
    developing new testing methods to detect corrosion in the
    earliest possible stages and in making new conductive polymers
    that short circuit the corrosion process. A center has been
    formed at North Dakota State University and has already
    succeeded in obtaining significant financial support from
    industry and the Department of Defense.
        We have established new collaborations with Wright
    Patterson Air Force Base and Tinker Air Force Base that keep
    our efforts focused on defense-critical projects. At this time,
    we are dedicating substantial resources to the corrosion
    problems associated with the C-135 transport.
        The planning for this and other Federal EPSCoR programs in
    North Dakota involve faculty and administrators from across the
    State in a remarkably cooperative and collaborative effort.
    Indeed, one of the most significant successes of the EPSCoR
    program nationwide has been the partnerships it has engendered.
    These partnerships extend beyond the universities, to include
    the State government and industry as we develop the program
    goals, research projects, and program funding. Because matching
    funds are required in EPSCoR projects, the program has explicit
    buy-in and visibility with the North Dakota Legislature.
        Senator Stevens (presiding). Dr. Boudjouk, I am going to
    have to keep you to somewhere near the 5-minute time limit. And
    we do have some questions we would like to ask you. So could
    you finish your statement, please?
        Dr. Boudjouk. Thank you very much, Senator.
        In conclusion, Mr. Chairman, the Coalition of EPSCoR States
    supports the Defense Department's basic research programs for
    budget function 6.1 and 6.2. Thank you for consideration of
    this request.
        [The statement follows:]
                   Prepared Statement of Dr. Philip Boudjouk
        Mr. Chairman and members of the Subcommittee, I thank you for the
    opportunity to submit this testimony regarding the Defense Department's
    basic scientific research program and the Defense Experimental Program
    to Stimulate Competitive Research (EPSCoR).
        My name is Philip Boudjouk. I am a Professor of Chemistry and Vice
    President for Research at North Dakota State University. In addition, I
    am Chairman of the Board of the Coalition of EPSCoR States. I am here
    today to speak in support of funding for the Defense Department's
    Experimental Program to Stimulate Competitive Research (EPSCoR). This
    statement is submitted on behalf of the nineteen states and Puerto Rico
    that participate in EPSCoR \1\.
    ---------------------------------------------------------------------------
        \1\ Alabama, Alaska, Arkansas, Idaho, Kansas, Kentucky, Louisiana,
    Maine, Mississippi, Montana, Nebraska, Nevada, North Dakota, North
    Dakota, Puerto Rico, South Carolina, South Dakota, Vermont, West
    Virginia, and Wyoming.
    ---------------------------------------------------------------------------
        The Coalition of EPSCoR States supports the Defense Department's
    budget request of $9.895 million for the Defense EPSCoR program, but we
    respectfully urge the Subcommittee to appropriate an additional $15
    million for this productive program. The Coalition also supports the
    Department's budget request for basic research, of which the Defense
    EPSCoR program is but a small part.
        EPSCoR is a research and development program that was first
    initiated by the National Science Foundation. Through a merit review
    process, EPSCoR is improving our Nation's science and technology
    capability by funding research activities of talented researchers at
    universities and non-profit organizations in states that historically
    have not received significant Federal research and development funding.
    EPSCoR helps researchers, institutions, and states improve their
    research capabilities and quality in order to compete more effectively
    for non-EPSCoR research funds. EPSCoR is a catalyst for change and is
    widely viewed as a ``model'' Federal-state partnership.
        Based on the positive results of the NSF program, Congress created
    EPSCoR programs in six additional federal agencies. One of these is the
    Defense Department. The individual agency EPSCoR programs, much in the
    same way as the NSF EPSCoR, help researchers and institutions in
    participating states to improve the quality of their research so they
    can compete for non-EPSCoR research funds. The federal-wide EPSCoR
    effort funds only merit-based, peer reviewed programs that work to
    enhance the competitiveness of research institutions and increase the
    probability of long-term growth of competitive funding.
        EPSCoR relies heavily on state involvement and participation,
    including non-federal matching funds. Due to the federal/state
    partnership upon which EPSCoR relies, EPSCoR is often considered a
    model program, and is a wise use of taxpayer funds during these
    difficult fiscal times.
        The Defense EPSCoR (DEPSCoR) program contributes to the states'
    goals of developing and enhancing their research capabilities, while
    simultaneously supporting the Defense Department's research goals.
    DEPSCoR grants are based on recommendations from the EPSCoR state
    committees and the Department's own evaluation and ranking. Research
    proposals are only funded if they provide the Defense Department with
    research in areas important to national defense.
        In my own experience, the North Dakota State EPSCoR program set
    forth criteria that encouraged collaboration with Defense Department
    scientists and engineers prior to the submission of my proposal to the
    DEPSCoR program. This motivated me to establish contacts and
    collaborative relationships with DOD researchers on two important
    projects: Navy sponsored research on nanomaterials, i.e., particles
    smaller than one-billionth of a meter, and Air Force sponsored research
    on corrosion. Because of these initial contacts, I was also able to
    develop meaningful relationships with other researchers in academia and
    industry that have helped me establish my research in both areas. The
    initial investments have paid off in North Dakota.
        Several DOD supported researchers, with critical help from DEPSCoR,
    have formed a center that focuses its efforts on corrosion, targeting
    specifically, corrosion problems of aluminum alloys found in the C/KC-
    135 transport and F22 fighter planes. This center now enjoys
    considerable support from the Department of Defense and private
    industry. We are now marshalling our resources to form a center that is
    directed to advancing the knowledge base and applications of
    nanomaterials.
        DEPSCoR was originally authorized by Section 257 of the National
    Defense Authorization Act of 1995 (Public Law 103-337), which states
    that the Defense EPSCoR program's objectives are to:
      --enhance the capabilities of institutions of higher education in
            eligible states to develop, plan, and execute science and
            engineering research that is competitive under the peer-review
            systems used for awarding Federal research assistance; and
      --increase the probability of long-term growth in the competitively
            awarded financial assistance that universities in eligible
            states receive from the Federal Government for science and
            engineering research.
        Last year the Defense Department issued an announcement of a
    competition under the aegis of the Defense EPSCoR program. A total of
    256 projects were received from the 18 states eligible to participate
    in DEPSCoR. Following review of the individual projects by the
    appropriate research office (the Army Research Office, the Ballistic
    Missile Defense Organization, the Office of Naval Research, or the Air
    Force Office of Scientific Research), 81 projects were selected for
    funding with $24 million made available in fiscal year 2000. The
    average award was $296,000.
        Let me now tell you something about our program in North Dakota.
    Twenty-three DEPSCoR projects have been funded in North Dakota since
    1994. The projects were developed by North Dakota science and
    engineering researchers in collaboration with DOD program officers to
    address topics critical to defense readiness and capabilities. The
    program is a true partnership between DOD, the State of North Dakota,
    and the universities involved. The research topics cover a wide
    spectrum of issues important to the DOD mission. We have DOD sponsored
    efforts in logistics, database development, encryption science, and a
    variety of materials-based programs.
        For example, one of my projects has led to a very safe and low
    temperature method of production of semiconductor materials such as
    gallium arsenide, tin sulfide, and tin selenide in a new and useful
    form, quantum dots, i.e., less than one ten billionth of a meter.
    Semiconductors in this form open the door to broad range of useful
    properties. We shall be seeing these ``nanomaterials'' in all phases of
    our lives where electronic equipment is important: from very sensitive
    optical detectors to micro lasers to vanishingly small transmitters. In
    North Dakota, we are now imbedding these incredibly small particles in
    polymers to develop an entirely new class of polymeric materials. The
    sky is the limit here. One could say that the smaller the particle, the
    larger the potential for scientific and technical advances.
        Mr. Chairman, this a very exciting new area of scientific research.
    It can really change the way our world will be in the future and it
    will provide our military with significant new war-fighting
    capabilities for the 21st Century. The Department of Defense is at the
    forefront of this research and DEPSCoR supported researchers are
    playing an important role in maintaining our nation's leadership in
    this vital area.
        In another important area of research supported by the Defense
    Department's EPSCoR program, corrosion science, several of our
    researchers have made significant advances in developing new testing
    methods to detect corrosion in the earliest possible stages and in
    making new conductive polymers that ``short circuit'' the corrosion
    process. A center has been formed at North Dakota State University and
    has already succeeded in obtaining significant financial support from
    industry and the Defense Department. We have established new
    collaborations with Wright Patterson Air Force Base and Tinker Air
    Force Base that keep our efforts focused on critical projects. At this
    time we are dedicating substantial resources to the corrosion problems
    associated with the C-135 transport.
        The planning for this and the other federal EPSCoR programs in
    North Dakota involve faculty and administrators from across the state
    in a remarkably cooperative and collaborative effort. Indeed, one of
    the most significant successes of the EPSCoR program has been the
    partnerships it has engendered. These partnerships extend beyond the
    universities to include the state government and industry as we develop
    the program goals, research projects, and program funding. Because
    matching funds are required in EPSCoR projects, the program has
    explicit buy-in and visibility with the North Dakota Legislature.
        The partnership concept extends also to our interactions with the
    federal agencies. Joint development of the Defense EPSCoR and other
    EPSCoR program goals and objectives will ensure that the program
    achieves its mission of stimulating competitive research. Indeed, given
    the buy-in and participation by so many constituencies, EPSCoR is a
    good example and model for federal-state partnerships in science and
    technology.
        It is important that the DEPSCoR program continues this very
    important role of bringing new researchers into productive
    relationships with DOD, and avoids the ever-present danger of using
    DEPSCoR funds to replace existing DOD funding of already-established
    researchers.
        It has been our experience that the EPSCoR programs yield a return
    far beyond the original investment. EPSCoR allows the states to
    accomplish more than is possible through the regular research programs.
    It has helped North Dakota attract and retain young researchers who are
    able to demonstrate through EPSCoR support of their research, that they
    have bright futures in fields of research that are of interest to the
    Defense Department. The Coalition appreciates this Subcommittee's long-
    standing support for Defense EPSCoR and we urge you to continue that
    support. The Coalition recognizes the very tight fiscal constraints
    this Subcommittee faces in the new era of a balanced federal budget,
    but we respectfully request that you provide $25 million for the
    Defense EPSCoR program for fiscal year 2001.
        The Defense Department's Experimental Program to Stimulate
    Competitive Research is a wise and worthwhile investment of scarce
    public resources. It will continue to contribute significantly to
    efforts to build scientific and engineering research efforts in support
    of national defense needs.
        Mr. Chairman, the Coalition of EPSCoR States, supports the Defense
    Department's basic research programs (budget functions 6.1 and 6.2).
    With the end of the Cold War, the technological demands facing our
    military have increased. New research must be pursued to meet new
    challenges in the fields of information warfare, high technology
    terrorism, the proliferation of weapons of mass destruction and threats
    in diverse parts of the world.
        It is essential that Congress ensure that scientific research and
    technological advances in support of our military are not eroded
    because of the lack of adequate funding for DOD's basic and applied
    research. There are legitimate concerns that the fiscal year 2001
    budget request fails to keep pace with the needs of science and
    technology. The Coalition of EPSCoR States supports realistic funding
    levels that support vigorous science and engineering research programs
    at the Defense Department.
        Thank you for your consideration of this request.

        Senator Stevens. Are you going into the nanoscience area
    now with your research?
        Dr. Boudjouk. Yes.
        Senator Stevens. You have a center of excellence developing
    there for that?
        Dr. Boudjouk. We are developing that in our State, yes. It
    is a collaboration effort between the University of North
    Dakota and North Dakota State University.
        Senator Stevens. I have urged our University to do the same
    thing. I note you have got a $10 million level, approximately,
    now. You want to go up to $25 million?
        Dr. Boudjouk. Yes.
        Senator Stevens. Is that money shared with other
    universities?
        Dr. Boudjouk. Yes, it is.
        Senator Stevens. How much do you share of that? Of the $10
    million, how much are you sharing?
        Dr. Boudjouk. The sharing among the universities is done on
    a competitive basis. The investigators from all universities in
    DEPSCoR States are invited to compete for this funding. So the
    funding is done on a peer-review basis that takes into account
    the DOD mission statement and the excellence of the proposers.
        Senator Stevens. Who does that? Do you do that or does DOD
    do that?
        Dr. Boudjouk. The States first select the best proposals
    within the State, and then the Department of Defense screens
    and evaluates and makes the final decision on who gets funded.
        Senator Stevens. The $25 million you are asking for is
    nationwide or just for your university?
        Dr. Boudjouk. Nationwide, for the Coalition of EPSCoR
    States, Senator.
        Senator Stevens. I do think this is a very important area,
    and I am delighted to hear some of the smaller universities are
    getting involved. We look forward to working with you on this,
    Senator Dorgan.
        Senator Dorgan. It is impressive. And, frankly, I think we
    need to do much, much more in this area. There is so much
    talent out there and so many resources available. And yet, we
    all know what happens with the research dollars--they just go
    to a few clusters of big institutions.
        Senator Stevens. That is why I asked the question, because
    normally we get into this peer review, and the peers are the
    people from the universities that have gotten the research in
    the past. I am delighted to see some of this spreading out so
    that we get other areas of the country involved. I told a group
    this morning at one of those major universities that if they
    want to increase the research budget, they have got to get
    greater popular support, greater support from the people of the
    country. And you cannot get that by keeping it in three or four
    well-known institutions that have really monopolized the money
    in the past.
        We were severely criticized when we used to have a
    university program. Do you remember that, Senator? And this is
    a good way to do it. I appreciate what you are doing and we
    want to work with you.
        I think nanoscience is the answer for small universities,
    if they can get involved. Do you have a small cyclotron?
        Dr. Boudjouk. No, we do not, Mr. Chairman. We do not have
    that. And in areas such as that, with help from DEPSCoR and
    programs like it, they will allow us to get the basic funding
    to get that.
        Senator Stevens. You know that there is a small cyclotron
    now for universities?
        Dr. Boudjouk. No, I did not know that.
        Senator Stevens. Well, I urge you to go to the University
    of California-Los Angeles (UCLA) and see that, because we
    miniaturized them with defense money as a matter of fact. So
    there are cyclotrons now available that are of a size that even
    the smallest university ought to be able to afford. I think
    this is essential, as we get into the nanoscience area, that we
    have the full capability to pursue nuclear science at the same
    time.
        I appreciate your statement, and I thank you, Senator
    Dorgan, for urging that we listen. This is an area that we want
    to pursue. We want the smaller universities involved in this
    future research, too.
        Dr. Boudjouk. Thank you, Mr. Chairman and members of the
    subcommittee. Thank you once again.
        Senator Stevens. Our next witness is Betty Gallo, the
    Director of the University of Medicine and Dentistry.
    STATEMENT OF BETTY GALLO, DIRECTOR, ADVOCACY AND
                FUNDRAISING, THE CANCER INSTITUTE OF NEW
                JERSEY
        Ms. Gallo. Good morning. I would like to thank the chairman
    and the committee for allowing me to testify before you today.
    But I want to especially thank you for your support of prostate
    cancer and the Gallo Prostate Cancer Center.
        I am here on behalf of a priority project at the University
    of Medicine and Dentistry of New Jersey. That project is the
    Dean and Betty Gallo Prostate Cancer Center at the Cancer
    Institute of New Jersey. The Cancer Institute is a partnership
    of the University of Medicine and Dentistry, which is part of
    the Robert Wood Johnson Medical School and hospital affiliates,
    and the only NCI-designated center in New Jersey. The Gallo
    Prostate Cancer Center was named in honor of my husband, and
    your colleague in the House, Congressman Dean Gallo, of New
    Jersey, who died of prostate cancer at the age of 58.
        With the funding the Gallo Prostate Cancer Center has
    received, we have been able to focus on the strength of the
    Cancer Institute as to the devastating problems of prostate
    cancer in New Jersey, its surrounding region, and in the Nation
    as a whole, through treatment and research. Since obtaining
    this funding, we have been able to fund five seed grants to
    scientists interested in pursuing prostate cancer research. The
    Gallo Prostate Cancer Center will eventually be able to provide
    the resources to effectively recruit additional nationally
    recognized leaders in research to study prostate cancer.
        In order to bring together scientists of this caliber, all
    focused on prostate cancer, it is imperative to have a strong,
    focused prostate cancer center. My position, as Director of
    Public Outreach for the Gallo Center, has allowed me to become
    involved directly in the community. Nationally, with regard to
    prostate cancer incidence rates, New Jersey is number 10 in the
    general population and number eight in the African-American
    community.
        The Gallo Prostate Cancer Center is in the process of
    providing education, screening, prevention, and research. We
    have begun our programs by partnering with 100 black men
    statewide. Together we have started a prostate cancer
    initiative which will screen the underserved community. We hope
    to have all 21 counties in the State of New Jersey on board by
    the year 2003.
        With continued funding, we foresee expanding the Gallo
    Prostate Cancer Center to the north and south in New Jersey.
    When people are ill, they do not want to travel. And this would
    help to lessen that concern.
        In the short time that the Gallo Prostate Cancer Center has
    been in existence, we have made some major accomplishments. But
    there is much more we need to do to make the Gallo Prostate
    Cancer Center a premier center nationally. This year, we
    respectfully ask for the continuing support from the Department
    of Defense subcommittee so we can continue to create a state-
    of-the-art prostate cancer center in memory of Congressman Dean
    Gallo to promote research, education, and treatment for people
    diagnosed with prostate cancer. This is so other men and their
    families do not have to suffer as Dean and his family did, from
    this terrible disease.
        I am also here on behalf of Biosecurity, which is another
    university project. This was initiated by Senator Lautenberg.
    Due to the intense witness schedule, we were asked to have one
    person give some points on this project.
        New Jersey has a dense population, a concentration of
    professional pharmaceutical and biotech companies and is
    located near major transportation hubs. It is vulnerable as a
    possible target for biological threats. The Nation's largest
    public health science university, with statewide campuses, is
    well positioned to respond to potential biological threats by
    providing a statewide program, ranging from our training
    ability in public health to our expertise in infectious disease
    basic research.
        The University is currently increasing preparedness in the
    event of the introduction of a dangerous pathogen. Funding
    recommended last year from the Department of Defense will help
    us coordinate hospital emergency services with other State and
    Federal agencies. We have formed a blue ribbon panel on
    biosecurity, comprised of health representatives of the
    pharmaceutical industry. Our faculty serve on the State
    Bioterrorism Surveillance Advisory Group and as members of
    Federal panels. The University will increase the education and
    training of individuals involved with biological threats.
    Funding will be used to set up our emergency response plans and
    will involve our level 1 and level 2 trauma centers and our
    helicopter trauma service.
        Another area of emphasis is basic scientific research. We
    recently opened a new facility that has a center for applied
    genetics and biosafety level 3 laboratory, which would allow
    for the growth and isolation of targeted organisms. The Center
    for Emerging Pathogens, the national Centers for Disease
    Control and Prevention (CDC) Tuberculosis Center and the Public
    Health Research Institute are all participating entities in the
    new facility.
        With funding obtained from several Federal agencies, the
    University of Medicine and Dentistry has state-of-the-art
    instrumentation, including gene chip technology, that can be
    tailored for detection of target organisms. We can also provide
    a strategy for the detection of unknown pathogens. Our vast
    scientific expertise in molecule biology, gene chip technology
    and deoxyribonucleic acid (DNA) sequencing allows us to
    identify and treat potential disasters resulting from
    biological warfare.
        Finally, with your continued support, we would develop a
    statewide center for biosecurity, concentrating on emergency
    response plans and basic scientific research into the
    detection, intervention and generation of agents in response to
    biological threats.
        I want to thank the committee.
        [The statement follows:]
                       Prepared Statement of Betty Gallo
        Mr. Chairman and members of the Committee, we appreciate this
    opportunity to bring to your attention two priority projects of the
    University of Medicine and Dentistry of New Jersey (UMDNJ) that are
    consistent with the mission of this committee.
        UMDNJ is the largest public health sciences university in the
    nation. Our statewide system is located on five academic campuses and
    consists of 3 medical schools and schools of dentistry, nursing, health
    related professions, public health and graduate biomedical sciences.
    UMDNJ also comprises a University-owned acute care hospital, three core
    teaching hospitals, an integrated behavioral health care delivery
    system, a statewide system for managed care and affiliations with more
    than 200 health care and educational institutions statewide. No other
    institution in the nation possesses the resources which match our scope
    in higher education, health care delivery, research and community
    service initiatives with federal, state and local entities.
        Our first priority is the development of a statewide Center for
    BioSecurity. Last year, with the strong support of this committee,
    UMDNJ was recommended to receive $1.5 million toward its initiatives in
    biodefense and biosecurity. The Department of Defense is currently
    considering our proposal for training, education and research to
    counter threats of bioterrorism. That funding will help us to develop a
    comprehensive plan that will include coordination of hospital emergency
    services, basic science research in detection methods, and
    participation by various agencies of State and Federal Government, as
    well as the pharmaceutical industry in New Jersey.
        New Jersey is the nation's most densely populated state. Newark,
    its largest city, is in close proximity to New York City and is closely
    linked with this metropolis by extensive commuter services. Newark
    Airport, the 12th largest in the United States, is a transportation hub
    for the Northeast and ranks third in the level of international travel.
    More than 30 million passengers traveled through Newark in the first
    half of 1998, making the region a prime area for the possible
    introduction of biological weapons. UMDNJ, is well positioned to
    address the threat of biological terrorism through our expertise in the
    following programs:
    Emergency response:
        The Center for Education and Training (CET) of the Environmental
    and Occupational Health Sciences Institute, a joint venture of UMDNJ
    and Rutgers University, is the nation's foremost program in education
    and training concerning chemical and physical threats. The Center has
    provided hazardous materials training to more than 175,000 individuals
    (police, firefighters, municipal and state employees as well as to
    physicians, nurses and other healthcare personnel). Preparing emergency
    response personnel for chemical and biological incidents is an
    extension of the Center's existing infrastructure and expertise.
        UMDNJ has several Level I and Level II Trauma Centers within its
    statewide system. A crucial component of the trauma network is the
    helicopter trauma service, NorthSTAR and SouthSTAR, linking the
    northern and southern regions of the state. Members of the UMDNJ
    Emergency Response Team participated in a federally sponsored ``Weapons
    of Mass Destruction'' education program last year.
    Identification of agents:
        A number of laboratories within the UMDNJ system are engaged in
    developing rapid methods of detection of virulent agents with
    particular emphasis on the most dangerous multi-drug resistant species.
    The molecular basis of drug resistance is the focus of a number of
    these laboratories, as well as the establishment of large libraries of
    clinical strains available for epidemiological studies. State-of-the-
    art Biosafety Level III (BSLIII) clinical laboratories for the
    isolation and culture of certain clinical strains are available at
    University Hospital in Newark and the Robert Wood Johnson University
    Hospital in New Brunswick. The International Center for Public Health,
    a world-class public health complex at University Heights in Newark and
    part of the UMDNJ system, will also contain several thousand square
    feet of BSLIII space.
    Basic Research:
        Many UMDNJ faculty are advisors to the U.S. Government and have
    served on committees such as the U.S. Government Blue Ribbon Panel on
    Biologicals; the Program and Technical Review Committee of the U.S.
    Chemical and Biological Defense Command, the Committee on Toxicology,
    and the New Jersey State Department of Health Bioterrorism Surveillance
    Advisory Group. Our scientific experts are studying the effects of
    exposure to a variety of chemical agents and organic chemicals. We have
    considerable expertise in the analysis of the effects of radiation, and
    toxic chemicals. Early markers of disease or infection may be shared by
    more than one infectious agent. Basic research in the immunopathology
    of infection may led to the identification of markers useful for
    screening potential victims in a biological attack.
        Newark is an internationally renowned center for the
    identification, treatment and basic research in tuberculosis and other
    emerging and re-emerging pathogens. The New Jersey Medical School
    National Tuberculosis Center at UMDNJ and the Public Health Research
    Institute will join the Department of Microbiology and Molecular
    Genetics at the UMDNJ-New Jersey Medical School to form a core group of
    researchers at the International Center for Public Health. In addition,
    the recent establishment of the Center for Emerging Pathogens at NJMS
    will introduce expertise in analysis of a number of pathogens.
    Gene Chip Technology:
        Gene chip technology is a recent, cutting edge technology enabling
    the simultaneous analysis of thousands of DNA sequences. State funding
    has led to the formation of the Center for Applied Genetics at UMDNJ
    and the International Center for Public Health. The Center will provide
    the equipment and personnel necessary for the application of existing
    gene technology and for the development of novel applications. In the
    context of chemical and biological weapons, new chips will be designed
    that can display sequences representing a panel of potential agents for
    rapid screening and positive identification.
        UMDNJ is well positioned to respond to the possibility of
    biological and chemical threats. We can provide a comprehensive
    statewide program ranging from our nationally acclaimed training
    ability in the public health arena to internationally recognized
    expertise in infectious disease basic research. This year, we seek $2.5
    million to establish a statewide Center for BioSecurity that will
    coordinate first responder training programs; develop methods of rapid
    detection and identification of biological agents; conduct research to
    enhance identification; and design new gene and protein chip technology
    for the rapid identification of biological agents in response to
    threats of bioterrorism.
        Our second priority is the Dean and Betty Gallo Prostate Cancer
    Center which was established at the Cancer Institute of New Jersey
    (CINJ) with the goal of eradicating prostate cancer and improving the
    lives of men at risk for the disease through research, treatment,
    education and prevention. GPCC was founded in memory of Rep. Dean
    Gallo, a New Jersey Congressman who died of prostate cancer diagnosed
    at an advanced stage. The purpose of the GPCC is to establish a multi-
    disciplinary center to study all aspects of prostate cancer and its
    prevention.
        GPCC unites a team of outstanding researchers and clinicians who
    are committed to high quality basic research, translation of innovative
    research to the clinic, exceptional patient care, and improving public
    education and awareness of prostate cancer. GPCC is a center of
    excellence of the Cancer Institute of New Jersey, a partnership of the
    UMDNJ-Robert Wood Johnson Medical School and hospital affiliates and
    the only NCI-designated cancer center in the state. GPCC efforts will
    be focused in four major areas: (1) Basic, Clinical and Translational
    Research; (2) Comprehensive Patient Care; (3) Epidemiology and Cancer
    Control; and (4) Education and Outreach.
        Basic, Clinical and Translational Research.--GPCC scientists will
    investigate the molecular, genetic and environmental factors that are
    responsible for prostate cancer initiation and progression. Our
    researchers will develop appropriate model systems that will facilitate
    the design and implementation of novel strategies for prevention and
    treatment. GPCC will foster multi-disciplinary efforts that will lead
    to the effective translation of basic research to improved patient care
    and novel clinical trials.
        Comprehensive Patient Care.--It is the goal of the GPCC to provide
    exceptional patient care through a multi-disciplinary patient care team
    in the areas of urological oncology, radiation oncology and medical
    oncology for each patient during all stages of the disease. The patient
    care team will develop novel clinical approaches for treating all
    stages of prostate cancer.
        Epidemiology and Cancer Control.--Another goal of the GPCC is to
    understand the etiology of prostate cancer susceptibility and to find
    effective modalities for prevention of prostate cancer.
        Education and Outreach.--GPCC will continue its efforts to
    education the public throughout the State of New Jersey about the
    importance of early detection of prostate cancer, particularly in
    underserved communities where there is a population at high risk for
    the disease.
        The Cancer Institute of New Jersey has received $5 million in
    federal funding over the last two years for the Dean and Betty Gallo
    Prostate Cancer Center. This important funding has enabled us to
    establish a world-class program in prostate cancer research that
    includes publications in prestigious journals such as the New England
    Journal of Medicine and Genes and Development. CINJ has used its
    findings to leverage additional research dollars for individual
    investigators from such agencies as CapCure, the Department of Defense
    and several private foundations. Top investigators have been recruited
    to initiate programs in prostate cancer research through our education
    and pilot grant programs. We have also established education and
    outreach programs that will enhance the visibility of our clinical
    programs, including a partnership with the 100 Black Men organization.
        This year we seek to build on our basic research in prostate cancer
    and to support the development of technological approaches including:
    The use of microarray technology to survey gene expression patterns in
    prostate tumors; The use of mouse models for prostate cancer that can
    be used to test new methods of prevention and treatment; The
    development of monoclonal antibodies that may be used for prognosis and
    diagnosis.
        We will bring basic research directly to the clinic by fostering
    interactions among basic and clinical researchers through our education
    programs supported by this funding. Additional funding will allow us to
    enhance our treatment of patients with prostate cancer through several
    new clinical trials for patients at all stages of the disease. To
    increase the number of additional clinical trials, we will utilize
    funding to develop a support team that will assist our physicians to
    design and implement new clinical trials.
        We seek $2 million in federal funding to enhance the research,
    education and cancer care programs of the Dean and Betty Gallo Prostate
    Cancer Center at our New Brunswick facility, and to expand these
    programs statewide.
        We thank this committee for its strong support in past years of
    these initiatives.

        Senator Stevens. We congratulate you for what you have done
    to establish this Center in memory of Dean and want to work
    with you. But I notice in your statement that you have
    indicated that the funding you request would be used for
    treatment of patients with past prostate cancers. We are
    dealing with basic research money. Can you tell us how this is
    basic research money if we give this $2 million to you for this
    request?
        Ms. Gallo. What it does is we have 22 laboratories at the
    Cancer Institute as part of the Gallo Center, and what they are
    doing is taking the research from the labs and bringing them
    into the clinics to help treat the patients. So any research we
    do, we hope will be translational, to be able to eventually
    become useful for the patients.
        Senator Stevens. Well, is this money to be used in
    operation of the Center?
        Ms. Gallo. No.
        Senator Stevens. You know I am a prostate cancer survivor.
        Ms. Gallo. I understand that.
        Senator Stevens. And your husband unfortunately passed
    away. We do want to help you maintain that Institute on a
    research basis, but we cannot get into treatment centers. We do
    not give anybody money for treatment centers.
        Ms. Gallo. I should probably just say that basically we are
    more involved in research, education and prevention and not so
    much the treatment aspect. I maybe misconstrued it and made you
    think that we are doing it for treatment. But that was not the
    main reason of what this Center is about. A good portion of it
    is research.
        Senator Stevens. You are part of that Center, too. If we
    make that money available, will you assure us the money is
    going to be used for research and not for just routine
    treatment of prostate cancer?
        Ms. Gallo. Yes, it will be used for research. We have a
    scientific committee already in place. We have two scientists
    that are doing research on prostate cancer, who are heading the
    Gallo Prostate Cancer Center.
        [The information follows:]

       The Dean and Betty Gallo Prostate Cancer Center,
                         At the Cancer Institute of New Jersey,
                                                          May 12, 2000.
    Honorable Ted Stevens,
    522 Hart Senate Building,
    Washington, DC 20510.
        Dear Chairman Stevens: I want to thank you for allowing me to
    testify before the Senate Department of Defense sub-committee on May 3,
    2000. I want to also thank you for your kind words about my husband,
    Dean Gallo and the work I am doing for The Dean and Betty Gallo
    Prostate Cancer Center (GPCC) at The Cancer Institute of New Jersey.
        I want to give you some information with regard to the research
    being done at the Gallo Prostate Cancer Center.
        The GPCC scientists will investigate the molecular, genetic and
    environmental factors that are responsible for prostate cancer
    initiation and progression. Our researchers will develop appropriate
    model systems that will facilitate the design and implementation of
    novel strategies for prevention and treatment. GPCC will foster multi-
    disciplinary efforts that will lead to the effective translation of
    basic research to improve patient care and novel clinical trials.
        I want to assure you that the funding we receive from the
    Department of Defense is used ONLY for research and programs.
        Thank you again for all your support.
                Sincerely,
                                                Betty I. Gallo,
                  Director of Public Outreach and Government Relations.

        Senator Stevens. Thank you.
        Questions, Senator?
        Senator Inouye. No, Mr. Chairman.
        Senator Stevens. Thank you very much, Ms. Gallo. Nice to
    see you.
        Ms. Gallo. Thank you.
        Senator Stevens. Our next witness is Dr. Peter Lennie, Dean
    for Science and Professor of Neural Sciences at New York
    University. Good morning, Doctor.
    STATEMENT OF PETER LENNIE, PH.D., DEAN FOR SCIENCE AND
                PROFESSOR OF NEURAL SCIENCE, NEW YORK
                UNIVERSITY, ON BEHALF OF COGNITION,
                LEARNING, EMOTION, AND MEMORY STUDIES AT
                NEW YORK UNIVERSITY
        Dr. Lennie. Thank you, Mr. Chairman. Thank you for the
    opportunity to appear before you today. I am speaking on behalf
    of New York University (NYU), as its Dean for Science. I thank
    the committee for its recognition that university research is a
    cornerstone of national security efforts. And I appreciate
    being able to discuss a project that will enhance national
    security by enhancing the scientific understanding of the brain
    and its role in learning and memory.
        In line with the committee's interests, NYU has undertaken
    a major initiative to advance studies in cognition, learning,
    emotion, and memory. Our research efforts received a major
    boost in 1999, when we successfully competed for an Office of
    Naval Research (ONR) grant to study emotional influences on
    information processing and biological and computational
    mechanisms of visual recognition. This is an area of
    exceptional significance and, indeed, one in which NYU has
    great strengths. NYU now aims to further advance its program by
    exploiting new technologies, particularly functional magnetic
    resonance imaging, which allows us to explore directly and non-
    invasively the link between cognitive processes and the
    architecture of the brain.
        Concentrated investment in this research is needed to
    increase our understanding of how the brain controls behavior.
    Our initiative focuses on what happens in the brain when we
    learn and remember things, and distinguish and identify visual
    objects, particularly under stressful conditions. Understanding
    brain function allows us to improve the human capacity to
    learn, remember, recognize objects, and perform better under
    stress, and to design intelligent machines that mimic and
    improve upon human performance.
        The extent to which brain research is important for
    national security objectives is clear in the following
    examples, all areas in which NYU has substantial strength. On
    condition and perception, understanding how humans analyze and
    distinguish different sensory signals and how they allocate
    attention among the range of objects in their environment is
    crucial to the design of information display systems. Speedy
    and appropriate responses to visual or auditory information,
    whether displayed by instruments or in direct viewing of
    targets or potential threats, it is essential for effective
    performance.
        On machine vision, many of the perceptual and cognitive
    tasks that human beings perform effortlessly, such as
    recognizing visual objects and events and anticipating changes
    in the environment or understanding speech and acoustical
    signals, are in fact tasks of great complexity. We appreciate
    this only when we try to construct intelligent machines that
    have similar capabilities, an enterprise that has so far had
    limited success.
        We can design more intelligent machines if we understand
    the principles the brain uses to solve these complex problems.
    Studies of biological vision can help address machine vision
    problems that relate to vehicle recognition in complex scenes,
    human activity recognition, and autonomous vehicle navigation.
        On learning and memory, understanding the changes that
    occur in the brain when people attend to things and require and
    retain skills will make it easier for us to design intelligent
    training systems that can respond to individual differences
    among personnel in cognitive and psychomotor abilities.
        On stress and performance, understanding the brain systems
    that control emotional memories and affect learning, memory and
    cognitive skills is crucial in optimizing performance under the
    high stress conditions that characterize military operations.
        NYU has outstanding researchers and strengths in the
    disciplines that need to be brought together to tackle these
    complex problems and to successfully meet our national goals
    and this committee's priorities. Your support to continue our
    efforts, particularly in the area of brain imaging, is greatly
    appreciated.
        Mr. Chairman, this concludes my testimony.
        [The statement follows:]
                       Prepared Statement of Peter Lennie
        On behalf of New York University (NYU), I appreciate the
    opportunity to discuss a project of scientific research which is not
    only an important priority for NYU, but which we believe will advance
    national security interests through enhanced scientific understanding
    of brain function and brain development.
        Our project addresses the programmatic interests of this
    subcommittee in enlisting fundamental, university-based scientific
    research to catalyze technological innovation with applications for
    defense purposes as well as for the industrial, medical, and
    educational sectors. This initiative is congruent with Department of
    Defense research priorities and application areas, including its
    interest in sophisticated techniques that involve measurement of brain
    function and computational modeling. Our project will substantially
    expand what we know about: the neural mechanisms of learning and
    memory; the perception, acquisition and storage of information in the
    nervous system; the neurobiology of fear and its impact on learning and
    performance; and the implications of neural vision systems for their
    machine analog, computer vision.
        In line with the Subcommittee's interests, New York University has
    undertaken a major initiative to concentrate and advance studies in
    cognition, learning, emotion, and memory. This enterprise draws on the
    University's strengths in the fields of neural science, computer
    science, biology, chemistry, and psychology to push the frontiers of
    our understanding of how the brain develops, functions, and
    malfunctions, and to prepare the next generation of interdisciplinary
    brain scientists.
        We thank this committee for taking the time to consider and give
    its support to the important research being conducted in this area--an
    area of great strength at New York University. We at NYU firmly believe
    that in the coming decades, a federal investment in mind and brain
    studies will repay itself many times over.
        Our initiative at NYU received a major boost in September 1999
    when, in response to a new multi-disciplinary University Research
    Initiative from the Office of Naval Research, New York University
    successfully competed for a $1.9 million grant to study ``Emotional
    influences on information processing, and biological and computational
    mechanisms of visual recognition.'' New York University is using the
    ONR award to support and expand the research programs of existing
    faculty, attract additional faculty and trainees, and provide the
    technical resources and personnel support that result in a world class
    scientific enterprise.
        A major thrust of our work is research on the learning process,
    including the underlying cognitive processes and architecture that
    affect attention, memory, information processing, skills acquisition,
    and retention, as well as their implications for strategies that can
    rationalize and optimize training and learning--for example, computer-
    aided or ``intelligent'' tutoring--and ultimately, human task
    performance. Of special interest to those studying learning and memory
    systems is neural plasticity, which is the nature of the underlying
    change in the nervous system. At NYU, ongoing investigations into the
    neurobiology of fear are especially revealing in this regard, and are
    helping to explain how the neural emotional memory system, functioning
    normally and abnormally--in phobias, panic attacks, and anxiety--
    affects performance. Central to the neural science enterprise at NYU
    are fundamental studies in neural systems, particularly vision--
    including studies of visual processing pathways, perception, and
    information processing; and audition--including studies of auditory
    regions of the nervous system, behavioral studies, and studies of
    auditory psychophysical ability. These various studies of mind and
    brain employ a full range of techniques; they coordinate anatomical,
    neurophysiological, biochemical, and behavioral experiments; and they
    are conducted in various model systems up through humans, and computer
    modeling and simulations. Additional studies examine biological
    systems, e.g., the neural bases of vision perception and information
    processing, to engineer their computer analogs in data imaging,
    processing, and retrieval.
        New York University is now seeking support to capitalize on the
    momentum generated by the award from the Office of Naval Research, and
    to advance to the next level of technical development to maintain
    research and training excellence with state-of-the-art resources.
    Specifically, NYU is seeking $3,000,000 to continue anatomical,
    neurophysiological, and behavioral studies, and to enhance these by
    exploiting new technologies in a new Brain Imaging Center--a
    university-wide resource for multidisciplinary research in the
    neurosciences and cognitive sciences, particularly learning and memory
    and their underlying neural mechanisms.
        The recent development of imaging technologies has made it possible
    to better understand the link between cognitive processes and the
    architecture of the brain. Previously, it was not possible to subject
    the learning process to traditional scientific methods of experiments,
    controls, hypotheses, and objective observation. Using functional
    Magnetic Resonance Imaging (fMRI), it is now possible to anatomically
    locate, noninvasively, the parts of the brain that are involved in
    brain functions (e.g., learning) and dysfunctions (e.g., memory loss),
    map out the interactions that occur between individual neurons, and
    localize brain areas involved in specific tasks. An investment in
    functional neuroimaging at NYU is an essential step in meeting the
    growing needs of our investigators for study of normal and abnormal
    brain function during the performance of perceptual and cognitive
    tasks.
        Individual researchers in the science programs at NYU compete very
    effectively for federal funds for investigational support through
    traditional routes. However, these traditional funding sources do not
    provide the extensive funding necessary to support purchase multi-use
    instrumentation, and provide the necessary technical and support
    infrastructure for a coordinated large-scale initiative. Support from
    the Department of Defense would enable us to meet these needs, and to
    fully develop the potential New York University has to produce a new
    understanding of the brain, and new ways of using that knowledge for
    improving the national welfare.
    Research Applications for National Security
        The principal thrust of our initiative is to understand what
    happens in the brain when we learn and remember things, retrieve
    information from memory, and distinguish and identify visual objects,
    particularly under conditions of emotional stress. Through
    understanding these aspects of brain function we become able to do two
    things: first, we can improve the human capacity to learn, remember,
    recognize objects, and perform better under stress; second, we can
    design intelligent machines that mimic and improve upon human
    performance in many of the complex perceptual and cognitive tasks now
    undertaken by military personnel. The great extent to which brain
    research can meet Defense objectives is clear in the following
    examples, all areas in which NYU has substantial strength:
        Cognition and perception.--Understanding how humans analyze and
    distinguish different sensory signals, and how they allocate attention
    among the range of objects in their environment, is crucial to the
    design of information display systems. Speedy and appropriate responses
    to visual or auditory information, whether arising in complex signals
    displayed by instruments, or from direct viewing of targets or
    potential threats, is essential for effective military performance.
    Researchers at NYU study how the brain analyses visual and auditory
    information, both at the level of operation of nerve cells, and at the
    level of the performance of the man or woman engaged in tasks. These
    studies provide important information about how the brain distinguishes
    and analyzes different sensory stimuli, about which parts of it are
    most involved in different perceptual and cognitive tasks, and about
    the characteristics of visual and auditory patterns that maximize their
    distinguishability and legibility.
        Biomimetic machine vision.--Many of the perceptual and cognitive
    tasks that human beings perform effortlessly, such as recognizing
    visual objects and events and anticipating changes in the environment,
    or understanding speech and acoustical signals, are in fact tasks of
    great difficulty. We appreciate this only when we try to construct
    intelligent machines that have similar capabilities--an enterprise that
    has so far had limited success. We can design more intelligent machines
    if we understand the principles the brain uses to solve these complex
    problems. Researchers at NYU are studying these principles by
    developing theories about the computational operations that the brain
    performs, particularly in the vision system. These biomimetic vision
    studies bear directly on challenging machine vision problems that
    relate to vehicle recognition in complex scenes, human activity
    recognition, and autonomous vehicle navigation.
        Learning and memory.--A major part of our effort is devoted to
    research on the learning process, with a focus on understanding the
    neuronal changes in the brain when people attend to things, and acquire
    and retain skills. Neuroscientists are now close to understanding the
    nature of the changes that occur in the brain when we learn new things.
    Very important changes involve alterations in the strength of the
    synapses--the connections between individual nerve cells. These
    connections become stronger or weaker in ways that we do not yet fully
    understand. When we understand how, when, and under what conditions
    experience changes these connections in the brain we will be able to
    improve the speed and flexibility with which people learn complex
    tasks, and the reliability and longevity of their memories. Such
    studies are an essential prerequisite for designing ``intelligent''
    training programs that can respond to individual differences among
    military recruits in cognitive and psychomotor abilities, attention,
    and concentration.
        Stress and performance.--Emotional memories, particularly those
    involving fear, have a profound impact on people's lives, often
    interfering with the normal execution of a person's duties. The brain
    systems that control emotional memories and behavior are now being
    charted by neuroscientists, and the pathways that control fear, and its
    influence on a wide range of behaviors, are beginning to be well
    understood. A fuller understanding of the unconscious circuitry of fear
    will make it possible to control fear and its potentially destructive
    effects on human performance. Understanding the mechanisms by which
    neural circuits involved in emotion affect learning, memory, and
    cognitive skills is crucial in optimizing performance under the high-
    stress conditions that characterize military operations. NYU scientists
    have already made some of the most notable contributions to our
    understanding of fear and anxiety disorders, and are especially well-
    placed to advance our understanding of this important phenomenon.
        NYU's program of research on these problems draws on a range of
    contributing disciplines--neuroscience, behavioral science, computer
    science and applied mathematics--and encompasses work ranging from the
    investigation of the activity of single nerve cells, through large
    scale modeling of brain function, to the careful measurement of human
    performance on perceptual and cognitive tasks. The marriage of these
    disciplines and levels of study is essential to understanding the
    complexities of human performance and the operations underlying it.
    When we understand these operations better we will be able to devise
    ways to improve the quality and reliability of human performance, and
    to design better and more intelligent machines.
        While research at NYU will have these direct applications for
    national security, there will be important spin-offs in other areas,
    including biomedical therapeutics and diagnostics, early childhood
    learning and intervention, and job training. As examples, research
    conducted in these areas will necessarily address the loss of memory
    through aging or injury, the acquisition of language, and windows of
    learning opportunity in brain development, among others.
    Feasibility: Institutional Strengths
        New York University has the resources necessary to conduct broad
    ranging multidisciplinary research and training. Beyond the
    intellectual resources and talents of our faculty, there are
    established frameworks for interdisciplinary and interschool
    collaboration and a commitment to brain studies at the highest level of
    the University administration. The nation's largest private university,
    with 13 schools and over 49,000 students, NYU is a leading center of
    scholarship, teaching and research. It is one of 29 private
    institutions constituting the distinguished Association of American
    Universities, and is consistently among the top U.S. universities in
    funds received from foundations and federal sources.
        As the core of a decade-long multi-million dollar science
    development plan, NYU created a premier neuroscience program that
    encompasses a pre-eminent faculty and generates substantial external
    funding from federal and state agencies as well as the private sector.
    These investigations have attracted millions of federal dollars from
    the NIH, NSF, ONR, and EPA. In addition, NYU has received major funding
    from the most prestigious private foundations supporting the sciences,
    including the Howard Hughes Medical Institute, the W.M. Keck
    Foundation, the Alfred M. Sloan Foundation, and the Beatrice and Samuel
    A. Seaver Foundation. Neural science faculty have, as individuals, won
    prestigious awards, including HHMI Investigator, NSF Presidential
    Faculty Fellow, NIH Merit Awardee, McKnight Foundation Scholar in
    Neuroscience, and MacArthur ``Genius'' Fellow.
        While other academic institutions are also conducting brain
    studies, NYU has special strengths in important emerging research
    directions that are central to the Defense mission. Neural science at
    NYU is particularly well known for research in the neural basis of
    visual processing and perception, theoretical/computational
    neurobiology, the linkage of sensation and perception with action,
    emotional memory, plasticity in the visual and auditory system, and
    molecular and developmental neurobiology. NYU scientists have made
    important contributions to visual processing, deriving the most
    successful methods available for studying nonlinear interactions in
    neuronal information processing; emotion, giving the first real glimpse
    into the neuroanatomy of fear; neural development, with landmark work
    on the vision system; and the neural bases for auditory function,
    including neural sensitivity to auditory motion stimuli.
        NYU is strategically placed to conduct studies in cognition,
    learning, emotion, and memory that capitalize on expertise in
    physiology, neuroanatomy, and behavioral studies and build on active
    studies that range from the molecular foundations of development and
    learning to the mental coding and representations of memory. Research
    in these areas will encompass diverse research approaches, including
    mathematical and computational modeling, human subject psychological
    testing, use of experimental models, and electro-physiological,
    histological, and neuroanatomical techniques.
        Support from the Department of Defense will help us move rapidly
    forward with a research effort that should yield knowledge of great
    importance for the priorities of the Department of Defense.

        Senator Stevens. We do thank you, Doctor.
        I note that you said you competed for a grant from the
    Office of Naval Research. Have you competed for grants from the
    Institute of Brain Disorders, of NIH? We have doubled the
    amount available to that Institute over the last 10 years. It
    has now reached the level of $3.7 plus billion, much more money
    than we have in this bill for research. Did you compete for
    money from that Institute?
        Dr. Lennie. We have not sought support from the programs of
    the National Institute of Mental Health (NIMH), Mr. Chairman.
    We sought support from ONR because we believe that the work we
    proposed to do was more closely allied with the objectives of
    the ONR program through the university research initiatives.
        Senator Stevens. I understand that. You want additional
    money now, right?
        Dr. Lennie. Yes, sir.
        Senator Stevens. From ONR, when we are increasing it over
    at the Institute of Brain Disorders.
        Dr. Lennie. There will be parts of the enterprise at New
    York University that would be competing for these funds at
    NIMH, but the initiative that I am discussing now is one that
    we believed was very closely in line with the objectives of
    ONR, which is why we had in fact applied for the funds.
        Senator Stevens. Did ONR request the money that you are
    asking for?
        Dr. Lennie. Last year.
        Senator Stevens. Is it in the budget now?
        Dr. Lennie. I do not know, sir.
        Senator Stevens. We will look. But one of our problems is
    that these two lines of funding are duplicating the application
    of money for research when we are trying to maintain a
    Department of Defense. We have supported the decade of the
    brain at NIH tremendously, and they have a tremendous amount of
    money. I would urge you to look to them if you have got some
    new initiatives that you want to pursue in brain research.
        Dr. Lennie. Thank you.
        Senator Stevens. Senator.
        Senator Inouye. I have nothing for this witness, Mr.
    Chairman.
        Senator Stevens. Thank you very much.
        Our next witness is Rogene Henderson, Senior Scientist from
    the Lovelace Respiratory Research Institute.
        We have a statement to be put in the record prior to your
    testimony from Senator Domenici. He had to go to his committee
    meeting and has asked us to put this in here. It has two
    questions that he has asked you to answer for the record. And,
    Dr. Henderson, I hope you will agree to do that.
        We will give this to you, but I ask you to answer it for
    the record and mail it to us, please.
        [The statement follows:]

                 Prepared Statement of Senator Pete V. Domenici

        I would like to briefly bring to the attention of this
    Committee and persons in attendance at this hearing the
    important work of a collaborative effort between the Lovelace
    Respiratory Research Institute and the University of Alabama.
    These two institutions are tackling the critical problem of
    acute lung injury in our effort to ensure better healthcare and
    maximize survivability on the battlefield.
        Exposure to smokes, obscurants, aerosols, or noxious
    substances have long presented a potential hazard to our men
    and women in uniform. At the same time, possible exposure to
    chemical and biological agents or nuclear materials presents an
    increasing risk in battlefield operations. No cure exists for
    the trauma or possible respiratory brought on by such
    exposures.
        I believe these two institutions bring some of the best
    medical and technical knowledge to the fore in addressing this
    increasing risk. For a small investment we can ensure that
    accidental exposures in the course of day-to-day operations or
    the ever-increasing possibility of biological, chemical or
    nuclear agents on the battlefield do not unnecessarily threaten
    our military personnel.
    STATEMENT OF ROGENE HENDERSON, PH.D., SENIOR SCIENTIST,
                LOVELACE RESPIRATORY RESEARCH INSTITUTE
        Dr. Henderson. Thank you. I will answer it and mail it to
    you.
        Senator Stevens. Thank you very much.
        Dr. Henderson. Thank you, Mr. Chairman. And I also would
    like to thank you for your prior support of medical research to
    meet military needs. I am testifying on behalf of a joint
    project on acute lung injury proposed by the Lovelace
    Respiratory Research Institute and the University of Alabama at
    Birmingham (UAB). Dr. Loring Rue, from UAB, is here with me to
    answer questions regarding that institution.
        Senators, there is a deadly lung disease that thwarts the
    efforts of our military field medical personnel to care for our
    wounded. Trauma, burns, infection, and blood loss can develop
    into a condition that leads to rapid accumulation of fluid in
    the lungs. If not reversed, this condition leads to lack of
    oxygen, multiple organ failure and death.
        In the Vietnam conflict, this condition affected over 90
    percent of those injured personnel who were initially evacuated
    alive from the battlefield but who later died. There is still
    no specific treatment for this condition.
        Permanent lung disability is common among those who
    survive. There are about 150,000 cases a year in injured
    civilians, where the condition is called acute respiratory
    distress syndrome (ARDS). Nationwide, the survival rate is only
    about 50 percent. There are actually more fatalities from ARDS
    than from breast cancer or prostate cancer or acquired immune
    deficiency syndrome (AIDS).
        NIH sponsors research on ARDS, but does not focus on injury
    and treatment scenarios of special concern to defense
    operations. Extensive bullet wounds, burns or blood loss often
    lead to ARDS.
        Field treatment is problematic, especially during the first
    critical hour after injury. Understanding these issues,
    Lovelace and UAB developed a plan to combine their
    complementary resources to conduct research to improve the
    management of acute lung injury of defense significance.
        Lovelace is recognized worldwide for its research on lung
    damage from inhaled chemicals and radioactive materials. This
    unique, federally owned, privatized inhalation laboratory
    operates as a national resource for all agencies. The
    laboratory has a long history of studying the toxicity of
    inhaled pollutants, developing and using animal models of human
    lung conditions and studying the causes and treatments of lung
    disease.
        However, Lovelace needed a partner with complementary
    research and clinical skills. The UAB was also reaching out for
    complementary expertise. Dr. Matalon's group is world renown
    for its work on cellular and molecular mechanisms of acute lung
    injury, and especially ARDS.
        Working with the Office of Naval Research, Dr. Matalon's
    group has begun to identify potential new treatments. The
    University Medical Center treated over 250 cases of ARDS in the
    past 2 years. The unusually close collaboration between the UAB
    clinicians and laboratory scientists facilitates testing
    emerging therapies for civilian ARDS patients.
        Together, Lovelace and the UAB have designed a carefully
    targeted program that focuses on defense-related acute lung
    injury. Several interrelated tests with high potential for
    payoff in a limited time are proposed. These projects are
    listed in the written testimonies.
        Several administer stakeholder organizations within the
    Department of Defense would benefit from the results of this
    research. Of particular relevance for this work is the issue of
    military preparedness, which can be improved by the medical
    technologies to be developed at this proposed center for acute
    lung injury.
        Mr. Chairman, we now seek the resources required to
    implement this effort. We respectfully request recognition of
    this need in the defense appropriations. Thank you.
        [The statement follows:]
                     Prepared Statement of Rogene Henderson
        It is proposed that the Department of Defense support two new
    multi-institutional efforts developed specifically to address issues
    important to the Department's mission. Support is sought for the Center
    for Acute Lung Injury, a collaborative effort between the Lovelace
    Respiratory Research Institute and the University of Alabama aimed at
    improving the management of lung injury and enhancing lung repair, a
    critical battlefield injury in need of scientific and medical pursuit
    to improve the survivor-ability under battlefield conditions.
                          center for acute lung injury
    The Problem
        Acute lung injury is a major problem to the military because of the
    unique work situations encountered by Department of Defense (DOD)
    personnel. Training or actual battlefield situations can involve
    potential exposure of troops to smokes and obscurants, respirable
    aerosols that will deposit in the lung. Detonations of military weapons
    produce shock waves that injure the lung. Confined spaces, such as on
    nuclear submarines, the holds of aircraft carriers and the interior of
    tanks provide the potential for exposures to noxious substances where
    increased ventilation may be difficult to achieve. In actual
    battlefield operations, exposures to chemical and biological warfare
    agents as well as nuclear materials, all pose a threat to the pulmonary
    system if inhaled. Systemic sepsis and severe trauma encountered from
    battlefield wounds can eventually develop into a condition known as
    Adult Respiratory Distress Syndrome (ARDS), in which all vessels within
    the body become leaky resulting in respiratory insufficiency, tissue
    hypoxemia and multi-organ failure.
        There is at present no cure for this condition. A scientific center
    devoted to the study of the prevention and treatment of acute lung
    injury would serve to focus the research efforts of the military in
    this area and would be an effective research arm for military
    institutions devoted to protecting the health of military personnel and
    their families. This effort would significantly add to the military
    preparedness of our Armed Forces.
    Two Institutions Join to Respond to the Need
        To meet the needs of the DOD, two outstanding national institutions
    have joined in a collaborative effort to establish the Center for Acute
    Lung Injury. Lovelace Respiratory Research Institute (LRRI) is an
    internationally recognized inhalation toxicology laboratory, which was
    originally founded by DOE and its predecessors to study the health
    effects of inhaled radionuclides. LRRI is fully equipped to handle
    highly toxic agents, such as plutonium, depleted uranium, biological
    warfare agents and nerve gases. The excellent aerosol scientists at
    LRRI are also known for their ability to monitor and characterize
    atmospheres under field conditions. Thus, LRRI cannot only test for
    pulmonary toxicity, but can determine the nature and amount of noxious
    material in exposure atmospheres. The University of Alabama at
    Birmingham (UAB) has, under the outstanding leadership of Dr. Sadis
    Matalon, established a world-renowned laboratory studying the cellular
    and molecular mechanism of acute lung injury, and in particular, the
    mechanism of the development of ARDS. During the last six years,
    scientists and clinicians at UAB have been performing a variety of
    biochemical, molecular biology and physiological studies to understand
    the basic mechanisms by which reactive oxygen species damage the lungs
    and to identify the physiological consequences of this injury.
        Both LRRI and UAB have a past history of high quality research
    performed for the DOD. Both institutions have clinical research centers
    for clinical trials and extensive contacts and collaborations with
    biotechnology and pharmaceutical companies aimed at designing and
    testing new therapeutic agents. The combination of these two
    outstanding groups from a state-of-the-art team for addressing the
    problems of the DOD related to acute lung injury. It is the intention
    of the two collaborating organizations that the Center for Acute Lung
    Injury should be the first place the DOD turns to when a problem
    regarding inhalation toxicology and acute lung injury arises.
        In summary, LRRI and UAB propose to establish a center for Acute
    Lung Injury to support the DOD with all problems related to inhalation
    toxicology and acute lung injury.
    Roles of the Collaborating Institutions
        Lovelace Respiratory Research Institute.--LRRI is recognized world-
    wide for its inhalation toxicology research, for its use of laboratory
    research to determine human health risks from inhaled materials, and
    for the federally-owned privatized inhalation laboratory it operates as
    a national resource. The unique laboratory is fully equipped to handle
    highly toxic agents, such as strategic chemical, biological and
    radiological agents, and has a long history of doing so safely. LRRI
    aerosol scientists are also known for their ability to monitor and
    characterize atmospheres under field conditions, and to reproduce those
    atmospheres under controlled laboratory conditions.
        The University of Alabama.--UAB has, under the outstanding
    leadership of Dr. Sadis Matalon, established a world-renowned
    laboratory studying the cellular and molecular mechanism of acute lung
    injury, and in particular, the mechanism of the development of ARDS.
    During the past six years, scientists and clinicians at UAB have
    conducted several key biochemical, molecular biology and physiological
    studies advancing our understanding of the basic mechanisms by which
    reactive oxygen species damage the lungs and identifying the
    pathological and physiological consequences and prognosis of this
    injury.
        Both LRRI and UAB have a solid track record of performing high
    quality research for DOD. In addition, both institutions have clinical
    research centers for clinical trials and extensive contacts and
    collaborations with biotechnology and pharmaceutical companies aimed at
    designing and testing new therapeutic agents. The combination of these
    two outstanding groups form a state-of-the-art team for addressing the
    problems of the DOD related to acute lung injury. It is the specific
    intention of the two collaborating organizations that the Center for
    Acute Lung Injury would be a much-needed first-line source of
    information and assistance for DOD when a problem regarding inhalation
    toxicology and acute lung injury arises.
    The Center's Research Strategy
        The two partner institutions have identified and prioritized a set
    of interrelated key issues that target current knowledge barriers, are
    amenable to research by their coordinated efforts in a constrained time
    frame, and have high potential for pay-off. Through the Center, they
    will conduct integrated research specifically targeting lung injury,
    repair, and treatment issues pertaining to DOD problems. The research
    will include basic studies on induction and repair of acute lung
    injury, applied inhalation toxicity studies to address specific DOD
    problems, and atmosphere monitoring and characterization to meet DOD
    needs. Basic research will be conducted to determine the key defense
    mechanisms of the lung with emphasis on enhancing the defenses that
    kill pathogens, and studies to assess the ability of drugs (retinoids
    and growth factors) to promote wound healing and tissue repair.
        This carefully-targeted body of research will consist of the
    following five project areas supported by core activities at both
    institutions. A key feature of the work is that both LRRI and UAB will
    be represented among the chief investigators of each project.
        Research Project Areas:
      --Mechanisms of Pathogen Killing by Normal and Injured Lungs
      --Mechanisms and Prevention of Acute Lung Injury Following Systemic
            Trauma
      --Role of Oxidant Stress During Acute Lung Injury
      --Role of Altered Immune Function on Mortality in Acute Lung Injury
      --Development of New Models of ARDS that More accurately Predict New
            Effective Human Medical Interventions
    Addressing the DOD Needs for Military Preparedness
        Our Armed Forces must be prepared to face medical assaults both on
    the battlefield and within the military population and those civilian
    populations that are dependent upon DOD logistical and direct support.
    It is noted that there has been a significant increase in adenovirus
    respiratory infection within the military population in recent years.
    Other respiratory diseases are on the increase and can markedly reduce
    the preparedness of our Armed Forces to accomplish all of their
    numerous missions. The work of the Center will result in new
    interventions to reduce these disease risks for military and related
    civilian populations in all aspects of their lives. Much of the
    functionality of the Armed Forces requires a healthy military and
    civilian population, and any degradation of the respiratory health of
    the support forces of the DOD also reduces the ability of the military
    to accomplish their missions.
        More effective anticipation, prevention, diagnosis, and treatment
    of acute lung Injury will enhance the effectiveness of DOD programs at
    all levels from battlefield protection of troops from chemical and
    biological warfare agents or blast damage to routine protection of
    service personnel from toxic chemicals during peacetime duties. With
    emerging threats from weapons of mass destruction, state of the art
    information from the Center for Acute Lung Injury will be of interest
    to many DOD organizations and could have critical significance for U.S.
    tactical and strategic postures. There are many major DOD stakeholders
    in the issues addressed by this program. These include:
      --The Office of Naval Research (ONR) with broad responsibilities for
            improving technology to protect personnel;
      --The U.S. Army Medical Research Institute of Infectious Disease
            (USAMRIID) with lead responsibilities for research to advance
            the medical prevention and treatment of biological diseases and
            biological warfare casualties;
      --The U.S. Army Medical Research Institute for Chemical Defense
            (USAMRICD) which is the nation's lead laboratory for research
            to advance the medical prevention and treatment of chemical
            warfare casualties;
      --The Defense Threat Reduction Agency (DTRA) which is dedicated to
            reducing the threat to the United States and its allies from
            nuclear, chemical, biological, conventional, and special
            weapons;
      --The Air Force Nuclear Weapons and Counterproliferation Agency
            (NWCA) with responsibility for ensuring an effective deterrence
            posture for weapons of mass destruction; and
      --The Defense Advanced Research Program Agency (DARPA) which is DOD's
            central research and development organization for pursuing high
            risk/high payoff research and technology.
        In addition, improved knowledge of the opportunities and
    limitations for preventing and treating acute lung injury will be of
    interest to many special purpose organizations such as the Marine Corps
    Chemical and Biological Incident Response Force (CBIRF) which is a
    self-contained, task-oriented unit with the ability to detect hazardous
    materials, perform decontamination, and offer medical treatment and
    security.
    Funding Is Sought to Conduct These Key Studies
        A total of $6 million ($3 million each to LRRI and UAB) is sought
    to provide salaries, purchase equipment, provide core support services,
    facilitate travel for collaborating scientists between the two
    institutions as necessary to conduct the five specific, carefully-
    targeted and coordinated studies listed above.

        Senator Stevens. Doctor, Senator Domenici has some
    questions and I will not duplicate them here. But tell me, can
    you assure me that if we open this new line of research that it
    really is military related?
        Dr. Henderson. Yes, it is, because the condition is caused
    by trauma and blood loss and infections. This is of special
    significance to the military, because the battlefield injuries
    are just those types of injuries that tend to lead to this
    condition.
        Senator Stevens. I understand that, and we are familiar
    with the terrible problem of invasion of blood into the lungs
    and other problems that develop when a person is injured in
    military activity. That is a terrible thing. Are you going to
    concentrate, however, on the military side of this or on the
    side that deals with accidents on the civilian side? I know
    that the medical result may be the same, but it is two
    different problems.
        There is lots of money at NIH dealing with the problems of
    those people who are injured on the highways. We are interested
    in the acute problems of people who are injured in military
    actions. Is that what you are going to be interested in?
        Dr. Henderson. Yes, that is the whole plan for this center.
    And Lovelace has in the past done a great deal of work for the
    military. We are familiar with their problems, and it is their
    needs that we are trying to address. As you say, there are
    other people who are funding research to address the civilian
    needs. The condition that develops, as you say, is similar. And
    some of the work that we do for the military will benefit the
    civilian population.
        Senator Stevens. I imagine it will, but we are very acutely
    interested in the result of concussion and the new bullets and
    mechanisms that cause such an enormous impact on the body when
    they hit them.
        Dr. Henderson. Yes. And that is what we will emphasize, and
    that is where Lovelace, as I say, has emphasized work on these
    types of scenarios in the past. And we are fully prepared to do
    that in the future.
        Senator Stevens. Senator, do you have any questions?
        Senator Inouye. No, Mr. Chairman.
        Senator Stevens. Thank you very much. It is a very
    interesting thing. I was exposed to a briefing on some of these
    events that took place in past conflicts, and we are very
    interested in that. We are very interested in finding a way to
    deal with it on the battlefield, Doctor.
        Dr. Henderson. Yes, we are, too. And it is an important
    thing to be able to deal with it immediately, before the
    condition develops. And that is what we want to do.
        Senator Stevens. Thank you very much.
        The questions that Senator Domenici referred to earlier
    that he was going to submit will be inserted in the record at
    this point along with your responses.
        [The information follows:]
                Questions Submitted by Senator Pete V. Domenici
                               acute lung injury
        Question. Mr. Henderson, I appreciate your appearance here today on
    behalf of the Center for Acute Lung Injury. I have read your testimony
    and would merely request clarification on one point.
        1. I understand that the $6 million to the Lovelace Respiratory
    Institute and the University of Alabama will be divided equally.
    However, I would ask that for the record you provide us with full
    accounting of how the $6 million will be allocated between salaries,
    procurement, services, and studies as indicated in your testimony.
        2. After initial establishment of the Center, what level of
    continued support would be required to sustain your research
    operations?
        Answer.
                       Lovelace Respiratory Research Institute,
                                  Albuquerque, New Mexico, May 9, 2000.
    The Honorable Ted Stevens,
    522 Hart Senate Office Building,
    Washington, DC 20510.
        Dear Senator Stevens: I would like to take this opportunity to
    thank you for the opportunity to appear before your subcommittee on May
    8 and to present you with a detailed explanation of our collaborative
    initiative at the New Mexico based Lovelace Respiratory Research
    Institute and the University of Alabama for an Acute Lung Injury Center
    Project to explicitly serve DOD and military operational and medical
    technology. Respectfully, I will use this letter as a means of
    answering the questions posed to you, Mr. Chairman, as well as those
    submitted by Senator Domenici.
        First and foremost, this project is a focused Department of Defense
    (DOD)-specific endeavor directed at the unique and extreme risks
    associated with the medical emergencies encountered by DOD personnel on
    the battlefield and related situations. Military men and women all face
    acute trauma, which frequently and rapidly develops into what is called
    Acute Lung Injury. I want to reassure you and reiterate that this joint
    Lovelace-Alabama project is designed and intended to focus specifically
    on military needs, preparedness objectives and to military technical
    development.
        Acute Lung Injury can result from toxic exposures to inhaled
    materials or extreme trauma to the chest or other vital body regions
    that results in rapid hypoxemia, pulmonary edema, extreme lung
    inflammation and multiple organ failure. Death is the frequent result.
    These are injuries most likely to be expected in DOD operations to DOD
    personnel. The lessons learned from the proposed studies can be
    directly implemented by DOD medical personnel to reduce and mitigate
    these combat related clinical emergencies on the battlefield or
    immediately after triage to a field hospital. The project envisions a
    series of directed studies that will lead to the development of
    practical interventions to be employed by military medical personnel
    upon the affected DOD soldiers, sailors and related workers in unique
    extreme military situations.
        We were asked to provide a full accounting of how the requested $6
    million would be spent. Attached is a specific breakdown of the budget,
    and an explanation of the breakdown of funds dedicated to research,
    research institutes and equipment and to related costs that support
    that research. The funds will be expensed equally between the two
    institutions.
        Approximately two-thirds of all expenditures will be devoted to
    critical research personnel, support of highly skilled investigators,
    and over 15 bachelor and masters level technical support staff, along
    with numerous animal care workers, computer service personnel and
    aerosol exposure technicians. They will undertake the actual work of
    developing and expanding the unique animal models of Acute Lung Injury
    described in the proposal proper and developing interventions designed
    to reduce, mitigate or eliminate the fatalities associated with the
    syndrome. For example, the scientists, lab technicians and animal care
    workers will develop two new animal models of Acute Lung Injury
    focusing on differing aspects of the disease and subsequent treatments
    (lung edema and hemorrhage). All of these workers will be working 100
    percent on the research proposed including the development of new
    technologies to be implemented later as effective medical
    interventions.
        The other core area of expenditure is the critical research
    equipment, materials and supplies (approximately one-fifth of the total
    costs). These too represent costs that are 100 percent dedicated to the
    actual scientific experiments--paying for animals, chemicals, some
    exposure equipment and tissue culture and related supplies. The
    remaining costs include minor expenses for clinical samples from
    victims of Acute Lung Injury, consulting costs and travel to scientific
    meetings. The indirect costs for both institutes are approved by
    federal audit and go toward many of the categories described above
    including support personnel for exposure suits, animal care personnel
    and facilities and upkeep, as well as the development of the necessary
    computer support services and facility upgrades necessary to carry out
    the goals of the project. Less than 20 percent of the indirect costs
    (less than 10 percent of the total) will be devoted to peripheral but
    necessary expenses such as clerical and peripheral administrative
    costs.
        The final question is related to the need for continued support
    after the initial establishment of the Center. We anticipate that this
    program of research and technology development will take approximately
    12 to 24 months to accomplish. Thereafter, the successes of the work
    will be identified and only those directly, exclusively and
    specifically related to the Defense Department medical mission would be
    explored through a continuing smaller relationship with the DOD. It is
    anticipated that peripheral to this core of discoveries will be a
    number of outcomes that will be of interest to other agencies such as
    the EPA, DOE, CDC and NIH. Funds will be sought from other sources to
    support these other on-going activities of the Center as well. We
    anticipate that this project will lead to a permanent Center of
    Excellence between LRRI and UAB organizations focusing on the
    development of enhancements and exploitation of the discoveries that
    come from the R&D activities of the projects.
        We hope that this explanation adequately answers the questions
    posed at the hearing, and we at Lovelace again thank you for that
    opportunity. We understand your concerns about the utilization of
    limited resources within the Defense budget, and wanted to take every
    effort to assure you of our military focus and commitment. We want to
    thank you as well for your leadership on defense and research issues
    and stand ready to respond to any additional questions you might have.
                Sincerely,
                                       Rogene Henderson, Ph.D.,
                                 Senior Scientist/NERC Deputy Director.

                                           UNIVERSITY OF ALABAMA 2 YEAR STUDY
    ----------------------------------------------------------------------------------------------------------------
                                                                                   Project 4
                                               Project 1   Project 2   Project 3      J.       Project 5   CATEGORY
                                               M. Sadis    C. Irshad  K. Randall   Thompson   S. Matalon     TOTAL
    ----------------------------------------------------------------------------------------------------------------
    PERSONNEL...............................    $348,390    $320,880    $302,448    $373,054    $194,896  $1,539,668
    CONSULTANT COSTS........................  ..........  ..........  ..........  ..........      11,200      11,200
    MAJOR EQUIPMENT.........................      75,000  ..........      11,568      72,000      37,132     195,700
    MATERIALS & SUPPLIES....................      78,060     100,000      16,000      90,000       9,000     293,060
    TRAVEL COSTS............................       6,000       6,000       6,000       6,000      19,200      43,200
    PATIENT COSTS...........................      16,000  ..........      64,000  ..........  ..........      80,000
    OTHER COSTS.............................  ..........       4,000  ..........      14,000      26,000      44,000
    INDIRECT COSTS..........................     213,346     187,432     141,136     210,128     113,228     865,270
                                             -----------------------------------------------------------------------
          PROJECT TOTALS....................     736,796     618,312     541,152     765,182     410,656  ..........
          COMBINED PROJECT TOTALS...........  ..........  ..........  ..........  ..........  ..........   3,072,098
    ----------------------------------------------------------------------------------------------------------------

    LBERI 2 YEAR STUDY

    PERSONNEL.....................................................  $920,056
    MATERIALS & SUPPLIES..........................................   385,310
    TRAVEL COSTS..................................................    10,000
    COMPUTER SERVICE..............................................    51,496
    DOE FACILITY USE COST.........................................   102,292
    INDIRECT COSTS................................................ 1,366,862
                        --------------------------------------------------------------
                        ____________________________________________________

          SUBTOTAL................................................ 2,836,016
                        --------------------------------------------------------------
                        ____________________________________________________

    6 PERCENT FEE.................................................   163,984
                        --------------------------------------------------------------
                        ____________________________________________________

          TOTAL................................................... 3,000,000

                           TOTAL COMBINED COST--YEAR 1
    ------------------------------------------------------------------------
                                                                   CATEGORY
                                              UAB        LBERI      TOTALS
    ------------------------------------------------------------------------
    PERSONNEL...........................  $1,539,668    $920,056  $2,459,724
    CONSULTANT COSTS....................      11,200  ..........      11,200
    MAJOR EQUIPMENT.....................     195,700  ..........     195,700
    MATERIALS & SUPPLIES................     293,060     385,310     678,370
    TRAVEL COSTS........................      43,200      10,000      53,200
    CLINICAL COSTS......................      80,000  ..........      80,000
    COMPUTER SERVICE....................  ..........      51,496      51,496
    DOE FACILITY USE COST...............  ..........     102,292     102,292
    OTHER COSTS.........................      44,000  ..........      44,000
    INDIRECT COSTS......................     865,270   1,366,862   2,232,132
    6 PERCENT FEE.......................  ..........     163,984     163,984
                                         -----------------------------------
          PROJECT SUBTOTALS.............   3,072,098   3,000,000  ..........
                                         ===================================
          PROJECT TOTAL.................         6,072,098
    ------------------------------------------------------------------

        Senator Stevens. Our next witness is Joe Flynn, Vice
    President of the Fourth District of the American Federation of
    Government Employees (AFGE). Good morning.
    STATEMENT OF JOE FLYNN, NATIONAL VICE PRESIDENT, FOURTH
                DISTRICT, AMERICAN FEDERATION OF GOVERNMENT
                EMPLOYEES, AFL-CIO
        Mr. Flynn. Good morning, sir. Good morning, Senator Inouye.
        Mr. Chairman, AFGE is the largest Federal employee union,
    representing more than 600,000 public employees across the
    country, including more than 200,000 in the Department of
    Defense. I thank you for this opportunity to discuss the issue
    of most concern to Federal employees, and especially those in
    DOD, and that is contracting out.
        We certainly appreciate the bipartisan support we have
    received from this subcommittee on this issue. And in
    particular, Mr. Chairman, we would like to recognize yourself
    as being one of our strongest supporters in this area.
        A March 10 report from the DOD Inspector General gave the
    Department's service contracting out efforts the worst grade
    ever. The Inspector General (I.G.) looked at 105 DOD contracts
    worth $6.7 billion. Every single one of them had some type of
    problem. The I.G. confessed that he and his staff were startled
    by the audit results, because they found problems with every
    one of the 105 actions. In nearly 10 years of managing the
    audit office of the I.G., I do not ever recall finding problems
    on every item in that large a sample of transactions, programs
    or data.
        Mr. Chairman, the subcommittee and other folks should be
    convinced that there needs to be a brake put on DOD contracting
    out pending further review. And in particular, we would like to
    address your attention to the Navy's ill-considered
    privatization of its entire communications system. As the
    General Accounting Office (GAO) reported, the Navy's
    acquisition approach and implementation plan for developing an
    Internet have a number of weaknesses that make the effort
    unnecessarily risky. The GAO also pointed out that the
    extraordinary rush to bestow this multi-billion dollar contract
    on one lucky contractor was not driven by specific mission
    needs.
        Navy officials insist that public/private competition is
    not required because the Internet contract somehow constitutes
    new work. Any objective examination of this contract, which
    also includes an oversight contract, suggest that this claim is
    nothing more than an attempt to avoid serious scrutiny.
        GAO has also raised questions about the financing for this
    privatization scheme, as well as the impact of entrusting the
    Navy's entire communications system to a contractor,
    potentially one that could be foreign owned.
        This subcommittee should force the Navy to subject the
    Internet work to private/public competition. The thousands of
    Federal employees currently performing the Navy's communication
    work deserve the chance to defend their jobs. And any
    contractor must be required to prove in advance that
    outsourcing is in the best interests of our warfighters and
    taxpayers.
        Senator, once again, thank you for the opportunity for
    allowing us to appear. If there are any follow-up questions or
    additional information we can provide you, we are certainly at
    your service.
        [The statement follows:]
                        Prepared Statement of Joe Flynn
        My name is Joe Flynn and I am the National Vice President for
    AFGE's Fourth District, which includes Maryland, Virginia, West
    Virginia, and North Carolina. AFGE is the largest federal employee
    union, representing more than 600,000 public employees serving across
    the nation and around the world, including more than 200,000 in the
    Department of Defense (DOD). I appreciate this opportunity to discuss
    the issue of most concern to federal employees: contracting out and
    privatization. I thank you, Mr. Chairman, for your very strong support
    for federal employees generally as well as in the context of defense
    appropriations legislation. I must also single out in particular three
    Senators who have striven to reduce the obvious inequities in the
    Administration's outsourcing agenda: Senators Durbin, Lautenberg, and
    Harkin.
    The Failure to Monitor the Costs and Consequences of Contracting Out
        Those lawmakers most familiar with contracting out understand, in
    the words of the House Defense Appropriations Subcommittee, that there
    is ``no clear evidence that (contracting out and privatization) is
    reducing the cost of support functions . . . with high cost contractors
    simply replacing government employees.'' The General Accounting Office
    (GAO) agrees, reporting that the Department of Defense (DOD), the
    agency that does the most contracting out, has no way of determining if
    savings from all of its contracting out efforts are actually being
    realized.
        And the situation is getting worse, not better. A March 10 report
    from the DOD Inspector General (IG) gave the department's service
    contracting crusade the worst grade ever. The IG looked at 105
    Department of Defense (DOD) contracts worth $6.7 billion. Every single
    one of them had some type of oversight problem. During his recent
    testimony before the House Government Management Subcommittee, Mr.
    Robert J. Lieberman, the Assistant Inspector General for Auditing,
    confessed that he and his experienced staff were ``startled by the
    audit results, because we found problems with every one of the 105
    actions. In nearly ten years of managing the audit office of the IG, I
    do not ever recall finding problems on every item in that large a
    sample of transactions, programs or data.'' (Mr. Lieberman later said
    that he had signed 2,000 different audits during his tenure.) The
    report states that the collective dereliction of duty on the part of
    DOD with respect to service contracting ``clearly left the government
    vulnerable--and sometimes at the mercy of the contractor.''
        Here are some of the general findings about problems in tracking
    costs and savings from contracting out and privatization:
      --77 percent--inadequate government cost estimates;
      --69 percent--inadequate use of prior history to define requirements;
      --68 percent--inadequate price negotiation memoranda;
      --67 percent--inadequate contract surveillance;
      --60 percent--inadequate competition;
      --57 percent--cursory technical reviews; and
      --25 percent--lack of cost control.
        And here are some of the specific findings:
      --The Army contracted with Raytheon for 39 years to service HAWK
            missile system but it never bothered to establish a fixed price
            for the contract. Instead, the Army awarded Raytheon a cost-
            plus-fixed-fee deal, which allows the contract to go above the
            expected price.
      --A government contracting office had $8 million worth of taxpayer
            dollars to spend on a contract but only found $5.8 million in
            costs. The Pentagon decided to put the extra $2.2 million in
            the contract anyway.
      --A National Guard contract was estimated at $2.2 million, a figure
            that copied the $2.1 million application from a contractor. A
            review discovered that the real costs only totaled $1.2
            million.
        The DOD official on the same panel admitted that the Pentagon could
    not take issue with the IG's findings.
        Surely it's not too much to ask that the Administration and agency
    managers be required to prove that A-76 competitions and contracting
    out and privatization generally will actually achieve real and
    significant savings before throwing public employees and their families
    out on the street. Moreover, it is imperative that these real and
    significant savings persist over the long-term. There is considerable
    anecdotal evidence to suggest that whatever initial savings are
    generated from contracting out dissipate by the time the contract is
    renewed since there is no public-private competition and precious
    little private-private competition, thus leaving taxpayers at the mercy
    of sole-source contractors.
        In 1998, the Administration agreed to require agencies to develop
    tracking systems to monitor the costs and savings of contracting out.
    As a senior OMB official admitted, it is ``indefensible'' that there
    should be an inventory of work performed by public employees through
    the FAIR Act but no similar inventory for work performed by contractor
    employees, even though two-thirds of the federal government is already
    contracted out. Although more than a year has passed, no progress
    whatsoever has been made towards establishing contractor inventories.
    The Failure to Subject Contractors to the Same Level of Competition as
            Public Employees
        Agencies should be required to contract in work for performance if
    in-house staff will be more effective, more efficient, and more
    reliable than contractors. Virtually no work is ever contracted in so
    it can once again be performed by experienced and reliable public
    employees. If public-private competition is appropriate for work
    performed by public employees, then it is just as appropriate for work
    performed by contractors. If only work performed by public employees is
    subjected to public-private competition, then the Administration and
    agency management are simply replacing public employees with contractor
    employees, rather than trying to make government more efficient.
        Last year, the Administration ``agree(d) with (AFGE) that we should
    ask federal managers to . . . consider the potential benefits of
    converting work from contract to in-house performance . . . OMB will
    encourage agencies to identify opportunities for the conversion of work
    from contract to in-house performance . . .'' Unfortunately, the
    Administration has failed to provide agencies with this guidance. In
    response, this Subcommittee required DOD to document just how
    infrequently work has been contracted in, identify barriers to
    contracting in, and provide recommendations for maximizing the
    possibility of effective competition for work that has already been
    contracted out.
    The Failure to Shine the Light of Truth on the Shadow Workforce
        Despite the Administration's stated intention to document the size
    of the contractor workforce--often referred to as the ``shadow
    workforce'' because it has historically been enshrouded in such
    mystery--no progress has been made. The House and Senate Armed Services
    Committees agreed, over the Pentagon's strenuous objections, to require
    a count of DOD's contractor workforce in last year's defense
    authorization conference report. A similar requirement was included in
    report language in last year's Senate defense appropriations bill.
    Failure to Prevent Work from Being Contracted Out Without Public-
            Private Competition
        Although generating much attention, OMB Circular A-76 is really a
    sideshow. Most government work that is performed by contractors is
    never subject to public-private competition. Either the work has never
    been performed by public employees and was simply given to contractors
    from the very beginning (``new starts'') or it was started in-house and
    then transferred to the private sector without giving public employees
    any opportunity to compete in defense of their jobs. That is, despite
    all of the talk from Administration officials about the importance of
    public-private competition, most contractors obtain their lucrative
    deals without ever having to compete against public employees. Last
    year's Senate Defense Appropriations Bill included report language that
    would enable lawmakers to finally at least get a handle on the problem
    in DOD, directing Pentagon bosses to provide ``an analysis of the
    amount and value of contracts that were awarded to private contractors
    through OMB Circular A-76 versus other mechanisms.''
        For the last several years, taxpayers have paid contractors at
    least $45 billion annually for services provided to agencies other than
    DOD. Yet, during that time, there have been virtually no OMB Circular
    A-76 competitions outside of DOD, by the admission of the
    Administration, which means that public employees have not been allowed
    to compete for billions of dollars of work. Currently, most work is
    contracted out without public-private competition by even DOD--the
    agency often held out as the champion of OMB Circular A-76. Although
    DOD contracts out in excess of $60 billion annually, public employees
    have no chance of competing for almost all of that work--even with the
    Pentagon's supposed increased reliance on the circular. For example,
    according to an Army study, only 16,000 contractor jobs out of the
    service's entire contractor workforce of 269,000 were competed through
    OMB Circular A-76.
        Various rationales are offered for not allowing public employees to
    compete. Work is arbitrarily defined by Pentagon officials as ``new''
    or ``reconfigured'', thus negating rules that require public-private
    competition. As is happening on DOD base after DOD base, work is
    arbitrarily split up into functions of less than ten employees in order
    to fall below the threshold that normally mandates A-76 competitions.
    Sometimes, the work is not deemed subject to public-private competition
    because it is being ``privatized''--on the pretext that the government
    ``is getting out of the business''. However, that misses the point. DOD
    may decide that it will no longer perform work in-house, but that
    doesn't mean it no longer needs the work. In fact, the work will
    continue to be done for DOD--but by contractors, not public employees.
    Since the taxpayers will still be paying for that work to be done for
    DOD, whether the work is contracted out or privatized, why shouldn't
    they at least have the security of knowing contractors have to prove
    that they can perform the work more efficiently, more effectively, and
    more reliably than public employees? As GAO reported last year, DOD
    managers have been told to look for waivers and exceptions to the use
    of A-76 whenever possible.
        This very subcommittee could close off an option that Air Force
    managers are using to contract out work without any public-private
    competition. Using an obscure loophole in a perennial general provision
    in the defense appropriations bill, the Air Force is contracting out
    more than 600 jobs without any public-private competitions, in at least
    two different locations (Kirtland, NM, and Eglin, FL), to a Native
    American firm that has no experience at performing the work in
    question. The general provision to which I refer allows such
    contracting out to any firm that claims to be ``under 51 percent Native
    American ownership.'' Although DOD is ostensibly striving to reduce
    infrastructure costs, the installation has scrapped an OMB Circular A-
    76 competition in favor of a non-competitive, sole-source arrangement
    with a firm from out-of-state. Is a sole-source arrangement likely to
    generate higher savings than an A-76 competition or a strategic
    sourcing initiative? Of course not. Is it fair to prevent the hard-
    working employees at Kirtland and Eglin from even defending their jobs?
    Of course not. Is the Air Force required to use the Native American
    set-aside provision? Of course not. Meanwhile, unless the Air Force
    reverses its decision, hundreds of hard-working Air Force employees
    will soon lose their jobs without any demonstration that the contractor
    is a better service provider.
        Another example of contracting out without public-private
    competition is the Navy's ill-considered privatization of its entire
    communications system. As the GAO reported, ``the Navy's acquisition
    approach and implementation plan for developing an Intranet have a
    number of weaknesses that make the effort unnecessarily risky.'' The
    GAO also pointed out that the extraordinary rush to bestow this multi-
    billion dollar contract on one lucky contractor was ``not driven by
    specific mission needs.'' Navy officials insist that public-private
    competition is not required because the Intranet contract somehow
    constitutes ``new'' work. Any objective examination of this contract,
    which even involves oversight of the contract, suggests that this claim
    is nothing more than an attempt to avoid serious scrutiny.
        GAO has also raised questions about the financing for this
    privatization scheme as well as the impact of entrusting the Navy's
    entire communications system to a contractor, potentially one that
    could even be foreign-owned. This subcommittee should force the Navy to
    subject the Intranet work to public-private competition. The thousands
    of federal employees currently performing the Navy's communications
    work deserve the chance to defend their jobs--and any contractor must
    be required to prove in advance that outsourcing is in the best
    interests of warfighters and taxpayers.
    The Failure to Account for the Extent the Federal Government's
            Contracting Out Undercuts Public Employees on their Wages and
            Benefits
        If there is little information about the size of the contractor
    workforce, there is virtually no information about how contractors
    treat their workforce. It is commonly accepted in the private sector
    and elsewhere in the public sector that to the extent savings are
    generated in certain circumstances through contracting out such savings
    essentially come from contractors short-changing their employees on
    wages, benefits, and job security. A survey conducted by GAO in 1985 of
    public employees who were involuntarily separated after their jobs were
    contracted out revealed that over half ``said that they had received
    lower wages, and most reported that contractor benefits were not as
    good as their government benefits''. When GAO attempted to obtain more
    recent date about the wages and benefits of contractor workers,
    contractors refused to cooperate. It is outrageous that Administration
    officials and more than a few lawmakers--despite their words of support
    for working Americans--continue to allow contractors to take work away
    from public employees simply because, in many cases, they pay their
    workers less and provide them with inferior benefits. When the budget
    is in surplus, the economy's booming, and the stock market is soaring,
    how can anyone justify replacing working and middle class Americans
    with contingent workers who are forced to scrape by with so much less?
        AFGE has worked diligently with the Administration and the Congress
    to attempt to correct those problems and right those wrongs. However,
    there is still no contractor inventory to track the costs and
    consequences of contracting out. Agencies are still not subjecting work
    performed by contractors to the same scrutiny as work performed by
    public employees. Work is still being contracted out without giving
    public employees opportunities to defend their jobs through public-
    private competition. And arbitrary personnel ceilings still prevent
    public employees from competing for work in all too many instances.
    Clearly, public employees and their families have been left with no
    choice but to insist that there be a suspension of federal service
    contracting until those matters have been satisfactorily resolved. It
    is time we stopped wasting America's money on privatization.
        AFGE thanks the subcommittee for allowing us this opportunity to
    discuss our concerns about contracting out and privatization.

        Senator Stevens. We would be glad to contact you. Thank you
    very much, Joe. We appreciate your coming.
        Mr. Flynn. Yes, sir. Thank you.
        Senator Stevens. Do you have any questions?
        Senator Inouye. No, Mr. Chairman.
        Senator Stevens. Thank you very much.
        Our next witness is Cyrus Jollivette, Vice President for
    Government Relations, the University of Miami.
    STATEMENT OF CYRUS M. JOLLIVETTE, VICE PRESIDENT FOR
                GOVERNMENT RELATIONS, UNIVERSITY OF MIAMI
        Mr. Jollivette. Good morning, Mr. Chairman, Senator Inouye.
    I appreciate the opportunity to testify today on behalf of my
    colleagues at the University of Miami and its Rosenstiel School
    of Marine and Atmospheric Science. The Rosenstiel School has
    special expertise in the area of remote sensing and it is for
    this reason that I appear before you today.
        First, though, I would like to say thank you to you for
    your support. We are already engaged in this project because of
    your support, provided last year, through the URI and through
    the drug interdiction accounts. The Rosenstiel School is a
    partner of DOD in many ways, and it is for that reason, too,
    that I am here.
        This project is one that was brought to the attention of
    the University of Miami by the Office of Naval Intelligence
    (ONI) and it is one that we are carrying through with very,
    very close involvement of people at Southern Command (SOUTHCOM)
    in Miami. What we are proposing is continuation of funding for
    our remote sensing facility.
        Senator Stevens. How much?
        Mr. Jollivette. $5 million, sir, for the remote sensing
    facility at the University of Miami, the National Center for
    Tropical Remote Sensing Applications and Resources. We believe
    it would be a small investment that would provide vast return
    to the Nation. This facility uses synthetic aperture radar
    (SAR). It is able to operate in all weather, day or night.
    Space-based satellite SAR systems are able to monitor the
    movement of targets on land or ocean in near real-time. It can
    map topography with unprecedented accuracy. It can assess storm
    and flood damage. It can localize forests and wildfires. It can
    assess soil properties. It can do many things, including
    forecast major volcanic eruptions and help understand the
    earthquake process.
        Senator Stevens. Mr. Jollivette, let me interrupt you.
        Mr. Jollivette. Yes, sir.
        Senator Stevens. Can you assure us that you are going to
    continue to work on this concept of detecting the small
    targets, particularly those that are involved in the war
    against drugs and in terms of this problem of wake imaging.
        Mr. Jollivette. Yes, we will, sir.
        Senator Stevens. I took two trips last month, down to Key
    West and out to California, to talk to people who are involved
    in that detection system. That is the key right now to our
    success in the war against drugs for these small boats that are
    coming very fast up both the east and west coast. And if you
    will continue that, we will assure you we will put up the $5
    million.
        Mr. Jollivette. That is my primary reason for being here.
    We will continue that, sir. And that is why we are working very
    closely with SOUTHCOM. General Wilhelm is supportive of this
    project and has indicated that to Senator Mack.
        Senator Stevens. Your full statement is in the record and
    you have got the $5 million.
        Mr. Jollivette. Thank you, sir.
        [The statement follows:]
                   Prepared Statement of Cyrus M. Jollivette
        Mr. Chairman, I thank you and the Members of the Subcommittee for
    this opportunity to present testimony today on behalf of my colleagues
    at the University of Miami and its Rosenstiel School of Marine and
    Atmospheric Science.
        Founded in 1925, the University of Miami is the largest private
    research university in the Southeastern United States and the youngest
    of 23 private research universities in the nation that operate both law
    and medical schools. Through its 14 colleges and schools, 1,915 faculty
    instruct 13,715 students in more than 110 areas of undergraduate study
    and 162 disciplines for graduate study.
        The Rosenstiel School is recognized as one of the premier academic
    oceanographic research facilities in the world and ranked among the top
    six nationally. The more than 100 recognized scientists, researchers,
    and educators at the Rosenstiel School collaborate closely with other
    institutions in addressing critical national and regional issues. The
    Rosenstiel School has special expertise in remote sensing and it is for
    this reason that I appear before you today.
        Last year you provided support to launch the National Center for
    Tropical Remote Sensing Applications and Resources. In fiscal year 2001
    we hope to continue our partnership with the Department of Defense in
    moving this vital project forward. A small investment in this project
    will provide vast return to the nation.
        Synthetic Aperture Radar (SAR) is a powerful remote sensing system,
    able to operate in all weather, day or night. Space-based satellite SAR
    systems are able to monitor the movement of targets on land or ocean in
    near real-time, map topography with unprecedented accuracy, assess
    storm and flood damage to urban and rural infrastructure, localize
    forest and wildfires, and assess the soil properties of farm land (soil
    moisture) and health of vegetation. SARs provide data that can be used
    to forecast major volcanic eruptions and understand the earthquake
    process, and a host of other military, civilian, and scientific
    applications. SAR can make a major contribution to Southcom's various
    missions, especially in the area of drug interdiction, civil defense
    (e.g., storm damage assessment) and natural hazard mitigation (e.g.,
    volcano forecasting).
        The University of Miami uses SAR data for a variety of terrestrial
    and oceanographic applications, and has a large amount of experience in
    the analysis and use of SAR data, and expertise in the operation of
    satellite downlink facilities.
        The SAR receiving facility currently under construction by the
    University of Miami will provide a unique capability for the Caribbean
    and southeastern U.S. region Applications of this ground receiving
    station will be extremely diverse. They will include a wide range of
    scientific applications in earth, atmosphere and ocean sciences, as
    well as more practical applications in the fields of environmental
    monitoring, natural hazard assessment, civil defense and defense
    tactical applications. The station will initially operate at X-band,
    and will be capable of receiving data from a wide variety of low-Earth
    orbiting satellite systems. Our initial operational capability will
    focus on SAR and visible and infrared imagery. The combination of these
    sensor and imaging types will provide an unprecedented wealth of
    information of the earth's surface. Future upgrades of the Center's
    system should include the capability to collect L- and S-band
    downlinks, as well. In all cases a high priority will be placed on high
    reliability data reception to low elevation angles (2
    degrees above the local horizon). A heavy launch schedule over the next
    few years will place numerous new satellites with SAR and other
    radiometric sensors in space that requires at least two antennas to
    enable data recovery in the case of simultaneous satellite passes or
    situations with a blocked line-of-sight. The voluminous flow of data
    associated with high-resolution satellite sensors such as SAR will
    require high reliability data archiving with rapid retrieval, rapid
    dissemination of data (both raw and analyzed to some specified level)
    to selected users, full data analysis capability, and higher level
    software products to aid in data interpretation.
        For purposes of illustration, I provide three example applications
    of how SAR data can be utilized for drug interdiction, rapid storm
    damage assessment, and natural hazard mitigation.
    Drug Interdiction
        Small, fast moving boats are one of the major vectors for drug
    delivery to coastal regions of the southeastern United States. These
    boats have small radar cross-sections, and travel exclusively at night
    without running lights, and thus are very difficult to detect by
    standard techniques. Their low radar cross sections mean that the P3
    Orion surveillance aircraft equipped with standard ocean surface radar
    only rarely detect them (the targets have to be fairly close to the
    aircraft). Given the large area of ocean used by traffickers, and the
    relatively small numbers of surveillance flights, detection success
    rate is low.
        SAR can easily detect such targets. It does so not by direct
    detection of the boat, but rather by wake imaging. The center line wake
    of a small fast moving boat is typically 100-200 meters long, and is
    relatively smooth compared to adjacent ocean surface, thus is easily
    detected by standard civilian SAR and standard pattern recognition
    analysis. A recent test coordinated by the Office of Naval Intelligence
    had virtually 100 percent success rate at detecting this class of
    target during night time passes of RADASAT. The test target was a
    fiberglass boat operated by the University of Miami, cruising at high
    speed off Key Biscayne, Florida. Research efforts at the University
    include efforts to understand and quantify the interaction of the radar
    signal and the ocean surface. These efforts will be crucial to fully
    exploiting SARs potential for wake detection in all sea states.
        At the present time, there are two civilian SAR satellites that a
    South Florida ground station could access, RADARSAT (operated by the
    Canadian Space Agency) and ERS-2, operated by ESA. On average, we can
    expect to image a given ``patch'' of ocean every few days with one or
    both of these systems. Thus, we would probably not detect and track all
    targets. On the other hand, we could expect to track a much larger
    number of targets than are currently possible, and could generate, with
    ``post-diction'' analysis, an accurate picture of where most illegal
    traffic is originating and landing. This information would be
    invaluable to the larger drug interdiction program. Over the several
    day transit period of these small craft from Colombia, Venezuela,
    Haiti, Dominican Republic and Puerto Rico to the southeastern U.S.,
    approximately 30 percent to 40 percent of targets would be detected in
    ``real time'' by this approach with available satellite coverage,
    enabling direct at sea interdiction by the Coast Guard. This assumes of
    course that the data can be made available quickly to the responsible
    agency. The South Florida SAR facility would make this possible.
        SAR is also excellent at mapping changing land use, deforestation,
    and new drug growing areas. Again, this data could form a key part of
    drug surveillance operations. Here the need for real time is less
    critical, and therefore it is possible to build up 100 percent coverage
    of a given region over several months, by combining data from various
    passes.
        In summary, satellite SAR data could make a major impact on the
    drug interdiction program. However, realizing its full potential
    requires a dedicated facility in South Florida, integrated into the
    chain of command of the drug interdiction effort, and integrated into
    academic efforts in the area of rapid data processing and rapid image
    analysis, including pattern recognition algorithms for wake detection.
    The proposed University of Miami SAR ground station is an excellent
    vehicle for this type of collaborative activity.
    Natural Hazard Mitigation and Civil Defense
        Part of Southcom's mission includes civil defense and natural
    hazard mitigation in Central America, South America and the Caribbean
    region. The reason is that the nation's long term security interests
    are best satisfied by having prosperous, politically stable democracies
    in this hemisphere, and thus Southcom has a role to play in promoting
    the economic and political ``health'' of the region. Even if we ignore
    strictly humanitarian considerations, problems such as extreme poverty
    and civil unrest can negatively impact the U.S. both directly and
    indirectly. Examples include illegal immigration, reliance on a drug
    economy, and lost market opportunity for U.S. business.
        The poverty and poor infrastructure that is endemic in much of the
    hemisphere is exacerbated by natural disasters. In fact there is a
    negative feedback, with poor countries having weak infrastructure that
    is easily damaged by natural disasters (witness the recent devastation
    in Honduras during passage of tropical storm Mitch), followed by a
    period of increased poverty after the damage has occurred, precluding
    the necessary infrastructure investments. Also much of the region is
    especially amenable to severe natural disasters. The Caribbean and
    Central America are commonly hit by hurricanes, while the Caribbean,
    Central America, and the west coast of South America (Colombia,
    Ecuador, Peru and Chile) are frequently the location of devastating
    earthquakes and volcanic eruptions. Clearly, any techniques we can use
    to mitigate the effects of these natural disasters can be a big help to
    the region.
    Role of SAR in Volcano and Earthquake Hazard Mitigation
        Urban areas throughout the world are usually concentrated in
    coastal areas. For much of Central and South America and the Caribbean,
    coastal areas are frequently the sites of large earthquakes and
    volcanic eruptions. There is much that geologists do not know about
    these events, in terms of predicting the timing of onset, the magnitude
    and frequency of events, and the detailed impact on individual urban
    areas. One thing we do know is that much more data is required before
    we can answer these complex questions. SAR is turning out to be crucial
    for many studies of both earthquakes and volcanoes. For volcanoes, SAR
    interferometry allows construction of precise DEM's, enabling accurate
    prediction of the direction and speed of lahars, a type of volcanic
    mudslide. These would seem to be less dangerous than lava flows or
    large explosions, but in fact lahars are often the major ``killer''
    from volcanoes, claiming more than 20,000 souls at Nevado del Ruiz in
    Colombia earlier in the decade. A mudslide from a dormant volcano was
    also responsible for most of the casualties in Honduras during the
    recent passage of tropical storm Mitch.
        Differential SAR interferometry on volcanoes also allows detection
    of pre-eruption swelling of the volcano, which many volcanologists
    believe can be used to help predict eruption. Such studies are of
    academic interest only at the present time, because it takes so long
    acquire imagery from the few available ground receiving stations that
    can routinely acquire SAR data (six month or longer waits are typical
    for U.S. investigators requesting data from the European Space Agency
    or the Canadian Space Agency). A South Florida ground station dedicated
    to rapid data processing and monitoring of all dangerous targets could
    expect to provide at least several weeks warning of major eruption to
    civil authorities. Also, a dedicated mapping program could provide
    lahar danger maps for all major targets within the Western Hemisphere
    within about 18 months of initiating a program.
        Earthquakes are an incredible hazard for much of the Western
    Hemisphere, capable of causing much death and destruction. A relatively
    small earthquake in Los Angeles several years ago caused $20 billion in
    damages. An earthquake in the 1970's in Managua, the capital of
    Nicaragua, so severely damaged the city that parts of it have never
    been rebuilt. The economic devastation caused by this event is believed
    by many social scientists to have been an important contributing cause
    to two decades of civil war in this country.
        Understanding earthquakes is more difficult than understanding
    volcanoes, and at the present time most researchers in the field do not
    feel it is feasible to predict earthquakes. Nevertheless, SAR can play
    a critical role in understanding the earthquake process and reducing
    hazard. Earthquakes cause characteristic ground displacement that can
    be mapped with differential SAR interferometry. By comparing the
    observed displacement pattern to patterns calculated from theory,
    seismologists can refine their models for this type of earth movement,
    in the process gaining much better understanding of the earthquake
    process. It turns out that SAR is probably the best tool available for
    this type of study, because of its complete coverage, and all weather,
    day/night operations. In some cases, SAR is the only way to get this
    kind of data, especially for the inaccessible areas of South America.
    Role of SAR in Storm Damage Assessment and Civil Defense
        As more people and societal infrastructure concentrate along
    coastal areas, the United States is becoming more vulnerable to the
    impact of tropical cyclones. Furthermore, it is not surprising that
    hurricanes are the costliest natural disasters because of the changes
    in the population and the national wealth density or revenue. The
    States most affected by the cost of hurricanes (e.g. Florida, Texas,
    North Carolina and Maryland) have also a high total common tax revenue,
    which is an indicator of wealth for the state. The impact of hurricanes
    along the East Coast is further amplified because the people moving
    into these coastal areas represent the higher wealth segment of our
    society. Early and accurate warnings can save millions in dollars and
    reduce the detrimental impact of storms upon making landfall. Quick
    look SAR imagery can be used to assess the damage of storms after
    landfall and assist in directing resources to areas of immediate need.
        SAR images can provide multi-faceted information on the
    characteristics and properties of storms. Since SAR measures the
    electromagnetic radiation scattered back from small ocean waves it can
    be used to extract information not only of the sea state, but also of
    the surface wind speed. The later information is very important to
    weather forecasters, civil defense planners and the population, because
    it represents the actual measure of the wind speed at heights of houses
    and structures. Sea state information such as the directional
    properties of ocean waves and their associated heights and periods are
    needed to predict the potential threat to coastlines. Waves impact the
    coastal areas in two ways: (1) coastal structures such as jetties,
    piers, walls, houses can easily succumb to the huge forces associated
    with waves; and (2) an additional storm surge is induced by the waves
    in elevating the nearshore water level. Radar frequencies are also
    sensitive to the intensity of rain and can better locate concentrations
    of strong rainfall within tropical storms. Such real time observations
    can provide better estimates of the strength and fury of tropical
    storms and their potential threat to people and societal infrastructure
    along coastal areas.
        After landfall it is critical to obtain timely and accurate
    information on the damage of tropical storms. Because SAR imaging can
    occur at day and night and during inclement weather, quick looks can be
    available to assess the extent of beach erosion, breaches in barrier
    islands and destruction of housing and vegetation. Destroyed houses and
    structures as well as broken vegetation appears much rougher in SAR
    images than in their normal condition. Flooded streets and land will
    appear as a smooth surface because water movement will be slow.
    Education: K-12, Undergraduate, Graduate Level
        The Florida Space Grant Consortium (FSGC) is a voluntary
    association of seventeen public and private Florida Universities and
    Colleges, all the community colleges in the state, Kennedy Space Center
    Astronaut Memorial Foundation, Higher Education Consortium for Science
    and Mathematics, and Spaceport Florida Authority. Collectively, it
    serves more than 230,000 university students (100 percent of the public
    enrollment and approximately 75 percent of total Florida enrollments).
    FSGC represents the State of Florida in NASA's Space Grant College and
    Fellowship Program. As one of the sixteen founding Space Grant
    Consortia, it was formed in 1989 when the federal Space Grant program
    was implemented. With programs now in place in fifty states plus Puerto
    Rico and the District of Columbia, Space Grant now joins the Land Grant
    and Sea Grant Programs to form a triad of federally mandated programs
    addressing critical national needs in education, research and service.
    The FSGC is dedicated to helping Florida assume its appropriate
    leadership role in developing the nation's technological and scientific
    aerospace-related enterprises, increasing opportunities for all of
    Florida's citizens to contribute their energies and creativity to such
    enterprises thereby enabling them to share in the economic rewards and
    satisfactions derived from contributing to the success of these
    enterprises, and capitalizing upon the motivational power of space-
    related activities to help a new generation of children to develop the
    knowledge and skills necessary to lead productive lives in the context
    of the rapidly evolving demands of today's technological society.
        The new National Center for Tropical Remote Sensing at the
    University of Miami would provide a unique opportunity for FSGC to
    achieve these goals and begin dedicated education and training of the
    use of space-based remote sensing and imagery. The research and
    education activities here would complement the concentration of
    expertise, businesses and industries around the Kennedy Space Center
    complex and provide new opportunities and infrastructure for
    communities and businesses in South Florida.
        Furthermore, opportunities also exist to broaden the educational
    use of the Tropical Remote Sensing site through a K-12 education
    partnership with Miami-Dade County Public Schools. In particular, we
    envision the development of a Magnet Studies Program in Space Science
    that would modeled after a very successful existing program in marine
    science and technology in collaboration with the University of Miami.
    Such a magnet program would entrain and challenge young students at an
    early age and help to develop their skills and learning in the field of
    science and mathematics. This partnership would educate first-rate
    students and help produce the next generation of scientists, engineers,
    and technology experts for the nation.
        Mr. Chairman, last year you provided support to launch this vital
    remote sensing initiative. We hope to continue our partnership in
    fiscal year 2001 with the Department of Defense and seek $5 million for
    the Defense Applications Center of the National Center for Tropical
    Remote Sensing Applications and Resources. We understand what a
    difficult year this will be as you allocate the limited funds
    available. However, we believe firmly that this project is vitally
    important and can make a major contribution to the various missions of
    the Department of Defense.
        Thank you for allowing me to appear before you today.

        Senator Stevens. Dr. Knobbe, Oklahoma State University and
    the University of Tulsa.
    STATEMENT OF EDWARD T. KNOBBE, PH.D., ASSOCIATE DEAN,
                GRADUATE COLLEGE, OKLAHOMA STATE UNIVERSITY
                AND DIRECTOR, CENTER FOR AIRCRAFT AND
                SYSTEMS SUPPORTING INFRASTRUCTURE (CASI),
                ON BEHALF OF THE COALITION OF OKLAHOMA
                INSTITUTIONS OF HIGHER EDUCATION
        Dr. Knobbe. Mr. Chairman and members of the subcommittee, I
    thank you for the opportunity to submit this testimony
    regarding Oklahoma's distributive Center for Aircraft and
    Systems Supporting Infrastructure, commonly known by the CASI
    acronym.
        I am Edward Knobbe, Associate Dean of the Graduate College
    at Oklahoma State University, and Director of CASI, Oklahoma's
    statewide research and technology consortium. I am here today
    representing the CASI coalition, which includes not only
    academics from Oklahoma's system of higher education, but also
    State government and members of the industry/military aerospace
    sector. The institutions responsible for CASI's primary
    operations are the University of Oklahoma system, the
    University of Tulsa, and Oklahoma State University and the A&M
    system.
        I would like to speak today on behalf of the three campus
    request for incremental funding to the Department of Defense in
    order to support the $5 million CASI infrastructure enhancement
    initiative. CASI is a revolutionary, multi-institutional
    organization, combining engineering, business and science
    faculty from Oklahoma's institutions of higher education into
    focused, multi-disciplinary, project-oriented support teams.
    The Center's faculty and extensive research facilities serve as
    a reservoir of applied research capabilities and emerging
    technologies.
        This vast infrastructure has been organized under the aegis
    of the Oklahoma State Regents for Higher Education to provide
    innovative support of the Defense Department's capital-
    intensive aircraft inventories. CASI's charter is to develop
    strategies aimed at the integration of promising new
    technologies with economics-based management methods. The goal
    is to help aircraft fleet owners substantially lower
    maintenance costs, promote environmental compliance, increase
    fleet readiness, and improve safety.
        CASI seeks to serve in the role of an applied research and
    emerging technology insertion partner for DOD maintenance
    depots, especially the Oklahoma City Air Logistics Center
    located at Tinker Air Force Base in Oklahoma City, Oklahoma.
        I wish to note, however, that CASI faculty have already
    begun to enter into strategic relationships and to provide
    technology support for DOD systems at other facilities,
    including the Ogden Air Logistics Center at Utah and Warner
    Robins Air Logistics Center in Georgia.
        Senator Stevens. What makes you think this money is not in
    the budget already, this $5 million?
        Dr. Knobbe. We have not requested congressional award for
    this particular consortium. In fact, the State of Oklahoma does
    not have an award for this amount.
        Senator Stevens. You are dealing with the DOD that has just
    general money for this basic concept, do they not?
        Dr. Knobbe. The Air Force Office of Scientific Research has
    6.1 type monies that they use to support basic research. Tinker
    Air Force Base has what they call 6.4 money for production
    programs. If you visit the Office of Scientific Research, they
    feel that programs that are directly supporting the near-term
    needs of the logistics centers are too near term and do not
    qualify for funding under the 6.1 program. Tinker, on the other
    hand, when you approach from the universities, they regard the
    universities as research oriented and not production oriented.
        Senator Stevens. Well, Dean, I suggest you get a letter
    from DOD, stating that they wish to fund this research, and we
    would be glad to give it to you. You want $5 million more added
    to their budget, as I understand it.
        Dr. Knobbe. That is correct.
        Senator Stevens. Have they approved your request?
        Dr. Knobbe. There is a lot of support from the Oklahoma
    City Air Logistics Center for this.
        Senator Stevens. A lot of support is not really a request.
    I want you to document their support saying they want this
    money. If you get that, we will be glad to fund it. I
    understand what you are doing, and I think it is a very good
    thing. But they have a lot of money out there in this general
    area, and I do not know why they cannot fund it out of what
    they have already got. But if they say they cannot, you get us
    a letter and we will be glad to work with the Senators from
    Oklahoma and see that you get the money.
        Dr. Knobbe. All right, very good.
        Senator Stevens. Thank you very much.
        Dr. Knobbe. Thank you very much.
        [The statement follows:]
                   Prepared Statement of Dr. Edward T. Knobbe
        Mr. Chairman and members of the Subcommittee, I thank you for the
    opportunity to submit this testimony regarding Oklahoma's distributed
    Center for Aircraft and Systems/Supporting Infrastructure, commonly
    known by the CASI acronym.
        I am Edward Knobbe, Assoc. Dean of the Graduate College at Oklahoma
    State University and Director of CASI, Oklahoma's statewide research
    and technology consortium. I am here today representing the CASI
    partnership, which includes not only academics from Oklahoma's system
    of higher education, but also state government, and the industry-
    military aerospace sector. The institutions responsible for CASI's
    primary operations are the University of Oklahoma System, the
    University of Tulsa, and Oklahoma State University and the A&M System.
    I am here today to speak on behalf of the core institutional
    stakeholders requesting incremental funding to the Department of
    Defense to support the $5 million CASI infrastructure enhancement
    initiative. Funding of this request will serve to substantially improve
    and integrate University of Tulsa, the University of Oklahoma System,
    and Oklahoma State University and the A&M System faculty and research
    facilities for the purpose of supporting the Department of Defense's
    aircraft logistics centers and maintenance depots.
        The Center for Aircraft and Systems/Supporting Infrastructure is a
    revolutionary, multi-institutional organization, combining engineering,
    business, and science faculty from Oklahoma's institutions of higher
    education into focused multidisciplinary project-oriented support
    teams. The Center's faculty and extensive research facilities serve as
    a reservoir of applied research capabilities and emerging technologies.
    This vast infrastructure has been organized, under the aegis of the
    Oklahoma State Regents for Higher Education, to provide innovative
    support of the Defense Department's capital-intensive aircraft
    inventories. CASI's charter is to develop strategies aimed at the
    integration of promising new technologies with economics-based
    management methods, with a goal of assisting aircraft fleet owners to
    substantially lower maintenance costs, promote environmental
    compliance, increase fleet readiness, and improve safety. The Center
    has positioned itself to support aircraft logistics centers and
    maintenance depots across the nation. In particular, CASI, seeks to
    serve in the role of an applied research and emerging technology
    insertion partner for the Oklahoma City Air Logistics Center (OC-ALC),
    located at Tinker Air Force Base in Oklahoma City, Oklahoma. I wish to
    note, however, that CASI faculty have already begun to enter into
    strategic relationships and to provide technology support for DOD
    systems maintained at sites outside of Oklahoma, including the Ogden
    Air Logistics Center located at Hill Air Force Base in Utah and the
    Warner Robins Air Logistics Center, located at Robins Air Force Base in
    Georgia.
    Summary of the Problem:
        Modern aircraft fleets, both civilian and military, have become
    increasingly expensive to develop, maintain, and operate. Two pressing
    issues related to aircraft maintenance costs are in need of immediate
    attention. The first issue is that of aging aircraft inventories, where
    fewer new aircraft are presently being built and the existing fleets
    must be retained in service periods that, in some cases, dramatically
    exceed the original design lifetime. In the 1997 National Research
    Council report entitled Aging of U.S. Air Force Aircraft, the reporting
    committee indicated that ``The U.S. Air Force has many old (20 to 35+
    years) aircraft that continue to function as the backbone of the total
    operational force. . . ''. The C/KC-135, DOD's primary air-to-air
    refueling platform, is an example of an aging aircraft fleet. While the
    original design lifetime of this aircraft was reportedly less than 20
    years, the average age of the fleet today is more than 38 years.
    According to recent reports, the C/KC-135 fleet is scheduled to be
    retained in the operational inventory until the year 2040, when the
    average aircraft age will approach 80 years. Although maintenance costs
    of these aircraft are rapidly increasing, the total cost of fleet
    replacement (estimated to exceed $40 billion for the existing fleet of
    more than 600 aircraft) prohibits serious consideration of this
    alternative.
        The second issue relates to aircraft maintenance and logistics
    centers is the need to comply with increasingly stringent environmental
    regulations. DOD needs to decrease or eliminating hazardous materials,
    especially those derived from painting/depainting operations in order
    to meet EPA and OSHA regulatory requirements. The Oklahoma City Air
    Logistics Center, for example, is located in an air-quality non-
    attainment county. To date, the base has not had to comply with the
    provisions in the appropriate Control Techniques Guidelines (CTG) is
    that the basis for the non-attainment rating is being challenged in the
    courts and the court has ruled that the standard is not measurable and
    thus not enforceable. EPA is expected to appeal this decision and, if
    EPA wins, the base will be forced to comply with the provisions of the
    CTG. In addition, the National Emission Standards for Hazardous Air
    Pollutants (NESHAP) provision has recently been enacted. This, coupled
    with the CTG issues, places Tinker Air Force Base in serious danger of
    being unable to comply with future VOC restrictions. As a result,
    Tinker Air Force Base has inserted a large budgetary request for the
    procurement, installation and maintenance of VOC abatement equipment
    over the next several years. The environmental management groups at
    most logistics centers, including the OC-ALC, strongly prefer the
    development of alternate non-chemical processes to reduce VOC emissions
    and, importantly, to reduce the volume and expense associated with
    hazardous waste stream handling and disposal. The OC-ALC needs to
    substantially reduce emissions to expand operations and gain workload
    without increasing total emissions for the base.
    The Solution:
        Military aircraft program offices and logistics facilities, such as
    the Oklahoma City Air Logistics Center, rely extensively on aircraft
    original equipment manufacturers (OEMs) and secondary support
    industries to establish and update aircraft maintenance practices.
    While continuing secondary and OEM industrial support is a critical
    aspect of fleet sustainment, an independent source of alternative
    approaches and new technology insertion is essential to ensure the
    continued development of optimal, integrated maintenance methodologies.
    Oklahoma's research universities can provide the technology infusion
    and assist in the development of economics-based management strategies
    that are needed to substantially augment today's aircraft and support
    systems infrastructure.
        Beginning in 1999 with seed funding provided by the Oklahoma State
    Regents for Higher Education, Oklahoma's statewide consortium of
    research institutions, lead by Oklahoma State University and the A&M
    System, the University of Oklahoma System, and Tulsa University, formed
    the Center for Aircraft and Systems/Support Infrastructure. CASI is the
    first academic entity of its type in the nation, focusing on the
    development of a state-wide, multidisciplinary approach for conducting
    applied research, modeling, technology insertion, and engineering
    support activities for the aircraft maintenance and sustainment
    communities. Working in close collaboration with its partner
    affiliates, CASI institutions have begun to provide the stakeholder
    community, especially the OC-ALC, with integrated solutions to some of
    the most challenging problems currently facing the military/industrial
    aerospace complex. The statewide CASI consortium is prepared to provide
    substantially expanded service to the OC-ALC and to all other DOD
    logistics centers and maintenance depots. In order to facilitate the
    extension of new technologies into maintenance facility operations,
    however, appropriations are needed to enhance our existing
    infrastructure.
        There are numerous examples of relevant expertise areas throughout
    Oklahoma's Higher Education System. Among them are included:
      --High performance materials, aircraft coatings, and ultra-precision
            surface finishing methods.
      --Specializations in mechanical & aerospace engineering in areas such
            as cyclic fatigue analysis and stress-corrosion cracking.
      --Simulation, advanced forecasting and modeling, especially in areas
            such as system reliability, logistics, and physics of failure.
      --Economic best-practices for maintaining aircraft fleets, including
            life-cycle cost benefit analysis, optimal repair vs.
            replacement strategies, and enhanced readiness.
      --Hazardous waste stream abatement, remediation, advanced
            environmental monitoring methods, and pollution prevention
            technologies. Evolving technologies include chromate
            replacement and VOC/HAP reduction from aircraft paint/depaint
            operations.
      --Occupational health and bioengineering.
      --Environmental monitoring, environmental management, and multi-
            dimensional visualization methods using geographic information
            systems.
      --Industrial engineering (e.g., man-machine studies, resource
            allocation, process management).
      --Real-time aircraft health assessment.
    Example CASI Project Summaries
        During the past fiscal year, the statewide CASI consortium
    established a cost-share program designed to stimulate the
    establishment of new collaborative relations between the Oklahoma City
    Air Logistics Center and Oklahoma researchers. A unique state
    sponsorship program, underwritten by the Oklahoma Experimental Program
    to Stimulate Competitive Research office, the Oklahoma State Regents
    for Higher Education, and the research institutions of Oklahoma, has
    recently resulted in the establishment of several new multidisciplinary
    program areas. The state cost share program, with substantial funding
    provided by Oklahoma EPSCoR, has fostered several new technology
    insertion activities with collaborating entities at the OC-ALC. I
    provide hereinafter a summary of a few of these projects:
      --The Integration of GIS, Remote Sensing, and Weather Technologies to
            Develop a 4D Real-time Air Pollution Management System.
          The immediate objective of this 1-year project is to provide a
            tool for 4D [real-time] visualization and analysis of Tinker
            Air Force Base [TAFB] air emission units, controls, emission
            points, and pollutant plumes released from those emission units
            using real-time weather information and user-defined emission
            rates. The overall, multi-year objective is to provide a truly
            real-time system that allows for near continuous monitoring and
            analysis of emissions and their dispersions dictated by highly
            localized weather conditions and thus allow for daily
            management of pollution emissions. Such real-time capabilities
            will enable pro-active scheduling [and increase] of
            installation workload while insuring emission compliance with
            federal, state, and local air quality standards.
      --Operation and Validation of Fourier Transform Infrared Spectrometer
            and Spectral Data
          In production and maintenance operations at Tinker AFB,
            industrial wastewater streams are generated which contain
            hazardous air pollutants (HAPs). These HAP-containing
            wastewater streams result from both direct and indirect contact
            with chemical compounds via chemical depainting operations,
            chemical cleaning processes, and electroplating operations. The
            HAPs in the wastewater are treated at the industrial wastewater
            treatment facility in open surface impoundments and collection
            systems. Some of these collection and treatment steps result in
            the release of HAPs to the ambient air. Assessment
            (identification and quantification) of hazardous air pollutant
            emissions to the ambient atmosphere is necessary to ensure
            regulatory [federal, state, and local] environmental
            compliance.
      --Metals Treatment Optimization at the OC-ALC Industrial Wastewater
            Treatment Plant
          The objective of this project is to optimize the metals treatment
            process at the industrial wastewater treatment plant [IWTP].
            The Oklahoma City Air Logistics Center produces a wide variety
            of aqueous waste streams which require significant treatment
            prior to discharge. These waste streams include oils and
            greases, heavy metals, volatile organic chemicals, and
            biodegradable organics. Much of this treatment is performed at
            the sites industrial waste treatment plant, which includes
            primary clarification, oil-water separation, flow equalization/
            stabilization, heavy metals treatment/removal, etc. The need to
            improve the performance of metals treatment system has been
            identified as an important need at the OC-ALC. The primary
            problem to be addressed is the infrequent exceedance by
            molybdenum [including chromium, cadmium, nickel, and zinc] in
            the IWTP effluent, although other opportunities for improvement
            of the IWTP will also be considered.
      --Topcoat Delamination in C/KC-135 Wing Fuel Cells
          The C/KC-135 aircraft has been experiencing delamination of
            topcoat materials over the past few years resulting in
            premature blockage of fuel filters and, in some cases, engine
            flameout. Topcoat failure is particularly problematic, as the
            delamination mechanism is not currently understood. Presently,
            the C/KC-135 system program office has adopted the lowest
            short-term risk solution, e.g., removal of all topcoat
            materials within the wing fuel cells, leaving the surfaces with
            only a chromate-based surface pretreatment to prevent corrosion
            initiation and growth. The long-term effectiveness of this
            approach, however, is not known. Certain paint-stripping
            methods, such as those employing high pressure water, may
            compromise the long-term service lifetime of the affected skin
            sections by causing extensive water intrusion into cracks,
            seams and joints. The topcoat delamination project will focus
            on: (1) an understanding of the mechanism of topcoat peeling in
            C/KC-135 wing fuel cells; (2) assessment of factors that could
            initiate or accelerate corrosion in the wing cells; and (3)
            materials and process recommendations for topcoat and sealant
            treatment and/or replacement.
    Summary
        It is clear that the types of projects being developed through CASI
    do not fall into the traditional university basic research areas funded
    by so-called 6.1 monies. Instead, CASI tends to focus on the technology
    insertion and demonstration/validation activities normally associated
    with 6.2- and 6.3-type funding. The statewide CASI consortium is
    prepared to provide substantially expanded service to the OC-ALC and,
    by extension, to all other DOD logistics centers and maintenance
    depots. In order to facilitate the insertion of new technologies into
    maintenance facility operations, however, appropriations are needed to
    enhance our existing infrastructure. We respectfully request funds to
    promote continuation and expansion of the services CASI presently
    provides to this nationally important community.
        Thank you for your consideration of this request.
                                     ______

                                     Oklahoma State University,
                                    Stillwater, Oklahoma, May 12, 2000.
    The Honorable Ted Stevens,
    Chairman, Subcommittee on Defense Appropriations, U.S. Senate, 522 Hart
            Senate Office Building, Washington, D.C. 20510.
        Dear Senator Stevens: I would like to thank you once again for the
    opportunity to testify before the Senate Subcommittee on Defense
    Appropriations this past May 3. It was truly an honor to appear in that
    setting, and to have a chance to participant in the legislative
    process.
        As you may recall, I appeared before your Committee to provide
    testimony regarding the CASI consortium, which seeks to leverage in-
    house research facilities and engineering support expertise from within
    Oklahoma Universities in support of DOD logistics and maintenance
    center operations. CASI is presently targeting the near-term needs of
    the Oklahoma City Air Logistics Center (OC-ALC), located at Tinker Air
    Force Base in Oklahoma City. Ultimately, our goal is to develop
    collaborative technology support and engineering activities across all
    of DOD's maintenance and logistics centers.
        During my testimony, you suggested that it would be helpful if the
    Committee could receive a DOD letter of advocacy for a congressional
    award to CASI. It is my information that Mr. Wayne Jones, Technology
    Center Chief Engineer at OC-ALC, is preparing such a letter at this
    time. I anticipate that a copy of Mr. Jones letter will be available by
    17 May. Please do not hesitate to contact me if additional materials
    are needed. Thank you once again for your time and consideration in
    this matter.
                Sincerely,
                                              Edward T. Knobbe,
       Assoc. Dean, Graduate College and Director of the Environmental
                                                             Institute.
                                     ______

                           Department of the Air Force,
       Headquarters, Oklahoma City Air Logistics Center (AFMC),
                         Tinker Air Force Base, Oklahoma, May 15, 2000.
    Edward T. Knobbe,
    Assoc. Dean of the OSU Graduate College and Director, Center for
            Aircraft and Systems/Support Infrastructure, 003 Life Sciences
            East, Oklahoma State University, Stillwater, OK 74078.
    OC-ALC/TIE
    3001 Staff Drive, Ste T67,
    Tinker AFB, OK 73145-3038.

    SUBJECT: CASI's Request for Congressional Appropriation Fiscal Year
    2001

        The Oklahoma City Air Logistics Center (OC-ALC), at Tinker AFB, OK,
    provides depot-level repair, overhaul, and maintenance for a variety of
    Air Force weapons systems, including aircraft, cruise missiles, jet
    engines, and related commodities. We understand the multi-institutional
    consortium Center for Aircraft and Systems/Supporting Infrastructure
    (CASI) has requested a congressional appropriation of $5,000,000 in
    fiscal year 2001. This appropriation would be used for CASI to work
    cooperatively with OC-ALC in technology areas related to our mission.
        Past discussions concerning collaborative government--education
    efforts make it clear CASI is well positioned to support the various
    missions of the OC-ALC, especially in the areas pertaining to weapons
    system sustainability, reliability, and maintainability. Other areas
    related to safety, occupational health, and environmental compliance
    assurance will also benefit from the expertise CASI can bring to the
    table.
        For the record, let it be known that we strongly support continued
    development of the partnership between CASI and OC-ALC and
    enthusiastically advocate the requested congressional award.

                                                   Wayne Jones,
                                         Center Chief Systems Engineer.

        Senator Stevens. We will now turn to Harry Armen, Senior
    Vice President, American Society of Mechanical Engineers.
    STATEMENT OF HARRY ARMEN, SENIOR VICE PRESIDENT,
                AMERICAN SOCIETY OF MECHANICAL ENGINEERS
        Mr. Armen. Good morning, Mr. Chairman.
        Senator Stevens. Good morning.
        Mr. Armen. My name is Harry Armen, and I serve as Senior
    Vice President for Public Affairs at the American Society of
    Mechanical Engineers. I have 35 years of industrial experience
    in defense aerospace engineering, research and development.
    Much of my work has been supported by DOD.
        Our written testimony cites all the facts and figures
    regarding the President's budget request and what Congress
    appropriated last year, so I will not go into those details. My
    oral testimony represents an early warning system associated
    with the most important resource the defense and civilian
    aerospace infrastructure of this Nation has. And that is the
    talents of its engineers and scientists.
        Last year, your subcommittee displayed great leadership and
    foresight in providing increased funding for DOD's science,
    engineering and technology programs by $1 billion--a move that
    we very much applaud--and one called for by the fiscal year
    2000 Authorization Act. However, your leadership will once
    again be needed this year. Also, last year, a bipartisan group
    of 76 Members of Congress and 20 Senators warned the President,
    and I quote: The continued long-term erosion of defense
    science, engineering and technology funding will have a
    devastating impact on the future capabilities of the armed
    forces of the United States. Closed quote.
        Despite that warning, the administration once again has
    refused to request increases for defense science, engineering
    and technology, with the exception of a modest increase this
    year for basic research. In the 1998 report, the Defense
    Science Board concluded that ideally, about 3.5 percent of the
    total defense budget should consistently be invested in
    science, engineering and technology. Thanks to strong support
    by your subcommittee and the rest of Congress, the fiscal year
    2000 level is nearly 3 percent of the total DOD spending. We
    urge Congress to continue this positive trend in fiscal year
    2001.
        What are the consequences of neglect? Consistent declines
    in defense-funded research and development over the past 7
    years have resulted in the disruption of the process that
    generates highly skilled, highly motivated scientists and
    engineers essential for today's and tomorrow's high-tech
    defense industry. These people have been the mainstay of our
    military strength and have contributed significantly to our
    current economic prosperity.
        As defense research and development budgets are reduced,
    the job market for highly skilled scientists and engineers in
    the defense industry shrinks, leaving little incentive for
    college students to choose careers in these fields. Simply put,
    reduced R&D funding equals fewer employed graduate students who
    are the future DOD research and development (R&D) work force
    both in the private sector as well as for the defense agencies.
        The long-term difficulty that I worry about, and that you
    should be concerned about, is how are we to attract and retain
    the best and brightest young people to work in the defense
    industry. It requires excitement. That means planning and
    thinking about the future, about building systems that push the
    edge of the envelope, systems that have never been done before,
    systems that make a difference.
        What I am imploring you to do is to invest in research and
    development to generate that excitement. You must have teams of
    people thinking about the future, about doing new things. Maybe
    you do not put all the new ideas into production, but that
    ought to be a part of your strategy. If you do not design and
    build new systems, then someday, when you need something new,
    there will be nobody there who knows how to do it. There will
    be no one to develop tomorrow's technologies, like advanced
    radars, new avionics systems and advanced composite materials.
        Why? Because as DOD cuts back its research, the talented
    men and women who do have the knowledge and who do have the
    ability and the drive are headed to the dot com companies, to
    the start-ups, where they can be excited about the
    possibilities of using cutting-edge technologies to make a
    difference while making far more money. We are literally
    experiencing a brain drain from the defense industry to the
    commercial sector. Reversing this trend will be a very
    difficult task in the midst of a future national security
    crisis.
        I hope the concerns I have conveyed to you, concerns from
    an industrial point of view, from a perspective where the
    science, engineering and technology funds are put to use in the
    labs, and on the systems we build for the services will
    resonate with you. If you on the subcommittee and this Congress
    continue to realize the importance of R&D to the future health
    of our military, the concerns I spoke about earlier can be
    appropriately addressed. Thank you very much.
        [The statement follows:]
                       Prepared Statement of Harry Armen
        Mr. Chairman and Members of the Subcommittee: Thank you for the
    opportunity to appear before your Subcommittee to present our views on
    the importance of the science and technology accounts at the Department
    of Defense. Out of all of the engineering disciplines, mechanical
    engineering claims the largest share of DOD engineering research
    funding, at 23 percent.
        ASME International was very pleased with the support that your
    Subcommittee provided for defense research and development in the
    fiscal year 2000 budget, and would like to take this opportunity to
    express our appreciation for your efforts.
        The 125,000-member ASME is an international engineering society
    focused on technical, educational, and research issues. It conducts one
    of the world's largest technical publishing operations, holds over 30
    technical conferences and 200 professional development courses each
    year, and guides the setting of many industrial and manufacturing
    standards and codes. Our Inter-Council Committee on Federal Research
    and Development assesses federal investment in R&D, examines the
    President's budget request, and to presents views to the Congress on
    agency R&D budgets.
    Role of Research at the Department of Defense
        Over the past decade or so, an increasing number of peacekeeping
    deployments to various parts of the globe, and steadily declining
    budgets, have combined to put a severe strain on the ability of the
    Department of Defense to appropriately plan for its future technology
    needs through investments in basic and applied research. This situation
    is viewed by the DOD Task Force as extremely serious, one that could
    jeopardize the ability of the United States to maintain air and ground
    superiority over adversaries in the coming decades of the 21st Century.
        As engineers know well, the research of today, particularly the
    basic research of today, largely determines the technological
    advancements of a decade or more from now. Research takes a lot of time
    to bear fruit. Take, for example, technological advancements of such
    military equipment as the F-117A Stealth Fighter, or the B-2 Bomber, or
    the ``smart'' bombs, all of which were used so successfully in the Gulf
    War and in Kosovo. The research that led to such technological wonders
    was funded by the Department of Defense in the 1960s and the 1970s, yet
    bore fruit only in the early 1990s.
        The repercussions of a shortsighted research policy today will
    inevitably extend in the future to the private sector as well. Without
    question, America's civilian aviation industry has benefited greatly
    from the strength and technological advancement of the U.S. military.
    In short, the situation facing the United States in 2020 could be a
    technologically deficient military that resulted in a sub-par civil
    aviation industry. Neither scenario is obviously in the interest of
    Congress or the nation.
        Our testimony today will focus primarily on the Technology Base
    program at the Department of Defense, which is comprised of the Basic
    Research account and the Applied Research account, known to you as the
    6.1 and 6.2 accounts. This program is widely referred to as the ``seed
    corn'' for our nation's future military capabilities. We come before
    you today gravely concerned that the administration and the Department
    of Defense are nibbling at that seed corn, at the expense of our
    nation's future military preparedness.
    An Air Force Example
        In a report released earlier this year, the White House laid out
    its ``National Security Strategy for a New Century.'' While the report
    did not include a specific section on science and technology, several
    areas of the report refer to the ability of the future military to be
    technologically prepared. In the section of the report entitled
    ``Advancing U.S. National Interests,'' under the heading ``Military
    Activities,'' the administration states, ``We will maintain our
    technological superiority in space systems, and sustain a robust U.S.
    space industry and a strong, forward-looking research base.'' The same
    section also states that, ``Investment in research and development
    while closely monitoring trends in likely future threats are important
    elements of our transformation efforts.''
        We are concerned that the administration's budget this year does
    not reflect the noble goals outlined in that report. For example, the
    Air Force S&T program would be reduced in 6.1, 6.2, and 6.3, by a total
    of $97 million from current funding levels. This reduction continues an
    unfortunate trend that has seen the Air Force S&T budget decline 53
    percent in real terms over the past decade. That rate is far greater
    than the overall decline in defense spending (30 percent). Included in
    this reduction is advanced aeronautics R&D with the Air Force Office of
    Scientific Research, whose budget would decline from $216 million in
    fiscal year 2000 to $206 million next year, if the budget request were
    followed.
        The Air Force and NASA are responsible for ensuring that the United
    States ``maintains--technological superiority in space systems,'' as
    stated in the White House National Security Strategy. Unfortunately,
    NASA's budget has been reduced over the past several years, and the Air
    Force's S&T budget is constantly under attack, not only from the
    administration, but also within the Department of Defense and within
    the Air Force itself.
        The U.S. aerospace industry, which is largely DOD funded, has
    dramatically declined just in the past decade. Where there once were
    eight prime airframe contractors, now there are barely three. The
    companies that built the majority of our military aircraft have gone,
    and with them much of the spirit of innovation that led the U.S. to
    technological prominence in aerospace. The shortsighted approach that
    has been apparent in the Air Force S&T budget requests since 1993--and
    those of the other services--must not be allowed to continue if the
    U.S. intends to continue its technological preeminence into this
    century.
    Congress Calls for Increases
        We are not alone in this view. Congress itself, in the Fiscal Year
    2000 National Defense Authorization Act, reiterated the call made in
    fiscal year 1999 for annual defense science and technology budget
    increases of at least 2 percent above inflation. In a 1999 letter to
    the President, a bi-partisan group of 76 Members of Congress and 20
    Senators warned that the ``projected levels of spending are
    insufficient to ensure that the defense technology base remains strong
    and capable of providing the necessary foundation for the national
    defense.'' They went on to state that the ``continued long-term erosion
    of defense science and technology funding will have a devastating
    impact on the future capabilities of the armed forces of the United
    States.'' The lawmakers urged the President to increase spending on
    defense research by the target amount set in the fiscal year 1999
    authorization.
        Furthermore, in a 1998 report, DOD's well-respected independent
    advisory group, the Defense Science Board, concluded that ideally about
    3.5 percent of the total defense budget should consistently be invested
    in science and technology. Thanks to strong support by the Congress,
    the fiscal year 2000 S&T level is nearly 3 percent of total DOD
    spending. We urge Congress to continue this positive trend in fiscal
    year 2001.
    The Technology Base Budget Request for Fiscal Year 2001
        The Defense Basic Research Account, the so-called 6.1 account,
    received its first increase in seven years in fiscal year 2000, and
    that was only because of the leadership displayed by your Subcommittee
    in dramatically increasing the President's request. We are heartened
    that the administration has decided to build upon that increase for
    fiscal year 2001, requesting an increase of $56 million. Not dramatic,
    but certainly an improvement from previous years. We urge the
    Subcommittee to, at the least, honor the President's request for this
    program and, ideally, to increase that amount. After nearly a 10
    percent decline, in real terms, over the past seven years, we have a
    lot of catching up to do in this area. It is only through a robust 6.1
    program that innovative, cutting-edge 6.2 programs can occur in the
    future, as one account naturally follows another.
        The situation with the Defense Applied Research account, the so-
    called 6.2 account, is not nearly as promising, due in large measure to
    many years of neglect in the 6.1 account. After your Subcommittee
    wisely increased the 6.2 account nearly $500 million over the
    administration's request in fiscal year 2000, the administration has
    once again made applied research an also-ran in its defense research
    priorities, proposing a decrease of $266 million from the fiscal year
    2000 level. These decreases will not be made up by industry, as some
    have erroneously assumed in the past. No, Congress must again step
    forward to make the statement that applied research in the Department
    of Defense is a priority to maintain the future superiority of our
    nation's armed forces.
    The benefits of research, and the consequences of neglect
        The benefits of defense-funded research extend far beyond simply
    maintaining U.S. military superiority, as vital as that is. Research
    within the Department of the Air Force on highly efficient gas turbine
    engines has, for example, been transferred successfully for use in
    U.S.-built commercial aircraft, in U.S.-built commercial ships, and for
    emergency electric generation in critical buildings.
        It is important to note that serious declines in defense-funded
    research and development have resulted in a disruption of the cycle of
    highly skilled, highly motivated scientists and engineers who have been
    the mainstay of our military strength, and who also have contributed
    significantly to our current economic prosperity. As research and
    development budgets are reduced, the job market for these highly
    skilled scientists and engineers shrinks, leaving little incentive for
    college students to choose careers in these fields. Simply put, reduced
    R&D funding equals fewer employed graduate students, who are the future
    DOD R&D workforce. The unmistakable result is already being manifested
    in the dramatic increases in foreign high-skilled worker visas being
    requested by business in the past couple of years, and being granted by
    the Congress. Add to the mix the fact that irreplaceable facilities are
    being destroyed to reduce corporate overhead costs, and it is easy to
    see where we are headed if we don't take steps now to reverse the
    trend.
        Furthermore, the defense agencies have been the single largest
    source of federal funding for engineering research at the nation's
    universities. The decline in this support has led many engineering
    departments to seek other sources of support, thereby threatening the
    historically important contributions of the nation's universities to
    the U.S. defense technology base. A severe enough disruption, such as
    could conceivably occur if defense R&D funding continues to be
    neglected, could result in the U.S. losing its formidable technological
    edge.
        Thank you for the opportunity to offer testimony regarding the
    science and technology budget request of the Department of Defense.
    ASME's DOD Task Force will be pleased to respond to requests for
    additional information on this or other aspects of our nation's defense
    posture.

        Senator Stevens. Thank you very much. We will do our best
    to continue what we have started in the past, but I do not know
    how successful it will be. We have got a $4 billion increase in
    the budget, but it has already been absorbed by health care and
    by the problems of overseas deployments. So we will be hard
    pressed to continue that billion dollars, but we will do our
    best.
        Mr. Armen. As a manager of R&D activity, I am living this
    experience where the young people are literally leaving the
    industry.
        Senator Stevens. They are leaving us, too. Those dot com's
    are hiring all our people, too, Doctor.
        Mr. Armen. Thank you very much, Mr. Chairman.
        Senator Stevens. Thank you very much.
        Our next witness is Mike Duggan, Deputy Director, National
    Security-Foreign Relations Commission, The American Legion.
    Good morning, Mike.
    STATEMENT OF MIKE DUGGAN, DEPUTY DIRECTOR, NATIONAL
                SECURITY-FOREIGN RELATIONS COMMISSION, THE
                AMERICAN LEGION
        Mr. Duggan. Good morning, Mr. Chairman. Good to see you
    again. Thank you very much for the opportunity to allow us to
    appear. And thank you for scheduling this hearing, sir. We are
    extremely grateful to you and your subcommittee for your
    continuing efforts on behalf of the men and women of the armed
    forces to improve their quality of life, readiness and
    modernization.
        As National Commander Alan Lance has noted in his letter to
    you, he has travelled extensively and has visited with young
    service members as well as military retiree veterans stateside,
    overseas and, frankly, at sea. In his view, no issue has a
    greater priority among these patriotic Americans than
    maintaining a strong national defense. But they are also deeply
    concerned about the well-being of their families as well as the
    pace of the operations tempo.
        Frankly, Mr. Chairman, the Legion has believed for years
    that the armed forces have been under-resourced. We have
    recommended that defense budgets be more on the order of 3 to 4
    percent of the gross domestic product rather than about the 2.9
    or 3 percent of the gross domestic product, as is now the case,
    which is basically at the same levels that this country
    experienced just before Pearl Harbor was attacked.
        As mentioned, despite last year's pay raises, the military
    pay continues to lag behind the private sector during this
    period of a robust economy. The basic allowance for housing
    (BAH) rates, as we mentioned, have to be fixed, we believe they
    will be fixed, so as to reduce and perhaps eliminate out-of-
    pocket housing expenses. With nearly 60 percent of our military
    being married, with families, a lot different than it used to
    be, health care continues to be a major concern for active duty
    personnel, as well.
        For many, the promise of receiving health care while on
    active duty continues to be a major reason for entering into
    and serving in the armed forces today. As we know, TRICARE
    requires considerable improvement. And as you noted, sir, it is
    experiencing severe cost overruns. I think that is the phrase,
    ``cost overruns.''
        This budget proposes to eliminate TRICARE co-payments made
    by military dependents. And, frankly, we are very grateful for
    that. But there are no provisions addressing health care for
    military retirees, and I will not go into that in much detail
    except to mention that military retirees have been the armed
    forces most effective recruiters over the years. And many of
    these have believed, at least the perception, that lifetime
    health care was promised in exchange for decades of service to
    the Nation.
        The Legion is in support of extending the pharmacy benefit
    to all Medicare-eligible military retirees. But we also believe
    that all military retirees including Medicare-eligible retirees
    and their dependents, should have access to not only military
    health care, but also, to a larger extent, to the Veterans
    Administration (VA) medical centers and pharmacies. And
    recognizably, that is a different side and we are approaching
    that through the VA committees, as well. So basically we are
    talking about perhaps trying to expand access to military
    retirees, perhaps using their TRICARE benefits in the VA
    medical centers.
        Mr. Chairman, this concludes the American Legion's
    statement. Thank you very much.
        [The statement follows:]
               Letter From Alan G. Lance, Sr., National Commander
                                   The American Legion,
                                           1608 K Street, N.W.,
                                         Washington. D C., May 3, 2000.
    Honorable Ted Stevens,
    Chairman, Senate Appropriations Committee,
    S-128, The Capitol, Washington, DC.
        Dear Chairman Stevens: I regret I am unable to attend the hearing
    today to personally express The American Legion's views on the
    Department of Defense appropriations for fiscal year 2001. While my
    travel schedule precludes my appearance before you, my resolve to put
    forth The American Legion's adopted positions in support of a strong
    national defense is, in no way, diminished.
        The American Legion's written statement on fiscal year 2001 Defense
    Appropriations is included with this letter. It expresses The American
    Legion's positions on national security, which were unanimously adopted
    by delegates to our National Conventions in 1998 and 1999. Foremost
    among these positions is our advocacy of devoting between three and
    four percent of the Gross Domestic Product on national defense.
    Although a fiscal year 2000 supplement with defense funds was not
    adopted in the Senate, the increased funding added to the fiscal year
    2001 defense authorizations bill is certainly appreciated.
        As you and your colleagues deliberate Defense Appropriations for
    fiscal year 2001, I strongly urge you to substantially increase
    military spending, and military readiness. The Administration's request
    of $291.1 billion is clearly and wholly inadequate. It does not
    effectively address military readiness, modernization or personnel
    issues, nor adequately improves quality of life concerns. This is
    especially true with respect to health care for military men and women,
    their families as well as Medicare-eligible military retirees and their
    dependents.
        In my first seven months at the helm of The American Legion, I have
    traveled over 100,000 miles and visited with the young service members
    serving in Kosovo, Hungary, Germany and Bosnia. I have spent time at
    sea aboard the U.S.S. George Washington visiting with sailors and
    airmen, mechanics, cooks and pilots. I have spoken with service
    members, as well as veterans, throughout the United States. No issue
    has a greater priority among those patriotic Americans than maintaining
    a strong national defense. However, they are also deeply concerned
    about the wellbeing of their families and the pace of the operations
    tempo.
        One of the alarming aspects of having deployed our forces thirty-
    six (36) times in the last seven (7) years, and having troops in one
    hundred thirty-two (132) nations around the world is the fact that we
    are destroying our National Guard and Reserve components in the
    process.
        Our experts advise that we need a total of 1.8 million military
    personnel on active duty to fulfill the mission requirements for our
    present foreign policy/national defense imperatives. We presently have
    approximately 1.37 million active duty enlisted personnel available at
    any given time. We are making up the difference by increasing
    operations tempo resulting in recruitment and retention complications
    and by over-utilizing our National Guard and Reserve components. In
    time, these deployments will result in a significant and substantial
    undermining of our National Guard forces, as well as the Reserves. I
    have spoken with many Active Duty, Guard and Reserve forces and I am
    conveying to you the unvarnished distillation of hundreds of hours of
    conversations.
        Mr. Chairman, if America is to continue as the world's remaining
    superpower, it must operate from a position of strength. This strength
    can only be sustained through the adequate funding of the armed forces.
    Thank you for your continued leadership and support of America's
    military and their families.
        When I am in Washington, DC I would welcome the opportunity to meet
    with you to share my thoughts on America's national defense.
                Sincerely,
                                            Alan G. Lance, Sr.,
                                                    National Commander.
                    Prepared Statement of D. Michael Duggan
        Mr. Chairman, The American Legion is grateful for the opportunity
    to present its views regarding the Department of Defense (DOD) fiscal
    year 2001 defense appropriations. The American Legion values your
    leadership in assessing and appropriating adequate funding for quality
    of life, readiness and modernization of the Armed Forces. As history
    has demonstrated, it is important for the President and Congress to
    continue to uphold their constitutional responsibilities to provide for
    the ``common defense'' of the American people in a highly uncertain
    world.
        Mr. Chairman, The American Legion and the Armed Forces owe you and
    this Subcommittee a debt of gratitude for the strong support of
    military quality of life issues. Nevertheless, this assistance is
    needed now more than ever. Positive Congressional action is needed in
    this budget to overcome old and new threats to retaining the finest
    military in the world. Servicemembers and their families have endured
    physical risks to their well-being and livelihood, substandard living
    conditions, and forfeiture of personal freedoms that most American
    civilians would find unacceptable. Worldwide deployments have increased
    significantly, and a smaller force has had to pick up the tempo with
    longer work hours and increased family separations.
        With the end of the Cold War, the clear and identifiable threat
    posed by communism and the Soviet Union no longer exists. Instead, the
    United States has been faced with a myriad of threats and challenges
    which appear more perplexing, complex and difficult. Serious regional
    threats continued to include those in the Balkans, North Korea and the
    ever-growing threat of the People's Republic of China. A vehemently
    defiant Iraq and Iran pose continuing threats to vital oil reserves in
    the Persian Gulf. Additionally, the United States faces the non-
    traditional threats of increasing nuclear proliferation, development of
    chemical and biological warfare weapons by rogue nations or groups and
    the challenges posed by international terrorism.
        The President's defense budget request for fiscal year 2001 is
    $291.1 billion, and reflects a small real spending growth and does not
    appear to be built on a foundation of assumed savings and economic
    assumptions as was the administration's fiscal year 2000 budget.
    Unfortunately, serious mismatches between strategy, forces and
    resources are not improving. The consequent budgetary shortfalls,
    estimated at $15.5 billion for fiscal year 2001 by the Joint Chiefs of
    Staff, are being reflected in debilitating quality of life, readiness
    and modernization problems that the military forces continue to
    confront. After years of decline, the administration has under-
    resourced its defense budgets which, according to House Armed Services
    Committee Chairman Floyd Spence, ``will take a decade or more of real
    growth in defense spending to catch up.''
        The President's budget request for fiscal year 2001 totals over
    $1.80 trillion and allocates 15 percent for defense and well over 50
    percent for social programs and entitlement spending. The fiscal year
    2001 Defense budget represents an increase in defense spending, but it
    is still 40 percent below the 1985 Reagan budget which eventually led
    to the end of the Cold War. In 1990, the United States was spending 5.1
    percent of the gross domestic product on defense.
        According to Chairman Spence, the nation is going to need to spend
    a lot more money than the Administration is requesting and projecting
    to spend in the future in order to maintain even current military
    capabilities. Whatever the level of annual operational shortfalls,
    annual modernization shortfalls will be significantly greater. In this
    regard, it is important to note that while the Administration's fiscal
    year 2001 procurement request has been advertised as finally reaching
    the five-year old $60 billion target, it was only with the help of some
    new accounting such as the inclusion of submarine overhaul funds in the
    procurement accounts for the first time.
        American Legion National Commander Alan Lance recently visited
    American troops in Europe, Bosnia and Kosovo. He also visited sailors
    aboard the aircraft carrier U.S.S. George Washington. High operational
    tempo, manning shortages and inadequate health care head the list of
    complaints. The American Legion receives numerous letters and emails
    from military retirees and their dependents citing the string of
    ``broken promises''--mainly access to military health care. Medicare-
    eligible military retirees are prohibited from enrolling in the TRICARE
    program. The TRICARE system requires considerable improvement. The
    American Legion is supportive of a pharmacy benefit and extending the
    two pilot programs for Medicare-eligible retirees and dependents,
    namely, TRICARE Senior Prime and FEHBP 65. The American Legion believes
    that all military retirees including Medicare-eligible retirees and
    their dependents, should have access to both military and VA medical
    facilities and pharmacies.
        The American Legion believes that operational tempo and continued
    deployments must be reduced, and military pay must be on par with the
    civilian sector. Military retirees and their dependents are the Armed
    Forces' most effective recruiters. Recently, The American Legion held a
    meeting of its Policy Coordination and Action Group (PCAG). This PCAG
    meeting was prompted by DOD and media reports that the Armed Forces had
    been showing signs of difficulty in attracting qualified individuals to
    volunteer for military service and for seasoned servicemembers to
    reenlist. Allied to these issues are perceptions of declining military
    quality of life features to include military health care and readiness,
    as well as the impact of increased operating tempos and underresourced
    defense budgets on recruiting, retention and readiness.
        What needs to be done? The American Legion recommends that the
    following steps be implemented immediately:
      --Continued quality of life improvements to include military pay
            raises; equitable increases in Basic Allowances for Housing and
            Subsistence; improved military health care, improved benefits
            under the Montgomery G.I. Bill and other quality of life
            features.
      --Defense spending as a percentage of Gross Domestic Product should
            be maintained between 3 and 4 percent annually.
      --The Quadrennial Defense Review (QDR) must be reevaluated. It does
            not provide the forces or the defense budgets to fight two
            nearly simultaneous major regional conflicts while conducting
            peacekeeping operations.
      --Force modernization for the Services must be realistically. The
            strategy-resources mismatch needs to be eliminated.
      --The National Guard and Reserves must be realistically manned,
            structured, equipped and trained, fully deployable and
            maintained at high readiness levels. These forces are
            indispensable to America's national defense.
                           quadrennial defense review
        Since the collapse of the Soviet Union in 1991, the United States
    has conducted three substantial assessments of the strategy and force
    structures of the Armed Forces necessary to meet the national defense
    requirements of this Country. The assessment by the Bush Administration
    (``Base Force'' assessment) and the assessment by the Clinton
    Administration (``Bottom-Up Review'') were intended to reassess the
    force structure of the armed forces in light of the changing realities
    of the post-Cold War world. Both assessments served an important
    purpose: to reevaluate the military posture of the United States. The
    pace of global change requires a new, comprehensive assessment of the
    current defense strategy for the 21st century.
        The American Legion continues to support the force structure
    proposed by the Base Force strategy. The United States must maintain 12
    active Army combat divisions, 12 Navy aircraft carrier battle groups,
    15 active Air Force fighter wings and three Marine Corps divisions and
    a total manpower strength of at least 1.6 million. The American Legion
    supports the two-war strategy. If America is drawn into a war with one
    regional aggressor, another could be tempted to attack its neighbor.
    The American Legion believes such a strategy should be threat-based
    rather than budget-driven. This strategy must employ a robust force
    structure and reflect increased budgeting for quality of life,
    readiness and modernization than recommended in the Bottom-Up Review or
    its follow-on Quadrennial Defense Review. The two-war strategy, in our
    view, has never been adequately resourced. The American Legion believes
    the ``win-win'' two-war Bottom-Up Review strategy is delusional. The
    U.S. currently has a ``win-hold'' strategy at best with growing
    worldwide commitments, and only 10 Army combat divisions and three
    Marine divisions.
        The American Legion also believes the U.S. can no longer afford to
    become the world peace enforcer by dispatching forces on unbudgeted
    operations every time the United Nations passes a resolution to do so
    or the President so orders. The American Legion believes Congress, as
    the representatives of the American people, needs to become more
    involved in the decision-making process regarding the commitment of
    United States military forces. U.S. forces should be committed when the
    vital national interests of this country are at stake and only when
    such deployments are supported by the will of the American people and
    the Congress and with a clear exit strategy. The Congress, in our view,
    needs to become involved in the policy of committing U.S. troops before
    troops are committed not after. The United States is not only over-
    committed in peacekeeping operations, it remains committed for extended
    periods.
                             contingency operations
        The Administration has expressed its preference for multilateral
    operations. United States forces have responded to United Nations
    resolutions on numerous occasions in the past six years. The American
    Legion believes the United States should not allow its stated
    preference for multinational action to become an excuse for continued
    U.S. military action when clearly the national interests may not be at
    stake; nor should American unilateral action be delayed when the
    national interests are at stake. Clearly, the continuance of military
    peace operations will detract from military readiness and its declining
    combat capabilities. These operations may also inhibit the ability of
    the United States to respond to real emergencies that threaten the
    vital national interests. As General MacArthur stated in 1962: ``The
    purpose of a military is to fight and win wars.''
        The American Legion believes the following principles should be an
    integral part of the United States national security and foreign policy
    decision-making process when considering the commitment of U.S.
    military forces:
      --Americans need a clear definition of its vital national interests
            as they relate to all military operations to include
            peacekeeping and humanitarian operations;
      --On a case-by-case basis, Congress needs to be more directly
            involved in the approval and funding process of such operations
            before the commitment of troops;
      --United States forces should not be placed under foreign or United
            Nations control except in exceptional circumstances where
            Congress grants special approval; and
      --American servicemen or women who are captured during peace
            operations should be granted full POW status and afforded all
            the protections of the Geneva Conventions.
        America's national security framework provides the umbrella that
    allows Americans to work and prosper without fear. A strong national
    defense does not inhibit a strong economy, it complements it.
                         active force personnel issues
        The American Legion is concerned that a number of influences, to
    include the military drawdown, pose significant--and often
    underestimated--retention and readiness risks for the remainder of the
    decade.
        The depth of the defense drawdown has significantly undermined one
    of the major historical selling features of a military career--
    employment security. In the history of the All-Volunteer Force,
    qualified young enlisted members and officers were actively recruited
    for extended terms of service or full military careers, but the
    situation has radically changed within the past six years.
        Now is the time to look to the force recruiting and retention
    needs. Positive congressional action is needed now to begin overcoming
    past years of negative career messages and begin countering the renewed
    attacks on military benefits.
        Continued Military Pay Raises.--The Chairman of the Joint Chiefs of
    Staff stated last year that the area of greatest need for additional
    defense spending is ``taking care of our most important resource, the
    uniformed members of the armed forces.'' To meet this need, he enjoined
    the (Congressional) committee members to ``close the substantial gap
    between what we pay our men and women in uniform and what their
    civilian counterparts with similar skills, training and education are
    earning.'' But 11 pay caps in the past 15 years has taken its toll and
    military pay continues to lag behind the private sector.
        Basic Allowance for Housing (BAH).--The New Basic Allowance for
    Housing rates which took effect on January 1, 2000 resulted in losses
    or gains of hundreds of dollars per month in different locales
    throughout the country. Although the 4.8 percent pay raise was
    unrelated to BAH calculations, there were instances where
    servicemembers have sustained a net loss in pay and allowances due
    primarily to the fiscal year 2000 BAH rate change. Mr. Chairman, the
    BAH rates must be adjusted so as to reduce out-of-pocket expenses and
    be more closely approximate actual housing costs.
        Montgomery G.I. Bill Enhancements (MGIB).--The American Legion is
    particularly supportive of improvements pertaining to the MGIB. These
    enhancements include increasing the monthly G.I Bill allowance for
    servicemembers who serve for more than or less than three years;
    eliminating the $1,200 contribution ($100 monthly) that each service
    member must make to participate in the G.I. Bill program; accelerated
    payments for personnel who served in the reserve components; allowing
    Select Reservists up to five years from their date of separation to use
    their G.I. Bill entitlements; and allowing veterans to apply their G.I.
    Bill benefits for required testing for admission to institutions of
    higher learning. Mr. Chairman, we believe these particular improvements
    to the MGIB offer the incentives and the potential to favorably assist
    in turning the recruiting trend around.
        Commissaries.--Several years ago, DOD had considered closing some
    37 commissary stores worldwide and reducing operating hours in order to
    resolve a $48 million shortfall in the Defense Commissary Agency. Such
    an effort to reduce or dismantle the integrity of the military
    commissary system would be seen as a serious breach of faith with a
    benefit system that serves as a mainstay for the active and reserve
    components, military retirees, 100 percent service-connected disabled
    veterans, and others. The American Legion urges the Congress to
    preserve full federal funding of the military commissary system and to
    retain this vital non-pay compensation benefit which, we believe, is
    essential to the morale and readiness of the dedicated men and women
    who have served, and continue to serve, the national security interests
    of the United States. Furthermore, The American Legion fully supports
    the full-time usage of commissary stores by members of the reserve
    components.
                     health care for military beneficiaries
        Today, there are approximately 8.2 million beneficiaries in the
    military health care program. Military retirees and their dependents
    make up nearly one half of that number, and over 500,000 retirees have
    lost or will lose their access to military health care as a result of
    the closure of approximately 40 percent of military treatment
    facilities. Access to affordable health care, regardless of age, status
    or location, represents the number one concern among military retirees.
    Military retirees have often served as the most effective recruiters
    for military service. Until recently, military retirees were always led
    to believe that they were entitled to free lifetime health care as a
    major promise made in exchange for meager pay received and after having
    served 20 or more years in the most demanding and dangerous of
    professions. The notion that lifetime health care was promised was
    perpetuated in Service recruiting literature as recently as 1993.
        Military retirees are the only group of Federal ``employees'' who
    lose their health care benefits when they become 65 and are no longer
    eligible for CHAMPUS or TRICARE but become Medicare-eligible. Medicare
    covers much less than TRICARE, and must be supplemented by expensive
    health care supplement insurance which many military retirees cannot
    afford. We often tend to forget that the average enlisted military
    retiree is an E-7 and not a Lieutenant Colonel. Despite its many
    problems, The American Legion supports full-funding and improvement of
    the TRICARE program, and it strongly believes that all military
    retirees, to include Medicare eligibles and their dependents, should
    continue to have expanded access to military and VA treatment
    facilities. Furthermore, all military retirees and their dependents
    regardless of age, status or location should have access to a uniform
    pharmacy benefit.
        The fiscal year 2001 budget was to have been the ``Year of Military
    Health Care Reform.'' When the defense budget was publicly released on
    February 7, 2000, it was clear that the ambitious program of military
    health care upgrades outlined by the Joint Chiefs of Staff, to include
    improvements in both active duty and retiree health care, were
    considerably reduced.
        The fiscal year 2001 military health care budget proposes an
    expansion of TRICARE by $30 million to extend TRICARE Remote to active
    duty families; $50 million to eliminate active duty TRICARE copayments
    by dependents; and $20 million to implement a new benefit with long-
    term care needs. But there were no provisions addressing health care
    for military retirees and their dependents which explains the plethora
    of health care bills in both chambers of Congress. The American
    Legion's ``GI Bill of Health'' proposes that the Veterans Health
    Administration be authorized to expand its treatment of TRICARE
    beneficiaries. Such authority would give the military services the
    ability to enter into direct VA-DOD contracts for the treatment of
    military beneficiaries.
        The American Legion believes there needs to be certain incentives
    to encourage TRICARE eligible retirees to enroll in VA. Certainly,
    dependents of TRICARE beneficiaries must be included in a family health
    insurance plan, and individuals enrolled in TRICARE Prime must have
    greater inducements to enroll in VA.
        The TRICARE program began five years ago and has been fully
    operational for less than two years. During that period, many
    unforeseen problems have developed. We believe it is time to take bold
    and necessary steps to correct TRICARE's serious deficiencies and set a
    dependable and fiscally stable direction. The American Legion believes
    the Department of Veterans Affairs can perform a vital function in
    resolving many of TRICARE's existing difficulties. It is our conviction
    that this Subcommittee will enact measured steps to restore the
    integrity of the TRICARE program to regain the confidence of the
    beneficiaries it serves.
        Mr. Chairman, the nation has an obligation to do better. We believe
    there is a moral obligation for the government to find a way to provide
    at least the same level of health coverage to military retirees that it
    already provides to every other federal retiree.
                         other military retiree issues
        The American Legion believes strongly that quality of life issues
    for retired military members and families also are important to
    sustaining military readiness over the long term. If the Government
    allows retired members' quality of life to erode over time, or if the
    retirement promises that induced them to serve arduous military careers
    are not kept, this will undoubtedly inhibit retention in the current
    active duty force.
        Accordingly, The American Legion believes Congress and the
    administration must place high priority on ensuring that these long-
    standing commitments are honored.
        Military Retired Pay COLAs.--Service members, current and future,
    need the leadership of this Subcommittee to ensure that Congress
    remains sensitive to long-standing contracts made with generations of
    career military personnel. A major difficulty is the tendency of some
    to portray all so-called ``entitlement'' programs, including military
    retirement, as a gratuitous gift from the taxpayer. In truth, military
    retired pay is earned, deferred compensation for accepting the unique
    demands and sacrifices of decades of military service. Because most
    Americans are unwilling to endure those arduous conditions, the
    retirement system is the services' single most important career
    incentive.
        The American Legion urgently recommends that the Subcommittee
    oppose any changes to the military retirement system, whether
    prospective or retroactive, that would undermine readiness or violate
    contracts made with military retirees.
        Social Security Offsets to the Survivors' Benefits Plan (SBP).--The
    American Legion supports amending Public Law 99-145 to eliminate the
    provision that calls for the automatic offset at age 62 of the military
    SBP with Social Security benefits. Military retirees pay into both SBP
    and Social Security, and their survivors pay income taxes on both. The
    American Legion believes that military survivors should be entitled to
    receipt of full social security benefits which they have earned in
    their own right. It is also strongly recommended that any SBP premium
    increases be assessed on the effective date, or subsequent to,
    increases in cost of living adjustments and certainly not before the
    increase in SBP as has been done previously.
        In order to see some increases in SBP benefits, The American Legion
    would support a gradual improvement of survivor benefits from 35
    percent to 45 percent over the next five-year period.
        The American Legion also supports initiatives to make the military
    survivors' benefits plan more attractive. Currently, about 75 percent
    of officers and 55 percent of enlisted personnel are enrolled in the
    Plan.
        VA Compensation Offset to Military Retired Pay.--A continuing issue
    of high concern to The American Legion is the VA compensation offset to
    military retiree pay. The purposes of these two compensation elements
    are fundamentally different. Longevity retirement pay is designed
    primarily as a force management tool that will attract large numbers of
    high-quality members to serve for at least 20 years despite
    extraordinary and arduous conditions of service, including a forced
    mid-life career change. Veterans disability compensation is paid to
    veterans who are disabled by injury or disease incurred or aggravated
    during active military service in the line of duty. Monetary benefits
    are related to the residual effects of the injury or disease or for the
    physical or mental pain and suffering and subsequently reduced
    employment and earnings potential. Opinions may differ over the extent
    to which concurrent receipt should be implemented to the offset formula
    used. But action should be taken to provide more equitable compensation
    for those who served more than 20 years in uniform and incurred
    substantial service-connected disabilities that severely inhibit their
    post-service earning opportunities.
        The American Legion believes strongly that the 100 percent offset
    requirement is an inordinate penalty especially for those disabled
    retirees who are most severely disabled and whose disabilities have
    precluded them from pursuing productive post-service employment
    opportunities. The American Legion led the effort last year to mandate
    the provisions of H.R. 44 which provided for special compensation pays
    for severely disabled retirees. This year, we would like to see the law
    expanded to include severely disabled military disability retirees and
    early retirement retirees who also qualify for special compensation
    pays, as well as eliminating the four-year limitation on the awarding
    of the 70 to 100 percent disability rating.
                                  procurement
        Under the administration's plan, defense procurement funding, which
    has declined steadily in real terms since 1985, would finally increase
    in 2001 to $60 billion.
        Only a few major systems currently in production would be funded in
    the fiscal year 2001 defense budget. The funding level for weapons
    procurement is the lowest of any administration since 1950 and has been
    some 71 percent less than that of 1985. Major development programs
    which The American Legion supports include the Air Force F-22 fighter
    and C-17, F/A-18Es for the Navy and Joint Strike Fighters for the Air
    Force and Navy and the CVN-77, LHD-17 Amphibious Assault ship and DDG-
    51 destroyers. Other items in the research budget include the V-22
    Osprey, the hybrid airplane-helicopter, which the Marine Corps is
    developing as a troop carrier. Unquestionably, the Navy will also need
    to acquire more submarines.
        If left unaddressed, omissions in the Defense Department's
    modernization budget could have the following implications:
      --They will result in the continued deterioration of our defense
            industrial base;
      --The future technological superiority of American forces will be at
            risk thereby increasing the danger to our service men and women
            should they be called into combat; and
      --The failure to replace and upgrade equipment in a timely manner
            will create a massive modernization shortfall in each of the
            military, services and possibly lead to even more serious
            readiness problems in the long run.
        A number of defense consulting firms are predicting that the Armed
    Forces are heading for a ``train wreck'' unless annual defense budgets
    called for procurement accounts in the $118 billion range, rather than
    in the $45-60 billion range.
        The American Legion further urges the Congress to expedite the
    procurement of improved and sensitive equipment for the detection,
    identification, characterization and protection against chemical and
    biological agents. Current alarms are not sensitive enough to detect
    sub-acute levels of chemical warfare agents. Improved biological
    detection equipment also needs to be expedited.
        The American Legion firmly believes with the continuing threat of
    nuclear proliferation, that America should retain its edge in nuclear
    capabilities as represented by the TRIAD system, and that its highest
    priority should be the deployment of a national missile defense for the
    United States and its citizens. Although the development and deployment
    of advanced theater missile defenses to protect U.S. forward-deployed
    forces is imperative, any dismantling of acquisition programs to defend
    the American people is imprudent. The United States should focus on
    developing and deploying by 2003, not by 2005, an anti-ballistic
    missile detection and interception system that is capable of providing
    a highly effective defense of the United States against limited attacks
    of ballistic missiles.
        Mr. Chairman, this concludes The American Legion statement.

        Senator Stevens. Thank you. Your full statement is in the
    record.
        I note with interest that you have got both the
    Distinguished Flying Cross air medals and the Soldier's Medal
    for Bravery and three Bronze Stars.
        Mr. Duggan. Yes, sir, in Vietnam.
        Senator Stevens. You were both Air Force and Army
    apparently?
        Mr. Duggan. No, sir. I was an infantry operations officer.
    We directed a lot of air from helicopters.
        Senator Stevens. It is nice to have you here. You all
    joined Chennault Post on Taiwan?
        Mr. Duggan. Yes, sir, which belongs to the Department of
    Alaska.
        Senator Stevens. That is right. And I served under General
    Chennault. Nice to have you here, Mike. I appreciate it very
    much.
        Mr. Duggan. Thank you, sir.
        Senator Stevens. The next witness is Dr. Daryle Busch,
    Professor of Chemistry, University of Kansas and President of
    the American Chemical Society.
    STATEMENT OF DARYLE BUSCH, PRESIDENT, AMERICAN CHEMICAL
                SOCIETY
        Dr. Busch. Thank you, Chairman Stevens.
        The American Chemical Society (ACS) is the world's largest
    scientific society, with 161,000 members, 126 of them in
    Alaska. In order to sustain our Nation's technological
    leadership and living standards, we believe that basic research
    should have a top priority in the Federal budget. Many
    economists in fact argue that investments in research generate
    a higher rate of return for the economy and society in general,
    than any other area of Federal spending.
        While we are pleased to see the emphasis given to basic
    research in this year's budget resolution, we are concerned
    that constant dollar declines in Federal support for basic
    research over the past decade, particularly in the physical
    sciences, have weakened the roots of our Nation's innovative
    system. Mr. Chairman, the ACS members are most concerned about
    the science and technology program. This program is clearly the
    bedrock of the Department's research, development, test, and
    evaluation activity, and we urge the subcommittee to approve
    strong funding in this core area.
        In particular, ACS urges the committee to increase DOD
    basic research on 6.1 accounts by at least 7 percent this year.
    An increase at this level would help make up for the nearly 10
    years of decline in real terms of DOD basic research over the
    last 7 years.
        Senator Stevens. How much would that be, a 7-percent
    increase?
        Dr. Busch. Seven percent, I do not have dollars. I am
    sorry, sir.
        Senator Stevens. We will look it up.
        Dr. Busch. I probably have it in another book as a matter
    of fact.
        Strong increases in basic research, most of which is
    conducted by our Nation's universities, is critical to
    maintaining the technological edge that is so central to our
    national security. We often hear about stealth technologies,
    smart bombs, night vision and the like, but we rarely hear
    about the incredible scientific discoveries that inspire and
    advance these types of developments. This is what DOD's 6.1
    investments are all about--investing in those fundamental areas
    of research that have the highest potential for advancing our
    Nation's security.
        The academic research supported by DOD not only provides
    long-term military benefits, but it is crucial to the basic
    health of many science engineering disciplines, including
    chemistry, physics, mathematics, computer science and material
    science, as well as training the next generation of scientists
    and engineers in disciplines critical to our national security.
        In 1998, the Department's own Science Board concluded that
    approximately 3.5 percent of the total defense budget should be
    invested in the science and technology (S&T) program to
    maintain military technological superiority. While Congress
    funded S&T programs above the Board's recommended level for
    fiscal year 2000, the administration failed to maintain this
    level in its fiscal year 2001 budget proposal.
        Furthermore, the fiscal year 2000 Defense Authorization Act
    clearly requires DOD to either increase S&T programs by 2
    percent in real growth over the preceding year or verify that
    the request is adequate to protect the stability of the defense
    technology base. We are concerned that the administration's
    request fell short of this mark.
        Given the bipartisan agreement to increase defense spending
    overall, we remain hopeful that more emphasis will be given to
    science and technology accounts as this process moves forward.
    It is no secret that U.S. military operations in the
    foreseeable future will occur in an increasingly complex world,
    where threats to our security are more diffuse than during the
    Cold War. To respond to these new threats, it is essential for
    DOD to invest in research that increases understanding in key
    fields and fosters the development of leading-edge
    technologies, like energetic materials, advanced batteries,
    materials for extreme environments, and sensors.
        Mr. Chairman, we fully recognize that crafting budgets with
    limited resources means difficult decisions. We also recognize
    the careful balance that must be struck between current
    obligations and future opportunities. In our judgment, it is
    unfortunately true that future opportunities continue to take a
    back seat. We must realize that a strong investment in basic
    research is fundamental to protecting the lives of soldiers and
    maintaining our military's preeminent position during the next
    century.
        Put most simply, we are asking the subcommittee to keep a
    close eye on the long view of our national security. The
    Society is concerned that short-range budget questions continue
    to overshadow the long-term investments needed to safeguard our
    national security. The negative impacts will not be felt this
    year or next, but 10 or 20 down the line. To stay several
    technological steps ahead of future adversaries we simply have
    no choice but to invest in cutting-edge science today.
        Thank you for your attention to this important matter. We
    look forward to helping in any way we can.
        [The statement follows:]
                       Prepared Statement of Daryle Busch
        Chairman Stevens, Ranking Member Inouye, and Members of the
    Subcommittee: Good afternoon. My name is Daryle Busch and I am the
    President of the American Chemical Society. I am also a professor of
    chemistry at the University of Kansas. I am pleased to appear before
    you today on behalf of the Society to share our views on the importance
    of strengthening the nation's investment in basic defense research.
        The American Chemical Society is a nonprofit scientific and
    educational organization that represents 161,000 chemical scientists
    and engineers. The world's largest scientific society, ACS advances the
    chemical enterprise, increases public understanding of chemistry, and
    brings its expertise to bear on state and national matters.
        In order to sustain our nation's technological leadership and
    living standards, we believe that basic research should be a top
    priority in the federal budget. It is increasingly clear that
    investments in research and development (R&D) underlie U.S. economic
    growth and national security. Many economists, in fact, argue that
    investments in research generate a higher rate of return for the
    economy, and society in general, than any other area of federal
    spending. While we are pleased to see the emphasis given to basic
    research in this year's budget resolution, we are concerned that
    constant dollar declines in federal support for basic research over the
    past decade--particularly in the physical sciences--have weakened the
    roots of our nation's innovation system.
        Mr. Chairman, the Department of Defense (DOD) program that our
    members are most concerned about is the Science and Technology (S&T)
    program. This program is clearly the bedrock of the Department's
    Research, Development, Test and Evaluation (RDT&E) activity and we urge
    the subcommittee to approve strong funding in this core area.
        In particular, ACS urges the committee to increase the DOD basic
    research, or 6.1 accounts, by at least 7 percent this year. An increase
    at this level would help make up for the nearly 10 percent decline in
    real terms of DOD basic research over the last 7 years. Strong
    increases in DOD basic research, most of which is conducted by our
    nation's universities, are critical to maintaining the technological
    edge that has been so central to our national security.
        Although we often hear about stealth technologies, smart bombs,
    night vision and the like, we rarely hear about the incredible
    scientific discoveries that inspire and advance these types of
    developments. This is what DOD's 6.1 investments are all about--
    investing in those fundamental areas of research that have the highest
    potential for advancing our national security. The academic research
    supported by DOD not only provides long-term military benefits but is
    crucial to the basic health of many science and engineering
    disciplines, including chemistry, physics, mathematics, computer
    science, and materials science. DOD-supported academic research
    supplies new knowledge and understanding in these fields as well as
    training for the next generation of scientists and engineers in
    disciplines critical to our national security.
        In 1998, the Department's own Science Board concluded that
    approximately 3.5 percent of the total defense budget should be
    invested in the S&T program to maintain military technological
    superiority. The Board also urged DOD to devote approximately one-third
    of the S&T program to revolutionary technology initiatives, such as
    those contained in the basic research account. While Congress funded
    defense S&T programs above the Board's recommended level for fiscal
    year 2000, the administration failed to maintain this level in its
    fiscal year 2001 budget proposal.
        Furthermore, the Fiscal Year 2000 Defense Authorization Act clearly
    requires DOD to either increase S&T programs by 2 percent in real
    growth over the proceeding year or verify that the request protects the
    stability of the defense technology base. We are concerned that the
    administration's request fell short of this mark. In our view, this
    budget could indeed have negative impacts in both the short- and long-
    run. Given the bipartisan agreement to increase defense spending
    overall, we remain hopeful that more emphasis will be given to the S&T
    account as this process moves forward.
        It's no secret that U.S. military operations in the foreseeable
    future will occur in an increasingly complex world, where threats to
    our security are more diffuse than during the Cold War. To respond to
    these new threats, it is essential for DOD to invest in research that
    increases understanding in key fields and fosters the development of
    leading-edge technologies. This type of research had led to advances in
    global positioning satellite methodologies, energetic materials,
    advanced batteries, materials for extreme environments, sensors, and
    signatures.
        Mr. Chairman, we fully recognize that crafting budgets with limited
    resources means difficult decisions. We also recognize the careful
    balance that must be struck between current obligations and future
    opportunities. But, in our judgement, it is unfortunately true that
    future opportunities continue to take a back seat. We must realize that
    a strong investment in basic research, in which technologies having
    potential military applications are explored over a long time period,
    is fundamental to protecting the lives of soldiers and maintaining our
    military's preeminent position during the next century.
        Put most simply, we are asking the subcommittee to keep a close eye
    on the long view of our national security. The Society is concerned
    that short-range budget questions continue to overshadow the long-term
    investments needed to safeguard our national security--not this year or
    next year, but 10 or 20 years down the line. While I am not an expert
    on national security, if history is any guide, advances in technology
    will continue to transform the nature of combat, the safety of our
    troops, and how aggression is deterred in the future. To stay several
    technological steps ahead of future adversaries, we simply have no
    choice but to invest in cutting-edge science today.
        Thank you for your attention to this important matter. We look
    forward to assisting you in any way possible.

        Senator Stevens. Thank you very much. The staff tells me we
    have got requests for $1.217 Billion for 6.1, and your 7
    percent would be a little bit over $85 million. We agree with
    you in terms of basic emphasis. If we can find our way to
    continue the initiative we started last year, we will.
        We really do need that money. We know it. But I do not know
    whether we have got the money this year.
        Dr. Busch. It was 4.8 percent in the President's budget, I
    guess, which is not quite enough. Yes, I have $85.2 million
    from my staff. If we can help, please let us. And we sure wish
    you the very best in this process.
        Senator Stevens. Thank you very much. We will do our best.
        John Rogers, Parkinson's Action Network is next, please.
    Good morning.
    STATEMENT OF JOHN C. ROGERS, PARKINSON'S ACTION NETWORK
        Mr. Rogers. Mr. Chairman, good morning. Thank you for the
    opportunity to testify. I am here today as a volunteer on
    behalf of the Parkinson's Action Network.
        As a former Deputy Assistant Secretary of Defense, I am
    honored to be able to testify before you today. As the son and
    grandson of Parkinson's victims, I am proud to be here today.
    As a person who has lived with Parkinson's in my family for
    more than 30 years, I feel compelled to be here today. On
    behalf of the entire Parkinson's community, I am grateful for
    the subcommittee's interest in finding a cure for this
    devastating disease.
        Parkinson's is a terrible neurological disease. It affects
    nearly 1 million Americans. It is caused by the degeneration of
    brain cells that produce dopamine, a neurochemical that
    controls motor function. Its sufferers have difficulty with
    most routine movements, like walking or brushing their teeth.
    It causes uncontrollable tremors and, in its final stages, robs
    individuals of the ability to speak or move at all.
        My father, a World War II veteran, has suffered from
    Parkinson's for the past 15 years and has experienced all of
    these symptoms. The 210-pound giant I once knew has dropped to
    a frail 135 pounds. He shakes uncontrollably and suffers from a
    loss of movement, slurred and soft speech, and entire body
    freeze-ups. He has experienced severe dementia from his
    medication and fights depression daily. He has fallen and
    broken bones just getting out of bed, and he has suffered what
    any one of us would consider the most egregious indignities to
    his body. He is also the bravest man I know to have fought this
    beast every day. His caretaker, my mom, deserves another kind
    of medal for her care and support.
        The conventional treatment for Parkinson's is a more than
    30-year-old drug commonly known as L-dopa. My grandmother took
    L-dopa, as has my father. It usually restores function to a
    certain extent, and at first it may seem like a miracle drug.
    But, overall, it works inefficiently, produces side effects,
    and eventually does not work at all.
        This need not happen. Parkinson's research is at a major
    crossroads. In fact, many scientists identify Parkinson's as
    the neurological disorder most likely to produce a breakthrough
    therapy or cure. To reach that point, however, we need more
    aggressive research funding.
        The acknowledgement of Parkinson's sufferers, like Pope
    John Paul II, Muhammed Ali, Janet Reno, Billy Graham, and
    especially Michael J. Fox, who recently established a
    foundation for Parkinson's research, has raised public interest
    about this disease to an all-time high. It is imperative that
    we capitalize on the public consciousness and take advantage of
    the momentum it has created for finding a cure.
        The Department of Defense Neurotoxin Exposure Treatment
    Research (NETR) Program, which this subcommittee has supported,
    is a vital component in our Nation's efforts to fight
    Parkinson's disease and other neurodegenerative diseases that
    afflict military personnel and civilians alike. The Department
    of Defense has done an excellent job in administering this
    program. As a DOD official, I witnessed the beginning of
    research that continues to link toxins to environmental factors
    to neurological disorders and diseases--disorders such as the
    Gulf War Syndrome.
        The NETR Program has advanced scientific research
    identifying toxins that contribute to the inception of
    Parkinson's disease. The program is critically important for
    the military because some service men and women work in
    environments that pose risks to neurodegenerative diseases. By
    continuing to advance research in this area, the DOD is better
    able to understand and minimize risk to military personnel and,
    in doing so, enhance readiness.
        The Network urges the subcommittee to continue its very
    important support of this program and to provide $50 million,
    for fiscal year 2001, for the NETR Program. The Network also
    encourages the subcommittee to provide supplemental funds for
    the current fiscal year to ensure that deserving research
    grants do not go unfunded. Current fiscal year funding, which
    is at $10 million, will fund only one-quarter of the research
    the NETR Program submitted just last year.
        As the son and grandson of Parkinson's victims and as a
    former DOD official, I thank you for your interest, and urge
    you to promote this very valuable program. We believe the NETR
    Program richly deserves your continued support. Thank you.
        [The statement follows:]

                      Prepared Statement of John C. Rogers

        Mr. Chairman, Senator Inouye, thank you for the opportunity to
    testify. I am here today on behalf of the Parkinson's Action Network.
        As a former Deputy Assistant Secretary of Defense, I am honored to
    be able to testify before you today. As the son and grandson of
    Parkinson's victims, I am proud to be here today. As a person who has
    lived with Parkinson's for more than thirty years, I feel compelled to
    be here today.
        On behalf of the entire Parkinson's community, I commend the
    Chairman and Subcommittee for their past support in finding a cure for
    this devastating disease.
        As you may know, the Parkinson's Action Network was created in 1991
    to give a voice to a community that has been largely invisible, and to
    increase funding for Parkinson's in an effort to deliver breakthroughs
    and cure this awful disease.
        Parkinson's is a devastating neurological disease; it is caused by
    the degeneration of brain cells that produce dopamine, a neurochemical
    that controls motor function. Its sufferers have difficulty with the
    most routine movements, like walking or brushing teeth. It causes
    uncontrollable tremors, and its final stages rob individuals of the
    ability to speak or move at all. Many Parkinson's sufferers retain
    their cognitive senses and have to watch helplessly as their bodies
    deteriorate.
        My father, a World War II veteran, has suffered from Parkinson's
    for the past fifteen years and has experienced all of these symptoms.
    The 210-pound giant I once knew dropped to 120 pounds before rebounding
    to a frail 135 pounds. He shakes uncontrollably and suffers from a loss
    of ambulatory movement, slurred and soft speech, frozen face and freeze
    ups. He has experienced severe dementia from his medication and fights
    depression daily. He has fallen and broken bones just getting out of
    bed and he has suffered what any one of us would consider egregious
    indignities to his body. He is also the bravest man I know to have
    fought this beast every day. His caretaker, my mother, deserves another
    kind of medal for her care and support.
        Conventional treatment for Parkinson's is a more than 30-year-old
    drug commonly known as ``L-dopa'' that attempts to boost the production
    of dopamine in existing dopamine cells (by analogy, this process is
    similar to putting more gas in a car that has gas but now the car can
    go further). My grandmother took the same L-dopa in the late 60s and
    early 70s that my father was prescribed in the 80s, 90s, and still
    takes today. It usually restores function to a certain extent, and at
    first, it may seem like a miracle drug. But overall, it works
    inefficiently, produces side effects, and eventually does not work at
    all. As the dopamine cell degeneration advances, individuals with
    Parkinson's lose the automatic movements needed to walk, talk,
    swallow--eventually becoming unable to move at all.
        This need not happen. Parkinson's research is at a major
    crossroads, with important new scientific opportunities for a major
    leap in treatments for Parkinson's and related disorders. In fact,
    leading scientists identify Parkinson's as the neurological disorder
    most likely to produce a breakthrough therapy and/or cure. To reach
    that point, however, we need a more aggressive research investment.
        The acknowledgment of Parkinson's sufferers like Pope John Paul II,
    Muhammed Ali, Janet Reno, Morton Kondracke's wife and especially
    Michael J. Fox, who recently established the Michael J. Fox Foundation
    for Parkinson's Research, has raised public interest about this disease
    to an all-time high. It is imperative that we capitalize on the public
    consciousness and take advantage of the momentum it has created for
    finding a cure.
        The Department of Defense Neurotoxin Exposure Treatment Research
    Program (NETRP), which this Subcommittee had the foresight to
    establish, is a vital component in our nation's effort to fight
    Parkinson's disease and other neurodegenerative diseases that afflict
    military personnel and civilians alike. The Department of Defense has
    done an excellent job of administering the funds appropriated to them.
    Their peer review process has ensured quality research for this effort.
        The Program focuses on the importance of environmental factors in
    the onset of Parkinson's and funds research to prevent, detect, and
    treat environmental toxicity. This is particularly important in light
    of recent evidence in a major study published last year that narrowed
    the cause of classic Parkinson's, eliminating inherited genetic
    factors, and pointing to outside ``triggers'' such as environmental
    toxins that result in dopamine cell death and Parkinson's symptoms.
        The Program is critically important for the military, because some
    servicemen and women work in environments that pose risks for
    neurodegenerative disease, including some Parkinson's symptoms. Our
    fighting men and women may be at risk from occupational exposures to
    psychological stress, toxic industrial and agricultural chemicals,
    chemical threat agents, head injury, and even radio frequency
    radiation. By continuing to advance research in this area, the DOD is
    better able to understand and minimize risks to military personnel and
    in so doing improve military readiness.
        The Program also makes an important contribution to basic research
    on mechanisms of neurodegeneration that will lead to better diagnosis,
    treatment and prevention. This will help those who already suffer from
    Parkinson's. The DOD is interested in funding four main categories of
    research in their program:
        1. Mechanisms of damage and protection against neural cell death;
        2. Development and validation of new approaches to
    neuropsychological testing to improve early detection of
    neurodegenerative diseases;
        3. New therapeutic strategies for the treatment of
    neurodegenerative disease; and
        4. Influence of environmental factors.
        The Subcommittee has an enormous opportunity to take us closer to
    winning the fight against Parkinson's and other neurological disorders.
    Scientists tell us that there is a correlation between an investment in
    research and improved treatments or finding a cure. But that can't
    happen if the funding is inadequate to the task--and falls short of the
    promising research agenda defined by the program.
        Last year, NETRP funded $45 million in peer-reviewed and approved
    research grants. There is tremendous excitement in the scientific
    community about this Program. But scientists in the field describe
    immense frustration with the halting pace of research breakthroughs
    because of inadequate funding for Parkinson's research.
        The Network urges the Subcommittee to support this program and to
    provide $50 million for fiscal year 2001 for the Neurotoxin Exposure
    Treatment Research Program and its focus on Parkinson's and other
    neurodegenerative disease research.
        We believe that the Neurotoxin Exposure Treatment Research Program
    richly deserves your continued support.
        Thank you.

        Senator Stevens. Did you testify at Senator Specter's
    hearing on Parkinson's?
        Mr. Rogers. No, sir, I did not. I testified before the
    House Appropriations Committee on Defense on the same issue.
        Senator Stevens. We have increased NIH funding for
    Parkinson's. It was at $132 million in 1999, $158 million in
    2000, and it is at $165 million this year. That is the area for
    the initiative on Parkinson's, not defense. You have $10
    million from last year. I just do not think you can say that
    this is a defense-related disease.
        Mr. Rogers. The argument and the discussion that we have
    been having with Defense is that neurotoxins affect military
    personnel. If you have chemicals out there, they can affect
    military personnel in a very similar way that neurotoxins
    affect Parkinson's victims.
        Senator Stevens. I understand that. And the $10 million is
    there. But I have got to tell you, we provided $10 million for
    you last year, and now you have asked for $50 million this
    year. This is a Defense appropriations bill.
        Mr. Rogers. I understand that, sir.
        Senator Stevens. It is not an NIH subcommittee. I urge you
    to talk to the Health and Human Services people if you believe
    there should be an increase in this funding.
        Mr. Rogers. We are, as well, sir.
        Senator Stevens. Thank you very much.
        Mr. Rogers. Thank you.
        Senator Stevens. The next witness is Michael Miller,
    National Prostate Cancer Coalition. Good morning, Mike. As the
    only Alaskan, I am sorry to keep you down toward the end, but
    you have got my attention, Mike.
    STATEMENT OF MICHAEL H. MILLER, NATIONAL PROSTATE
                CANCER COALITION
        Mr. Miller. Mr. Chairman, I would wait all day to have this
    opportunity to speak before you and your committee. Thank you,
    Mr. Chairman, and members of this committee for allowing me to
    present testimony today on a disease that has changed my life.
    My name is Michael H. Miller, and I am from, as you know,
    Senator Stevens, your home State of Alaska. I am here today on
    behalf of the National Prostate Cancer Coalition, to request
    that you provide at least $150 million for peer review research
    in the coming fiscal year to the Department of Defense Prostate
    Cancer Research Program at Fort Detrick, Maryland.
        I have had the pleasure of working with you, Mr. Chairman,
    before many times on prostate cancer awareness and research
    funding. I want to thank this committee very much for all of
    its past and continuing support of these important issues. I
    have advanced prostate cancer. I am a 4-year survivor, and I am
    a prostate cancer activist. Funding for Federal prostate cancer
    research is a profoundly personal issue for me.
        The only reason I am able to be here today is because I
    participated in an experimental prostate cancer clinical trial
    funded in part by the Federal Government. I have travelled all
    the way from Juneau, Alaska, to put a new face on this deadly
    disease. Too many people with prostate cancer think this is an
    old man's disease, but I was only 43 years old when I was
    diagnosed with prostate cancer, just one of many American men
    diagnosed with this disease in the prime of their lives.
        While my age was young, my disease was advanced. It had
    already gone into my bones. My doctors told me that the cancer
    was very high grade and very aggressive. I was given between 17
    and 35 months to live. When I got that news, I was a very
    active and nationally recognized swim coach, following a very
    successful career as a competitive swimmer. I had been an
    eight-time small college all-American and was voted outstanding
    college athlete of America at Central Washington State. After
    graduation, I began a 21-year career as a swimming coach,
    including 14 years in Juneau, Alaska, as a coach at the Glacier
    Swim Club.
        I took my team to the Junior Nationals 10 times. I had a
    leadership role in Alaska swimming competitions, including
    serving as a coach for the 1991 Elite Training Camp for the
    United States Olympic Training Center in Colorado. All of this
    came to a screeching halt on January 17, 1996, when I learned I
    had advanced prostate cancer. Faced with very few treatment
    options, I entered an experimental National Institutes of
    Health sponsored clinical trial at the Oregon Cancer Center,
    Oregon Health Sciences university.
        I remained in the trial for 8 months, until I was forced to
    withdraw due to severe side effects that are with me to this
    day. My adrenal gland system was shut down, and I developed
    adrenal deficiency syndrome. Trying to cope with that syndrome,
    as well as prostate cancer in my bones and osteoporosis, I had
    to quit working and leave a sport and career about which I had
    always been passionate. I developed sensitivity to light and
    lost 90 percent of the hearing in my right ear.
        In short, the medical treatment prolonged my life, but it
    greatly diminished my quality of life. However, I must say I do
    have quality of life. In this I am typical of many prostate
    cancer patients. Treatment for this disease can bring on a
    variety of debilitating side effects, ranging from incontinence
    and impotence to intense bone pain and osteoporosis. In 2000,
    more than 180,000 American men will be diagnosed with prostate
    cancer. More than 30,000 men will die this year from this
    disease. Too many of the rest of the men are undergoing
    treatment and coping with side effects similar to mine.
        And as the population continues to age, more and more men
    will be diagnosed with prostate cancer unless our country makes
    a decision to diligently and relentlessly pursue a cure. The
    statistics on this disease are not an abstraction for me. As I
    looked at my family, at the boys I have been coaching over the
    years, and especially at my two sons, I did not want them to
    face this disease. My sons have up to six times the risk of
    prostate cancer as other men because of my diagnosis. For their
    sakes, I have chosen to do what I can to help eradicate this
    disease.
        Shortly after my diagnosis, I made my first speech about
    prostate cancer to high school students at Juneau Douglas.
    Since that first talk, I have spoken to more than 3,000
    students and 660 teachers in Juneau alone. I began travelling
    to other States, like California, Oregon, Washington,
    Wisconsin, and North Dakota, and have spoken about prostate
    cancer to more than 16,000 people. Echoing your words, Mr.
    Chairman, I told them to watch their diets, exercise, and begin
    to receive prostate cancer tests and examinations early.
        I also became politically active to advocate for increased
    Government funding of prostate cancer research. I spearheaded a
    1998 effort to pass a resolution in the Alaska Legislature that
    called for Federal funding for prostate cancer research--the
    only such legislation in any State. I might add that thanks to
    the leadership of the chairman and members of the committee,
    Federal spending for prostate cancer research increased by 55
    percent that same year.
        I was the first person ever to testify by video to the Food
    and Drug Administration about suramin, one of the drugs used in
    my treatment. I have organized petition drives and candlelight
    vigils, and I have spoken many times as a panelist on prostate
    cancer issues. I join the American Cancer Society Northwest
    Division Prostate Cancer Task Force and its public issues
    committees. I have presented testimony to many legislative
    bodies, including in support of a bill in the Alaska
    Legislature, passed this month, which reduced the age at which
    insurance companies in my State would be required to pay for
    prostate cancer screening. I recently started a foundation
    called the Southeast Alaska Cancer and Wellness Foundation.
        Senator Stevens. Mike, you are going to have to get to the
    bottom line. I have got to be fair to everybody else.
        Mr. Miller. Today, the Senate Subcommittee on Defense
    Appropriations is discussing DOD prostate cancer research
    programs, so I am here to let you know that there are many
    promising areas of research that should be pursued and put into
    clinical trials, but funding for them is not available.
    Providing $150 million for peer-reviewed research in the
    Department of Defense program would allow important and
    essential clinical research to go forward.
        I thank you very, very much.
        [The statement follows:]

                    Prepared Statement of Michael H. Miller

        Thank you, Mr. Chairman and members of this committee, for allowing
    me to present testimony today on a disease that has changed my life.
        My name is Michael H. Miller, and I am from Senator Stevens' home
    state of Alaska. I am here today on behalf of the National Prostate
    Cancer Coalition to request that you provide at least $150 million for
    peer review research in the coming fiscal year to the Department of
    Defense prostate cancer research program at Ft. Detrick, Maryland.
        I have had the pleasure of working with Senator Stevens before--
    many times--on prostate cancer awareness and research funding, and I
    want to thank this committee very much for all of its past and
    continued support of these important issues.
        I have advanced prostate cancer. I am a survivor, and I am a
    prostate cancer activist. Funding for federal prostate cancer research
    is a profoundly personal issue for me. The only reason I am able to be
    here today is because I participated in an experimental prostate cancer
    clinical trial, funded, in part, by the federal government.
        I have traveled all the way from Juneau, Alaska, to put a new face
    on this deadly disease. Too many people think of prostate cancer as an
    ``old man's disease.'' But, I was only 43 years old when I was
    diagnosed with prostate cancer, just one of many American men diagnosed
    with this disease in the prime of their lives. While my age was young,
    my disease was advanced. It had already gone into my bones. My doctors
    told me that the cancer was very high grade--and very aggressive. I was
    given between 18 and 36 months to live.
        When I got that news, I was a very active--and a nationally
    recognized--swim coach, following a very successful career as a
    competitive swimmer. I had been an eight-time, small college ``All
    American,'' and was voted an ``Outstanding College Athlete of America''
    at Central Washington State. After graduation, I moved to Juneau and
    began a 14-year stint coaching the Glacier Swim Club. I took my team to
    the Junior Nationals 10 times. I had a leadership role in Alaska
    swimming competitions, including serving as a coach for the 1991 Elite
    Training Camp for the United States Olympic Training Center in
    Colorado.
        All of this came to a screeching halt on January 17, 1996, when I
    learned I had serious prostate cancer. Faced with very few treatment
    options, I entered an experimental, National Institutes of Health-
    sponsored clinical trial at the Oregon Cancer Center, Oregon Health
    Sciences University. I remained in the trial for 8 months, until I was
    forced to withdraw due to severe side effects that are with me to this
    day.
        My adrenal gland shut down, and I developed adrenal deficiency
    syndrome. Trying to cope with that syndrome--as well as prostate cancer
    in my bones, I had to quit working and leave a sport and career about
    which I had always been passionate. I developed sensitivity to light,
    and I lost 90 percent of the hearing in my left ear. In short, the
    medical treatment prolonged my life, but it greatly diminished its
    quality.
        In this, I am typical of many prostate cancer patients. Treatment
    for this disease can bring on a variety of debilitating side effects,
    ranging from incontinence and impotence to intense bone pain and
    osteoporosis. In 2000, more than 180,000 American men will be diagnosed
    with prostate cancer. More than 30,000 men will die this year from this
    disease. Too many of the rest are undergoing treatment and coping with
    side effects similar to mine.
        And, as the population continues to age, more and more men will be
    diagnosed with prostate cancer, unless our country makes a decision to
    diligently and relentlessly pursue a cure.
        The statistics on this disease are not an abstraction for me. As I
    looked at my family, at the boys I have been coaching over the years,
    and especially at my two sons, I did not want them to face this
    disease. My sons have six times the risk of prostate cancer as other
    men because of my diagnosis. For their sakes, I have chosen to do what
    I can to help eradicate this disease.
        Shortly after my diagnosis, I made my first speech about prostate
    cancer to young men at a local high school. Since that first talk, I
    have spoken to more than 3,000 students and 660 teachers in Juneau
    alone. I began traveling to other states, like California, Oregon,
    Washington, Wisconsin and North Dakota, and have spoken about prostate
    cancer to more than 16,000 people. Echoing words I have heard from
    Senator Stevens, I told them to watch their diets, exercise and begin
    to receive prostate cancer tests and examinations early.
        I also became politically active to advocate for increased
    government funding of prostate cancer research. I spearheaded a 1997
    effort to pass a resolution in the Alaska legislature that called for
    increased federal funding for prostate cancer research, the only such
    legislation in any state. I might add that, thanks to the leadership of
    the chairman and members of the committee, federal spending for
    prostate cancer research increased by 55 percent that same year.
        I was the first person ever to testify by video to the Food and
    Drug Administration about suramin, one of the drugs used in my
    treatment. I have organized petition drives and candlelight vigils, and
    I have spoken many times as a panelist on prostate cancer issues. I
    joined the American Cancer Society Northwest Division Prostate Cancer
    Task Force and its public issues committees. I have presented testimony
    to many legislative bodies, including in support of a bill in the
    Alaska legislature, passed this month, which reduced the age at which
    insurance companies in my state would be required to pay for prostate
    cancer screening. I recently started a foundation called the
    ``Southeast Alaska Cancer and Wellness Coalition,'' an organization to
    bring together health and wellness resources for people residing in
    that part of Alaska.
        Along with other prostate cancer activists, I do a lot more than
    argue in favor of more federal funding for research. We are teaching
    others about prostate cancer, urging men to get early screening,
    forming support networks and survivor networks--doing whatever we can
    to beat this disease.
        Today, the Senate Subcommittee on Defense Appropriations is
    discussing funding for the DOD prostate cancer research program. So I
    am here. I am here to let you know that there are many promising area
    of research that should be pursued and put into clinical trials, but
    funding for them is not available. Providing $150 million for peer
    reviewed research in the DOD program would allow important--and
    essential--clinical research to go forward.
        Many more lives could be saved. Many more families could be spared
    the agony of prostate cancer. Unless we invest now to cure prostate
    cancer, this disease will strike down more men like me. I am here now
    so that my children will not have to be. I am fighting for my sons'
    futures.
        On their behalf--and on behalf of countless other sons and their
    fathers and the people who love them--please appropriate the necessary
    funding this year for the DOD Prostate Cancer Research Program.
        Thank you.

        Senator Stevens. Thanks for all you do. I know that you
    have done a tremendous amount on your own, just tirelessly, to
    educate people about this disease. And as a fellow who has also
    suffered from the disease, I thank you for my sons, too. We
    will do our very best, Mike. And I thank you for taking the
    time to come.
        Mr. Miller. Thank you, Mr. Chairman.
        Senator Stevens. Our next witness is Mr. William Schwartz,
    from CaP CURE. Nice to see you.
    STATEMENT OF WILLIAM A. SCHWARTZ, MEMBER, BOARD OF
                DIRECTORS, ASSOCIATION FOR THE CURE OF
                CANCER OF THE PROSTATE
        Mr. Schwartz. Good morning, Mr. Chairman. Good to see you
    again. And I am testifying on behalf of CaP CURE, as a Member
    of the Board of Directors. CaP CURE is also know as the
    Association for the Cure of Cancer of the Prostate. It is a
    public charity, dedicated to the rapid discovery of cures or
    controls for prostate cancer, which has been the Nation's
    number one, most commonly diagnosed non-skin cancer. It was
    founded in 1993 by financier/philanthropist Michael Milken,
    shortly after his own diagnosis of advanced prostate cancer.
        CaP CURE, since that time, has awarded more than $80
    million to over 600 innovative research projects in more than
    25 States and five countries. I am here to talk about the
    importance of prostate cancer research, Mr. Chairman. And like
    Mike Miller, my statistics are not very good. I was diagnosed
    with metastatic prostate cancer 5\1/2\ years ago and,
    statistically, should not be alive today. Only 30 percent of
    the men so diagnosed survive 5 years. But those statistics
    notwithstanding, I am delighted to be with you again. My cancer
    is under reasonable control and, God willing, I look forward to
    watching my first grandchild, who was born just a couple of
    months ago, grow into a young man, and maybe even get to his
    wedding.
        It is crucial that we develop treatments and therapies that
    can extend lives that are now lost to this dreaded disease.
    Accordingly, Mr. Chairman, I am pleased to provide testimony
    today in support of our partner in prostate cancer research,
    the U.S. Army Medical Research and Materiel Command at Fort
    Detrick. Mike has given you the figures: almost 200,000 men
    diagnosed last year, and nearly 40,000 died. That means every
    day 500 men learn they have prostate cancer. Some are famous,
    like General Schwartzkopf and Senator Dole and Joe Torre, but
    most are out of the public spotlight. All have families and
    friends who bear the burden with them. And every day, more than
    100 of these men die.
        In fact, one in six, or 300,000 men of the nearly 2 million
    men in active and military Reserve military service will be
    diagnosed with prostate cancer at some time during their lives.
    The need for the DOD Prostate Cancer Research Program is
    underlined by the fact that, on average, 15 percent of all
    cancer cases are prostate cancer, and 15 percent of all male
    cancer deaths are prostate cancer. Over the past 5 years, an
    average of only 5 cents of every Federal prostate cancer dollar
    has been allocated to find a cure for this disease.
        Senator Stevens. You said 5 percent of what?
        Mr. Schwartz. Five percent of Federal cancer research
    dollars has been allocated to the disease.
        Congress, and particularly with your leadership, Senator,
    has assured that the funding is getting better. And this
    committee's $75 million appropriation last year is helping to
    narrow the gap. But given where we are and the opportunities
    that surround us, we have got a long way to go.
        That is why CaP CURE, as a partner in the National Prostate
    Cancer Coalition (NPCC), is asking you to commit $150 million
    to the program for fiscal year 2001. And here are some of the
    reasons why:
        The Prostate Cancer Research Program at the DOD does unique
    work. We know that because we have worked closely with them
    since the program's inception. In addition, the DOD program
    representatives were core participants at an historic and
    precedent-setting conference sponsored just last week by CaP
    CURE, the NPCC and the National Cancer Institute. That
    conference brought together private and public sector funders
    of prostate cancer research to discuss opportunities, synergies
    and collaborations. And we are trying to ensure that all funds
    spent on prostate cancer research are spent productively.
        Every single funder in both the public and private sector
    now knows how important the DOD program is, because it is
    really additive and non-duplicative of other work in the
    private and public sectors, and it really is the only place in
    the public sector where a research can focus his or her
    energies specifically on prostate cancer.
        In its April 1998 investment strategy for prostate cancer,
    the Army medical research program pointed out that it could not
    undertake appropriate and crucial clinical trials with less
    than $100 million net. And we must guarantee that treatment
    opportunities are converted from the bench to the bedside. And
    the only way they get there is going through a clinical trial.
        The program loses just under 20 percent per year to a host
    of DOD set-asides and program and command overhead. So last
    year's $75 million, Mr. Chairman, only netted the peer review
    program $60 million. So, again, I just want to reiterate that
    in order for clinical trials to commence, the Department
    requires a net after all these overhead expenses of at least
    $100 million.
        Last year the program only funded 19 percent of the
    worthwhile projects and proposals that were presented to them.
    And to retain the pool of talented researchers who have
    committed themselves to solving the problem of prostate cancer,
    we must improve that statistic dramatically.
        So, Mr. Chairman, given these daunting facts, I ask you and
    your colleagues to be mindful of the impact of this terrible
    cancer on the country, as a whole, and especially on the 8
    million Department of Defense staff and retirees and their
    families whose well-being is in the care of the Department's
    worldwide health program.
        Again, I thank you for this opportunity to speak to you.
        [The statement follows:]

                   Prepared Statement of William A. Schwartz

        Mr. Chairman and members of the Subcommittee on Defense
    Appropriations, my name is Bill Schwartz. I am with you today in my
    capacity as a member of the board of directors of CaP CURE.
        CaP CURE, also known as the Association for the Cure of Cancer of
    the Prostate, is a public charity dedicated to the rapid discovery of
    cures or controls for prostate cancer, which has been the nation's most
    commonly diagnosed non-skin cancer. Founded in 1993 by financier-
    philanthropist Michael Milken shortly after his own diagnosis of
    advanced prostate cancer, CaP CURE has awarded more than $80 million to
    over 600 venture research projects in more than 25 states and five
    countries.
        Mr. Chairman, I am here to talk about the importance of prostate
    cancer research. I was diagnosed with metastasized prostate cancer 5\1/
    2\ years ago. Statistics show that I should not be alive today, since
    only 30 percent of men diagnosed with metastatic prostate cancer
    survive five years. Statistics notwithstanding, I am delighted to be
    with you. My cancer is under reasonable control, and God willing, I
    look forward to watching my first grandchild, who was born just a few
    months ago, grow into a young man.
        I am here today because I want to ensure that we develop treatments
    and therapies that can extend and save lives that are now lost to this
    dread disease. Accordingly, Mr. Chairman, I am pleased to provide
    testimony today in support of our partner in prostate cancer research,
    the extramural program conducted by the U.S. Army Medical Research and
    Materiel Command at Ft. Detrick, MD.
        Last year, almost 200,000 men were diagnosed with prostate cancer
    and nearly 40,000 died from this disease. That means that every day
    more than 500 men learned they had prostate cancer.
        Some are famous, like General Schwarzkopf, Senator Dole, and Joe
    Torre.
        Most are out of the public spotlight.
        All have families and friends who bear the burden with them.
        And every day more than 100 men died.
        In fact, one in six--or 300,000 men--of the nearly 2 million men in
    active and reserve military service will be diagnosed with prostate
    cancer at some time in their life.
        The need for the Department of Defense Prostate Cancer Research
    Program is underlined by the fact that prostate cancer has been the
    number one diagnosed non-skin cancer in the country. It has accounted,
    on average, for 15 percent of all cancer cases and 15 percent of cancer
    deaths among men. Over the past few years, an average of only 5 cents
    of every federal cancer research dollar has been allocated to find a
    cure for this disease.
        Congress has assured that funding is getting better and this
    Committee's $75 million appropriation last year is helping to narrow
    the gap. But, given where we are, and the opportunities that surround
    us, there is a long way to go.
        That is why CaP CURE, as a partner in the National Prostate Cancer
    Coalition, is asking you to commit $150 million to the program in
    fiscal year 2001, and here are some of the reasons why:
      --The DOD program is a model federal program. For example, while NIH
            has many wonderful programs that could impact prostate cancer,
            only DOD has a program whose sole focus is prostate cancer-
            specific research, which is designed to compliment and not
            duplicate research at other federal agencies.
      --We also believe strongly in the DOD research program because it
            emphasizes innovative public/private partnerships, involving
            biotech and pharmaceutical companies, which help federal
            dollars go further and yield quicker results.
      --Additionally, the DOD program has distinguished itself by focusing
            on unique research opportunities and including consumer
            advocates in the scientific review process. As a survivor, I
            have the honor, for the first time, of sitting on this year's
            Prostate Cancer Integration Panel, which oversees the DOD
            research projects.
      --In its April 1998 business plan, the Army's medical research
            program defined its investment strategy for prostate cancer.
            The program can only become fully operational if funded
            annually at no less than $200 million net, a goal the NPCC has
            said must be reached by fiscal year 2002.
      --The program cannot undertake appropriate and crucial clinical
            trials research with less than $100 million net. We must
            guarantee that treatment opportunities are converted from bench
            to bedside, and clinical trials are necessary for this to
            happen.
      --The program loses just under 20 percent per year to a host of DOD
            set-asides and program and command overhead, so last year's $75
            million netted only about $60 million for the Peer-Reviewed
            Research Program. Consequently, to net $100 million for peer-
            review will require a minimum appropriation of $125 million.
      --Last year the program could only fund about 19 percent of worthy
            grant applications. To retain the pool of talented researchers
            who have committed themselves to solving the problem of
            prostate cancer, we must improve that statistic dramatically.
        Mr. Chairman, in the face of these daunting facts, and as you
    consider the future investments in this Department of Defense research
    program, I ask you and your colleagues to be mindful of the impact of
    prostate cancer on the country as a whole. And I also ask you to
    consider the potential--and special--impact of prostate cancer on the
    eight million Department of Defense staff and retirees--and their
    families--whose well-being is in the care of the Department's worldwide
    health system.
        While costs are involved to increase funding of this important
    research program, I also ask you to remember the greater costs involved
    in any further delay to the cure of prostate cancer.
        Thank you for your consideration.

        Senator Stevens. How much of that $75 million actually went
    to research last year?
        Mr. Schwartz. Only $60 million got into peer review; 18
    percent went for overhead and other sorts of set-asides. That
    is why, with the problem with clinical trials, the Department
    of Defense medical program has said, look, we have to have at
    least $100 million net. That is after all these overhead
    deductions.
        Senator Stevens. Why didn't they ask for it? They did not
    ask for that. Their budget does not request that. If they say
    that, why didn't they ask for it?
        Mr. Schwartz. I cannot answer that. I know in their program
    that they put out in April, they called for a spending program
    of $200 million a year. And I am not sure why they did not ask
    for it in this particular appropriation. We will have to look
    into it.
        Senator Stevens. I would suggest that the people who put
    out those suggestions get together with those who send us the
    budgets. You are asking for a 100 percent increase in one item
    in one year. And I have got to tell you that is going to be
    next to impossible. Because if we did that, then we have got to
    increase breast cancer. We have got to increase diabetes. We
    have got to increase all these other things. Over a half-a-
    billion dollars now goes into medical research from DOD's
    budget.
        Mr. Schwartz. Well, Senator, I understand what you are
    saying, and I can appreciate the difficulty. I guess the key
    thing is really not that we double. The key thing is that we
    just reach $100 million on a net basis so that we can get to
    the major clinical trials that are necessary.
        Senator Stevens. How much do you get from NIH?
        Mr. Schwartz. Last year was $260 million.
        Senator Stevens. You are saying $100 million net from
    Defense, but you have already got $260 million net from the
    other department.
        Mr. Schwartz. I understand.
        Senator Stevens. I am a prostate cancer survivor, but I
    think you have to be reasonable with us, and that is not being
    reasonable. We will do our very best, but we just cannot pursue
    an increase every year in defense money for research on a
    specific disease of this kind; 100 percent increase is just not
    possible. I do thank you for the testimony.
        Mr. Schwartz. Thank you very much, Mr. Chairman.
        Senator Stevens. Next is Mr. Robert Parker, the Coalition
    for National Security Research.
    STATEMENT OF ROBERT PARKER, DEPUTY DIRECTOR, UNIVERSITY
                OF SOUTHERN CALIFORNIA INFORMATION SCIENCES
                INSTITUTE, ON BEHALF OF THE COALITION FOR
                NATIONAL SECURITY RESEARCH
        Mr. Parker. Good afternoon. I would first like to thank the
    committee for allowing me to speak here today. I do represent
    the Coalition for National Security Research (CNSR). CNSR is a
    coalition of approximately 40 organizations across the United
    States, including a diverse set of universities as well as
    professional societies that in turn represent research
    organizations and the industry. The primary goal of CNSR is to
    advocate for a strong science and technology base supported by
    the Department of Defense.
        We are interested in asking you to stay the course in your
    support of 6.1 through 6.3 research in the Department of
    Defense. And we are also requesting that you consider a small
    increase only to cover the amount of inflation in that
    budgetary request for this coming year.
        My name is Robert Parker. I am Deputy Director of the
    University of Southern California's Information Sciences
    Institute (ISI). ISI has done Department of Defense research
    for almost 30 years, and we have been involved since the early
    days of the Advanced Research Projects Agency (ARPA) network in
    creating the advanced protocols that enabled that network to
    come to fruition and has evolved now into the Internet
    technology that we have in the United States today.
        I have also done Government service through the IPA
    program. I spent 4 years at the Defense Advanced Research
    Projects Agency (DARPA) as a Deputy Director of the Information
    Technology Office. So I understand the S&T process both from
    the project management side of the organization as well as a
    researcher from the university.
        Given my background in information technology, I wanted to
    spend a couple of moments today telling you my concerns for
    funding in this specific area. If you look, as I am sure the
    committee has looked, at Joint Vision 2010 for information
    superiority, the Army's digital battlefield, the future combat
    system, the full spectrum dominance, the Navy's network-centric
    warfare, and the Air Force's global engagement. These are all
    visions that the services have brought forward, and they all
    share one common need. And that is a need for an underlying
    information infrastructure. That is an infrastructure that does
    not exist in the United States today. It will be critical if we
    are to bring those missions to the battlefield.
        And there is a danger here, a very serious danger, in the
    sense that you can look back on investments in S&T that DOD has
    provided over the years and you can see how specific examples
    of technology developed in the university base have helped fuel
    the information technology revolution that the whole United
    States economy is the beneficiary of today. There is documented
    evidence of that, and it is very clear.
        The danger is in complacency, in saying, well, gee, no
    matter how much money we raise in DOD, the amount of money
    provided through the commercial sector just dwarfs that amount,
    and therefore we will let them provide the information
    technology investments in the future. There is significant
    danger in that. I advocate that there is a divergence of
    interests between the commercial industry and DOD even greater
    than it has been in the past.
        The DOD needs to include in these areas, systems that are
    highly fault tolerant, and that are responsive to very complex
    mission scenarios. As we enter battlefield scenarios, where the
    missions transition from warfighting to peacekeeping, where we
    have complex force structures that change over time, that
    involve coalition forces and needs for things like multilevel
    security. If we look at systems that need to be reactive,
    responsive to the environment, perhaps gracefully degrade over
    time, that are solutions that are applicable across multiple
    missions, if we look at all of these areas of need in DOD, in
    addition to the fact that there is a tremendous legacy system
    problem in DOD, we simply do not have the funds to replace all
    of the systems that are currently fielded.
        The only way to introduce information technology is through
    finding ways for them to coexist in the field with these other
    systems. These are all problems, for better or worse, that DOD
    owns uniquely. They are not problems shared by the commercial
    world. And we cannot expect the commercial world to solve those
    problems without continuing to invest strongly in the S&T
    process, through DOD, to create the innovative ideas that will
    feed the requirements of DOD in the future.
        So we are encouraging you to continue the support for 6.1
    through 6.3 and to not leave this important area of information
    technology to chance. That concludes my testimony.
        [The statement follows:]

                      Prepared Statement of Robert Parker

        I would like to thank the Committee for allowing me to speak to you
    today about the importance of the Defense Department's support of
    science and technology to universities, scientific and engineering
    societies, and industry.
        My name is Robert Parker, and I am Deputy Director of the
    University of Southern California's Information Sciences Institute. ISI
    is involved in a broad spectrum of information processing research and
    in the development of advanced computer and communication technologies,
    and in 1999 received $36.5 million in research support from the
    Department of Defense.
        I am testifying today on behalf of the Coalition for National
    Security Research (CNSR). CNSR is a broadly-based coalition united by a
    commitment to a strong defense science and technology base.
    Participants include scientific, engineering, mathematical and
    behavioral societies, academic institutions, and industrial
    associations.
        CNSR strongly supports DOD's Science and Technology programs across
    all defense organizations, especially those defense research programs
    providing support to our nation's universities. The Department provides
    a critical investment in several disciplines including engineering,
    physical, math, computer and behavioral sciences vital to our future
    security. In addition, defense S&T programs conducted at DOD and
    private sector laboratories create the technologies and processes that
    support DOD systems, organization, and personnel. Today's high
    technology systems are a result of DOD's past investment in research
    and technological innovation.
        Many crucial defense technologies have emerged from research
    conducted on university campuses and at DOD and private sector
    laboratories. Among these are: radar, nuclear power, digital computers,
    semiconductor electronics, lasers, fiber optics, night vision, vaccines
    and drugs for malaria and other tropical diseases, the Global
    Positioning System, stealth and other advanced materials, computer-
    based visualization systems for training and for planning and
    conducting operations, and computer networking.
        Currently researchers supported by DOD funding are engaged in a
    wide range of activities. Some examples include developing remotely
    operated mini-robots that can survey battlefields and urban landscapes
    without danger to their users and creating highly-sensitive chemical
    and mechanical sensors that can identify minute amounts of dangerous
    substances in the environment. Researchers are also using networking,
    supercomputers and advanced software to develop very large-scale
    battlefield simulations to improve training, assess new weapons and
    tactics and analyze battlefield data. In a completely different area,
    scientists and engineers are working to create protein-based data
    memory systems, similar to the brain, that can store and retrieve
    vastly increased amounts of video, audio and other complex data.
        The President's budget request for the S&T program at DOD is only
    $7.6 billion, $700 million less than the appropriation made by Congress
    for fiscal year 2000. But at the same time, the budget request
    emphasizes a goal of ``Modernizing Weapons Systems.'' A reality,
    however, is that weapons modernization is not possible without the
    research that is the foundation of the technological advances upon
    which the military depends. The research successes of the past are what
    now allows the President to propose this goal. Without increased
    support for DOD's research programs, the ability of the military to
    modernize its weapons in the future will be severely jeopardized.
        For fiscal year 2001, CNSR's Steering Committee strongly urges
    Congress to strengthen the nation's national security investment by
    providing $8.4 billion for the Department's Science and Technology
    Programs. CNSR bases its recommendation on the Report of the Defense
    Science Board Task Force on Defense Science and Technology Base for the
    21st Century, which established a minimum funding level for DOD's 6.1,
    6.2, and 6.3 programs. When adjusted for inflation, their recommended
    minimum for fiscal year 2001 is $8.4 billion.
        $8.4 billion for DOD's fiscal year 2001 S&T program would support
    the scientific and engineering research that has produced today's
    preeminent U.S. forces, demonstrated most recently during Desert Storm
    and various peacekeeping missions. Continuing a stable investment in
    DOD's S&T programs will maintain this technologically superior force in
    the 21st Century.
        With continuing threats to national security so uncertain,
    maintaining technological superiority will require a strong continuing
    research effort. The armed forces today not only must be ready to fight
    in conventional regional wars like the Gulf War; they also must be
    ready to undertake peacekeeping missions in hostile situations and to
    defend against unconventional threats such as terrorism, biological and
    chemical agents, and computer sabotage.
        In summary, in accordance with the recommendations of the Defense
    Science Board, CNSR hopes that you will agree to provide $8.4 billion
    total for 6.1, 6.2, and 6.3 within the R,D,T & E title of the DOD
    appropriation for fiscal year 2001. Although the total budget request
    for these programs was only $7.5 billion, we believe it is crucial for
    our national security that there should not be a decline in funding for
    these important programs. Thank you for giving me the opportunity to
    testify today. I would be happy to answer any questions you may have.

        Senator Stevens. I appreciate that. And I think you are
    right. We were disappointed that the President's request did
    not at least keep the level of last year or this current year.
    And I personally authored the amendment to add $4 billion to
    Defense, with the idea that part of that would go into basic
    research. But it has already been eaten up by these things we
    have discovered since the budget was passed. So, I do not know.
    We will do our best to find the money. We should keep up at
    least the level of the current research, and I am sure we agree
    with that.
        Mr. Parker. We appreciate your support.
        Senator Stevens. I thank you for taking the time. Thank you
    very much.
        Ian Volner, Ovarian Cancer National Alliance, and Clark
    Rook. Thank you, gentlemen.
    STATEMENT OF IAN VOLNER, LAWYER, ON BEHALF OF THE
                OVARIAN CANCER NATIONAL ALLIANCE
    ACCOMPANIED BY E. CLARK ROOK, RETIRED NAVAL OFFICER, ON BEHALF OF THE
                OVARIAN CANCER NATIONAL ALLIANCE

        Mr. Volner. Mr. Chairman, members of the committee, my name
    is Ian Volner, and I have testified before the chairman in
    other capacities than my professional capacity. This is the
    first time I have ever testified in a personal capacity. My
    purpose today, on behalf of the Ovarian Cancer National
    Alliance, is to express my family's appreciation. As a
    representative of the thousands of women and families in the
    military and in civilian life, for the support that Congress
    has given to the Department of Defense's Ovarian Cancer
    Research Program, and we ask that the funding level for this
    vital and very successful program be increased to $20 million
    for fiscal year 2001.
        I wish I could say that my family is survivors of ovarian
    cancer because my wife's cancer was detected early, when the
    prospects for successful treatment were good, but that
    unfortunately was not true. Martha survived despite the odds
    because of the skill and dedication of doctors who treated her.
    And she is among the very small population, 28 percent, who
    survive ovarian cancer when it is detected at a late stage.
        There is unfortunately a simple answer to the question of
    why more than two-thirds of the ovarian cancer cases in the
    United States are not diagnosed until an advanced stage. The
    current diagnostic tools are imprecise and there is no reliable
    and easy way to administer a screening mechanism for the
    general population. My wife's declining health was ascribed
    variously to hormonal changes that occur in women of a certain
    age, to stress, to the flu, and, when Captain Rook testifies,
    you will see that though we did not coordinate, his wife
    suffered the same problem. It simply was not diagnosed early.
        In my wife Martha's case, it was not finally detected until
    she took herself off to an emergency room here in Washington
    and simply refused to leave until they told her what was wrong
    with her. For other cancers, there are screening mechanisms:
    the Pap smear for cervical cancer, the mammogram for breast
    cancer. For ovarian cancer, no such equivalent exists. And that
    is why the Department of Defense Ovarian Cancer Research
    Program is so critically important.
        The program is young. It was not initially funded until
    1997. But I am sure that the subcommittee will find, when they
    examine the work that has been done to date, that the money has
    been spent wisely and well. Among the very first research
    grants made was one for a study that is looking for molecular
    markers that can help detect ovarian cancer at an early stage.
        We appreciate the support that the committee has given to
    this very important program and we ask that you seriously
    consider our request to increase the funding to $20 million for
    fiscal year 2001. I would like to have Captain Clark explain
    his, unfortunately, less happy experience with this disease.
        Senator Stevens. Yes, sir.
        Mr. Rook. My name is Clark Rook. I am a retired Naval
    officer residing in Northern Virginia, and I am here today as a
    volunteer for the Ovarian Cancer National Alliance to briefly
    describe my personal involvement and concerns with what has
    been described as the deadliest cancers of the female
    reproductive tract, ovarian cancer. My testimony will focus on
    my wife, Elaine, who recently succumbed to the disease.
        However, before I continue, I would like to respectfully
    request each of you on this subcommittee develop an awareness
    of ovarian cancer, share this awareness with your family and
    friends, and hopefully ensure you will not have to experience
    what I am about to describe. Ovarian cancer has not received
    the notoriety other cancers have, but I can assure you that it
    is just as deadly.
        Elaine died at home this past New Year's Eve, after an
    almost 5-year battle with ovarian cancer, which she fought with
    grace and optimism. Briefly, she had three major surgeries,
    maximum radiation and essentially eight different types of
    chemotherapy. While the medical care she received once the
    cancer was diagnosed was outstanding, I am personally left with
    two very basic but frustrating questions: Why is there not some
    type of procedure for identifying ovarian cancer similar to the
    Pap smear used to detect cervical cancer, or the ``grab and
    smash it'' test, as Elaine described the mammogram, for
    detecting breast cancer? Also, why is there a significant lack
    of awareness in this country about ovarian cancer?
        One of the first doctors Elaine saw with her medical
    problems attributed them to a female who was aging. At that
    time, she was 57. Ironically, that doctor was a female
    gynecologist. Subsequently, in early 1995, after numerous
    tests, none of which gave any indication of ovarian cancer, a
    computer aided tomography (CAT) scan revealed a malignant
    tumor, the genesis of her problems. Elaine was diagnosed with
    ovarian cancer, and her tumor was the size of a 22-week fetus.
        I was recently asked if I was bitter at having lost my wife
    of 37 years. Yes, but my real bitterness, if you want to call
    it that, lies with the almost total lack of awareness of the
    female population of this country, as it relates to ovarian
    cancer, and the fact that unless they are directly or
    indirectly involved in oncology, my personal observation is
    that most of the medical profession are not far behind.
        While the development of a better awareness of ovarian
    cancer is a primary goal of all those concerned with ovarian
    cancer, it is only one of two primary goals. The other goal is
    increased research. I personally feel, through the loss of my
    wife, that not enough is being done in the area of ovarian
    cancer research or, if it had, Elaine's cancer might have been
    identified earlier.
        The American Cancer Society states that if ovarian cancer
    is diagnosed and treated early, the survival rate is 95
    percent. However, only about 25 percent are detected at this
    stage. The lack of awareness of ovarian cancer is presently
    being aggressively addressed on two fronts. The Ovarian Cancer
    National Alliance has launched an initiative to educate women
    and health care professionals across the Nation about symptoms,
    risks, and treatments of ovarian cancer. At the same time, the
    Gynecological Cancer Foundation is developing a teaching slide
    presentation of all gynecological cancers, with an emphasis on
    ovarian cancer.
        As you might guess, until her cancer was identified, Elaine
    was not aware of the symptoms of ovarian cancer, nor the
    potential impact cancer would have on her life and that of her
    family. Perhaps that may be the reason I am involved in
    volunteering with the Ovarian Cancer National Alliance, to
    maximize the awareness of ovarian cancer.
        In closing, there are several thoughts I would like to
    leave you with. This year alone, while it is estimated there
    will be 23,100 new cases of ovarian cancer, it is also
    estimated there will be 14,000 deaths due to ovarian cancer.
    The deaths in the States represented on this subcommittee alone
    comprise approximately one-third of these 14,000 deaths.
        The final thought I would like to leave with you concerns
    age. The National Cancer Institute addresses the age of ovarian
    cancer this way: The risk of developing ovarian cancer
    increases as a woman gets older. Most ovarian cancer occur in
    women over the age of 50; the risk is especially high for women
    over 60.
        On one occasion, while my wife was getting her
    chemotherapy, a young lady who had ovarian cancer was getting
    her chemotherapy. She was only 14 years old.
        Mr. Chairman, I thank you for your time.
        [The statements follow:]

                        Prepared Statement of Ian Volner

        Mr. Chairman and Members of the Committee: My name is Ian Volner
    and I am a lawyer here in Washington, DC. Over the years, I have
    testified in my professional capacity before Congress on numerous
    occasions on various public issues. This is the first time that I have
    ever testified in my personal capacity. I do so because my wife, our
    two sons and I are ``survivors'' of ovarian cancer. My purpose, simply,
    is to express my family's appreciation--as representative of the
    thousands of women and families--for the support Congress has given the
    Department of Defense's Ovarian Cancer Research Program and to ask that
    the funding level for this vital and very successful program be
    increased to $20 million for fiscal year 2001.
        I wish I could say that we are among the survivors because my
    wife's cancer was detected early when the prospects for successful
    treatment are good, but that is not true. My wife is among the tiny
    population, less than 28 percent of women who survive ovarian cancer
    that is not detected until an advanced stage. Martha survived despite
    the odds because of the skill and dedication of Doctors James Barter
    and Jeffrey Hines (then both with the Lombardi Clinic here in
    Washington) and in no small measure because of their courage and hers.
    I will never forget, however, the doctor's comment when, after the
    surgery, I asked whether or not there was reason to hope for a
    successful recovery so that I could tell my then thirteen and eleven
    year old sons. The doctor's reply that the best reason to hope was
    because the cancer had not yet reached the ``Gilda Radnor stage.'' The
    Subcommittee may recall that Gilda Radnor was a very talented and young
    actress whose ovarian cancer was not detected until it was too late.
        There is, unfortunately, a simple answer to the questions why more
    than two-thirds of the ovarian cancer cases in the United States are
    not diagnosed until an advanced stage. The current diagnostic tools are
    imprecise and there is not reliable and easy to administer screening
    mechanism for the general population. My wife's poor health was
    ascribed variously to hormonal changes that occur in women of a certain
    age, to the flu to simple stress. The cancer was not detected until one
    morning when Martha took herself off to the emergency room of a local
    hospital and simply informed the staff that she was not going to leave
    until they provided her with a hard and clean diagnosis of what was
    causing her to fell so unwell. For other cancers, there are reliable
    screening mechanisms: Pap smear for cervical cancer; the mammogram for
    breast cancer. For ovarian cancer, no such equivalent exists.
        And that is why the Department of Defense's Ovarian Cancer Research
    Program is critically important. The program is young; it was not
    initially funded until 1997. However, I am sure that when the Committee
    views the work that has been done to date, it will find that the money
    that Congress has appropriated for this program is being spent wisely
    and well. Among the first research grants is a study that is looking
    for molecular markers that can help detect ovarian cancer at an early
    stage. As someone who has had to share the horrors of this terrible
    disease, I want to express my appreciation for the support that
    Congress has given the DOD Ovarian Cancer Research Program and to
    request that this Committee increases the funding level to $20 million
    for fiscal year 2001. In that way, millions of women at risk in this
    country for ovarian cancer do not have to go through the ordeal that
    our family suffered, and in a real sense continues to suffer, because
    of this insidious disease.
        I want to thank the members of the subcommittee for the opportunity
    to testify at this important hearing today. I know it has been a long
    day for you. I am ready to answer any questions you may have at this
    time.
                                     ______

                      Prepared Statement of E. Clark Rook

        Mr. Chairman: My name is Clark Rook and I'm a retired naval officer
    residing in Northern Virginia. I'm here today as a volunteer for the
    Ovarian Cancer National Alliance to briefly describe my personal
    involvement and concerns with what has been described as the deadliest
    of cancers of the female reproductive tract--ovarian cancer. My
    testimony will focus on my wife, Elaine, who recently succumbed to the
    disease.
        Elaine died at home this past New Year's Eve after an almost five
    year battle with ovarian cancer which she fought with grace and
    optimism. Briefly, she had three major surgeries, maximum radiation,
    and essentially eight different types of chemotherapy. While the
    medical care she received once the cancer was diagnosed was
    outstanding, I am personally left with two very basic but frustrating
    questions. Why isn't there some type of procedure for identifying
    ovarian cancer similar to the Pap smear for cervical cancer or the
    ``grab and smash it'' test as Elaine described the mammogram for
    detecting breast cancer? Also, why is there a significant lack of
    awareness in the country about ovarian cancer?
        One of the first doctors Elaine saw with her medical ``problems''
    attributed them to ``a female who was aging.'' At that time she was 57.
    Ironically, that doctor was a female gynecologist. Subsequently, in
    early 1995 after numerous tests, none of which gave any indication of
    ovarian cancer, a CAT scan revealed a malignant tumor--the genesis of
    her ``problems.'' Elaine was diagnosed with ovarian cancer, and the
    tumor was the size of a 22-week fetus!
        I was recently asked if I was bitter at having lost my wife of 37
    years. Yes, but my real bitterness, if you want to call it that, lies
    with the almost total lack of awareness of the female population of
    this country as it relates to ovarian cancer, and the fact that unless
    they are directly or indirectly involved in oncology, my personal
    observation is that most in the medical profession aren't far behind.
        While the development of a better awareness of ovarian cancer is a
    primary goal of all of those concerned with ovarian cancer, it is only
    one of two primary goals. The other goal is increased research. I
    personally feel through the loss of my wife that not enough is being
    done in the area of ovarian cancer research, or if it had, Elaine's
    cancer might have been identified earlier. The American Cancer Society
    states that if ovarian cancer is diagnosed and treated early, the
    survival rate is 95 percent. However, only about 25 percent are
    detected at this stage.
        The lack of awareness of ovarian cancer is presently being
    aggressively addressed on two fronts. The Ovarian Cancer National
    Alliance has launched an initiative to educate women and health care
    professionals across the nation about the symptoms, risks, and
    treatments of ovarian cancer. At the same time, the Gynecologic Cancer
    Foundation is developing a teaching slide presentation of all
    gynecological cancers with an emphasis on ovarian cancer. This
    presentation will be directed at primary care physicians as well as the
    lay public.
        As you might guess, until her cancer was identified, Elaine was not
    aware of the symptoms of ovarian cancer nor the potential impact
    ovarian cancer would have on her life and that of her family. Perhaps,
    that may be the reason I'm involved in volunteering with the Ovarian
    Cancer National Alliance--to maximize the awareness of ovarian cancer.
        In closing, there are several thoughts I would like to leave with
    you. This year alone, while it is estimated that there will be 23,100
    new cases of ovarian cancer, it is also estimated that there will be
    14,000 deaths due to ovarian cancer. The deaths in the states
    represented on the subcommittee alone comprise approximately one third
    of these 14,000 deaths.
        The final thought I would like to leave with you concerns age. The
    National Cancer Institute addresses the age for ovarian cancer this
    way--``The risk of developing ovarian cancer increases as a woman gets
    older. Most ovarian cancers occur in women over the age of 50; the risk
    is especially high for women over 60.'' On one occasion while my wife
    was getting her chemotherapy, a young lady who had ovarian cancer was
    getting her chemotherapy. She was only 14 years old!
        Mr. Chairman, I thank you for your time and am ready to try and
    answer any questions you may have.

        Senator Stevens. Thank you very much, gentlemen. I
    appreciate your testimony.
        The next witness is Dr. William Strickland, the American
    Psychological Association.
    STATEMENT OF WILLIAM STRICKLAND, PH.D., AMERICAN
                PSYCHOLOGICAL ASSOCIATION
        Dr. Strickland. Good afternoon, Mr. Chairman. As you noted,
    I am Bill Strickland, and I am speaking here today on behalf of
    the American Psychological Association (APA). APA is a
    professional and scientific organization of more than 159,000
    members, many of whom conduct behavioral research relevant to
    the military.
        I would like to address two main issues of relevance to
    this subcommittee. First, the dangerous trend within the
    Department of Defense of cutting funds for its science and
    technology budget; and second, the critical need to invest in
    psychological research in DOD's service laboratories, including
    the particular need to sustain support for human systems
    programs in the Air Force. I have discussed each of these
    topics in some detail in my written testimony.
        I know that this subcommittee is very concerned with both
    of these issues, and I thank you and your colleagues in the
    Senate for adding funds to DOD's science and technology budget
    in fiscal year 2000, bringing it in line with the Defense
    Science Board's minimum recommendations. Clearly, our military
    superiority and success in recent years can be traced to
    substantial funding for basic and applied research that
    occurred decades ago.
        Similarly, our ability to maintain near-term and future
    global superiority depends on reinvesting in science and
    technology now. For fiscal year 2001, we ask that the
    subcommittee increase funding for the overall DOD science and
    technology budget to at least $8.4 billion. This represents
    only a 0.03 percent increase over last year's appropriated
    funds, but it is a 12 percent increase over the current
    administration request.
        I know that most of you are very familiar with the work
    being done in our military laboratories, which provide a
    mission-oriented focus for defense science and technology.
    Especially at the basic and applied exploratory development
    levels, research programs that are eliminated from the labs as
    cost-cutting measures are not likely to be picked up by
    industry, because industry typically focuses on short-term,
    profit-driven product development. Once the expertise is gone
    from the service laboratories, there is absolutely no way to
    catch up when mission needs for critical human-oriented
    research develop. And those needs will develop.
        APA supports the administration's fiscal year 2001 request
    for behavioral research programs within both the Army Research
    Institute and the Office of Naval Research. However, we urge
    the subcommittee to restore to the Air Force research
    laboratory funds that are now planned to be cut. Specifically,
    the funding for applied human-oriented research in the
    manpower, personnel, training, and crew technology programs.
    Restoring those funds would require an increase of $7.809
    million over the administration request.
        APA is concerned about the cuts planned for applied
    behavioral research within the Air Force, especially since
    Congress restored funds to these very programs in fiscal year
    2000 in order to ensure continuation of this vital work. These
    programs are responsible for developing products relevant to an
    enormous number of acknowledged Air Force mission needs,
    ranging from weapon system design, improvements in simulator
    technology, improving crew survivability in combat, and
    improved and less expensive training programs.
        I know that many of you are familiar with the situation at
    Brooks Air Force Base in Texas, where world-renown personnel
    and technical training research facilities basically no longer
    exist, having been reduced from a level of 130 people a few
    years ago due to funding cuts and resulting reductions in
    force.
        In January of this year, the Air Force Association issued a
    special report, ``Shortchanging the Future.'' That report's
    primary conclusion was: Within the Air Force today, near-term
    readiness and modernization concerns are not balanced with the
    investment in science crucial for meeting the demands of future
    threats. As this subcommittee has noted repeatedly this year,
    and this morning, this is a critical mistake. We ask your help
    in making sure that the Air Force does not continue on this
    course by restoring funds for crucial human-oriented research
    within the Air Force research laboratory.
        Chairman Stevens, thank you very much.
        [The statement follows:]

                Prepared Statement of William Strickland, Ph.D.

        My name is William Strickland, Ph.D., and I am speaking here on
    behalf of the American Psychological Association (APA). APA is a
    professional and scientific organization of more than 159,000 members
    and associates, many of whom conduct behavioral research relevant to
    the military. I would like to address two main issues of relevance to
    this Subcommittee: first, the dangerous trend within the Department of
    Defense (DOD) of cutting funds for its Science and Technology budget;
    and second, the critical need to invest in psychological research in
    DOD's service laboratories, and the particular need to sustain support
    for human systems programs in the Air Force. Once again, the
    Administration's request would cut the Air Force's applied behavioral
    research budget for fiscal year 2001, despite Congressional action
    restoring funds to this budget last year.
            dangerous under-investment in dod science and technology
        I know this Subcommittee shares the science community's strong
    concern about DOD's declining overall investment in science and
    technology. Our military superiority and success in recent hostilities
    can be traced to substantial funding for basic and applied research
    several decades ago, and our ability to maintain near-term and future
    global superiority depends on re-investing in science and technology
    now.
        APA thanks this Subcommittee and colleagues in the House for adding
    funds to DOD's requested Science and Technology budget in fiscal year
    2000, bringing it in line with the Defense Science Board's minimum
    recommendations. For fiscal year 2001, we ask that the Subcommittee
    increase funding for the overall DOD Science and Technology Budget to
    at least $8.4 billion; this represents only a 0.03 percent increase
    over last year's appropriated funds, and a 12 percent increase over the
    current Administration request.
                  need for behavioral research in the military
        Our military faces a host of current challenges around the world,
    including renewed hostilities, the emergence of non-traditional
    conflict situations, new peace-keeping missions, increased operational
    tempo and longer deployments for military members, at the same time
    that forces face continuing recruitment and retention problems. In
    addition, the sophistication of weapons and information technology has
    dramatically changed the skills required of military personnel. What
    hasn't changed is that success in military operations still depends on
    people--at every level, in every unit. We simply cannot afford to let
    hardware and software get too far ahead of the ``humanware.'' As the
    Secretary of the Air Force recently stated before this Subcommittee,
    training and education in particular are the essential keys to
    successful command and employment of military power when technology
    becomes more sophisticated and when the complexity and pace of
    operations increase.
        Psychological research addresses the most critical mission issue
    facing our armed services--maintaining readiness in an ever-changing
    national security climate--by providing policy-relevant data on the
    selection and assignment of personnel, skills-training, design of the
    human-machine interface, and efficient and safe operation of complex
    systems. Unfortunately, behavioral research is at a particular
    disadvantage in the current decision-making atmosphere, which favors
    easily identifiable research ``products,'' such as new hardware; the
    fact that behavioral research can determine whether personnel will be
    able to use that hardware is not obvious until something goes wrong.
                    the military behavioral science programs
         The military service laboratories provide a stable, mission-
    oriented focus for defense science and technology, conducting and
    sponsoring basic (6.1), applied/exploratory development (6.2) and
    advanced development (6.3) research. Especially at the 6.1 and 6.2
    levels, research programs which are eliminated from the mission labs as
    cost-cutting measures are extremely unlikely to be picked up by
    industry, which focuses on short-term, profit-driven product
    development. Once the expertise is gone, there is absolutely no way to
    ``catch up'' when mission needs for critical human-oriented research
    develop.
    Army Research Institute for the Behavioral and Social Sciences (ARI)
        ARI works to build the ultimate smart weapon: the American soldier.
    ARI was established to conduct personnel and behavioral research on
    such topics as minority and general recruitment; personnel testing and
    evaluation; training and retraining. ARI is the focal point and
    principal source of expertise for all the military services in
    leadership research, an area critical to the success of the military.
    Research that helps our armed forces identify, nurture, and train
    leaders is critical to their success. ARI also investigates how
    particular aspects of Army culture and/or larger societal issues
    influence recruitment, retention, morale and performance.
    Office of Naval Research (ONR)
        The Cognitive and Neural Sciences Division (CNS) of ONR supports
    research to increase the understanding of complex cognitive skills in
    humans; aid in the development and improvement of machine vision;
    improve human factors engineering in new technologies; and advance the
    design of robotics systems. An example of CNS-supported research is the
    division's long-term investment in artificial intelligence research.
    This research has led to many useful products, including software that
    enables the use of ``embedded training.'' Many of the Navy's
    operational tasks, such as recognizing and responding to threats,
    require complex interactions with sophisticated, computer-based
    systems. Embedded training allows shipboard personnel to develop and
    refine critical skills by practicing simulated exercises on their own
    workstations. Once developed, embedded training software can be loaded
    onto specified computer systems and delivered wherever and however it
    is needed.
    Air Force Research Laboratory (AFRL)
        APA is extremely concerned about the significant cuts anticipated
    for applied behavioral research (6.2) within AFRL, especially since
    Congress restored similar cuts to these research programs in fiscal
    year 2000 to ensure continuation of vital work. These programs are
    responsible for developing the products which flow from manpower,
    personnel, and training and crew technology research in the Air Force,
    products which are relevant to an enormous number of acknowledged Air
    Force mission needs ranging from weapons design, to improvements in
    simulator technology, to improving crew survivability in combat, to
    faster, more powerful and less expensive training regimens.
        As a result of recent cuts to the AFRL behavioral research budget,
    for example, the world's premier organization devoted to personnel
    selection and classification (formerly housed at Brooks Air Force Base)
    no longer exists. This has a direct, negative impact on the Air Force's
    and other services' ability to efficiently identify and assign
    personnel (especially pilots). Similarly, reductions in support for
    applied research in human factors have resulted in an inability to
    fully enhance human factors modeling capabilities, which are essential
    for determining human-system requirements early in system concept
    development, when the most impact can be made in terms of manpower and
    cost savings.
        In January of this year, the Air Force Association issued a special
    report, ``Shortchanging the Future,'' in which retired Generals and
    scientists outlined the dangers of the declining Air Force science and
    technology budget (both in terms of real dollars and percentage of
    total Air Force spending). APA strongly supports the report's primary
    conclusion: at critical decision-making points within the Air Force
    today, near-term readiness and modernization concerns are not balanced
    with an investment in science and technology to meet the demands of
    future threats. As this Subcommittee has noted repeatedly this spring,
    this is indeed a critical mistake.
        APA supports the Administration's fiscal year 2001 requests for
    behavioral research programs within both the Army Research Institute
    (ARI; $21.974 million) and the Office of Naval Research (ONR; $39.264
    million). However, we urge the Subcommittee to restore the planned cuts
    to the Air Force Research Laboratory (AFRL), specifically the funding
    for applied, human-oriented research in the Manpower, Personnel, and
    Training and Crew Technology programs (for a total of $99.498 million,
    an increase of $7.809 million over the Administration request).
                          summary and recommendations
        It is sometimes easy to overlook the important contributions of
    behavioral research to the missions of the Army, Navy and Air Force
    because the results usually do not translate directly into new weapons
    systems or hardware. Yet behavioral research has provided and will
    continue to provide the foundation for tremendous savings through
    increased personnel efficiency and productivity. This work is vital to
    the military for identifying critically needed improvements in human
    resources development, training and human error reduction.
        Increasing demands for qualified recruits place huge demands on the
    military to more efficiently target and train personnel; increasingly
    sophisticated weapons systems place more, not fewer, demands on human
    operators. We must ensure that military personnel are as well prepared
    as their machines to meet the challenge. Our servicemen and women
    deserve no less from us. This is not possible without a sustained
    investment in human-oriented research.
        APA thanks the Subcommittee for its leadership in bringing the
    fiscal year 2000 DOD Science and Technology budget in line with the
    minimum recommendations of the Defense Science Board, and we ask that
    you increase funding for DOD's overall Science and Technology budget to
    $8.4 billion for fiscal year 2001.
        In terms of the military service laboratories, we support the
    Administration's fiscal year 2001 requests for the Army and Navy
    behavioral research programs, but we urge you to restore the Air
    Force's funding for applied, human-oriented research to its fiscal year
    2000 level.

        Senator Stevens. Thank you very much, Doctor. I appreciate
    you coming.
        The next witness is Robert Morris, Executive Director of
    the Fort Des Moines Black Officers Memorial.
    STATEMENT OF ROBERT V. MORRIS, EXECUTIVE DIRECTOR, FORT
                DES MOINES BLACK OFFICERS MEMORIAL
        Mr. Morris. Senator Stevens, am I able to hand you a photo?
        Senator Stevens. Sure.
        Mr. Morris. Thank you for the opportunity to testify once
    again this year. And thank you for the kind support that you
    gave our project last year. As we drive toward preserving a
    critical part of America's military history for youth to see
    and learn from at Fort Des Moines, the park's rehabilitation
    and development costs continue to grow. No military
    installation has played as great a role in the racial and
    gender integration of America's armed forces as Fort Des
    Moines, which we are preserving through the development of a 6-
    acre memorial park project, featuring a 20,000-square-foot
    museum at Clayton Hall.
        Unfortunately, the rehabilitation costs of the museum at
    Clayton Hall will exceed the $2 million operations and
    maintenance (O&M) appropriation received last year, which was
    ambushed by a series of Government agencies, including the
    Department of Defense, who took $37,000 before it even left
    town, the U.S. Army Reserve Engineers' out of Atlanta, and the
    U.S. Corps of Engineers, which are currently levying their
    administrative fees out of that money, as well.
        Senator Stevens. What do they ask for, do you know how
    much?
        Mr. Morris. The Defense Department said that, that was
    administrative costs, and the Reserve Engineers and Corps of
    Engineers say that theirs will be administrative costs, and
    they set some aside for a contingency fee that they take out of
    the amount. So what we are going to end up with is about 75
    percent of what we started with.
        Senator Stevens. We have just got to stop that. That is
    just nonsense. How much do you need this year?
        Mr. Morris. We are hoping for $2 million this year. You are
    aware of the story of this monument, so I do not need to go
    through all of that.
        Senator Stevens. I have talked to other people about it,
    and we certainly will support it. But I am disturbed to hear
    that the money we put up does not get to the project we put it
    up for. This has got to stop. They get administrative costs.
    They pay their salaries from other items. They just are robbing
    these accounts.
        Mr. Morris. Yes, sir.
        Senator Stevens. I do not like that at all. We will do our
    best to get you the money you asked for, Mr. Morris. And we
    will also consider putting some limitations on these grants for
    specific projects so they cannot hit them with administrative
    costs.
        Mr. Morris. Thank you.
        Senator Stevens. You let us know if they do, all right?
        Mr. Morris. I appreciate that, and I will do that, sir.
    Thank you.
        And just to show you the picture I gave you, the black and
    white pictures are what the building looks like now, and the
    color photo on the brochure is what it used to look like and
    what it will look like again, once it is rehabilitated.
        Senator Stevens. I think that is wonderful. You can have
    these back if you would like. I have discussed that project
    with other members, and I think it is a wonderful project.
        [The statement follows:]

                     Prepared Statement of Robert V. Morris

        As we drive towards preserving a critical part of military history
    for America's youth to see and learn from at Fort Des Moines, Iowa, the
    park's rehabilitation and development costs continue to grow.
        No military installation has played as great a role in the racial
    and gender integration of America's Armed Forces than Fort Des Moines
    which we are preserving through the development of a six acre memorial
    park project featuring a 20,000 square foot museum at Clayton Hall.
    Unfortunately, the rehabilitation cost of the museum will exceed the $2
    million O&M appropriation received last year which was ambushed by a
    series of government agencies (Department of Defense $37k, U.S. Army
    Reserve Engineers and U.S. Corps of Engineers) on its way to Fort Des
    Moines. Therefore, we request an additional $2 million to finish the
    rehabilitation and development of the memorial park.
        As I noted last year, during the First World War, the U.S. Army
    established its first officer candidate school open to black Americans
    at Fort Des Moines in 1917. Although three black officers had
    previously graduated West Point, the Fort Des Moines OCS became the
    first class open to black candidates.
        Of the 1,250 black officer candidates that became the 17th
    Provisional Training Regiment at Fort Des Moines, 1,000 were college
    graduates and faculty and 250 were non-commissioned officers called
    representing the famous 9th and 10th Cavalry ``Buffalo Soldiers'' and
    the 24th and 25th Infantry who were in service on the plains. Many of
    the graduate officers went on to lead the 92nd Division against
    Imperial Germany on the battlefields of France in 1918.
        Three decades before formal military desegregation, the graduate
    officers of Fort Des Moines racially integrated the command structure
    of America's Armed Forces and set the standard for all who would
    follow.
                                    the waac
        Some 25 years later, the very thought of female soldiers offended
    many Americans but the Army was determined to try yet another
    experiment and once again conduct it at Fort Des Moines.
        The Women's Army Auxiliary Corps (WAAC) was formed at Fort Des
    Moines in 1942 where 65,000 women would receive non-combat training
    during World War Two. As part of the WAAC, Fort Des Moines hosted the
    first officer candidate school open to women graduating 436 officers,
    including 39 black females, on 29 August 1942. WAAC units served with
    distinction in England and France during WW II and created a standard
    of excellence followed by female troops serving in America's Armed
    Forces today.
        It is astonishing that these two critical events were held at the
    same location 25 years apart and that Fort Des Moines launched the
    racial and gender command integration of the United States military.
    The unique historical importance of our project is reflected by our
    advisory board members including: Gen. Colin L. Powell, USA (ret),
    former Chairman of the Joint Chiefs of Staff; B/Gen. Elizabeth
    Hoisington (ret), the military's first female General Officer; Lt. Gen.
    Russell Davis, the first black Chief of the National Guard; M/Gen. Evan
    Hultman, AUS (ret), former Executive Director of ROA.
        As part of our memorial park project at Fort Des Moines, an active
    Army Reserve post which is named on the Endangered National Historic
    Landmark list, the rehabilitation of the museum at Clayton Hall (Bldg.
    46) must receive top priority. The dilapidated 20,000 square foot
    Clayton Hall building is deteriorating rapidly through Iowa's brutal
    winters and must be saved. To this end, we request $2 million O&M
    funding to further rehabilitate and develop this critical part of our
    nation's history.
        Thank you.

        Senator Stevens. Thank you very much.
        Now, Master Sergeant Smith, you have been a patient man. We
    will not even run the lights on you. You have waited so long,
    you just tell us what you want us to hear.
    STATEMENT OF DON C. SMITH, MASTER SERGEANT, U.S. AIR
                FORCE (RETIRED), LEGISLATIVE ASSISTANT,
                MILITARY AND GOVERNMENT RELATIONS, AIR
                FORCE SERGEANTS ASSOCIATION
        Master Sergeant Smith. This is quite a different
    environment from when we first met. I used to fly the blue and
    whites out of Andrews.
        Senator Stevens. Yes.
        Master Sergeant Smith. I know I have seen you out there.
        Mr. Chairman, thank you once again for this opportunity to
    briefly highlight the items that are important to the 150,000
    active, Reserve and retired enlisted members of the Air Force
    Sergeants Association. As we have travelled around the Air
    Force, it is very clear that our efforts last year to formulate
    the current defense bill were met with great appreciation by
    those you worked so hard to protect. Quality-of-life issues,
    such as pay increases and retirement reform, will have a long-
    term impact on the challenges of recruiting, retention and
    readiness.
        As you move toward the fiscal year 2001 appropriations in
    the area of defense, we ask that you pay particular attention
    to the following matters:
        Although last year's pay raise, the new formula for future
    pay raises, the targeted pay adjustments upcoming in July, and
    the elimination of the reducts system were welcome changes,
    more needs to be done.
        Because mid-career non-commissioned officers (NCO) pay
    adjustments for July fell short of equity for these NCO's, we
    request further targeted increases within the enlisted chart,
    particularly for the grades of E-5, E-6 and E-7. And I am sure
    the FRA, Fleet Reserve Association, hit that pretty hard
    earlier.
        The basic allowance for housing (BAH) should be fully
    funded, to minimize out-of-pocket expenses for military
    members, and it needs to be increased for enlisted members, as
    well. Again, housing allowances are paid through two very
    different pay charts, with the enlisted chart considerably
    lower. We request help for enlisted members in this area.
        Military health care continues to be a challenge as the
    Department of Defense works to minimize its health care
    offerings, and as Congress works to protect those who serve. As
    you know, retiree health care is a major challenge this year.
    Several bills have been introduced, including one by the
    chairman of the House Armed Services Committee, and we
    respectfully request your full funding of the lifetime health
    care commitment.
        As the Veterans Affairs people work to build up the
    Montgomery G.I. Bill, we ask that you also provide considerable
    funding in the area of tuition assistance, which is the primary
    tool of active duty military members. We also ask that you once
    again provide impact aid dollars to protect military families
    from the administration's program shortfalls in Department of
    Education dollars in this area.
        Finally, we urge that the payment of special pays to
    Reserve component members be funded in parity with the payment
    policies for active duty. The concept of the weekend warrior is
    absolutely inaccurate in this age, when half of the military
    force used to carry out missions of this Nation are made up of
    Reserve component members.
        Once again, Mr. Chairman, thank you for all that you do for
    those who serve this Nation. Your commitment and that of the
    members of this committee is a great message for us to share
    with the wonderful young men and women who devote part of their
    lives to the service of their Nation. Thank you. And I would be
    pleased to answer any questions you have.
        [The statement follows:]

                       Prepared Statement of Don C. Smith

        Mr. Chairman and distinguished committee members, on behalf of the
    150,000 members of the Air Force Sergeants Association, thank you for
    this opportunity to offer our views on the funding efforts needed to
    assure the quality-of-life of the military forces. Your efforts last
    year, particularly in the areas of compensation and retirement,
    resulted in some great steps forward in beginning to address various
    features of military life. Your accomplishments during this Congress'
    first session of providing a good pay raise, retirement reform, the
    Temporary Lodging Expense for first time permanent change of station
    moves, the mandate that DOD implement a program similar to the Women,
    Infants, and Children food nutritional supplement/education program for
    overseas members, Career Enlisted Flyer Incentive Pay, and further
    improvements in military health care are some of your major
    accomplishments on behalf of those who serve. Now, we ask that you
    build on those efforts to continue to ensure the military as a viable
    instrument to achieve national security objectives and, at the same
    time, continue to draw the best and the brightest young people from our
    society to devote a period of their lives to the preservation of
    liberty.
        What are some of the dynamics that act as challenges to recruiting
    and retaining men and women to serve? In this testimony, we will limit
    the focus of this statement to items important to meeting the Air
    Force's quality-of-life needs: current and future life benefits and,
    for Reserve Force members, support of the unique contingencies of the
    ``Citizen Soldier.''
                        the quality of the military life
        The men and women in the Armed Forces work very long hours in
    extremely difficult environments to protect this nation. They are
    generally selfless and devoted to get the job done to the detriment, at
    times, of their own well-being. What are some factors that contribute
    to the quality of the military life style that need to be regularly
    addressed?
        Contemporary military forces have faced significantly greater
    missions with considerably fewer people, increasing family separations,
    declining health care programs, curtailed pay and allowances increases,
    deteriorating military housing, less opportunity for educational
    benefits, and more out-of-pocket expenses with every military
    relocation. It is amazing that so many continue to selflessly serve the
    military ``company.'' They obviously do so because of their dedication
    to a higher, patriotic ideal. However, it is time to take certain
    actions to provide the necessary funding needed to enhance the quality
    of enlisted military lives.
        Workload Versus Available Workforce.--This nation's changed
    strategy from projecting America's military force only when in support
    our ``vital national interests'' to one of global engagement and full
    participation in police actions and humanitarian efforts has had its
    toll on maintaining an all-volunteer force. The population of the
    military services has greatly decreased since the fall of the Berlin
    Wall, the collapse of the Soviet Union, and the emergence of the United
    States as the world's only ``super power.'' At the same time, the
    global missions of these forces (with far fewer people) have increased
    several fold. On top of that, while increased deployments take a toll
    on those who must deploy, those left behind now must assume even more
    tasks because the job that needs to be done at home has not gone away.
        This mathematical contradiction, i.e., far few people, far greater
    tasks, has resulted in longer hours, significant family separations,
    higher levels of stress, and the creation of a physically challenged
    force. Many military members wonder if they might have healthier,
    happier lives on the ``outside'' as a participant in the fruits of the
    booming economy they helped to create. The Air Force, in particular,
    has taken moves to help alleviate this ``spent force'' situation by
    transitioning to an Expeditionary Aerospace Force (EAF). Within the
    EAF, the predictability of long-term deployments promises to be far
    more visible, and members should be better able to plan their
    individual responses to mitigate the impact of deployments and family
    separations.
        While we applaud this effort, it will only be successful if manning
    levels are maintained or increased. Many officials call for further
    bases realignments and closures to eliminate unnecessary
    infrastructure. The contention is that as these unneeded facilities
    close, the manning can be transferred to the remaining bases, with the
    promise that the workload and pace of deployments will lessen. If this
    is not done, more and more military members will leave, and fewer and
    fewer will choose to enter any of the services. This is a situation we
    have created, and it is one we can and must correct. We urge this
    Congress to increase the quality of the lives of the all-volunteer
    force by taking this action:
      --Establish manpower levels to match the missions this nation has
            chosen to levy on those who serve--both those deployed and
            those at home.
        Military Pay.--Building on the gains made in the fiscal year 2000
    Defense Authorization, it is important to realize that the work is not
    finished. We applaud the 4.8 percent pay raise effective January 1,
    2000, and the pay adjustments to be made in July 2000 are a first step
    in readjusting the pay charts. Further, tying annual future military
    pay raises through the year 2006 to a half percentage above the
    Employment Cost Index was a wise move that sent a strong signal to
    those serving. However, some realities must be examined about the way
    we pay our military members. There are two pay charts for the military:
    one for commissioned officers, and a significantly lower-compensation
    one for enlisted members. The net effect of across-the-board pay raises
    over the years has served to pull these charts further apart. Yet both
    groups of members continue to face the same ``survival'' challenges in
    the same economic environment. This pay disparity is similar to what
    you would encounter in civilian industry between white collar and blue
    collar workers. However, there are two dynamics in the military that
    seem to have been ignored when considering how we pay our people: in
    recent years, many roles that were formerly handled by commissioned
    military members are increasingly being assumed by enlisted members,
    and the education level of the enlisted corps has increased
    considerably. Indeed, middle-range noncommissioned members handle many
    tasks formerly carried out by their superiors and, in fact, often
    assume as one of their duties the training of junior commissioned
    officers. Also, an increasing number of enlisted members enter service
    or take actions to move toward higher education during their careers.
    As AFSA representatives travel around United State Air Force bases, it
    is gratifying to note the innumerable cases where relatively low-
    ranking enlisted members are handling technologically awesome tasks and
    making day-to-day, life and death decisions. It is time that military
    compensation be re-examined and a new model be established to move the
    two compensation tables closer together to reflect the changing
    enlisted roles in relation to the overall military establishment. This
    will work to help us sustain the all-volunteer force. Additionally, we
    must establish minimum payment levels to ensure that no military member
    falls below this nation's poverty threshold that entitles them to Food
    Stamps.
      --Ensure adequate future pay raises.
      --Establish a new model for military pay recognizing modern enlisted
            responsibilities.
      --Establish minimum pay and compensation levels to place all members
            above the national poverty (Food Stamp eligibility) level.
        The Basic Allowance for Subsistence (BAS) is designed to pay for
    food for military members. Because the cost of food parallels the cost
    of goods and services in our economy, over the years Congress has
    increased the BAS by the same percentage each year as the growth of
    basic military pay until two years ago when BAS was frozen at one-
    percent growth per year for the next several years. This change
    resulted from the contention that military members, enlisted in
    particular, were receiving more than they needed for food, and (some
    claim) DOD's desire to provide alternate funding to pay for meal
    cards--payment for the dormitory dwellers' to eat in base dining
    facilities. Also, DOD maintained that limiting the growth of BAS would
    allow the provision of BAS to those residing in the dormitories--a
    reality that has come about in a very limited way. It is time to once
    again tie the annual growth of BAS to military pay increases.
      --Increase enlisted military pay to reflect the relative increased
            responsibilities of enlisted members.
      --Re-establish BAS increases to parallel military pay increases.
        Housing and Housing Allowances.--Where a military member lives is
    dictated by a number of factors, not always by choice. Those deploying,
    of course, live where (and under what conditions) the location of the
    mission dictates. At home base, factors include the member's rank, the
    number of accompanying family members (if any), the availability of on-
    base housing, dormitory space, and other factors. Those living on base
    generally face a variety of models of on-base housing ranging from a
    half-century old, to very modern structures. Some homes meet the
    quality muster some are substandard. In an effort to achieve
    efficiencies, DOD has entered into arrangements with private industry
    for the construction and maintenance of on-base facilities. The goal of
    construction outsourcing and privatization is to cut down on the
    backlog of the number of homes that are dilapidated and must be
    upgraded or replaced. AFSA supports this effort toward privatization
    with the caveat that we must ensure that privatization should not
    infringe on any military benefits.
        For those who must live off base, the provision of the Basic
    Allowance for Housing is intended to account for the average of 85
    percent of their out-of-pocket housing expenses. This committee has
    taken strong recent steps to provide funding to achieve that goal.
    Indeed, BAH is based on an independent assessment of the cost of
    housing for given areas based on certain parameters, including an
    arbitrary standard of housing (square footage, number of bedrooms, and
    whether an apartment/townhouse or stand-alone dwelling) determined by
    rank. For example, the only enlisted grade under the BAH standard that
    is authorized a stand-alone dwelling is the very highest rank the E-9.
    AFSA supports full funding of BAH, but maintains that it has created
    significant consternation among the military members because of the
    unrealistic standard used to determine where military members may live.
    Their allowance generally dictates the neighborhoods where they reside
    and the schools their children may attend. Ironically, in order to
    protect their families from the limitations of the standard, the lowest
    ranking (who are obviously paid the least) must expend additional out-
    of-pocket dollars. While the benefits increases following the
    achievement of higher rank is part of the military institution, BAH as
    it is structured needs to be re-examined to protect all of the military
    family members regardless of rank.
      --Re-examine the standard upon which BAH levels are determined.
        Military Health Care.--Military health care and readiness are
    inseparable. This state of health must be assured no matter where our
    members serve. In that sense, the provision of TRICARE Prime Remote for
    military members stationed away from a military treatment facility was
    a wise move. Our nation must also provide such an assurance of health
    to the families of those who serve. In recent years, military family
    member medical and dental care has evolved from fully funded coverage
    to member-subsidized coverage. Members have noted this erosion
    conscious choices on the part of the Department of Defense to lessen
    the overall benefit for family members. This communicates a negative
    inference on the judged importance of military families to those who
    make up the all-volunteer force. Additionally, DOD has closed many
    military hospitals and transformed them to limited-service, outpatient
    ``clinics.'' In most locations, members and their families must travel
    to a local civilian hospital for serious health care, or must travel a
    distance to a health care facility for specialized care. At this time,
    there is no mechanism to reimburse members of the military community
    who can no longer find such care locally. This association supports
    most funding provisions of the administration's fiscal year 2001
    Defense Budget health plans and congressional legislation that would
    help to sustain the all-volunteer force in meeting its readiness needs.
    In particular,
      --Provide fully funded health care for military retirees regardless
            of age.
      --Extend TRICARE Prime Remote to military family members.
      --Eliminate family member TRICARE Prime Co-Payments.
      --Provide reimbursement for out-of-pocket expense for military
            members and their families when health care must be obtained
            away from their local military facilities.
        Education.--We should take action now to raise the value of the
    Montgomery G.I. Bill (M.G.I.B.), the military's primary tool for a
    successful post-military readjustment into civilian society, to cover
    the cost of an average university, instead of an arbitrary dollar
    figure that has little to do with actual education costs. This would
    include adequate funding to cover books, tuition and fees toward a
    higher education for those able to take classes while in the military.
    Also, we ask this Congress to immediately provide an opportunity, an
    open window, for all of those who are not enrolled in the Montgomery
    G.I. Bill to join that program. Additionally, we ask you to support
    legislation to change the policies that tend to push members away from
    the educational benefit such as requiring military members to
    contribute $1,200 toward their own educational ``benefit'' and
    providing solely a one-time enrollment opportunity during basic
    training when they can little afford to enroll. A better move would be
    to eliminate the $1,200 member contribution; this would affirm that
    military members ``earn'' the benefit by putting their lives on the
    line for this nation's citizenry. We ask you to allow military members
    to enroll in the M.G.I.B. any time during their careers--or, better
    yet, make enrollment a no-cost automatic feature of military service.
    Finally, we ask you to consider this benefit as an earned program which
    the member may choose to transfer, in whole or in part, to immediate
    family members. In summary, there must be funds appropriated to
    accommodate the following educational actions necessary to provide our
    military members with an incentive to serve.
      --Create a new G.I. Bill Model tying the value of the MGIB to an
            annual educational benchmark that reflects the actual cost of
            tuition, book, and fees at an average four-year college.
      --Establish an open window to allow all currently serving military
            members to enroll in the new M.G.I.B.
      --Eliminate the member's $1,200 benefit enrollment fee.
      --Make enrollment in this benefit an automatic part of being in the
            military or, at the least, allow members to enroll at any time
            during their careers.
      --Allow beneficiaries to transfer the educational benefit, in whole
            or in part, to immediate family members.
                           reserve component members
        Our nation's military is now truly a ``Total Force.'' We simply
    could not accomplish the many tasks levied by our national military
    authority without the members of the Guard or the Reserve. These
    citizens are singular in demonstrating a love of nation and a level of
    patriotism and service that is admirable. In addition to facing many of
    the same challenges listed above for active duty members, additional
    funding must be made available to provide the reserve component members
    with adequate health care, full benefits, reduction in out-of-pocket
    expenses, and protection of their families. Their readiness is critical
    to our nation's defense.
        While the attainment of these goals for reserve component members
    is important, competing realities makes their accomplishment very
    difficult. Increasing mission tasking is coming despite plans for
    continued cutbacks in Reserve forces paralleling the mathematical
    contradiction faced by the active duty portion of the force. Secondly,
    because of the nature of the use of America's military forces, today--
    more than ever--reserve component members face challenges of
    accomplishing increasingly long-term military deployments while at the
    same time hoping to continue to enjoy the support of their civilian
    employers. These employers must see gestures on the part of the nation
    for their forbearance; employer tax credits for those who serve would
    be a step in the right direction. In order to meet the readiness needs
    of today's reserve forces, we should:
      --Provide full benefits and protection of the families of reservists.
      --Ensure proper manning levels to allow home land missions and the
            ability to participate in military tasking abroad.
      --Pass significant, genuine legislation to promote Employer Support
            of the Guard and Reserve with provisions such as employer tax
            credits.
        As Secretary Cohen noted, ``To attract and retain the best, we've
    got to offer a satisfactory quality of life. It is a moral obligation,
    but it is no less a practical necessity.'' Mr. Chairman, AFSA echoes
    that sentiment and respectfully submits that the suggestions above
    would enhance the quality of the lives of military members and, at the
    same time, go a long way towards helping the Air Force meet its
    readiness commitment by assuring a secure, positive force of
    servicemembers.
        Mr. Chairman, we ask that while you're deliberating the
    appropriation requirements of the fiscal year 2001 Defense Bill, its
    personnel programs, and its role in attracting and retaining those who
    serve, that you pay particular attention to the quality of a military
    lifestyle, including current and future benefits, and toward measures
    that would inspire trust in the military institutions of this nation.
    Additionally, for reserve force members, please include a realization
    of the unique sacrifices and contingencies these Americans face. On
    behalf of this association I want to thank you and the members of this
    committee for your dedication to those who serve. We are proud to work
    to complement your efforts and are ready to support you in matters of
    mutual concern.

        Senator Stevens. Thank you, Master Sergeant. I do not have
    any questions. We appreciate your patience with us. We do
    intend to markup this bill as soon as possible. I am sure we
    will get to it this month and get it done as quickly as we can.
    We are going to try to work first on the supplemental requests
    and put them on the military construction bill as it goes
    forward. We appreciate your courtesy in waiting and we
    appreciate your suggestions. We have gone over the full
    statements.
        Master Sergeant Smith. Thank you, sir.

                        additional submitted statements

        Senator Stevens. The subcommittee has received a number of
    statements from witnesses who could not be heard and they will
    be placed in the record at this point.
        [The statements follow:]

      Prepared Statement of the American Society of Tropical Medicine and
                                    Hygiene

        Mr. Chairman and members of the Committee, the American Society of
    Tropical Medicine and Hygiene (ASTMH) greatly appreciates the
    opportunity to present its views on fiscal year 2001 program priorities
    for the record.
        ASTMH is a professional society of 3,500 researchers and
    practitioners dedicated to the prevention and treatment of infectious
    and tropical infectious diseases. The collective expertise of our
    members is in the areas of basic molecular science, medicine, vector
    control, epidemiology, and public health. We hope that our
    recommendations are helpful to you in determining the annual funding
    levels for DOD's infectious disease research programs.
        I know every member of the Subcommittee appreciates the staggering
    burden of tropical and infectious diseases and the impact on global
    health. However, with globalization has come an increased realization
    that infectious diseases represent not only a humanitarian concern but
    also a bona fide threat to the national security of the United States.
    Poor health and the spread of infectious disease across borders has
    profound impacts on the social and economic development and stability
    of nations around the globe. With the enormous volume of travel and
    trade today, and with the expanded deployment of American troops,
    infectious diseases can impact populations around the globe within 24
    hours.
        In June 1996, President Clinton issued a Presidential Decision
    Directive calling for a more focused U.S. policy on infectious disease.
    The State Department's Strategic Plan for International Affairs lists
    protecting human health and reducing the spread of infectious diseases
    as U.S. strategic goals, and Secretary Albright in December 1999
    announced the second of two major U.S. initiative to combat HIV/AIDS.
    The unprecedented UN Security Council session devoted exclusively to
    the threat to Africa from HIV/AIDS in January 2000 is a measure of the
    international community's concern about the infectious disease threat.
        Furthermore, the CIA's National Intelligence Council issued a hard-
    hitting report this past January entitled ``The Global Infectious
    Disease Threat and Its Implications for the United States.'' The report
    concludes that infectious diseases are likely to account for more
    military hospital admissions than battlefield injuries. The report
    assesses the global threat of infectious disease, stating ``New and
    reemerging infectious diseases will pose a rising global health threat
    and will complicate US and global security over the next 20 years.
    These diseases will endanger US citizens at home and abroad, threaten
    US armed forces deployed overseas, and exacerbate social and political
    instability in key countries and regions in which the United States has
    significant interests.''
        Mr. Chairman, consistent with the standard set by our nation's
    armed forces and the men and women who selflessly serve in our
    military, it should come as no surprise that the Defense Department's
    medical research programs are second to none. DOD medical research
    fills a unique role in the spectrum of our nation's biomedical research
    enterprise, and plays a critical role in our nation's infectious
    disease efforts.
        As the leader in tropical and infectious disease research, DOD
    programs have been vital for the successful outcome of military
    campaigns. It was the DOD research program that developed the very
    first effective treatment for malaria in 1836. Indeed, virtually all of
    the important discoveries in malaria drugs have resulted from the
    efforts of this program. Every American tourist or visitor who is
    prescribed preventive drugs for malaria is benefitting from DOD
    research.
        The DOD investment in malaria vaccine development is not only good
    public health policy, but it also makes good sense from an economic
    standpoint. Malaria is estimated to cause up to 500 million clinical
    cases and up to 2.7 million deaths each year, representing 4 percent to
    5 percent of all fatalities. Malaria affects 2.4 billion people, or
    about 40 percent of the world's population. Tragically, every 30
    seconds a child somewhere dies of malaria. Malaria causes an enormous
    burden of disease in Africa and is considered a primary cause of
    poverty.
        The achievements and contributions to medical science from DOD
    infectious disease research are many. DOD researchers also identified
    and established the cause of yellow fever and dengue in the early
    1900s, developed an attenuated vaccine against Venezuelan Equine
    Encephalitis in 1960, established the AIDS diagnosis in 1986 and
    developed a rapid diagnostic test for tuberculosis meningitis in 1990.
        Working with other U.S. public health agencies, DOD scientists at
    the U.S. Army Research Institute for Infectious Diseases (USAMRIID),
    the Walter Reed Army Institute of Research (WRAIR), the U.S. Naval
    Medical Research Institute (NMRI), and in DOD medical laboratories
    abroad are helping us to better understand, diagnose, and treat
    infectious and tropical diseases such as malaria, AIDS, dengue fever,
    leishmaniasis, yellow fever, cholera, and diarrheal diseases.
        The primary mission of the DOD research program is to protect and
    maintain the health of our troops in the theater. With world-wide
    deployment of our military personnel, the need for protection from
    infectious disease epidemics in other areas of the globe is imperative.
    Often our troops are exposed to new strains of a disease that do not
    exist within our own borders. Two prime examples of this are malaria
    and AIDS. Vaccines and therapeutic interventions may prove to be highly
    effective treatments at home and yet unsuccessful when utilized abroad,
    which is why the research conducted by the DOD is unique and essential
    for the health and safety of our troops.
                                    request
        ASTMH urges a stronger national commitment to the DOD infectious
    disease research programs to accelerate the discovery of the products
    that protect American soldiers and citizens at home and abroad, and
    improve global health and economic stability in developing countries.
    The DOD infectious disease research program has proven to be a highly
    successful, cost-effective program. However, the ASTMH is concerned
    that recent DOD budgets reflect a low priority for these military
    infectious disease research programs. The total DOD infectious disease
    research program has been gradually declining in recent years. The
    impact of declining funds in the face of rising research costs has
    constrained basic research efforts, impeded the advancement of
    promising vaccines and drugs into clinical trials, and completely
    stifled the recruitment of young researchers into the DOD's infectious
    disease research program.
        Some important DOD programs have been canceled outright, such as
    Epidemiological Research on Infectious Diseases. Another casualty of
    budget restrictions has been the DOD's Leishmania Research program.
    Leishmania is a parasitic disease transmitted by biting flies common in
    the tropics, including the Arabian Gulf countries. However, the Society
    is pleased to note that the DOD proposes to use $1.5 million of Gulf
    War Funds for Leishmaniasis therapeutic drug development. Particularly
    hard hit have been funds for advanced development of research products
    such as vaccines and drugs. Research opportunities that have been
    slowed or postponed include the testing of vaccines for dengue viruses
    and for diarrheal diseases such as E. coli and Shigella.
        ASTMH urges you to reverse past funding trends and provide a total
    of $150 million in fiscal year 2001 for DOD infectious research
    efforts. We believe an increased commitment is absolutely critical to
    protect American soldiers and citizens at home and abroad against the
    threat posed by global infectious diseases.
    HIV Research
        Congress mandated that the DOD establish the HIV Research program
    in 1987 because of the significant risk of active-duty personnel in
    acquiring the HIV infection. Today, in all branches of the military,
    approximately 400 military personnel become newly infected each year,
    with as many as one-third of these infections acquired during overseas
    deployment.
        The DOD's HIV Research program is a world leader in the study of
    HIV genetic variation world-wide and in the development and testing of
    new vaccines to be used against HIV strains anywhere in the world. The
    DOD HIV Research program is moving forward with AIDS vaccine trials in
    Thailand and is preparing for clinical trial of AIDS vaccines in Rakai,
    Uganda and Cambodia. Unique among federally-supported HIV research
    efforts, the DOD HIV Research program has the facilities, resources and
    personnel to produce novel candidate AIDS vaccines and test them in
    international locations.
        ASTMH would like to thank the members of this Subcommittee for
    demonstrating their support for the DOD's HIV Research program last
    year by restoring the $10 million reduction the program received in
    fiscal year 1999 and in the President's fiscal year 2000 budget
    request.
                                    request
        The ASTMH requests that the Subcommittee consider providing a
    funding level of $50 million for the DOD HIV Research program in fiscal
    year 2001. This level of funding would permit the program to move
    forward with planned vaccine testing despite rising costs associated
    with developing and maintaining international infrastructure for
    conducting overseas clinical trials, maintaining field readiness for
    drug and vaccine testing, and the increasing costs associated with
    conducting international field trials. A reduced commitment to this
    program will halt important clinical trials and impede the search for a
    preventive HIV vaccine.
                             overseas laboratories
        The ASTMH believes the military's overseas laboratories also
    deserve special mention. The U.S. Army and the Navy currently support
    medical research labs located in developing countries around the globe.
    These research laboratories serve as critical sentinel stations
    alerting military and public health agencies to dangerous infectious
    disease outbreaks and increasing microbial resistance. Regrettably, the
    Army recently closed its lab in Brazil. With this closure, the US DOD
    now supports just five overseas laboratories, located in Thailand,
    Indonesia, Egypt, Kenya, and Peru. These research stations are an
    important national resource in the ongoing battle against emerging
    infectious disease. They should be strengthened with increased funding
    and increased opportunities for collaborations with civilian
    scientists.
        The Society is disturbed to note that the US government supports NO
    research laboratories in the tropical rain forests of the world, where
    the high biodiversity render these regions the crucibles for the
    emergence of new and exotic diseases such as Ebola and AIDS. The US DOD
    should not only fully support existing laboratories but should
    establish new laboratories in these strategic ecological regions in
    Africa and South America.
        The military's overseas laboratories play an important role in our
    domestic infectious disease research efforts through collaborations
    with academia, industry, and civilian governmental agencies. The DOD
    overseas laboratories have established in-country research facilities,
    field study sites at the locations of known high disease transmission,
    and trained local national staff. Unfortunately, the maximum potential
    for collaboration has not been realized. A significant increase in the
    DOD infectious disease research budget, such as the Society is
    suggesting, would permit enhanced research and training opportunities
    for both military personnel and civilian scientists at the DOD's
    overseas laboratories.
                                   conclusion
        ASTMH requests your strong support for the DOD Infectious Diseases
    Research programs. Our nation's commitment to this research is
    critically important given the resurgent and emerging infectious
    disease threats which exist today. As the world's only superpower and
    the global leader in biomedical research, the United States has an
    obligation to lead the fight against infectious disease. Our efforts in
    this area will lead to improved global health and the economic
    stability of developing nations. By helping others, we are mounting our
    own best defense against infectious diseases.
        ASTMH urges Congress to make infectious disease research a priority
    in fiscal year 2001 by funding the DOD infectious disease research
    budget at $150 million for fiscal year 2001. ASTMH also requests that
    the DOD HIV Research program receive an additional $20 million,
    resulting in a total of $50 million for fiscal year 2001, for the
    development of HIV experimental therapeutics and vaccines.
        If we don't make these important programs a priority, the health of
    our troops will continue to be at risk, we will continue to experience
    increased health costs, and infectious diseases will flourish around
    the world, prolonging economic and political instability in developing
    nations.
        Thank you for the opportunity to present the views of the American
    Society of Tropical Medicine and Hygiene and for your consideration of
    these requests.
                                     ______

     Prepared Statement of the Reserve Officers Association of the United
                                     States

        Mr. Chairman and Members of the Subcommittee: On behalf of the
    members of the Reserve Officers Association from each of the uniformed
    services, I thank you for the opportunity to present the association's
    views and concerns relating to the Reserve components and the National
    Defense Appropriations Act for fiscal year 2001.
        First, I would like to thank you for your past support of the
    Reserve components. By consistently promoting Reserve component
    programs, you have contributed directly to morale and to the high state
    of Reserve component readiness.
        In the National Defense Authorization Act for fiscal year 1991, the
    Congress stated that ``the overall reduction in the threat and the
    likelihood of continued fiscal constraints require the United States to
    increase the use of the Reserve components of the Armed Forces. The
    Department of Defense should shift a greater share of force structure
    and budgetary resources to the Reserve components of the Armed Forces.
    Expanding the Reserve components is the most effective way to retain
    quality personnel as the force structure of the Active components is
    reduced. . . . The United States should recommit itself to the concept
    of the citizen-soldier as a cornerstone of national defense policy for
    the future.''
        ROA was very pleased, therefore, when DOD decided to defer the
    final reduction of 25,000 members of the Army's Reserve components that
    had been recommended by the Quadrennial Defense Review (QDR) in 1997.
    We believe that the decision to have the next QDR in 2001 review those
    proposed reductions in light of the larger issue of shaping our force
    structure to meet ongoing and emerging requirements made great sense.
    To persist in reducing our already overtaxed Reserve force structure
    based upon old, outdated assumptions that are universally acknowledged
    to have been overtaken by unforeseen events was clearly unacceptable to
    all concerned.
        Greater Reliance on Reserve Components.--The 50 years of reliance
    on a large, Cold War, standing military has ended. Confronted with
    sizeable defense budget reductions, changes in the threat, and new
    missions, America's military answer for the future must be a return to
    the traditional reliance on its Minutemen--the members of the Reserve
    components. Can America's Reservists fulfill their commitment to the
    Total Force--can they meet the challenge?
        Operations Desert Shield and Desert Storm proved that the Reserve
    components were ready and able. During the Gulf War, more than 245,000
    Reservists were called to active duty. Of the total mobilized, 32
    percent were from the National Guard and 67 percent from ``the
    Reserve.'' More than 106,000 Reservists were deployed to Southwest
    Asia. About 20 percent of the forces in the theater were members of the
    Reserve components.
        In Bosnia and Kosovo, more than 43,000 Reservists have provided
    nearly 4.9 million duty days of support, again demonstrating their
    readiness and their capability to respond to their nation's call.
    Reserve Component Cost-Effectiveness
        ROA has long maintained that a proper mix of Active and Reserve
    forces can provide the nation with the most cost-effective defense for
    a given expenditure of federal funds. Reservists provide 35 percent of
    the Total Force, but cost only 8.2 percent ($23.9 billion) of the
    fiscal year 2001 DOD budget. They require only 23 percent of active-
    duty personnel costs, even when factoring in the cost of needed full-
    time support personnel. We need only consider the comparable yearly
    personnel (only) costs for 100,000 Active and Reserve personnel to see
    the savings. Over a 4-year period, 100,000 Reservists cost $3 billion
    less than 100,000 Active duty personnel. If the significant savings in
    Reserve unit operations and maintenance costs are included, billions
    more can be saved in the same period. ROA is not suggesting that DOD
    should transfer all missions to the Reserve, but the savings Reservists
    can provide must be considered in force-mix decisions. It is incumbent
    upon DOD to ensure that the services recognize these savings by
    seriously investigating every mission area and transferring as much
    structure as possible to their Reserve components.
                                  army reserve
        While providing 46 percent of the Total Force, today's Army is
    smaller than at any time since before WWII. Since 1989, the Army has
    reduced its ranks by more than 690,000 soldiers and civilians. While
    this downsizing has taken place, the soldiers of America's Army have
    experienced a 300 percent increase in the number of deployments. The
    Army has conducted operations in such places as Kuwait, Saudi Arabia,
    Iraq, Haiti, Rwanda, Somalia, Bosnia, Honduras, and Kosovo and conducts
    these and similar missions at a level 16 times that of the much larger
    Army in place prior to 1990. In 1999, on an average day, there were
    146,000 soldiers, from all Army components, stationed or forward
    deployed, participating in joint and combined exercises, and conducting
    operations in more than 70 countries.
        As missions increased, available budget resources, regrettably, did
    not keep pace. For fiscal year 2001 the Army's total obligation
    authority (TOA) for its Active, Guard, and Reserve components is $70.8
    billion, only 24 percent of the total $291.1 billion defense budget.
    Since fiscal year 1989 as the Army's OPTEMPO increased 300 percent, its
    buying power has decreased by about 37 percent in constant fiscal year
    2001 dollars.
        Since 1995, more than 13,000 Army Reservists have participated in
    Operations Joint Endeavor, Joint Guard, and Joint Forge in Bosnia.
    Included in these numbers are more than 2,000 Army Reserve civil
    affairs soldiers and more than 600 Army Reserve psychological
    operations soldiers. USAR soldiers are now serving in Kosovo and more
    than 200 Army Reservists replaced Germany based soldiers who deployed
    to Kosovo.
        The Army Reserve is a full partner in every Army operation. It is
    20 percent of the Total Army and is structured and missioned to perform
    43 percent of the Army's combat service support and 26 percent of the
    Army's combat support missions. Approximately 350 Army Reserve units
    are part of the Force Support Package--Active, Guard, and Reserve units
    that support America's Army Crisis Response Force and Early Reinforcing
    Force--and are required for every contingency operation.
        This increased reliance now requires the Army Reserve to maintain
    many units at substantially higher levels of readiness and to be ready
    to deploy these ``first-to-fight'' units on very short notice. However,
    this increased reliance has not generated adequate funding in the
    Defense budget.
        The Army Reserve's share of the Army budget request in the fiscal
    year 2001 DOD budget request is $3.9 billion or 5.5 percent of the
    entire $70.8 billion request. Separated into the Reserve Personnel,
    Army (RPA) and the Operation and Maintenance, Army Reserve (OMAR)
    accounts, the request is for $2.4 billion RPA and $1.5 billion OMAR.
    Both accounts require considerable plus-ups to fully fund known
    requirements--requirements that were identified during the development
    of the president's budget, but because of insufficient funding fell
    below the line and were not resourced. Critical/executable funding
    shortfalls identified in the RPA and OMAR areas alone exceed $330
    million.
    Reserve Personnel, Army
        The president's RPA budget request for $2.4 billion fails to
    provide adequate funds to train, educate, man, and support Army Reserve
    personnel and units at levels required for immediate mobilization and
    deployment. We believe the fiscal year 2001 Defense budget request
    critically underfunds the Army Reserve by over $157 million in several
    Reserve Personnel, Army accounts. Listed below are the critical
    shortfalls that the Army Reserve could execute in fiscal year 2001:

                            [In millions of dollars]

    Full Time Support.................................................    60
    Recruiting and Advertising........................................     1
    Enlisted incentives...............................................    22
    Funeral Honors....................................................     4
    Reserve Education and Learning....................................     1
    Information Operations............................................     1
    Weapons of Mass Destruction Training..............................     4
    Collective Training...............................................    41
    CINC Support......................................................     8
    Training Support Divisions........................................    15
                                                                      ______
          Total.......................................................   157

        ROA believes the RPA budget request understates the actual
    executable/critical shortfall by at least $157.0 million. Listed below
    are several examples.
    Full Time Support (FTS)
        FTS personnel give units the ability to maintain a high-level of
    readiness by providing the additional training, command and control,
    technical functional, and military expertise required to efficiently
    and effectively transition from peacetime to a wartime posture. The
    Army Reserve has the lowest percentage of FTS of all the Reserve
    components and yet is the component most frequently called and
    deployed. There is a critical Army Reserve shortage of 1,800 Active
    Guard and Reserve personnel (AGRs) and 1,418 military technicians
    (MILTECHs). The AGR FTS needed to improve readiness for fiscal year
    2001 is 1,800 Active/Guard Reserve soldiers at a cost of $60 million.
    The Army Reserve has a critical/executable-funding shortfall of $60.0
    million in its AGR FTS program.
    Enlisted Incentives Program
        Recruiting and retention of quality soldiers in this period of a
    booming economy is becoming one of the major challenges facing the Army
    Reserve. Without adequate incentives to attract and retain new and
    existing soldiers in the Army Reserve, the Army Reserve will be
    severely challenged and possibly unable to reach its end strength
    goals. The USAR has a shortfall of $22 million in its enlisted
    incentives program, which is critical to Army Reserve recruiting and
    retention. The Army Reserve uses non-prior service (NPS) and prior
    service (PS) enlistment bonuses, the MGIB-Selected Reserve kicker and
    the Student Loan Repayment Program (SLRP) in combination to attract
    soldiers into the most critically short military occupational
    specialties (MOS) and high priority units. The Army Reserve has a
    critical executable funding shortfall of $22 million in its Enlisted
    Incentives program.
    Collective Training
        The Army Reserve collective training account provides essential
    mandays above annual training to support planning, preparation,
    participation and recovery from unit training. It supports collective
    training strategies to maintain unit training readiness and funds
    mobilization exercises, IRR training, and short tours directly
    affecting unit readiness. Collective training is critically underfunded
    by $41.0 million. The executable/critical shortfall for Army Reserve
    collective training is $41.0 million.
    Army Reserve CINC Support
        CINC support missions (overseas deployment training) provides
    forward presence and nation-building activities in support of commander
    in chief (CINC) engagement strategy missions for Army Reserve soldiers
    and units. ODT maintains the Army Reserve overseas warfighting, mission
    training, operational mission support, nation assistance, and exercise
    capability for CINC validated requirements. The known fiscal year 2001
    critical/executable shortfall in CINC support is $8.0 million. In
    previous years over 18,000 soldiers from 40 units deployed to more than
    50 countries providing over 378,000 mandays of cost-avoidance in
    PERSTEMPO and OPTEMPO for the Active component. The executable/critical
    shortfall for CINC Support is $8.0 million.
    RC Training Support Divisions (TSD)
        The training support concept plan was approved by the vice chief of
    staff of the Army in March 1997, and the FORSCOM commander approved the
    implementation plan in August 1998. The TS XXI implementation plan
    dramatically increases the role of the five TSDs and its subordinate
    organizations from the five divisions (Exercise) by expanding the scope
    of training support.
        Low funding in fiscal year 2001 for this program limits the TSDs'
    ability under the AC/RC Integration Program to execute training for
    priority and early deploying RC units. The executable/critical
    shortfall for RC training support divisions is $15 million.
    RPA Summary
        Funding these identified shortfalls of $157.0 million in the RPA
    budget request will provide required educational, skill qualification,
    and mobilization training opportunities for soldiers in units and the
    IRR as well as provide essential support to recognized CINC
    requirements and the training base. ROA urges the Congress to add
    $157.0 million to the Army Reserve RPA budget to fund critical training
    and manning shortfalls for Army Reserve personnel.
    Operations and Maintenance, Army Reserve (OMAR)
        The fiscal year 2001 DOD budget request for the Army Reserve
    Operations and Maintenance (OMAR) account is $1.5 billion. We believe
    there is at least a $175 million executable/critical OMAR shortfall in
    the fiscal year 2001 budget request that will force the Army Reserve to
    compensate by further reducing equipment and facility maintenance, and
    supply purchases. Backlogs for maintenance and repair continue to grow
    and necessary support to essential training continues to deteriorate,
    decreasing readiness.
        Currently the OMAR appropriation is experiencing serious resourcing
    shortfalls in FTS, recruiting and advertising, information operations,
    and the backlog of maintenance and repair. Some critical shortfalls are
    shown below:

                            [In millions of dollars]

    Full Time Support (MILTECHS/PCS)..................................    42
    Recruiting and Advertising........................................    23
    USAR Military Funeral Honors Duty.................................     1
    Reserve Education and Learning Program............................     1
    Information operations............................................    17
    Medical and Dental Readiness......................................    19
    Weapons of Mass Destruction.......................................     1
    CINC Support......................................................     3
    Real Property Maintenance.........................................    45
    BASOPS............................................................    23
                                                                      ______
          Total.......................................................   175

    Full Time Support--MILTECH
        The lack of adequate numbers of military technicians (MILTECHs) in
    USAR maintenance facilities jeopardizes equipment readiness due to
    depot maintenance backlog. The increase in the MILTECHs' portion of the
    essential full time support needed to improve unit readiness for fiscal
    year 2001 is 1,418 MILTECHs, costing $42 million. The executable/
    critical shortfall for the USAR MILTECH program is $42.0 million.
    Medical and Dental Readiness
        The USAR fiscal year 2001 medical and dental readiness shortfall is
    $19 million. This funding shortfall severely limits the Army's ability
    to ensure that Reservists meet medical and dental readiness
    requirements. This validated amount is for Army Reserve Selected
    Reserve (SELRES) only (IRR Requirements are being developed). In 1999
    an analysis was conducted that determined that 15 percent of the SELRES
    had outdated physical exams and that other statutory and directed
    requirements (e.g., dental screening, treatment for early deployers,
    and immunizations) had not been completed. Funding in the fiscal year
    2001 budget request will support 56 percent of the early USAR early
    deployer population and none of the remaining USAR force (including the
    IRR). This results in a critical shortfall of $5 million to support the
    early deployers and an overall shortfall of $19 million.
    National Guard and Reserve Equipment Request
        The Office of the Secretary of Defense in its February 2000
    ``National Guard and Reserve Equipment Report for Budget Year 2001''
    states that the Army Reserve has 89 percent of its Equipment Readiness
    Code A (ERC A) equipment items and 87 percent of its ERC-P items on-
    hand for all units. This represents a projected shortfall of equipment
    through fiscal year 2005 that exceeds $2.1 billion. Realistically, the
    equipment on hand (EOH) includes substituted equipment--some that is
    not compatible with newer equipment in the Active Army, Army National
    Guard, and Army Reserve equipment inventory and may not perform as
    required
        The greatest source of relief to Army Reserve equipment shortages
    is the National Guard and Reserve Equipment Appropriation (NG&REA) that
    funds equipment requirements identified by the services but not
    resourced due to funding shortfalls in the FYDP. Since 1981 the Army
    Reserve has received, through the oversight of Congress, nearly $1.5
    billion in equipment through the NG&REA. Without the appropriation the
    Army Reserve would still be struggling to reach 50 percent equipment on
    hand (EOH). The NG&REA works, and works well.
        Due to the interest of Congress and the success this appropriation
    has made in increasing the level of EOH in the Army Reserve, the
    readiness of the Army Reserve has increased significantly over the past
    decade. We urge the Congress to continue the NG&RA and to fully fund
    the Army Reserve $892 million fiscal year 2001 Equipment Modernization
    Requirement.
        Military Construction, Army Reserve.--The organization, roles, and
    missions of the Army Reserve dictate the need for a widely dispersed
    inventory of facilities. It provides a military linkage to 1,315
    communities throughout America, its territories, and overseas
    locations. It occupies 1,150 facilities, consisting of more than 7,600
    buildings and structures that average 37 years old. Army Reserve-
    operated installations add another 2,600 buildings and structures to
    the total inventory. The average age of facilities on these
    installations is about 48 years. The replacement value of Army Reserve
    facilities and installations nears $10.6 billion.
        The Army Reserve continues to have a $1.9 billion backlog of known
    construction requirements. The Army Reserve fiscal year 2001 Budget
    requests for appropriations and authorization of $73,396,000, will fund
    the construction of: five new Army Reserve centers in Louisiana, Texas,
    and Virginia to accomplish essential facility replacements;
    revitalization of existing facilities in Florida and Washington; and
    land acquisition to support a future project in Rochester. It also
    requests $1,917,000 for Unspecified Minor Construction to satisfy
    critical, unforeseen mission requirements; and $6,400,000 for planning
    and design funds to provide for a continuous, multi-year process of
    designing construction projects for execution in the budget years and
    beyond.
        The fiscal year 2001 budget request is for appropriations and
    authorization of $81,713,000 for Military Construction, Army Reserve,
    and $114,704,000 for Real Property Maintenance funding which funds 72
    percent of Army Reserve real property maintenance requirements. Long
    term resource constraints in both military construction and real
    property maintenance have a combined effect of increasing the rates of
    aging and deterioration of our valuable facilities and infrastructure.
    Historically, the budget has provided RPM resources to only fund the
    most critical maintenance and repair needs. ROA urges the Congress to
    authorize and fully fund the Army Reserve fiscal year 2001 $81,713,000
    MCAR request and its fiscal year 2001 $114,704,000 Real Property
    Maintenance request.
                               air force reserve
        Air Force Reserve Command, the Air Force's second largest major
    command (MAJCOM), makes up 11 percent of the total Air Force--Active,
    Guard and Reserve. It is composed of 74,000 Reservists and 5,300
    civilians. Its aircrews are 93 percent prior service, while 86 percent
    of its support force has served on active duty previously. It operates
    400 aircraft all over the world on a daily basis in support of Air
    Force and DOD missions. It is allocated 4 percent of the Air Force
    budget and provides 20 percent of the Air Force combat capability. It
    is a good deal for the service and for the country.
    Air Force Reserve Command C-141s
        The Air Force will retire all of its C-141 aircraft by 2006. This
    is in accordance with a drawdown plan, which will ensure the
    elimination of an aging and worn aircraft from the inventory by the
    year 2006. If there is no follow-on aircraft for Air Force Reserve
    Command units, the country will lose approximately 5,000 flight crew
    personnel, maintainers and support personnel--all of whom were trained
    at great expense and are among the most highly experienced personnel in
    the Air Force. The retirement will close units at March ARB, CA;
    Wright-Patterson AFB, OH; Andrews AFB, MD; Charleston AFB, SC and
    McGuire AFB, NJ. It will eliminate the economic contribution these
    units make to the local community.
        Also eliminated will be the huge ton-mile airlift capacity produced
    by 240 C-141s, a need detailed by the JCS during readiness hearings in
    September 1998. Though 134 C-17s have been contracted for to help fill
    the strategic airlift shortfall being created, that figure is far from
    an adequate replacement for the departing capability. Even though we
    fully support and are hopeful that DOD will take advantage of Boeing's
    offer of reduced pricing on 60 more C-17s, the delivery schedule will
    leave our nation seriously under-resourced in strategic airlift assets.
    ROA urges the Congress to direct DOD to keep a minimum of 60 C-141C
    aircraft in AFRC until sufficient numbers of C-17s are acquired to
    fulfill the ton-mile requirement of the National Military Strategy.
    KC-135R Re-Engining Kits
        AFRC needs 11 re-engining kits to convert its remaining KC-135s
    from ``Es'' to ``Rs.'' This conversion will ensure compliance with
    environmental restrictions on noise and other pollution, while
    increasing the speed, range and payload of our KC-135 tanker fleet.
    Failure to convert these remaining aircraft in a timely fashion will
    decrease the capability of the Air Force tanker fleet, affecting
    planning, production, and through-put of airborne receivers during
    hostilities. This, in turn, will affect the length and outcome of any
    contingency operation. ROA urges the Congress to fully fund re-engining
    kits for the 11 remaining AFRC KC-135E aircraft.
    C-130J
        The 403rd Wing at Keesler AFB, MS has 14 C-130J aircraft assigned.
    Its usual complement in its 2 squadrons is 18. In the midst of a
    modernization/conversion program begun several years ago, the unit is
    now faced with the task of maintaining 2 different aircraft in pursuit
    of its missions of weather reconnaissance and tactical airlift. This is
    inefficient and very costly, as maintenance procedures and tools for
    the aircraft are different, thereby requiring redundant resources. ROA
    urges the Congress to provide funding to complete the 403rd Wing
    modernization to the C-130J.
    Selected Examples of AFRC's Fiscal Year 2001 Executable Unfunded
            Requirements (in thousands of dollars)
        Flying Hours--$7,800: programmatic changes within the CPFH (cost
    per flying hour) models; e.g., C-5 engine thrust reverser repairs are
    estimated to cost $1.5M more this year than last. Total F-16 engine
    overhaul costs will increase by $4.3M, and an additional $2M cost
    growth will be experienced for other weapon systems within the total
    flying hour program.
        DPEM/CLSS/Sustaining Engineering--$31,100: Materials costs and
    engine overhaul price increases, particularly for the C-5 and F-16
    weapon systems, plus DPEM (Depot Purchased Equipment Maintenance)
    factor changes and out-of-cycle increases in programmed depot man-
    hours, will result in substantial cost growth in these cost areas. AFRC
    benefited greatly from a congressional addition of $10M in fiscal year
    2000.
        Associate TTF--$10,100: The $10.1M shortfall in TTF (Testing,
    Training & Ferrying) is a compilation of rate disconnects for flying
    hours for the various associate weapon systems (C-5, C-17, C-141).
    Training rate costs charged by HQ TRANSCOM (HQ AMC) differ
    substantially from the approved reimbursement rates which we must use
    in budgeting. The disconnect is attributable to the 19full cost
    recovery'' policy for working capital funds established by OSD in 1995.
        ART Pilot Retention Allowance--$5,000: AFI (Air Force Instruction)
    36-802 and 5 CFR Section 575.301 provide guidance for group retention
    allowances. This allowance is being paid to increase ART pilot base pay
    by 10 percent for GS-12s-13s and 5 percent for GS-14s in order to
    assist the command in retaining an experienced and capable pilot force.
        Facility Projects--$35,000: Funds activity above the 1 percent of
    plant replacement value (PRV) in the current program/budget to try to
    stem the tide of further facility and infrastructure deterioration at
    units throughout the Air Force Reserve Command. These projects range
    from repair and maintenance efforts on existing structures to renewal
    of parking aprons, airfield lighting systems, and base infrastructure.
    The compelling need for repair and maintenance dollars is a direct
    result of limited military construction investment. The current Air
    Force estimate is that at least 1.75 percent of PRV would be required
    to stop the growth of the backlog. AFRC benefited greatly from a $10M
    congressional addition in fiscal year 2000 and a transfer of $12.2M in
    quality of life funding. Current funding will only accomplish ``Band-
    Aid'' repairs--few major repairs or minor construction, and little
    progress on the backlog. The overall facility and infrastructure
    condition continues to deteriorate. The situation constitutes a quality
    of life and recruitment/retention issue for the Air Force Reserve
    Command.
        Information Technology--$15,000: Funding is required to provide
    sustainment of AFRC computer hardware and software. Implements a
    lifecycle management strategy by providing a 3-year (33 percent per
    year) replacement of hardware and software (24,000 desktops, 4,500
    notebooks, and 250 network servers) and a more systematic renewal of
    networking and communications infrastructure.
        Personnel Separation Costs--$11,100: Outsourcing and privatization
    efforts are creating unfunded costs for retraining and relocation of
    civil service personnel, lump sum leave payments, and other
    entitlements and benefits due to employees affected by reductions-in-
    force.
        A-76 Contract Cost--$24,600: This is also an outsourcing and
    privatization issue. The budget process would not allow extensive
    programming for contract costs without documented experience.
    Essentially, the costs of base support at four locations, which have
    been outsourced, are unfunded. These include Dobbins, Niagara Falls,
    Gen. Mitchell, and Westover.
    Total O&M, AFR--$144,500,000
    Selected Examples of AFRC's Fiscal Year 2001 Reserve Personnel
            Accountable Unfunded Requirements (thousands of dollars.)
        AGR Pilot Bonus--$3,750: Funds a pilot retention bonus program for
    the AFR AGR pilots comparable to that offered by the AF.
        Tuition Assistance--$13,000: This program helps Reservists with
    educational expenses (officers as high as 75 percent and enlisted as
    high as 90 percent).
        Montgomery GI Bill Kicker--$5,500: This program aids in the
    retention and recruitment of high quality men and women in critical
    skills in the part-time service in the Selected Reserve. Unlike
    previous Reserve component programs and the Active program, it provides
    for receipt of benefits before the qualifying military service is
    complete (funds 1,800 people).
        Medical Bonus Increases--$4,350: Increased costs of approved bonus
    program enhancements.
        ROA urges the Congress to fully fund AFRC's RPA requirements.
        Total RPA: $28,050
        AFRC's Fiscal Year 2001 Unfunded Equipment Requirements.--ROA is
    pleased to thank Congress for its past support of Air Force Reserve
    Command (AFRC), the second largest major command in the Air Force.
    Those efforts have made the command a ready and able partner in the
    Total Force, while making it an excellent value for the country at the
    same time.
        However, as Congressman Steve Buyer (R-IN), co-chairman of the
    House National Guard and Reserve Caucus, pointed out at the caucus's
    annual breakfast with Reserve component leaders on February 17th,
    distribution of modernization funds among the Reserve components has
    not been equitable. Where Air Force funding of Air National Guard
    programs totaled$237.8 million, AFRC received only $17.1 million. Where
    National Guard and Reserve Account (NGREA) money for the ANG totaled
    $30 million, AFRC received $20 million.
        AFRC's unfunded equipment requirements for fiscal year 2001 total
    $420 million.
                                 naval reserve
        Thanks to Congress, funding for fiscal year 2000 enabled the Naval
    Reserve to fund peacetime contributory support, bonuses, a substantial
    pay raise, real property maintenance, base operating support, and
    recruiting advertising/support. In this regard, it is clearly evident
    that Congress has given full recognition to the significant and well-
    recognized compensating leverage offered by today's Naval Reserve,
    which represents 20 percent of the Navy, yet expends only 3 percent of
    the budget.
        Unfortunately, the fiscal year 2001 budget submission falls short
    with reference to information technology, recruiting, ship depot
    maintenance, real property maintenance, base support operations,
    peacetime contributory support, annual training, and bonuses.
    Selected Naval Reserve IT Infrastructure Requirements
        The Naval Reserve has developed an Information Technology Strategic
    Vision that enables this transformation. Its goal is a seamless
    information and communications systems/capabilities integration, both
    within in the Naval Reserve and with the active duty Navy. It fully
    complies with the Navy's Navy/Marine Corps Intranet (N/MCI) initiative.
    However, current funding remains a barrier to integration preventing
    the Naval Reserve from adopting advanced network-centric initiatives.
    ROA urges the Congress to support full compliance by providing a
    dedicated investment--one of just over $100M in the next 6 years
    ($30.5M in fiscal year 2001: $27.8M OMNR, $2.7M RDT).
    Reserve Recruiter Support & Advertising
        Recruiter support and advertising remain a top priority for the
    Naval Reserve. Its budget remains the lowest of all the services. The
    $10M fiscal year 2000 congressional addition enabled the Naval Reserve
    to establish its first ever national advertising campaign, and
    operations support for 45 additional Reserve recruiters. The
    advertising campaign includes media and market research, and placement
    of advertising in television, print, radio, direct mail, and PSAs. In
    fiscal year 2001, Navy added $3.7M to advertising and recruiter
    support, but is still short of the fiscal year 2000 baseline. ROA urges
    the Congress to provide an additional $6.7M for the Naval Reserve to
    maintain its national advertising campaign and support for 45
    additional recruiters in fiscal year 2001 (total of 90).
    Ship Depot Maintenance
        Funding for ship depot-level maintenance in support of operational
    readiness and ship material condition continues to be a significant
    concern for the Naval Reserve. Current funding of 94 percent of
    programmed requirements has greatly improved material readiness of the
    NRF ships, however, continued deferral of depot maintenance continues.
    ROA urges the Congress to provide an additional $20M in fiscal year
    2001. If this additional funding is not provided, 5 CNO depot-level
    availabilities will be cancelled, and 4 other availabilities will be
    reduced in scope.
    Reserve Base Support, Real Property Maintenance & Base Operating
            Support
        Base support continues to be a big concern for the Naval Reserve.
    Since most of its buildings were built back in the 1940s/50s, the cost
    of repairing them continues to escalate. Although the backlog of
    critical maintenance (BMAR) growth has slowed, thanks to recent
    congressional support and a Navy program growth increase in PR-01, the
    projected fiscal year 2001 End of Year BMAR is $121.0M. ROA urges the
    Congress to provide an additional $15M in RPM funds to help arrest
    growth of the critical backlog.
        Base Operating Support funding has also benefited recently from
    congressional plus-ups and Navy program growth. However, in fiscal year
    1999, in an effort to save money, the Navy transferred custody of its
    A-N government vehicles to GSA with the intent of leasing them back,
    with 20 percent being replaced annually. However, lease rates only
    include the cost of capitalization, fuel, maintenance, and mileage,
    with no funding for procurement.
        The cost of providing Collateral Equipment (CE) for Naval Reserve
    MILCON projects is also an area of concern. CE includes the furnishings
    required to complete a construction project. CE costs vary depending on
    the project, but a historical planning figure of 10 percent of project
    costs for the entire construction budget has been used. ROA urges the
    Congress to add $6.0M to help properly fund the GSA A-N vehicle
    conversion and to cover MILCON CE costs.
    Selected Funding Shortfalls--Personnel
                Annual Training (AT)
        $23.5M to support AT tour lengths increase from 14 days to 15 days
    (inclusive of travel) as desired by ASD/RA to meet Title 10
    requirements, and will mirror that of the Marine Corp Reserve Force.
    The additional day will provide for an increase in the amount of
    peacetime contributory support that Commander, Naval Reserve can
    provide to gaining commands, particularly in OCONUS operations. Funds
    travel cost escalation. First quarter fiscal year 2000 costs have been
    coming in at 12 percent above budgeted amount.
                Active Duty for Training (ADT-Fleet Support)
        $13.5M to fund greater direct and indirect support for CINC
    requirements. It will allow Commander, Naval Reserve to increase the
    amount of peacetime contributory support that can be provided to
    gaining commands for exercises, mission support, conferences, exercise
    preparations, and unit conversion training. Funds travel cost
    escalation.
                ACtive Duty for Training (ADT-Schools)
        $14.5M to increase mandays essential to meet individual training
    plan goals that are based upon mobilization requirements that include
    ``A'' and ``C'' school completion. SELRES in commissioned hardware
    units and those performing contributory support require training whose
    manday requirements are over and above the annual two-week period. This
    provides training due to a change in unit, unit mission, or new
    equipment.
                Inactive Duty Training Travel (IDTT)
        $3.5M to continue providing airlift support missions, operational
    missions, aviation proficiency skills training, refresher skills
    training, exercises, and training at mobilization sites. This is the
    primary status in which Reservists travel to their gaining commands to
    perform high priority work meeting peacetime contributory support
    requirements and perform training required by Navy training plans.
        ROA urges the Congress to provide an additional $60 million to
    support unfunded Naval Reserve personnel requirements in fiscal year
    2001.
    Equipment Modernization
        Despite the encouraging trends in the fiscal year 2000 budget,
    continuing budgetary constraints have resulted in no new equipment for
    the Naval Reserve. In this regard, over the past years, much of the
    progress made in improving the readiness and capability of Naval
    Reserve units has been the direct result of congressional action--to
    designate new equipment for the Naval Reserve in the National Guard and
    Reserve Equipment Appropriation (NGREA) to earmark funding for the
    Naval Reserve in the traditional procurement appropriations.
    Accordingly, ROA has identified unfunded fiscal year 2000 Naval Reserve
    equipment requirements for consideration by Congress for addition to
    the administration's request for fiscal year 2001, in either the NGREA
    or as earmarked additions to the Navy's traditional procurement
    appropriations.

             SELECTED NAVAL RESERVE FISCAL YEAR 2000 EQUIPMENT NEEDS
                              [Dollars in millions]
    ------------------------------------------------------------------------
              Unfunded equipment requirement               Cost     Quantity
    ------------------------------------------------------------------------
    C-40A Transport Aircraft..........................     $175.0          3
    IT-21 Fleet Readiness Infrastructure Support......       30.5  .........
    P-3C AIP/Block Mod Update III Kits................       50.0          6
    Naval Coastal/Expeditionary Warfare...............       35.0  .........
    F/A-18 Mod, ECP 560 & AN/AAS......................       55.0         12
    FLIR Targeting Pod................................       55.0         12
    F-5 Avionics Modernization........................       47.0         12
    CH-60 Helicopter..................................       84.0          4
    Joint Forces Air Component Commander Units........         .6          3
    C-130 Avionics Modernization Program..............        2.5  .........
    ------------------------------------------------------------------------

        ROA urges the Congress to provide $479.4 million to support fiscal
    year 2000 Naval Reserve unfunded equipment needs.
    Fiscal Year 2001 Selected Naval Reserve Equipment Requirements
        Fiscal year 2001 has shown a sharp decline in procurement of
    equipment for the Naval Reserve. Total funded Naval Reserve equipment
    procurement has steadily declined from $260M in fiscal year 1997 to
    about $12M in fiscal year 2001.
        The Naval Reserve's Top Ten Equipment needs are as follows: 1. C-
    40A Transport Aircraft; 2. COMNAVRESFOR Information Technology
    Infrastructure; 3. P-3C AIP/BMUP Kits; 4. Naval Coastal Warfare/
    Expeditionary Warfare Equipment; 5. F/A-18A Upgrade (ECP-560R1) and
    NITE Hawk Targeting Pods (AN/AAS-38); 6. F-5 Avionics Modernization; 7.
    Joint Forces Air Component Commander (JFACC) Units; 8. C-130T Avionics
    Modernization Program (AMP); 9. Forward Looking Infrared (FLIR) Kits
    for SH-60B; 10. HH-60H Night Vision Goggles (NVG)/Forward Looking
    Infrared (FLIR)/Hellfire Missile Trainer.
         C-40A aircraft have been at the top of the Naval Reserve's
    equipment priority list for the past few years, and it was the number
    one priority last year as well. Currently, four C-40A's are funded and
    delivery will begin in fiscal year 2001. These aircraft will replace
    the aging C-9 transport aircraft, which handle 100 percent of the
    Navy's in theater airlift requirements. The average Navy C-9 aircraft
    is approximately 27 years old, about twice the commercial fleet DC-9
    age.
        Information technology infrastructure is essential in bringing the
    Naval Reserve to the 21st century for Information Technology, and for
    ensuring the Naval Reserve is fully compatible with the rest of the
    Navy regarding internet connectivity.
        The P-3C Avionics Improvement Program provides over the horizon
    missile targeting capability, improved communications and makes Reserve
    P-3s compatible with most of the fleet.
        Coastal warfare equipment is needed to modernize various support
    equipment used by construction battalions, harbor defense units, and
    expeditionary logistics units.
        F/A-18 upgrades will provide precision munitions capability for
    Reserve F/A-18A aircraft.
        In summary, given the force-multiplying effect of today's Naval
    Reserve and its proven potential as a cost-effective force multiplier
    to assist in additional missions, the Naval Reserve must continue to
    receive sufficient funding and to hold and receive updated warfighting
    equipment if the United States is to be expected to have a well-trained
    contingency force ready to respond in the event of national emergency.
                              marine corps reserve
        The Administration's budget proposes an end strength of 39,467
    Selected Marine Corps Reserve (SMCR) personnel for fiscal year 2001,
    down slightly from the level of 39,624 in fiscal year 2000. Similar to
    the Navy, there is also increased funding for the Marine Corps Reserve
    personnel, at $436 million, an increase of almost $24 million from
    fiscal year 1999.
    Funding Shortfalls
        The request to support the Marine Corps Reserve appears to be
    underfunded in the Operation and Maintenance, Marine Corps Reserve
    (O&MMCR) and Reserve Personnel, Marine Corps Reserve (RPMC)
    appropriations. Maintaining the necessary funding to pay, educate, and
    train our Marine Reservists, and to enable the units of the Marine
    Forces Reserve to conduct appropriate training and operations is the
    vital first step to combat readiness and sustainability.
        An additional $20.2 million in O&MMCR funds is needed for initial
    issue of equipment, replenishment and replacement of equipment,
    exercise support, and organizational and depot maintenance. Only by
    equipping and maintaining equally both the Active and Reserve forces
    will Total Force integration be truly seamless. Foremost is the
    maintenance of aging equipment. The Marine Corps Reserve armored
    vehicles' age, coupled with increased use, contribute to this
    requirement. The Initial Issue Program also continues to be a top
    priority. This program provides Reserve Marines with the same modern
    field clothing and personal equipment issued to their Regular Marine
    counterparts. Quite simply, in the extremes of climate and temperature
    where Marines conduct combat operations, all Marines need this initial
    issue to survive and sustain themselves.
        The Marine Corps Reserve personnel appropriation also appears
    underfunded. Much of the nearly $24 million increase is consumed by pay
    raises and pay table reform, accelerated BAH reform, and military
    funeral honors funding. The major deficiency in this appropriation is
    $3 million in the area of active duty for special work (ADSW). This
    valuable individual training is directly related to probable wartime
    tasking. The Congress's strong support to maintain ADSW funding allows
    Reserve Marines to sustain wartime skills while directly reducing the
    operating tempo of their Active counterparts.
        A delay of the fiscal year 2001 Quadrennial Defense Review 1997
    (QDR97) reductions in the Active Reserve program is required for the
    Reserve to continue to meet its augmentation and reinforcement mission.
    The QDR directed reductions of Active Duty support of the Marine Corps
    Reserve, particularly the Active Reserve program, are undermining the
    Marine Corps Reserve's ability to maintain readiness and meet
    requirements for Reserve employment. To date, the Marine Corps Reserve
    has taken the cuts directed by QDR97 as planned and will continue with
    reductions through fiscal year 2003, but every cut taken in the Marine
    Corps Reserve decreases the operational or tactical capabilities of the
    Marine Corps. Delay of the fiscal year 2001 reductions in the Active
    Reserve program will cost $1.9 million and is essential to increased
    readiness and employment of Marine Corps Reserve units. ROA strongly
    urges the Congress to direct DOD to defer any further QDR97-recommended
    reductions in the Marine Corps Reserve until they can be reviewed by
    QDR01.
    Equipment Modernization
        Modern equipment is critical to the readiness and capability of the
    Marine Corps Reserve. Although the Marine Corps attempts to implement
    fully the single acquisition objective philosophy throughout the Marine
    Corps Total Force (Active and Reserve), there are some unfilled Reserve
    equipment requirements that have not been met because of funding
    shortfalls.
        To achieve the readiness necessary to quickly mobilize and augment
    the Active Marine Forces in time of national emergency, Marine Forces
    Reserve units must be equipped in the same manner as their Active force
    counterparts. The top modernization requirement of Marine Corps Reserve
    is ECP-583, which will make its F/A-18A aircraft compatible with the F/
    A-18 Cs and Ds utilized by the Active force.
        Acceleration of V-22 fielding is critical to the future readiness
    of Marine Corps aviation. Reserve CH-46Es will not be replaced for at
    least another 10 years at the current planned production rate. Further,
    until the V-22 is fielded to the Reserve, the Marine Corps Reserve will
    not be able to take full advantage of the skills of V-22 trained
    Marines who separate from the Active forces. The increasing cost of CH-
    46E maintenance and this potential loss of V-22 expertise can be
    avoided by accelerated production and earlier fielding of the V-22
    across the Total Force.

    ROA Recommendations for the Fiscal Year 2001 NG&REA--Marine Corps
    Reserve

                              [Dollars in millions]

    AVIATION EQUIPMENT (funded through Aircraft Procurement Navy
      appropriation):
        F/A-18A ECP-583 (10 USMCR aircraft)........................... $43.5
        MISCELLANEOUS RESERVE EQUIPMENT...............................  59.7

        ROA urges the Congress to provide $103.2 million for procurement of
    equipment for the Marine Corps Reserve.
    Real Property Maintenance in the Marine Corps Reserve
        There is a particular need for additional funding for real property
    maintenance in the Navy and Marine Corps Reserve. For example, as a
    result of BRAC closures and a reduction in force structure the Naval
    Reserve now has the smallest number of demographic centers since World
    War II and one third fewer than were in operation in 1978 when the
    number of drilling Reservists was just slightly above what it is today.
        Some states have only one Naval and Marine Corps Reserve center,
    resulting in the further lessening of the integration of the nation's
    armed forces with the civilian population. In addition, the
    concentration of personnel resulting from Reserve center consolidation
    makes it even more important that our sailors and Marines have access
    to modern, efficient and cost-effective facilities. Despite the
    reduction in facilities, the backlog of military construction and the
    critical backlog of essential maintenance and repair of Naval and
    Marine Corps facilities have continued to rise dramatically. The
    continuing shortage of funds for the orderly maintenance, repair and
    equipment replacement of these facilities is obvious. Accordingly,
    additional funds from the Congress are necessary to address these
    critical problems. ROA urges the Congress to provide at least $2
    million of additional funding is needed to keep the critical backlog of
    real property maintenance from increasing above the current level. This
    appropriation also needs approximately $2.8 million in additional
    funding for base operating support and $8.7 million for Reserve
    military construction for the Marine Corps.
    Conclusion
        Thank you for the opportunity to present the Reserve Officers
    Association's views on these important subjects. Your support for our
    men and women in uniform, both Active and Reserve, is sincerely
    appreciated.
                                     ______

       Prepared Statement of the Naval Reserve Association and the Naval
                          Enlisted Reserve Association

        Mr. Chairman and Members of the Subcommittee: On Behalf of the
    Naval Reserve Association, and the Naval Enlisted Reserve Association,
    we would like to thank you for the opportunity to submit testimony.
    Combined, the NRA and NREA have 37,000 members. They are representative
    of the 89,000 Selected Reservists, the 4,500 non-pay Drilling
    Reservists, and the 91,000 Individual Ready Reservists, as well as the
    Retired Reserve community. Collectively, we thank you for your support
    of the Navy and Naval Reserve in the past.
                                  introduction
        The Post Cold War era has brought a period of disorderly agitation
    where petty despots are no longer contained by super power rivals. The
    United States, the visible survivor, has been challenged by tempestuous
    tyrants who wanted to conquer feelings of impotence.
        As confrontation became crisis, the United States Navy has been
    called upon as the first choice in response by a number of Commanders
    in Chief. With a forward-deployed arsenal, which includes the Marine
    Corps, its own Air Force, and precision cruise missiles, the Navy
    provides the option to project a military power or a political
    influence into areas of concern.
        Since the end of the Cold War, the Navy, like other services has
    gone through subsequent downsizing. The vision of a 300-ship fleet is
    insufficient to meet the existent demands being asked of the Navy.
    Fleets are faced with longer deployments, higher OPTEMPO, and postponed
    maintenance. When joint air support was needed over Kosovo and Northern
    Iraq, aircraft carrier coverage of the West Pacific was gapped for 98
    days. In April of this year, 151 ships (48 percent) in our fleet were
    underway, with 71 percent of those vessels being deployed overseas.
        The Navy CINCs freely admit that they can no longer do their
    mission without the Naval Reserve. The Naval Reserve has actively
    participated in the four Presidential Call-ups. Reservists are deployed
    to Europe, Asia, South America, and have also played a key role in
    helping to resolve Vieques, PR. Within the prescribed budget, the Fleet
    CINCs could only be provided with 14 percent of the mandays that they
    requested in support from the Naval Reserve.
        In addition to constrained budget, the cost of Naval Reserve
    support is going up. Higher demand for personnel by the Fleet has
    increased the amount of overseas Annual Training. Overseas A.T. for
    fiscal year 2000 has increased from 20 to 25 percent of the Annual
    Training budget. Travel and lodging expenses increased by 12 percent
    for the first half of this fiscal year. P-3C flight hours have fallen
    short 1,701 thrs. Twenty-two of thirty USNR/USMCR series aircraft are
    flying 9.7 percent more.
        OPTEMPO and PERSTEMPO are impacting recruiting and retention.
    Congress has been quite generous in funding recruiting and advertising
    support. But aging equipment is a retention issue too. In addition to
    other concerns, young men and women are leaving the Fleet because of
    the material and readiness state of its ships and aircraft.
        Because of forward deployment, battle group independence, and the
    need for ongoing replenishment, the Navy has unique problems and costs.
    The Naval Reserve is playing a greater role with some of the solutions.
    Naval Reserve requirements need to be supported, as should those of the
    Navy as a whole.
                    naval reserve modernization requirements
        Table one provides a breakdown of the top twenty funding
    requirements requested by the Chief of Naval Reserve Force. Fourteen of
    these items have been included on the CNO's letter to Congress listing
    unfunded items. NRA and NERA most strongly support funding of the CNRF
    list. NRA Resolution #06-00 was passed on March 24, 2000 at our
    National Convention.

                                                         NAVAL RESERVE MODERNIZATION REQUIREMENTS--PR-01
                                                                      [Dollars in millions]
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                            Fiscal year    Fiscal year    Fiscal year    Fiscal year    Fiscal year    Fiscal year
                                                2001           2002           2003           2004           2005           2006
        Unfunded equipment requirement    ------------------------------------------------------------------------------------------         Remarks
                                             Cost    Qty    Cost    Qty    Cost    Qty    Cost    Qty    Cost    Qty    Cost    Qty
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    C-40A Transport Aircraft.............   171,500    3   170,500    3   172,000    3   134,700    2   183,000    3   195,000    3  Replace aging C-9 with
                                                                                                                                      C-40A.
    CNRF Information Technology              30,500  ...    20,112  ...    18,374  ...     9,491  ...     9,965  ...    10,515  ...  Improvements to NR LAN,
     Infrastructure.                                                                                                                  SIPERNET, system and
                                                                                                                                      infrastructure.
    P-3C AIP/BMUP Kits...................    49,468  2/3    52,350  2/3    53,143  2/3    45,008  2/2    45,809  2/2    28,500  2/0  Achieve commonality w/
                                                                                                                                      Active P-3C UD III
                                                                                                                                      Squadrons.
    Naval Coastal/Expeditionary Warfare      35,050  ...    31,700  ...    30,280  ...    11,400  ...    10,720  ...    10,660  ...  Fulfill CB/ELSF/NCW
     Forces.                                                                                                                          unit TOA for CESE,
                                                                                                                                      Comm Equip, Sup Equip.
    F/A-18 Mod, ECP 560 & AN/AAS-38          55,750   12    53,500   12  ........  ...  ........  ...  ........  ...  ........  ...  Upgrade Reserve F/A-18A
     Targeting Pods.                                                                                                                  precision guided
                                                                                                                                      munitions capability.
    F-5 Avionics Modernization...........    47,000   12    47,000   12    47,000   12  ........  ...  ........  ...  ........  ...  Upgrade the 25 year old
                                                                                                                                      F-5 avionics package.
    Joint Forces Air Component Commander        615    3  ........  ...  ........  ...  ........  ...  ........  ...  ........  ...  Equip JFACC units w/
     (JFACC) Units.                                                                                                                   hardware/software for
                                                                                                                                      SIPERNET connectivity.
    C-130T Avionics Modernization Program     2,352  ...     3,352  ...    19,256  ...    41,756    4    85,732    6    90,732   10  Standardize cockpit
                                                                                                                                      configuration of all
                                                                                                                                      NR/MCR C-130T
                                                                                                                                      aircraft.
    FLIR kits (AAS-51Q) for SH-60B.......     7,000    4       700  ...       800  ...       800  ...       900  ...       900  ...  Procure 4 Forward
                                                                                                                                      Looking Infra-Red
                                                                                                                                      (FLIR) (AAS-51-Q) for
                                                                                                                                      SH-60B.
    HH-60H NVG/FLIR/Hellfire Trainer.....     2,000    1  ........  ...  ........  ...  ........  ...  ........  ...  ........  ...  Procure HH-60H trainer.
    P-3C CDU Upgrades....................     3,000  ...     3,300  ...     3,600  ...  ........  ...  ........  ...  ........  ...  Increase counter drug
                                                                                                                                      capabilities of P-3C w/
                                                                                                                                       AIMS & 2 APG-66s for
                                                                                                                                      trng.
    P-3C Synthetic Aperture Radar (SAR)..     3,000    1     6,000    2     6,000    2  ........  ...  ........  ...  ........  ...  Procure Synthetic
                                                                                                                                      Aperture Radars (SAR)
                                                                                                                                      for NR P-3C aircraft.
    F-5 Global Positioning System (GPS)..     8,100   12     6,900   12     3,800   12       450  ...  ........  ...  ........  ...  Procure GPS for F-5.
                                                                                                                                      All Military Acft
                                                                                                                                      require GPS by 2005.
    F-5 Radar Upgrade....................     3,726    3     7,452    6    11,178    9    11,178    9    11,178    9  ........  ...  Replace APQ-153/159
                                                                                                                                      radar with APG-66
                                                                                                                                      radar.
    Computer Based Training..............     7,300  ...      5000  ...      6200  ...  ........  ...  ........  ...  ........  ...  Develop computer based
                                                                                                                                      maintenance/aircrew
                                                                                                                                      training for NR
                                                                                                                                      aircraft.
    Operational Flight Trainer (OFT)          5,000  ...  ........  ...  ........  ...  ........  ...  ........  ...  ........  ...  Upgrade 2 P-3C OFTs to
     Upgrade/ Mod.                                                                                                                    match current NR P-3C
                                                                                                                                      configuration.
    P-3C Update III Simulator............     1,000    1     2,000    2  ........  ...  ........  ...  ........  ...  ........  ...  Procure 3 Deployable
                                                                                                                                      Embedded Tactical
                                                                                                                                      Trainer Sys (DETTS)
                                                                                                                                      units.
    P-3C Trainer Upgrade.................     4,500  ...  ........  ...  ........  ...  ........  ...  ........  ...  ........  ...  Upgrade ESM suites w/
                                                                                                                                      ALR-66(V)III.
    Reserve Aircraft Modernization.......     2,500  ...  ........  ...  ........  ...  ........  ...  ........  ...  ........  ...  Upgrade various
                                                                                                                                      avionics systems on NR
                                                                                                                                      P-3C and Helo.
    C-9 Upgrades.........................     1,400   27  ........  ...  ........  ...  ........  ...  ........  ...  ........  ...  Upgrade PA, Ext Lights,
                                                                                                                                      Lndg Gear and Cabin
                                                                                                                                      Pressurization sys.
                                          ------------------------------------------------------------------------------------------------------------------
          February 24, 2000..............   440,761  ...   409,866  ...   371,631  ...   254,783  ...   347,304  ...   336,307  ...  .......................
    --------------------------------------------------------------------------------------------------------------------------------------------------------

        (a) Item #1 on the list is the C-40 aircraft procurement to replace
    the aging C-9 fleet. The Naval Reserve is the logistic airlift for the
    Navy. The department of the Navy has a fleet of (29) C-9's needing
    replacement. The first twelve aircraft were purchased used from
    commercial airlines, and are older than the Air Alaska airframe that
    crashed off of California. Others are from the same manufacturing lot
    as the ill fated Air Alaska aircraft. While inspected, air safety is
    still an ongoing concern.
        With five C-40's already authorized the Navy tried to sell its
    first C-9 aircraft, and was only offered $200,000. Obviously, the
    commercial airline industry views these airframes as fully depreciated.
    Besides age, these aircraft are handicapped by noise and exhaust
    pollution. The sooner we replace C-9's, the less we will have to spend
    on item #20 which are C-9 upgrades.
        The other argument for accelerated C-40 procurement is business-
    oriented. The aircraft is a cargo combo Boeing 737-700 with 800 style
    wings, providing an aircraft with more effective lift, and longer
    range. To buy single planes every other year maximizes the price.
    Further, the production line, with this model, will be run for only for
    eight to ten years, before Boeing changes model design. Extending the
    purchases of 737 cargo-combo model over a longer time horizon will mean
    mixing models. This will complicate ground support and aircrew
    training, and will also increase costs. With an extended procurement
    timeline the Navy may be forced to seek 737-700s from the used market,
    with a high cost of conversion to cargo-combo, and with a reduced
    airlift and range. The conversion cost might exceed the original
    purchase price.
        An optimum would be purchasing three aircraft each year, over the
    next eight years. In the long run it will save money. With a larger
    order, Boeing will discount the price, and we would also have model
    consistency.
        (b) Money is also being requested for the #2 item which is the CNRF
    Information Technology Infrastructure (IT-21). Different from the Navy/
    Marine Internet, this money would be earmarked to get the Naval Reserve
    out of the mire of DOS, upgrading its legacy software. The NSIPS was an
    attempt. The Naval Standard Integrated Personnel System (NSIPS) was
    intended to eliminate the USNR legacy pay system. Problems arose
    because this conversion was attempted within the existing budget, with
    costs kept on the margin. The overall cost has ballooned with selected
    reservists missing pay. The Naval Reserve learned a hard lesson that
    upgrades in hardware, memory, software, data flow, and staffing are
    needed. This was an exercise that Corporate America has already
    learned, you can't upgrade computers on the cheap.
        (c) Items #3, 11, 12, 16, 17, 18, and 19 are P-3 Upgrades. The
    Naval Reserve P-3 aircraft and avionics are not as updated as those
    being flown by active duty are. A commonality with active P-3C UDIII
    squadrons must be achieved to help maintain the Total Force. Missions
    for the Lockheed P-3 Orion are being expanded to include counter drug
    counter drug capabilities, and ESM.
        (d) Funding in #4 is needed for the Naval Coastal, Seabees, MIUW's,
    NR Expeditionary Warfare Forces to provide CESE, communications, and
    field support equipment. Existing equipment is aged, and worn, often
    being to commercial specifications, rather than military. Some of this
    equipment has been borrowed by active units for deployment overseas.
    Naval Coastal Warfare is growing in importance with the Navy's focus on
    littoral operations. Home Defense multiplies the importance. Newer
    equipment needs to be procured in an ongoing schedule to be able to
    upgrade unit readiness.
        (e) Upgrading the Naval Reserve F/A-18A with precision guided
    munitions capability is item #5. With greater emphasis being placed on
    combat support and precision combat air strikes, there is a requirement
    to upgrade USNR capabilities to match the active squadrons.
        (f) Items #6, 13, and 14 are needed to modernize the F-5. The F-5
    role is as the Navy's adversarial aircraft. The Naval Reserve operates
    the only dedicated adversarial squadron with the mission of preparing
    the Navy's tactical pilots prior to deployment. The F-5 is twenty-five
    years old. Without upgrades in avionics, navigation, and radar
    detection, a keen edged adversarial performance can not be maintained.
    Our deploying pilots would be handicapped.
        (g) To play joint, Item #7 asks for funding to equip our Joint
    Forces Air Component Commander (JFACC) units with hardware and software
    for SIPERNET connectivity.
        (h) The Naval Reserve has acquired C-130's over numerous budget
    years. Cockpit configurations differ between airframes. Item #8 is
    funding to standardize cockpit configuration of all NR/MCR C-130 T
    aircraft.
        (i) Items 9, and 19 provide funding for infrared FLIR kits, and
    upgrades for USNR helicopter forces.
        (j) Aircrew training is an ongoing requirement. Reduced air hours
    prevent in-flight training. Items 10 and 15 request specialized
    trainers to support maintenance and aircrew training.
                   unfunded requirements readiness shortfalls
        Tables two and three outline unfunded readiness requirements for
    fiscal year 2000 and fiscal year 2001.
    [GRAPHIC] [TIFF OMITTED] T02MY03.001

    [GRAPHIC] [TIFF OMITTED] T02MY03.002

                     fiscal year 2000 unfunded requirements
    OMNR
        (a) Flight Hour Program ($15M): Includes P-3C flight hour shortfall
    of 1,701 hrs to meet CINC contributory support requirements of 40
    aircraft forward deployed (3 Reserve aircraft); NAVICP LECP P-3C/C-130
    Replacement Inertial Navigation Unit (RINU) costing $4.5M; and, AVDLR
    price increases for the P-3C, UH-1N, F/A-18, and F-5E/F.
        (b) Ship Depot Maintenance ($13M): Includes deferred CINCLANTFL/
    PACFLT NRF ship depot level maintenance requirements for 3 FFGs, 2
    MCMs, and 4 MHCs, in addition to emergent repairs for INCHON on its
    main condenser.
        (c) Reserve Base Support, Real Property Maintenance ($10M):
    Includes $5.0M growth of critical backlog created by fiscal year 2000
    Congressional Rescission, and BMAR growth of $25M in fiscal year 2000.
    RPN
        (a) Annual Training (AT) ($11.6M): Fiscal year 2000 budget was
    calculated for a 6 percent travel escalation increase. Due to
    increasing fuel costs, first quarter fiscal year 2000 travel costs have
    been coming in at 12 percent and are expected to increase further. This
    will also allow SELRES enlisted participation to remain at 90 percent
    and officer participation to remain at 99 percent.
        (b) Active Duty for Training (ADT-FLEET SUPPORT) ($12.8M): CINC
    requirements are greater than available funding. This will allow for
    greater direct and indirect support for CINC requirements. It will
    allow Commander Naval Reserve to increase the amount of peacetime
    contributory support that can be provided to gaining commands for
    exercises, mission support, conferences, exercise preparations, and
    unit conversion training.
        (c) Active Duty for Training (ADT-Schools) ($3M): Funding will
    increase mandays essential to meet individual training plan goals that
    are based upon mobilization requirements which include ``A'' and ``C''
    school completion. SELRES in commissioned hardware units and those
    performing contributory support require training whose manday
    requirements are over and above the annual two-week period. This
    provides training due to a change in unit, unit mission, or new
    equipment.
        (d) Inactive Duty Training Travel (IDTT) ($5.3M): This is the
    primary vehicle which Naval Reservists travel to their gaining commands
    to perform high priority work meeting peacetime contributory support
    requirements and perform training required by Navy training plans. IDTT
    is used to provide airlift support missions, operational missions,
    aviation proficiency skills training, refresher skills training,
    exercises, and training at mobilization sites.
        (e) Active Duty For Special Work (ADSW-RPN) ($1.2M): Funds SELRES
    officers and enlisted personnel as well as members of the IRR drilling
    in the VTU providing contingency and peacetime mission support. There
    has been an upward trend in ADSW RPN requirements.
                     unfunded requirements fiscal year 2001
    OMNR
        (a) Ship Depot Maintenance ($20M): Includes continued deferral of
    NRF ship depot requirements. Continuing deferring maintenance
    requirements results in a downward spiral of declining material
    condition that will impact readiness.
        (b) Reserve Base Support, Real Property Maintenance ($15M): Arrests
    growth of critical backlog and holds at fiscal year 2000 level. Most of
    the buildings were built back in the 1940s/50s. fiscal year 2000
    Congressional Rescission caused BMAR to grow $5M. Projected fiscal year
    2001 End of Year BMAR is $121.0M. Also, the Asset Protection Index
    (Funding/Current Plant Value) of 2.1 percent falls just within industry
    standards (2-4 percent).
        (c) Naval Reserve It Infrastructure Requirements ($27.8M): Funds
    maintenance and life cycle support for newly developed software
    systems, and system recapitalization to bring IT infrastructure up to
    IT-21 standards. All infrastructure upgrades will fully complement NMCI
    and are critical to ensuring its timely integration. Lack of funding
    will prevent the Naval Reserve from being able to fully operate NMCI
    when it comes on line.
    RPN
        (a) Career Sea Pay ($1.7M): Funds fiscal year 2001 Unified
    Legislative Budgeting Initiatives(ULB).
        Increases sea pay to restore buying power lost since last update in
    fiscal year 1988. Also pays additional bonus for sailors desiring to
    remain at sea past the normal sea/shore rotation dates.
        (b) Basic Allowance For Housing (BAH) ($1M): Accelerates a proposed
    fiscal year 2002 ULB initiative into fiscal year 2001. Would allow
    single E-4s assigned to ships to receive BAH when room is not available
    at bachelor quarters. Funding requested would support allowing E-4s
    with more than 4 years of service to qualify for the allowance.
        (c) Annual Training (AT) ($23.4M): Additional funding supports AT
    tour lengths to increase from 14 days to 15 days (inclusive of travel)
    as desired by ASD/RA to meet Title 10 requirements, and will mirror
    that of the Marine Corp Reserve Force. The additional day will provide
    for an increase in the amount of peacetime contributory support that
    Commander Naval Reserve can provide to gaining commands, particularly
    in OCONUS operations. Funds travel cost escalation. First quarter
    fiscal year 2000 costs have been coming in at 12 percent above budgeted
    amount.
        (d) Active Duty for Training (ADT-FLEET SUPPORT) ($13.4M): CINC
    requirements are greater than available funding. This will allow for
    greater direct and indirect support for CINC requirements. It will
    allow Commander Naval Reserve to increase the amount of peacetime
    contributory support that can be provided to gaining commands for
    exercises, mission support, conferences, exercise preparations, and
    unit conversion training. Funds travel cost escalation.
        (e) Active Duty For Training (ADT-SCHOOLS) ($4.4M): Funding will
    increase mandays essential to meet individual training plan goals that
    are based upon mobilization requirements which include ``A'' and ``C''
    school completion. SELRES in commissioned hardware units and those
    performing contributory support require training whose manday
    requirements are over and above the annual two-week period. This
    provides training due to a change in unit, unit mission, or new
    equipment. Funds travel cost escalation.
        (f) Non-Prior Service (NPS) Bonus ($2.4M): This required funding
    would allow the Naval Reserve to implement the enlisted NPS bonus
    program, which is authorized by 37 USC 308c. As the Naval Reserve
    increasingly relies on the accession of NPS personnel, it is taking
    steps to increase recruiting goals that may not be achievable without
    these additional incentives. This is essential in order for Naval
    Reserve to be competitive among the services.
        (g) Active Duty Special Work (ADSW-RPN) ($1.2M): Funds SELRES
    officers and enlisted personnel as well as members of the IRR drilling
    in the VTU providing contingency and peacetime mission support. There
    has been an upward trend in ADSW RPN requirements.
        (h) Inactive Duty Training Travel (IDTT) ($3.5M): This is the
    primary vehicle which Reservists travel to their gaining commands to
    perform high priority work meeting peacetime contributory support
    requirements and perform training required by Navy training plans. IDTT
    is used to provide airlift support missions, operational missions,
    aviation proficiency skills training, refresher skills training,
    exercises, and training at mobilization sites.
                             recruiting shortfalls
        Reserve Recruiter Support & Advertising ($6.7M): fiscal year 2000
    Congressional adds of $5.0M enabled the Naval Reserve to establish its
    first ever national advertising campaign. Advertising campaign includes
    media and market research, and placement of advertising in television,
    print, radio, direct mail, and public service announcements. In fiscal
    year 2000, Congress also provided a $5.0M add for recruiter support.
    This provided support for 45 additional recruiters. In fiscal year
    2001, Navy added $3.7M to advertising and recruiter support but is
    still short of the fiscal year 2000 baseline. The additional support
    would allow the NR to maintain it national advertising campaign and
    support for 45 additional recruiters (total of 90).
                                   conclusion
        The Naval Reserve and the Naval Enlisted Reserve Associations have
    stated our interests and concerns. We are all deeply interested in the
    welfare of the Total Force Navy. We are confident in your support. Feel
    free to contact us at 703-548-5800 if you have any questions.
                                     ______

    Prepared Statement of the Enlisted Association of the National Guard of
                               the United States

                                  introduction
        Mr. Chairman, Members of the Defense Subcommittee of the Senate
    Appropriations Committee: I am honored to have this opportunity to
    present the views of the Enlisted men and women of the National Guard
    of the United States. Our members are very appreciative of the support
    extended to them in the past, and are very confident that you will,
    through your diligent and conscientious efforts, give serious
    consideration to the most critical issues facing the National Guard
    today.
        The citizen soldiers of today are truly the finest ever. You may
    ask yourself, Mr. Chairman, why are NCOs and Enlisted people so
    concerned about the budget? This is the bottom line: It is the NCOs'
    direct responsibility to train the troops that the Administration and
    Congress deploy around the world. The National Guard must have adequate
    funding to fully train its soldiers and airmen and protect them from
    harm. The Guard must be adequately prepared and resourced to complete
    its varying assigned missions and avoid degrading criticism from its
    adversaries. Without these additional funds, the National Guard will
    fall into the hollow force that is being predicted by some individuals
    in the military community.
        Today, the Guard is being called upon more and more to provide
    peacetime and combat-ready support for contingencies around the world.
    Shortages in specific areas are becoming acute. While we assert that
    the use of the National Guard is the most cost effective means of
    implementing a strong national defense strategy during these
    financially constrained times, we also believe that we must have
    adequate funds to maintain the best possible services to our nation.
        For years, Army and Air National Guard units have competed with the
    best of their active duty counterparts and have taken top honors home
    to their states. The National Guard has proven, time and again, that it
    is a vital part of the Total Force. For more than 360 years, in every
    war, the combat records of the National Guard prove that the Guard will
    fight, and win, if, and when it again becomes necessary.
                               full-time support
        The vast majority of personnel in the Army National Guard (ARNG)
    are the men and women who serve their country by drilling one weekend a
    month and two weeks each year. However, the Guard also relies heavily
    upon thousands of full time employees, Military Technicians and Active
    Guard/Reserves (AGRs), to ensure unit readiness throughout the ARNG.
        These full time employees perform vital day to day functions,
    ranging from equipment maintenance to essential leadership and staff
    roles, that allow the drill weekends and annual active duty training of
    the traditional Guard member to be dedicated to preparation for the
    National Guard's warfighting and peacetime missions.
        The level of full-time support manning has a demonstrated direct
    influence on readiness and is dictated by mission and equipment levels
    rather than end strength. Full-time support manning is a critical
    element in the day-to-day National Guard unit operations such as
    administration, personnel, maintenance, supply and training management,
    which enhances the effective and efficient operations of our units
    during inactive duty training periods and annual training.
        The Army National Guard's zero risk requirement for Technicians and
    AGRs is over 84,000, of which more than 73,693 have been validated as
    essential field requirements when assessed against deployment criteria.
    Of this essential field requirement, the Army National Guard has a
    minimum military technician staffing level of 25,500 and an AGR minimum
    staffing level of 23,500 to begin on a road to recovery for full time
    support. Failure to fully fund these full time personnel will have a
    detrimental effect on the readiness of ARNG units. The Army National
    Guard will not be able to fully accomplish all requirements without
    proper full-time manning, thus affecting readiness.
        The fiscal year 2001 budget, as submitted by the President,
    provides resources sufficient for approximately 23,957 Technicians and
    22,430 AGRs--end strength shortfalls of 1,543 and 1,052 respectively.
        EANGUS urges the Congress of the United Stated to provide an
    additional $76 million in fiscal year 2001 to the Army National Guard
    for the addition of 1,543 Military Technicians and 1,052 Active Guard/
    Reserves.
                distributive training technology project (dttp)
        The National Guard's distributed learning initiative (DTTP) was
    established by Congress in fiscal year 1995 as the Distance Learning
    Regional Training Network Demonstration Project. In each year since
    1995, Congress has appropriated funds to continue and expand the
    initiative.
        Improved readiness for the Reserve Components is a cornerstone of
    the project's objectives. This improved readiness will be realized
    through the greatly expanded availability, effectiveness and efficiency
    of training through distance learning. But the project offers much
    more. Through the establishment of the distributed learning network
    capabilities, the project has greatly enhanced command and control
    capabilities for units in the field, ensuring prompt, coordinated
    response to federal and state emergencies. Even more importantly,
    through the concept of ``shared usage,'' establishment of the DTTP
    facilities has broadened the national technology footprint by
    delivering distributed learning technology and its vast potential to
    communities across the nation.
        To date, DTTP has established over 200 distributed training
    facilities in communities that reach nearly every state. The Project's
    fielding plan calls for completion of 453 in fiscal year 2003. In
    fiscal year 2000, Congress provided $83 million ($41 million, Other
    Procurement, Army, and $42 million, Operations and Maintenance,
    National Guard) to support the establishment and operation of the
    fiscal year 2000 facilities.
        For the first year since the Project's inception, funding has been
    included in the President's Budget Submission for fiscal year 2001.
    However, funds requested in the budget ($11 million, Other Procurement,
    Army, and $10.6 million, Operations and Maintenance, Army National
    Guard), do not support the fielding activities necessary to complete
    facilities installation in fiscal year 2003, and even more
    significantly, do not provide adequate funds to keep existing
    facilities operational.
        In order for DTTP to remain on schedule and continue to support the
    facilities that are currently providing distributed learning capability
    to soldiers, communities, and local institutions, the fiscal year 2001
    requirement is $40.1 million, Other Procurement, Army, and $76.3
    million, Operations and Maintenance, Army National Guard for a total of
    $116.4 million.
                           firearms training systems
        This year, more funding for firearms training is necessary. the
    U.S. Army's Engagement Skills Trainer (EST 2000) provides training in
    marksmanship, squad tactical, and close-range ``shoot-don't shoot''
    techniques. The latter training feature is extremely important in the
    peacekeeping operations in which United States military members are
    currently participating. EST 2000 is part of the Army's total small
    arms training strategy that enhances the efficiency of live fire
    exercises, which are the capstone of small arms training. At the
    inception of the program in fiscal year 1998, it was fully funded. All
    Army components were each allocated to receive their share of the
    initial requirement of 368 trainers.
        Unfortunately, there is no funding in fiscal year 2001 for EST 2000
    and limited funding for the remainder of fiscal year 2000. National
    Guard training systems have been reduced from 100 to only 12. The Army
    National Guard needs $8 million in National Guard and Reserve Equipment
    to procure ninety (90) EST 2000 systems in fiscal year 2001.
                                    closing
        Mr. Chairman, it is our Association's belief that the National
    Guard, in conjunction with the active component, represents the most
    cost-effective weapon at our disposal to defend our nation. The
    National Guard's potential has barely been tapped. Yet, it stands
    ready, willing and accessible to meet our defensive needs. It is
    imperative to ensure that the National Guard has the necessary support
    to fully develop into an integral part of the Total Force. This can
    only be accomplished through modernization of equipment, a stable force
    strength, and training. Shortchanging any one of these areas could
    prove fatal to the effectiveness of the National Guard in defense of
    our country.
        Mr. Chairman, the National Guard is your next door neighbor, he or
    she may be a truck driver, your lawyer, your son or daughter or your
    grandchildren's teacher. When the National Guard is called, America
    goes to war. The National Guard is family, Americans at their best. The
    National Guard--protectors of freedom. and defenders of peace!
        I would like to thank the Chairman and Members of this committee
    for the opportunity to provide testimony on the fiscal year 1999
    funding requirements for the Army and Air National Guard.
                                     ______

         Prepared Statement of the National Military Veterans Alliance

                                  introduction
        Mr. Chairman and distinguished members of the Subcommittee, the
    National Military Veterans Alliance (NMVA/the Alliance) appreciates the
    opportunity to appear today and thanks you for holding these important
    hearings. This testimony represents the collective views of the
    Alliance's member organizations and NMVA trusts that the thoughts and
    recommendations provided will be helpful to the important deliberations
    the Subcommittee has undertaken.
        NMVA is a group of 21 military and veteran associations with a
    combined membership of 3.5 million members, worldwide. Collectively,
    NMVA associations represent all seven uniformed services, all ranks and
    grades, all components, family members and survivors. The Alliance
    arrives at consensus positions on legislative matters important to its
    membership. NMVA's testimony today is based on pay and compensation
    issues mutually supported by all Alliance associations.
        NMVA extends its sincere thanks to the Subcommittee for its long-
    standing interest and support for adequate pay and compensation, as
    well as important quality-of-life issues. While the fiscal year 2000
    National Defense Authorization Act by no means solves all of the
    personnel and readiness problems facing the uniformed services, it
    nonetheless represents one of the most significant defense measures in
    over two decades. Clearly, the guiding hand and seasoned leadership of
    this Subcommittee was a vital part in the final outcome and the
    Alliance salutes you for your magnificent work.
        NMVA believes the fiscal year 2000 defense measure must be viewed
    and serve as a building block for additional improvements in fiscal
    year 2001 and beyond. Equally, important, in NMVA's view, is the
    requirement to fulfill the commitments and promises made during
    military service. Intuitively, all of us know that the value and honor
    associated with active military service is also measured by the way in
    which promises made during that service are subsequently honored and
    valued. NMVA believes there is no amount of pay, compensation and
    quality of life enhancements sufficient to solve the problems in the
    active force if the Nation continues to ignore the plight of its career
    warriors. The time is ripe for this Subcommittee, the Full Committee,
    the Congress and the Administration to address all of these issues in a
    meaningful way. The cost of doing nothing or delaying further steps is
    simply too great.
                                      pay
        While the Defense Authorization Act for 2000 provided a welcomed
    and much needed boost in military pay and benefits, this subject
    nonetheless remains a major concern to Armed Forces members. The pay
    raises approved for this year were indeed a positive step in the right
    direction. It sent an encouraging signal to military people that they
    should be adequately compensated for their service in providing for the
    Nation's security. The pay raises help but we all know military
    compensation still lags behind the private sector.
        Without basic patriotism on the part of members of the uniformed
    services, there would be no armed forces. At the same time, patriotism
    by itself is not a sufficient motivation for military service in
    peacetime. Now, more so than at any time in recent memory, the
    uniformed services are in a manpower battle. If recruiting and
    retention figures are a reflection of the situation, one would have to
    conclude that the uniformed services are losing the fight. It is
    becoming increasingly difficult for the military services to compete
    with the civilian sector, when the pay and compensation offered is more
    lucrative, frequently many times over. When military income is compared
    to income in the private sector for like skills and responsibilities,
    it's not difficult for military members to do the math. The high
    quality young men and women we want to recruit can do the math. The
    high quality mid-career officers and enlisted people we want to retain
    can do the math also. As many are doing, they easily realize they can
    do better financially for themselves and their families in another line
    of work.
        NMVA is thankful that future pay raises in the next few years will
    be equal to the Economic Cost Index (ECI) plus one-half percent. This
    plan recognizes the seriousness of the pay situation but NMVA is
    concerned that it may not be enough, quick enough. When the current
    plan is completed, military pay will still 8-10 percent behind the
    private sector. The Alliance believes a more aggressive plan will be
    needed, a plan that will more rapidly eliminate the differential with
    civilian sector pay.
        As with the January 1, 2000, pay raise, NMVA applauds the targeted
    pay increases scheduled for July of this year. The Alliance certainly
    does not want to sound unappreciative, but the mid-career
    noncommissioned and petty officer force is being ``short changed'' once
    again. The Alliance believes a great opportunity was missed to address
    pay inequities in the mid-enlisted grades, inequities that have existed
    since the early days of the all-volunteer force. When one looks at the
    pay reform tables set to go into effect in less than three months, the
    conclusion is clear and dramatic; basic pay rates for grades E-5, E-6
    and E-7 are undervalued when compared to other grades. With increased
    deployments and training requirements, the cumulative experience of the
    mid-grade enlisted force has become even more critical to operational
    readiness. In 1998, the Honorable John Hamre, Deputy Secretary of
    Defense, stated: ``When you get to be an E-5, E-6 or E-7, the gap
    between military and civilian pay starts to widen.'' NMVA finds it
    extremely regrettable that the rates scheduled to go into effect in
    July failed to address this problem.
        With a surging economy and low unemployment, retaining key mid-
    grade enlisted personnel must be a priority. Today's mid-grade
    noncommissioned and petty officers are shouldering more responsibility
    than at any time in our history. They are better educated. They are the
    keys to the doorway for bringing new recruits into the enlisted ranks.
    They are integral to training both enlisted and officers. They provide
    the day-to-day, face-to-face leadership. They are the mentors. With
    increasing frequency, they are being called upon to assume
    responsibility and authority that at one time was reserved solely for
    commissioned officers. Congress must be as equally concerned with
    retaining these key enlisted leaders as we are with recruiting high-
    quality candidates for military service.
        In the strongest possible terms, NMVA urges Congress to reform the
    pay for mid-grade enlisted personnel. People will leave if they don't
    believe they are appreciated and there wasn't much appreciation
    expressed in the targeted pay raise this year for this group. It will
    take a strong statement from Congress and the Alliance believes that
    statement must be made now, in fiscal year 2001.
        NMVA strongly supports the proposed 3.7 percent active duty pay
    increase included in the Administration's budget. This follows the 4.8
    percent pay adjustment on January 1, 2000, and the planned increases of
    one-half percent above the Employment Cost Index (ECI) through 2006.
    These increases are especially important to uniformed services members
    and send a positive message to service members about the important and
    value of their service. NMVA believes all must recognize though that at
    the end of this six-year period, a pay gap in excess of 8 percent will
    still remain between military and comparable civilian pay levels.
    Funding for the pay increase and pay table improvements, which become
    effective on July 1, 2000, along with the reform of the REDUX
    retirement system, is of paramount importance. However, as stressed
    earlier, these improvements must be viewed as and mark the beginning to
    a longer-term strategy to solve the serious recruiting and retention
    problems that are undermining military readiness. Any longer-term
    strategy must also include solutions to address the pay of the mid-
    grade enlisted force.
                                    housing
        Housing remains a top quality-of-life concern among members of the
    uniformed services and impacts both married and single members. The
    fiscal year 2000 Defense Authorization Act provided some much needed
    relief in accelerating the initial Basic Allowance for Housing (BAH)
    program from what was to be a five-year implementation rate adjustment
    program. As a result of the BAH rate adjustments that have been
    implemented this year, many personnel did benefit from a much needed
    increase in their housing allowances in some parts of the country. As
    this Subcommittee is keenly aware, other areas of the country realized
    significant reductions in the housing allowance that imposed an
    unacceptable inequity on service members moving or transferring on or
    after January 1st. NMVA is tremendously pleased that on March 1st DOD
    began paying BAH at the 1999 rate to service members moving into areas
    where the 2000 housing allowance rates were set lower than the 1999
    rates.
        The new BAH rates however still are not fully comparable to housing
    costs in some areas of the country. NMVA is concerned that the survey
    used to arrive at the new rates did not capture the locations where
    service members are actually living. It appears to NMVA that the survey
    focused on areas immediately surrounding bases and installations, areas
    that are oftentimes the least desirable and which service members try
    to avoid because of safety and security concerns for their families.
    Consequently, the new BAH rates do not, in many cases, reflect the
    costs that service members are incurring to obtain adequate, safe
    quarters in desirable neighborhoods.
        NMVA remains concerned about the inequity of the requirement to
    include an additional out-of-pocket expense averaging nearly 19
    percent, which is presently incorporated with the BAH rates as being a
    ``fair housing cost.'' This additional expense is perceived as unfair
    because those who reside in government assigned housing are not, nor
    should they be, required to pay any out-of-pocket expenses.
        As you are aware, Secretary Cohen proposed a multi-year plan, as
    part of the DOD Budget proposal for fiscal year 2001, to eliminate out-
    of-pocket housing expenses and which seeks to repeal the current law
    that requires service members to pay at least 15 percent of their
    housing costs. NMVA salutes this initiative and urges the Subcommittee
    to support DOD's request. NMVA believes enactment of this initiative
    will provide equity for those who must live on the economy to be on par
    with those in government housing who do not incur such additional
    expenses. Also, DOD has stated they will ask Congress to authorize a
    retroactive hike to January 1st for those who received a lower BAH rate
    for the months of January and February 2000. NMVA urges the
    Subcommittee to support this initiative also.
                                  health care
        Among quality-of-life issues, none ranks higher in importance to
    NMVA than the availability, quality and timeliness of health care to
    uniformed services beneficiaries. Active duty, National Guard, reserve,
    military retirees, their dependents and survivors consistently cite
    health care as their number one quality-of-life concern. Base and
    hospital closures and the continued reduction in the number of health
    care professionals and military treatment facilities is seriously
    impacting the primary mission of the Military Health System, that of
    caring for active duty personnel and maintaining military medical
    readiness, readiness training and contingency operations. The
    reductions in health care infrastructure and personnel has further
    eroded the ability of the Military Health System to provide care for
    active duty family members and for all practical purposes has
    eliminated the care for military retirees and their beneficiaries in
    the Military Health System. This entire situation has been complicated
    by successive years of funding shortfalls.
        In NMVA's view, the greatest challenge before this subcommittee and
    Congress is the restoration of fair treatment and trust of service
    members, past and present. The experience of the ``hollow force'' of
    the 1970's is occurring again. Force reductions have gone too far. The
    force is overworked, over deployed and under paid. And, it will take
    more than mere laudatory speeches to reverse and fix this situation. It
    will take a sustained long-term commitment in pay and quality-of-life
    enhancements, and perhaps none more important than a resolve to fairly
    and equitably fix the Military Health System. The Alliance recognizes
    the cost will be high but the NMVA is convinced that the current
    situation cannot continue without further unacceptable long-term
    consequences.
                         military health system funding
        Nowhere has the erosion of benefits been more pronounced or serious
    than in the military health care system. In slightly over two decades,
    military members and retirees have seen this important benefit
    deteriorate from fully funded coverage to member-subsidized coverage.
    As a result of Base Realignment and Closure (BRAC) actions, 58 military
    treatment facilities (MTF) and numerous military treatment clinics have
    closed. Numerous other facilities were downsized to clinics and today
    16 states have either no MTF or clinic with inpatient capability.
    Today, only one MTF or Uniformed Services Treatment Facility exists in
    12 other states. With two additional rounds of base closures being
    sought by the Defense Department, the erosion of the health care
    benefit, inarguably the most important quality-of-life benefit, will
    continue to worsen.
        Despite the substantial savings, realized from actions already
    taken, military health care continues to be seriously under funded.
    Every action taken to improve the health care benefit--be it a test or
    demonstration--has been done with one underlying theme, save the
    Department of Defense money. In that process, the cost to members on
    active duty has soared. The cost on retirees, specifically retired
    noncommissioned and petty officers, is nearly unbearable. Today, the
    typical enlisted retiree pays between 25-30 percent of their retired
    pay and as much as 33 percent more than federal civilian retirees as
    the ``cost of the health care promise.''
        Adequate funding is not only necessary to lower the cost on DOD
    beneficiaries, adequate funding is essential to keep providers in the
    TRICARE networks. Most TRICARE managed care support contractors have
    reimbursement rates that are lower than Medicare. In many areas, health
    care providers are unwilling to accept TRICARE Standard (CHAMPUS)
    patients at all. The low TRICARE payment rates combined with untimely
    reimbursements after care has been provided are giving physicians two
    disincentives for not signing up in the TRICARE networks.
        NMVA is grateful for provisions in the fiscal year 2000 National
    Defense Authorization Act authorizing the Secretary of Defense to
    exceed the CMAC rates. In the Alliance's view, this should help attract
    providers into TRICARE networks. But these provisions can help only if
    they are implemented and DOD has shown no signs of taking these
    provisions seriously. When CHAMPUS (now TRICARE Standard) was enacted
    in 1966, Congress directed DOD to provide a benefit at least equal to
    FEHBP high option Blue Cross/Blue Shield, without imposing a premium.
    The fiscal year 2000 Defense Bill also provided enhanced opportunity
    for TRICARE contractors to use electronic processing for claims and
    streamlining the information flow, thus providing authority for two
    pieces of the claims debacle to be fixed. DOD has decimated the TRICARE
    Standard benefit and now seems reluctant to even implement the
    provisions that might attract physicians into TRICARE networks.
    Likewise, DOD has not unveiled any proposal or plan to implement
    electronic claims processing. Less and less money is being channeled
    into patient care while DOD fails to address its soaring medical
    administration overhead. NMVA strongly urges Congress to hold DOD
    accountable to its wishes.
        The Alliance firmly believes greater efficiencies in the military
    health system are achievable and their implementation will produce
    savings, which should be redirected to patient care. Administrative
    costs are excessive in comparison with other government-sponsored
    programs and the adoption by DOD of ``best industry standards'' would
    produce efficiency and savings. However, all of the potential savings
    from these and other initiatives such as reducing fraud and abuse
    cannot make up the ground lost to successive years of under funding. It
    will take a strong statement from Congress, backed up with adequate
    appropriations, to restore the military health care to a system that is
    fair to all beneficiaries, one that beneficiaries can rely on and
    trust.
                          tricare program improvements
        NMVA is sincerely grateful that DOD has recommended important
    improvements to the TRICARE program for active duty members and their
    dependents and asks the Subcommittee to support these initiatives:
      --Eliminate out-of-pocket expenses for active duty members enrolled
            in TRICARE Prime, and
      --Extend TRICARE Prime Remote to military family members.
        Both of these initiatives respond to the needs of uniformed
    services' members and will reduce the extraordinary out-of-pocket cost-
    sharing expenses experienced by some. As you consider these
    initiatives, the Alliance asks that you be particularly sensitive as to
    the importance of these improvements to Coast Guard personnel.
        TRICARE Prime is the most attractive and sought after plan of the
    three TRICARE options. Under Prime, the majority of care is provided at
    military treatment facilities. According to the 2000 TRICARE
    Stakeholders Report, approximately 80 percent of DOD family
    beneficiaries are enrolled in the Prime option. Unfortunately, as a
    factor of the locations where most Coast Guard members serve, the
    numbers are reversed to where less than 50 percent of eligible Coast
    Guard families are able to take advantage of Prime. Consequently, the
    majority of Coast Guard members are forced to rely on the lowest
    program option, TRICARE Standard.
        For outpatient treatment, TRICARE Standard involves a $300 per year
    deductible per family, plus an additional 20 percent out-of-pocket
    cost-share, which is defined as an allowable charge. The allowable
    charge is a standard amount established by TRICARE Management. The fact
    that very few medical care establishments accept the ``allowable
    charge'' means that the uniformed services' member must pay the cost-
    share, plus the difference of the amount from the ``allowable charge.''
    Depending on where the member is assigned, these cost differences can
    be substantial and Coast Guard personnel are adversely affected
    disproportionately to the other uniformed services. Many young enlisted
    personnel with a spouse and child making less than $15,000 per year of
    basic pay simply does not have the discretionary income to absorb these
    extraordinarily high costs for medical care. Although TRICARE Extra
    allows a smaller out-of-pocket expense than the Standard option, this
    option too is quite limited to Coast Guard families. Extra entails
    using designated health care providers, which usually are not in the
    remote locations where Coast Guard units are located.
        Successful and full implementation of TRICARE Prime Remote would
    greatly enhance the quality of life of uniformed services' members and
    their families by reducing the out-of-pocket expenses for members and
    their families who do not have access to military treatment facilities
    or access to the TRICARE Prime program. It is needed for all uniformed
    services and especially for the Coast Guard. NMVA requests the
    proactive involvement of the Members of this Subcommittee to ensure the
    successful and complete implementation of TRICARE Prime Remote.
        The Alliance recommends additional improvements to the TRICARE
    program and requests this Subcommittee provide the funding to support
    the following:
      --Reduction of the catastrophic cap for TRICARE Standard from $7,500
            to $3,000, the same as TRICARE Prime. The present cap penalizes
            beneficiaries unable to access TRICARE Prime.
      --Reimbursement of expenses incurred for transportation by TRICARE
            beneficiaries who travel over 100 miles to obtain specialty
            care.
      --Elimination of the 115 percent billing limit when TRICARE Standard
            is second payer to other health insurance.
      --Restoration of ``coordination of benefits'' for TRICARE Standard
            claims.
      --Acceleration of claims processing by reducing the number of claims
            set aside for audit and the aggressive expansion of electronic
            claims processing.
      --Updating of CHAMPUS maximum allowable charge (CMAC) rates more
            frequently to ensure a more accurate reflection of actual
            health care costs as a means to attract and retain quality
            TRICARE providers.
      --Full and complete implementation of portability and reciprocity for
            TRICARE Prime enrollees.
      --Relaxation of the requirement for TRICARE Standard beneficiaries to
            obtain non-availability statements or pre-authorizations before
            seeing private health care providers.
                          military retiree health care
        For individuals who dedicate the majority of their adult working
    life, often in harms way while providing for the nation's security,
    honoring the health care promise upon which many based career military
    decisions represents a breach of faith that defies description. In the
    Alliance's view, there is no amount of pay, benefits and quality-of-
    life enhancements sufficient to solve the problems in the active forces
    as long as Congress continues to ignore the plight of elderly, sick
    career warriors. Members on active duty and their families, as well as
    potential recruits, have witnessed this tragic breach of trust and
    honor, and in increasing numbers are electing to leave or not join at
    all.
        It is not NMVA's intention to seem inappreciative for the efforts
    Congress has made in recent years to address the health care needs of
    military retirees, especially those aged 65 and over. The Alliance
    supported these initiatives and continues to support any effort that
    will provide the health care that was promised and earned. But NMVA
    believes everyone must recognize that all of the various test and
    demonstration initiatives combined when fully implemented will help
    only a small percentage of the military retiree population and their
    beneficiaries--and, as implemented by DOD, all are structured to save
    DOD money.
        NMVA is immensely pleased that Congress has under consideration a
    number of health care proposals for military retirees, particularly for
    Medicare-eligible military retirees. The Alliance salutes the sponsors
    and co-sponsors on all of these initiatives for fostering a long
    overdue synergy for meaningful reform of health care for military
    retirees.
        In the Alliance's view, there is no ``one solution'' to fix the
    health care dilemma confronting military retirees and their
    beneficiaries. The fix to this enormously complex problem will occur
    only if Congress adopts a multi-faceted approach that will provide
    military retirees the freedom to choose. NMVA also believes it should
    be abundantly clear to everyone that the nation cannot afford the cost
    of further delay and inaction.
        Regardless of the promises made and of all the intentions of this
    Congress, health care for military retirees is not treated as a benefit
    and it certainly is not viewed as an entitlement. Health care for
    military retirees, their families and survivors is merely a line item
    expense in the DOD budget to be squeezed for more pressing needs by
    comptrollers and budget analysts who do not rely on the Defense Health
    System for their care. A solution to address this concern is to make
    the funding mechanism for military retiree health care the same as it
    is for other federal retirees by adding it to the entitlement portion
    of the federal budget. Until that step is taken, retiree health care
    will still have to compete for the same defense dollars used in weapons
    programs, research and development or operations and maintenance. And,
    as long as this situation is allowed to continue, health care will
    continue to be the loser. In the strongest possible terms, NMVA
    requests the support of this subcommittee in moving military retiree
    health care to the entitlement portion of the federal budget. If
    Congress can do it for other federal retirees, Congress surely can and
    should do it for the nation's career warriors.
        Medicare Subvention: TRICARE Senior Prime.--NMVA extends its thanks
    to the Subcommittee for your support of the TRICARE Senior Prime Test
    program, Medicare subvention. With the favorable response to this
    program by military in the six designated test sites, NMVA is seeking
    nationwide implementation of this program. Many Medicare-eligible
    retirees have received letters from hospitals stating that ``space
    availability'' no longer exists or is extremely limited due to
    downsizing of staff at MTFs. At other locations, however, space is
    available and allowing Medicare-eligible military retirees to use their
    Medicare benefit at MTFs will provide them with yet another option for
    health care. Though it should be understood that this is not the
    complete solution to the current problem, it is nonetheless an
    important piece to solving the broader health care dilemma for these
    beneficiaries. The support of this subcommittee is needed and requested
    to ensure expansion of TRICARE Senior Prime to additional sites with
    the ultimate goal of national implementation. Your support will help to
    provide a true health care benefit to military retirees that still
    reside near MTFs.
        In the meantime, there are other difficulties with the TRICARE
    Senior Prime program. The Health Care Financing Administration (HCFA)
    has provided $43 million in interim payments to DOD and DOD will be
    allowed to retain $6 million despite the fact that DOD has already paid
    out $40 million in claims. In our opinion, the reimbursement rates and
    rules between HCFA and DOD should be renegotiated. Also, DOD hospitals
    are providing services of $187 more per enrollee per month than they
    are receiving in HCFA reimbursements. With over 30,000 enrolled
    retirees and their family members, this is more than $5.6 million per
    month. The simple fact is that if health care is to be provided to
    military retirees, dollars must be provided to the MTFs from HCFA and
    DOD. Since care provided in MTFs is less expensive than civilian sector
    care, this is a good investment for retired beneficiaries and the
    American taxpayer.
        FEHBP-65.--Like TRICARE Senior Prime (Medicare subvention), FEHBP-
    65 represents another of the options that should be available to
    Medicare-eligible military retirees. Due to the continued downsizing of
    MTF staff, base closures, decreasing dollars for DOD health care, and
    capitated budgeting, military retirees continue to be pushed out of the
    military health care system. Even with full implementation of TRICARE
    Senior Prime, DOD will only be able to serve about 33 percent of the
    military retiree population over the age of 65. Some 17 percent of
    retirees have employer-sponsored health care and another 10 percent are
    already in Medicare Risk HMOs, leaving between 32 percent to 41 percent
    (approximately 533,000) to possibly access the FEHBP option.
        The continued support of this subcommittee for FEHBP-65 is needed
    and requested. Costs could be controlled if necessary by capping the
    program. Estimates indicate that fewer than 30 percent of retirees
    would elect the FEHBP option. Those that would need access to health
    care now, not five years from now when it will be too late. For many
    retirees, FEHBP-65 may very well represent the only available option
    and NMVA asks for your continued support of this program.
        Pharmacy Issues.--NMVA cannot over emphasize the importance of
    access to pharmaceuticals by military retirees, particularly by those
    over age 65. Of all the health care issues needing attention and
    competing for funding, none is more important than providing military
    retirees access to a uniform, nationwide pharmacy benefit, regardless
    of the age or location of the retiree. NMVA is requesting additional
    funding be allocated to expand the BRAC pharmacy benefit to Medicare-
    eligible military retirees to permit access to the National Mail Order
    Pharmacy and local retain pharmacy benefit. Further, the Alliance
    requests funding to provide a complete national formulary that address
    the drug needs and utilization of the Nation's aging war heroes and
    heroines. NMVA firmly believes this benefit could and should be
    provided without the need for any enrollment fee and/or deductibles.
    The Alliance asks the full support of this subcommittee toward that
    end.
        Medicare Part B Waiver for Military Retirees 65+.--Military
    retirees were counseled by MTF advisors not to enroll in Medicare Part
    ``B'' because they resided near MTFs and would be able to access their
    free health care. These retirees should not be punished with late
    enrollment fees due to the fact that the local MTF has now closed. NMVA
    requests the subcommittee to support funding that would permit the
    waiver of the penalty for not enrolling in Medicare Part ``B'' for
    Medicare-eligible military retirees. NMVA believes that this small
    investment will enable retirees to enroll in health care programs which
    require Medicare Part B for eligibility, such as TRICARE Senior Prime
    and the Fee-for-Service Option plans in FEHBP. Currently, military
    retirees are paying an exceedingly high penalty for Medicare Part B, or
    they just cannot enroll because of the steep cost.
                               concurrent receipt
        The Alliance is sincerely grateful for the special compensation
    provisions, for severely disabled military retirees, included in the
    fiscal year 2000 Defense Authorization Act. NMVA views these provisions
    that are yet to be implemented as an interim first step. Very likely,
    additional interim steps will have to be taken before The Alliance's
    ultimate goal--that of full concurrent military longevity retired pay
    and full VA disability compensation without offset from either--is
    achieved. It is particularly disturbing to NMVA that many Members of
    Congress believe this entire issue was solved by the ``special
    compensation'' when in fact we have yet to attack the root of this
    problem. The situation that has prevented a change in law for more than
    a quarter of a decade remains ever present. For more than two decades,
    the Veterans Affairs Committees and Armed Services Committees have been
    passing the buck on this issue. Armed Services says it belong to
    Veterans. Veterans' says it belong to Armed Services. Mr. Chairman, the
    charade must stop. These committees in both the House and Senate must
    work together to approve the change in Title 38 that would eliminate
    the offset. A corrective measure--or at least a plan and timetable for
    a corrective measure--must be considered and enacted this year. The
    concurrent receipt issue is a long-standing example of why so much
    trust has been lost. Another opportunity exists and this opportunity
    should not be allowed to pass without correction of this egregious
    discrimination.
                             survivor benefit plan
        The Survivor Benefit Plan (SBP) continues to be a valuable program
    to insure that the surviving dependents of military personnel who die
    in retirement or after becoming eligible for retirement will continue
    to have a reasonable level of income. As Congress seeks to enact
    further improvements to this valuable program, NMVA recommends:
      --Accelerating the paid up provisions by changing the effective date
            from 2008 to 2003 (to coincide with the 30th anniversary of
            enactment of SBP) for participants who are 70 years of age and
            who have paid premiums for 30 years. The Alliance supports H.R.
            601 and urges the Subcommittee to consider identical companion
            legislation in the Senate.
      --Increasing the annuity paid to survivors at age 62 from 35 percent
            to 55 percent The Alliance supports S.763, The SBP Benefits
            Improvement Act of 1999.
      --Allowing Retired Servicemen's Family Protection Plan (RSFPP)
            participants to convert to SBP without penalty at any time.
                               montgomery gi bill
        When Congress considers education policy, the starting point for
    that discussion should be the Montgomery GI Bill (MGIB) but that has
    not been the case for far too long. As a consequence, the MGIB has lost
    its recruiting power along with its higher education purchasing power.
    In the process of providing a GI bill for everyone but the GI, Congress
    has devalued military service and we are witnessing the consequences
    today. If post-secondary education is the goal of a young man or woman
    today, services in the Armed Forces is NOT the way to go and some
    simple comparisons are revealing.
        Americorps pays its ``volunteers'' $4,725 per academic year of
    service in education benefits, plus health care and a child care
    benefit, thereby increasing dramatically its overall value. The MGIB
    now pays $4,828 per academic year with no ancillary benefits, with the
    overall benefit totaling $19,296. In actuality, the total net
    educational benefit is $18,096 when the $1,200 enrollment ``tax'' is
    considered. Yet last year, the Congress said it believes $50,000 is the
    amount needed to go to college and provided that amount in non-
    repayable grants for DC high school graduates in the District of
    Columbia College Access Act. In academic year 1999-2000, the average
    undergraduate cost of attending a typical four-year public college or
    university is in excess of $8,800. Americorps, DC College access
    grants, Pell grants and other educational assistance have noble
    societal goals, however none demand anything close to the commitment,
    dedication and sacrifice required to qualify for the MGIB. Yet, where
    has Congress placed the greater comparative education value?
        Sixty-five percent of high school graduates pursue higher education
    and these young men and women, across the Nation, are making the
    comparisons on the grants, loans and programs available to them. A
    $50,000 non-repayable grant or four years of military service with a
    $1,200 tax to obtain $18,096 in net educational benefits? Which of
    these options would the members of this Subcommittee take? Which of
    these options would the distinguished members of this Subcommittee
    recommend to their sons, daughters and friends?
        Not only has the MGIB lost its recruiting power and higher
    education purchasing power; it has also lost its value as a
    readjustment benefit. The MGIB is no longer facilitating and easing the
    transition to civilian life following military service. Today, fewer
    than 40 percent of program participants use the benefit even though
    more than 96 percent of new recruits enroll in the program. There
    should be no question whatsoever in the minds of the Distinguished
    Members of this Subcommittee that dramatic action is needed now. The
    Alliance recognizes however that what should be done must be balanced
    against what can be done. In the strongest possible terms, NMVA
    believes a minimum step is needed now, this year. The Alliance believes
    if Congress does nothing else this year on the MGIB, the basic monthly
    stipend must be raised to a level that will afford military members and
    veterans a reasonable opportunity to pursue higher education. Bench
    marking and indexing the monthly stipend to the average cost of a
    typical four-year public institution would be an important step in the
    right direction.
        It is one thing to debate and consider further a completely new
    veteran education benefit as recommended by the Congressional
    Commission on Service Members and Veterans Transition Assistance. It is
    an entirely different thing to delay any action altogether. While the
    cost of enacting any improvements must be dutifully considered, NMVA
    suggests that you must also consider the cost of further inaction. The
    Alliance is convinced that the cost of doing nothing is much higher,
    and certainly of greater significance, than the money it would require
    to enact meaningful improvements.
                            reserve and guard issues
        Changing threats and utilization of the Guard and Reserves has
    created an environment, where our Reservists are being called upon more
    frequently than any time in the past other than war. Reservists are,
    more often, being called into service by the CINC's for longer periods
    of time per year to defer a ``hollowing out'' process that could draw
    down the strength, readiness and flexibility of our combat units. Our
    Commanders in the field realize that they can no longer get the mission
    done in the long term without the Guard and Reserve. The Department of
    Defense's plan for the Total Force has emphasized the integration of
    regular and reserve components of each service. In context with Total
    Force, the Guardsman and Reservist need to be given the same benefits
    as the Active Component. Not creating parity with the total force risks
    creating a second string on our national defense team. Because of
    OPTEMPO and aging equipment, retention and recruiting are problems in
    the Guard and Reserve today. If you treat people differently, retaining
    individuals will become even that much harder. The issues that follow
    are equity issues that have been highlighted by members of the Guard
    and Reserve over the last year.
        Availability of Bachelor Quarters.--Less time is being spent in
    Reserve Centers and National Guard Armories. Efforts are being made by
    the Reserve Service Chiefs to get Guardsmen and Reservists to their
    mobilization sites or gaining commands. More often, these citizen
    soldiers, sailors, marines and airmen are spending more training at
    active bases. In many cases, drilling sites have been relocated to
    active forts or bases. Members who drill are given a room only if space
    is available. A drilling member can check in only after five in the
    evening, if rooms aren't filled, and then must check out in the
    morning, repeating the cycle the next night. Active duty members on
    assignment are given a room at time of arrival for the duration of
    their stay. Most members pay for their own room off base rather than
    gamble on a room on base. Bachelor Quarter Managers are concerned that
    the influx of Reservists on a weekend may overwhelm the availability of
    quarters for everyone. The NMVA suggests that if a Guardsman or
    Reservist drives over 50 miles (one way) to get to drill, then his or
    her orders to drill should be treated with the same priority as an
    Active Duty member
        Single Rate Basic Allowance for Housing (BAH).--Currently,
    Reservists performing active duty tours, for other than declared
    contingency operations, when billeted in government quarters and who
    have no dependents, are not entitled to BAH. These individuals still
    have mortgages or rental obligations. Conversely, Reservists performing
    comparable active duty tours, with similar billeting, and whose
    dependents are prevented from occupying those quarters are entitled to
    BAH. NMVA believes that Reservists performing any type of active duty,
    who are billeted in government quarters and who have mortgage or rental
    obligations, should be entitled to BAH.
        Thrift Savings Plan.--The House of Representatives and Senate
    passed legislation signed into law by the President, authorizing a
    Thrift Saving Plan that would include Guardsmen and Reservists of all
    services. The director of the board administering this plan does not
    favor Reservists opening any accounts of this Thrift Savings Plan
    because of low dollar contributions. Suggested service charges for this
    plan are .6 percent for federal employees, 1.5 percent for active duty,
    and 8.4 percent for reservists. The NMVA urges Congress to continue its
    support for Guard and Reserves by directing that the service charge is
    no more than what the Active Duty participants pay. Further the small
    dollar contributions can by counteracted by allowing reservists to
    donate up to 5 percent of an active duty salary, but not to exceed
    their amount of drill pay.
        Heroism Pay for Guard and Reserve.--Section 3991 (Computation of
    Retired Pay)(a)(2), Title 10, United States Code, authorized an
    additional 10 percent for certain enlisted members credited with
    extraordinary heroism. Two cases have been noted where this pay may be
    lost: (A) an active person, qualifying for heroism retirement pay,
    loses it if they transfer to a branch of the Guard or Reserves. (B) A
    Reservist while recalled to active duty performs with valor and
    extraordinary heroics and qualifies for heroism retirement pay, but
    with their return to reserve status, they lose the 10 percent bonus.
    NMVA believes the bonus of 10 percent should be paid to any retiree,
    active or reservist, who qualifies through extraordinary heroism.
        Military Funeral Honors.--All Veterans, Active Duty, Guard and
    Reserve personnel are now entitled to military funeral honors. With the
    aging veteran population, 146,000 military funerals are anticipated in
    fiscal year 2000, rising to over 600,000 military funerals by fiscal
    year 2004. Active duty personnel cannot handle this increased duty
    assignment by themselves. National Guardsmen and Reservists will be
    called upon to help provide military funeral honors. A funeral detail
    honor guard needs to be a stable population, have trained
    professionals, who are dedicated at honoring the veteran and be
    reassuring to the veteran's family. Congress has authorized Guard and
    Reservists to perform Funeral Honor Duty, but with only a $50 dollar
    stipend, an inactive duty point, and travel reimbursement if mileage is
    over 100 miles roundtrip. Such reimbursement will encourage
    participation by Guardsmen and Reservists on occasion, but not be a
    basis for a committed, long-term honor guard detail. The NMVA feels
    that current stipend is insufficient. We urge Congress to change the
    law to provide honor guard reserve members with the same pay and
    benefits as the active member of the same honor guard duty.
                                   conclusion
        Individuals who enlist or reenlist recognize they cannot make large
    sums of money by choosing the profession of arms. Many join for the
    experience, excitement, or for the promise of certain post-military
    service benefits. Some view the military as a higher calling in service
    to their country, patriotism if you will. Whatever the reason or
    reasons that may persuade one to service or continued service, all
    expect to be treated fairly.
        More importantly, just the perception of fair treatment elicits
    trust. But the trust that once bound military members with their nation
    is waning. Among some, particularly career warriors and their spouses,
    families and survivors, trust no longer exists. Too many promises have
    been made and subsequently broken. Last year's Defense Bill was a step
    in the right direction toward placing fair value on military service
    and restoring trust that has slowly eroded the fighting fabric of our
    Armed Forces. It will take an equally strong statement this year and in
    future years. This year the debate must be about more than equipment,
    weapons systems, research and development and operations. Although
    important, individually and collectively, they quickly become
    meaningless unless we attract and retain the high quality people we
    desperately need.
        The support of this subcommittee is vital to ensure that our Armed
    Forces are properly staffed and that their level of pay, compensation,
    benefits and quality of life is comparable with the invaluable service
    they provide to the Nation's security and prosperity.
                                     ______

                 Prepared Statement of Florida State University

        Mr. Chairman, I would like to thank you and the Members of the
    Subcommittee for this opportunity to present testimony before this
    Committee. I would like to take a moment to briefly acquaint you with
    Florida State University.
        Florida State University is a comprehensive Research I university
    with a liberal arts base. The University's primary role is to serve as
    a center for advanced graduate and professional studies while
    emphasizing research and providing excellence in undergraduate
    programs. Faculty at FSU have been selected for their commitment to
    excellence in teaching, for their abilities to perform research and
    creative activities, and for their commitment to public service. Among
    the faculty are numerous recipients of national and international
    honors, including four Nobel laureates and eight members of the
    National Academy of Sciences. Our scientists and engineers do excellent
    research, and often they work closely with industry to commercialize
    their results. Florida State ranks third this year among all U.S.
    universities in revenues generated from its patents and licenses,
    trailing only Columbia University and the entire University of
    California system. Having been designated as a Carnegie Research I
    University several years ago, Florida State University currently
    exceeds $100 million per year in research expenditures. With no
    agricultural or medical school, few institutions can match our success.
        Florida State attracts students from every county in Florida, every
    state in the nation, and more than 100 foreign countries. The
    University is committed to high admission standards that ensure quality
    in its student body, which currently includes some 192 National Merit
    and National Achievement scholars, as well as students with superior
    creative talent. We consistently rank in the top 25 among U.S. colleges
    and universities in attracting National Merit Scholars. At Florida
    State University, we are very proud of our successes as well as our
    emerging reputation as one of the nation's top public universities.
        Mr. Chairman, let me tell you about a project we are pursuing this
    year involving Advanced Propulsion Systems. The Office of Naval
    Research (ONR) has been actively pursuing opportunities to increase its
    presence in the Gulf Coast Area by searching our centers of technical
    excellence which can serve as catalysts for bringing state-of-the-art
    research and development to the Gulf Coast Area. Particular emphasis
    has focused on forming partnerships with regional industry. The ONR has
    identified six areas of research and development that are of interest
    to the Navy, one of which is the next generation of Naval ship power
    and propulsion systems, the all-electric ship. This project involves
    FSU working with the ONR and focuses on supporting research,
    development, and testing of the next-generation propulsion systems.
    Such work will include research, simulation, testing, and development
    of prototype systems. Efforts will also require integration of high-
    performance computing capabilities, as well as strong partnerships with
    numerous industrial partners. The engineering and high-performance
    computing capabilities at FSU, along with the resources and talents
    National High Magnetic Field Laboratory (NHMFL), have converged to
    create a center for advanced transportation simulation and design and
    has resulted in focusing several unique national capabilities not
    available elsewhere. Our resources in power engineering, materials
    sciences, and computing sciences converge in providing the Navy with
    talents to move toward the development of advanced propulsion systems
    needed for the ships of the future. The combination of these resources
    and strong industrial collaborations are the key to this endeavor. We
    are requesting $4 million in fiscal year 2001 to continue our progress
    in this effort for the Navy and the Department of Defense.
        Our next project is also a continuing effort which involves the
    Learning Systems Institute at Florida State University and the
    Institute for Machine and Human Cognition (IMHC) at the University of
    West Florida. Together, the institutions will be involved in assisting
    the Chief of Naval Education and Training (CNET) with critical
    technology and training related issues.
        CNET has asked the Learning Systems Institute (LSI) at Florida
    State University to assist in the development of a system to assess the
    effectiveness of the entire Leadership Continuum. Part of the work is
    the identification of organizational performance-related data that can
    be linked to specific program training objectives.
        Simultaneously, CNET has also asked for assistance in the
    development of specific Internet tools for supporting training
    worldwide. FSU will collaborate with UWF in the further development of
    appropriate Performance Support Systems for the Navy that will involve
    the use of World Wide Web and other Internet technologies. This will
    result in the development of electronic tools that use elements of
    artificial intelligence and distance learning technologies to provide
    needed information and training at the moment and place of greatest
    need, which will simultaneously improve job performance while reducing
    training time and costs.
        The experience and skills of the Learning Systems Institute at
    Florida State University, specifically the Office of Interactive
    Distance Learning, and the Institute for Human and Machine Cognition at
    the University of West Florida are complimentary and synergistic. It is
    a powerful partnership that brings some of the best expertise available
    in the world to bear on critical education and training issues.
        Continuation funding is being sought at the $5 million level for
    fiscal year 2001 through the Department of Defense.
        Our final project is a new endeavor involving the Department of the
    Army's Training Support Center and their efforts to provide education
    and training to their personnel.
        Every branch of the armed services is using more advanced
    technology in everything from motor vehicles to advanced weapons
    systems. This is putting an increased pressure on training systems. To
    perform their jobs more effectively, military personnel must be better
    trained on a broader and broader array of systems. This is being made
    even more challenging by the current level of staffing which require
    each person to be able to perform more tasks than in the past. All of
    the services are developing new models of training and performance
    support, which depends on a good balance between traditional classroom
    and textbook methods, continuous distributed learning, and carefully
    designed, integral performance support systems.
        The various network and digital technologies that are available
    today permit the development of highly effective learning and
    performance support systems that involve the presentation of
    information in multi-media formats. One difficulty, however, is that
    the design of high quality, effective, media-based materials is
    expensive and time consuming. One way to address that problem is by
    maximizing the use and re-use of any developed learning materials.
    Maximizing reuse of materials is difficult if those materials are
    developed in whole-course chunks. It is more efficient to break a
    course down into small pieces granules fundamental concepts, skills,
    and ideas that can then be more easily used as components in other
    courses and disciplines.
        The Army Training Support Center (ATSC) is pioneering the design of
    digital, reusable educational objects or granules. There have already
    been efforts to digitize training objects and place them in a library
    from which they can be retrieved to be used as components of other
    training and support systems. Critical to the success of this model is
    a nomenclature system a way of tagging each object with information
    about subject, level, specific competencies, and a variety of other
    characteristics. Only when each object is cataloged using such a system
    will it be possible to find the appropriate modules when new training
    is being developed.
        One other challenge is to help instructors think in new ways.
    Designing curriculum that is granular is a new skill requiring new
    approaches. There is a need for on-line performance support tools that
    would help instructors design effective granular instruction. What is
    proposed here is the development of a set of interactive tools, or job
    aids, that will assist instructors in the systematic and scientific
    design of reusable educational objects.
        Florida State University, specifically the Learning Systems
    Institute (LSI), is uniquely qualified to work collaboratively with the
    Army Training Support Center with research on the design and
    standardization of a nomenclature system for reusable objects and also
    with the development of tools for instructors to assist in the design
    of granular training. We seek an initial funding of $2 million for the
    Army Training Support Center at Fort Eustis, Virginia to contract with
    Florida State University for this critical research and development.
        Mr. Chairman, these are just a few of many exciting activities
    going on at Florida State University that will make important
    contributions toward solving some key concerns our nation faces today.
    Your support would be appreciated, and, again, thank you for the
    opportunity to present these views for your consideration.

                             conclusion of hearings

        Senator Stevens. Thank you very much. If there is nothing
    further, the subcommittee will stand in recess.
        [Whereupon, at 12:50 p.m., Wednesday, May 3, the hearings
    were concluded, and the subcommittee was recessed, to reconvene
    subject to the call of the Chair.]

           LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS

                                  ----------
                                                                       Page
    American Society of Tropical Medicine and Hygiene, prepared
      statement......................................................   699
    Ames, Genevieve M., Ph.D., Associate Director and Senior Research
      Scientist, Prevention Research Center/Pacific Institute for
      Research and Evaluation, and Program Director, NIAAA Pre and
      Post Doctoral Training Program, Prevention Research Center and
      School of Public Health, and Adjunct Professor, Division of
      Public Health Biology and Epidemiology, School of Public
      Health, University of California, Berkeley.....................   602
        Prepared statement...........................................   603
    Armen, Harry, Senior Vice President, American Society of
      Mechanical Engineers...........................................   655
        Prepared statement...........................................   657

    Barnes, Joe, Master Chief, USN (retired), Director, Legislative
      Programs, Fleet Reserve Association............................   527
        Prepared statement...........................................   529
    Blanck, Lt. Gen. Ronald R., Surgeon General, U.S. Army,
      Department of Defense..........................................   149
        Prepared statement...........................................   150
        Questions submitted to.......................................   217
    Bond, Hon. Christopher S., U.S. Senator from Missouri:
        Prepared statements...................................116, 129, 243
        Questions submitted by.......................................   79,
                       85, 209, 221, 229, 234, 317, 327, 427, 435, 510, 522
        Statements of..............................................242, 447
    Boudjouk, Philip, Ph.D., Professor of Chemistry and Vice
      President of Research, North Dakota State University, and
      Chairman of the Board, Coalition of EPSCoR States..............   616
        Prepared statement...........................................   619
    Brannon, Brig. Gen. Barbara C., Director of Medical Readiness and
      Nursing Services, Office of the Surgeon General, Department of
      the Air Force, Department of Defense...........................   194
        Prepared statement...........................................   195
        Questions submitted to.......................................   238
    Bursell, Sven, M.D., Joslin Diabetes Center......................   593
    Busch, Daryle, President, American Chemical Society..............   668
        Prepared statement...........................................   669
    Byrd, Hon. Robert C., U.S. Senator from West Virginia, questions
      submitted by.................................................429, 511

    Caldera, Louis, Secretary, Office of the Secretary, Department of
      the Army, Department of Defense................................   383
        Prepared statement...........................................   388
        Questions submitted to.......................................   425
    Carlton, Lt. Gen. Paul K., Jr., Air Force Surgeon General,
      Department of Defense..........................................   168
        Prepared statement...........................................   169
        Questions submitted to.......................................   232
    Cochran, Hon. Thad, U.S. Senator from Mississippi:
        Questions submitted by....................71, 75, 81, 117, 509, 524
        Statement of.................................................   447
    Cohen, Hon. William S., Secretary of Defense, Office of the
      Secretary of Defense, Department of Defense....................   443
        Prepared statement...........................................   455
        Questions submitted to.......................................   509
    Craig, Hon. Larry E., U.S. Senator from Idaho:
        Prepared statement...........................................   245
        Question submitted by........................................   323

    Danzig, Richard, Secretary, Secretary of the Navy, Department of
      the Navy, Department of Defense................................     1
        Prepared statement...........................................     4
        Questions submitted to.......................................    71
    de Leon, Hon. Rudy, Under Secretary of Defense for Personnel and
      Readiness, Medical Programs, Department of Defense.............   127
        Prepared statement...........................................   132
        Questions submitted to.......................................   208
    Domenici, Hon. Pete V., U.S. Senator from New Mexico:
        Prepared statement...........................................   633
        Questions submitted by........71, 120, 212, 234, 315, 326, 430, 638
        Statement of.................................................    92
    Dorgan, Hon. Byron L., U.S. Senator from North Dakota:
        Questions submitted by.......................................   322
        Statements of.........................................245, 385, 447
    Duggan, Mike, Deputy Director, National Security-Foreign
      Relations Commission, The American Legion......................   660
        Prepared statement...........................................   662
    Durbin, Hon. Richard J., U.S. Senator from Illinois, questions
      submitted by..................................................86, 124

    Enlisted Association of the National Guard of the United States,
      prepared statement.............................................   721

    Florida State University, prepared statement.....................   732
    Flynn, Joe, National Vice President, Fourth District, American
      Federation of Government Employees, AFL-CIO....................   641
        Prepared statement...........................................   642
    Foil, Martin B., Jr., Chairman, International Brain Injury
      Association....................................................   577
        Prepared statement,..........................................   578

    Gallo, Betty, Director, Advocacy and Fundraising, The Cancer
      Institute of New Jersey........................................   622
        Prepared statement...........................................   624
    Goldberg, Joan, Executive Director, American Society for Bone and
      Mineral Research, on behalf of the National Coalition for
      Osteoporosis and Related Bone Diseases.........................   547
        Prepared statement...........................................   549
    Gustke, Col. Deborah, Assistant Chief, Army Nurse Corps, U.S.
      Army, Department of Defense....................................   199
        Prepared statement...........................................   202
        Questions submitted to.......................................   237

    Hamre, Dr. John J., Deputy Secretary of Defense, Department of
      Defense........................................................    89
        Opening statement............................................    93
    Harkin, Hon. Tom, U.S. Senator from Iowa:
        Prepared statement...........................................   449
        Questions submitted by................................379, 519, 526
        Statement of.................................................   448
    Harmeyer, Rear Adm. Karen A., Deputy Director, Navy Nurse Corps,
      Reserve Component, and Director, Naval Reserve Medical Program
      32, Bureau of Medicine and Surgery, Department of Defense......   187
        Prepared statement...........................................   188
    Henderson, Rogene, Ph.D., Senior Scientist, Lovelace Respiratory
      Research Institute.............................................   634
        Prepared statement...........................................   635
    Hollings, Hon. Ernest F., U.S. Senator from South Carolina:
        Prepared statement...........................................   446
        Statement of.................................................   446
    Hutchison, Hon. Kay Bailey, U.S. Senator from Texas, statement of   385
    Inouye, Hon. Daniel K., U.S. Senator from Hawaii:
        Prepared statements.....................91, 149, 242, 334, 384, 445
        Questions submitted by.......................................  213,
                           217, 224, 231, 235, 237, 238, 319, 328, 378, 441
        Statements of......................90, 128, 242, 334, 384, 445, 527

    Johnson, Adm. Jay L., Chief of Naval Operations, Secretary of the
      Navy, Department of the Navy, Department of Defense............     1
        Questions submitted to.......................................    75
    Johnson, David, PH.D., Executive Director, Federation of
      Behavioral, Psychological and Cognitive Sciences...............   536
        Prepared statement,..........................................   537
    Jollivette, Cyrus M., Vice President for Government Relations,
      University of Miami............................................   645
        Prepared statement...........................................   646
    Jones, Gen. James L., Commandant, U.S. Marine Corps, Secretary of
      the Navy, Department of the Navy, Department of Defense........     1
        Prepared statement...........................................    40
        Questions submitted to.......................................    81

    Kadish, Lt. Gen. Ronald T., USAF, Director, Ballistic Missile
      Defense Organization, Department of Defense....................   333
        Prepared statement...........................................   340
        Questions submitted to.......................................   524
    Knobbe, Edward T., Ph.D., Associate Dean, Graduate College,
      Oklahoma State University and Director, Center for Aircraft and
      Systems Supporting Infrastructure (CASI), on behalf of the
      Coalition of Oklahoma Institutions of Higher Education.........   650
        Prepared statement...........................................   651

    Lance, Alan G., Sr., National Commander, letter from.............   661
    Lautenberg, Hon. Frank R., U.S. Senator from New Jersey:
        Prepared statement...........................................   450
        Question submitted by........................................   214
        Statement of.................................................   450
    Leahy, Hon. Patrick J., U.S. Senator from Vermont:
        Questions submitted by..............................73, 80, 86, 331
        Statement of.................................................   128
    Lennie, Peter, Ph.D., Dean for Science and Professor of Neural
      Science, New York University, on behalf of Cognition, Learning,
      Emotion, and Memory Studies at New York University.............   628
        Prepared statement...........................................   629
    Lord, Mike, Commander, JAGC, U.S. Navy (retired), Executive
      Director, Commissioned Officers Association, U.S. Public Health
      Service, Inc., Co-Chair, The Military Coalition Health Care
      Committee......................................................   584
        Prepared statement...........................................   585
    Lynn, Hon. William, Under Secretary of Defense (Comptroller),
      Department of Defense..........................................   127
        Prepared statement...........................................   132
        Questions submitted to.......................................   211

    Martin, Rear Adm. Kathleen, questions submitted to...............   237
    McConnell, Hon. Mitch, U.S. Senator from Kentucky, questions
      submitted by.................................................123, 437
    Miller, Michael H., National Prostate Cancer Coalition...........   674
        Prepared statement...........................................   676
    Morris, Robert V., Executive Director, Fort Des Moines Black
      Officers Memorial..............................................   692
        Prepared statement...........................................   693

    National Military Veterans Alliance, prepared statement..........   723
    Naval Reserve Association and the Naval Enlisted Reserve
      Association, prepared statement................................   712
    Nelson, Vice Adm. Richard A., Medical Corps, Surgeon General,
      U.S. Navy, Department of Defense...............................   161
        Prepared statement...........................................   162
        Questions submitted to.......................................   227

    Olanoff, Mark H., Chief Master Sergeant, U.S. Air Force
      (retired), Legislative Director, The Retired Enlisted
      Association....................................................   566
        Prepared statement...........................................   567

    Parker, Robert, Deputy Director, University of Southern
      California Information Sciences Institute, on behalf of the
      Coalition for National Security Research.......................   682
        Prepared statement...........................................   683
    Partridge, Col. Charles C., U.S. Army (retired), Legislative
      Counsel, National Association for Uniformed Services...........   605
        Prepared statement...........................................   606
    Peters, Hon. F. Whitten, Secretary of the Air Force, Office of
      the Secretary, Department of the Air Force, Department of
      Defense........................................................   241
        Prepared statement...........................................   247
        Questions submitted to.......................................   311
    Pilling, Adm. Donald L., U.S. Navy, Vice Chief of Naval
      Operations and Chairman, Defense Medical Oversight Committee,
      Department of Defense..........................................   127
        Prepared statement...........................................   138
        Questions submitted to.......................................   214

    Queenan, Charles, III, Senior Vice President, PHB Hagler Bailly,
      Inc., on behalf of the Juvenile Diabetes Foundation
      International..................................................   574
        Prepared statement...........................................   576

    Raezer, Joyce Wessel, Deputy Associate Director, Government
      Relations, National Military Family Association................   554
        Prepared statement...........................................   556
    Reserve Officers Association of the United States, prepared
      statement......................................................   702
    Rogers, John C., Parkinson's Action Network......................   671
        Prepared statement...........................................   672
    Rook, E. Clark, Retired Naval Officer, on behalf of the Ovarian
      Cancer National Alliance.......................................   685
        Prepared statement...........................................   688
    Ryan, Gen. Michael E., Chief of Staff, U.S. Air Force, Office of
      the Secretary, Department of the Air Force, Department of
      Defense........................................................   241
        Prepared statement...........................................   247
        Questions submitted to.......................................   324

    Schwartz, William A., member, Board of Directors, Association for
      the Cure of Cancer of the Prostate.............................   678
        Prepared statement...........................................   680
    Shelby, Hon. Richard C., U.S. Senator from Alabama:
        Prepared statement...........................................   117
        Questions submitted by......................123, 231, 318, 439, 511
        Statement of.................................................   446
    Shelton, Gen. Henry H., Chairman, Joint Chiefs of Staff,
      Department of Defense..........................................   457
        Prepared statement...........................................   463
        Questions submitted to.......................................   522
    Shinseki, Gen. Eric K., Chief of Staff, Office of the Secretary,
      Department of the Army, Department of Defense..................   383
        Prepared statement...........................................   399
        Questions submitted to.......................................   430
    Smith, Don C., Master Sergeant, U.S. Air Force (retired),
      Legislative Assistant, Military and Government Relations, Air
      Force Sergeants Association....................................   694
        Prepared statement...........................................   695
    Specter, Hon. Arlen, U.S. Senator from Pennsylvania, questions
      submitted by.............................................83, 425, 430
    Stevens, Hon. Ted, U.S. Senator from Alaska:
        Opening statements..............1, 89, 127, 241, 333, 383, 443, 527
        Prepared statements..................................L242, 383, 444
        Questions submitted208, 211, 214, 217, 227, 232, 311, 324, 376, 430
    Strickland, William, Ph.D., American Psychological Association...   689
        Prepared statement...........................................   690

    Van Nest, Ronald, Certified Registered Nurse Anesthetist, Federal
      Government Affairs Office, American Association of Nurse
      Anesthetists (AANA)............................................   612
        Prepared statement...........................................   613
    Violi, Ronald L., Children's Hospital of Pittsburgh..............   593
        Prepared statement...........................................   595
    Visco, Fran, President, National Breast Cancer Coalition.........   551
        Prepared statement...........................................   552
    Volner, Ian, Lawyer, on behalf of the Ovarian Cancer National
      Alliance.......................................................   685
        Prepared statement...........................................   687

                                 SUBJECT INDEX

                                  ----------

                             DEPARTMENT OF DEFENSE

                     Ballistic Missile Defense Organization

                                                                       Page
    Additional committee questions...................................   375
    Airborne laser.................................................370, 375
    Arrow Program....................................................   378
    Ballistic missile defense programs...............................   351
    BMD acquisition management steamlining...........................   355
    Cost.............................................................   352
    Countermeasures..................................................   359
    Deployment readiness review (DRR)................................   336
    Discrimination...................................................   354
    Intercept flight tests...........................................   337
    International programs...........................................   339
    Layered defense..................................................   335
    Lower tier programs..............................................   338
    National missile defense.......................................335, 379
        Cost estimate................................................   358
        Military construction......................................364, 377
        System integration...........................................   363
        Technology demonstration.....................................   360
        Testing......................................................   352
        Testing criticism............................................   361
        Tests........................................................   356
        Theater wide for.............................................   376
        2005 deadline................................................   364
    NATO concerns....................................................   367
    Navy:
        Area program options.........................................   377
        Testing of Pacific missile test range........................   365
        Theater-wide.................................................   368
    Patriot II and Patriot Gem.......................................   371
    Patriot PAC-3 capabilities.......................................   376
    Realistic testing................................................   353
    South Korea and Japan............................................   367
    Space-based infrared system......................................   374
    Technology investment............................................   356
    Technology program...............................................   339
    Test scripting...................................................   354
    THAAD............................................................   366
    Upper tier programs..............................................   338

                          Department of the Air Force

                            Office of the Secretary

    Additional committee questions...................................   311
    Air Force:
        Exercises and readiness training...........................314, 325
        Pilot retention..............................................   325
        Plans for directed energy....................................   316
        Posture statement 2000.......................................   247
    Airborne laser.................................................304, 323
        Program......................................................   305
    Aircraft maintenance.............................................   289
    Airlift..........................................................   303
    B-2 bomber.....................................................320, 330
    B-52 force structure.............................................   322
    Base closure and realignment (BRAC)..............................   309
    Brooks Air Force Base............................................   310
    C-17.................................................293, 297, 317, 327
        Military construction in connection with.....................   298
        Requirements and pricing.....................................   313
    Combat proven....................................................   255
    Decisive fighting force..........................................   265
    Expeditionary Aerospace Force....................................   246
    F-15.............................................................   327
        Foreign military sales (FMS).................................   317
    F-15E............................................................   294
        Fiscal year 2000 appropriation...............................   318
    F-16.............................................................   296
    F-22......................................................290, 321, 330
        Bed down priorities of the...................................   323
        Block 3.0 software development...............................   311
        Strike impact and cost growth................................   312
        Testing program..............................................   292
    Global command support system (GCSS).............................   318
    Health care......................................................   290
    Infrastructure...................................................   286
    Introduction.....................................................   248
    Joint Strike Fighter (JSF):
        Acquisition strategy.......................................313, 324
        Open systems.................................................   315
    JSTARS.........................................................320, 330
    Kirtland's space vehicles directorate............................   316
    Military construction and real property maintenance..............   323
    Mission focused..................................................   256
    Modernization..................................................247, 276
    Officer:
        Shortages....................................................   319
        Training.....................................................   319
    People...........................................................   265
    Pilot shortage.................................................302, 303
    Preparing........................................................   260
    RDT&E and science and technology budgets, decreases in...........   326
    Readiness.................................................271, 288, 329
        Budget.......................................................   302
    Real property maintenance........................................   289
    Recruiting:
        And retention..............................................246, 289
        Concerns...................................................319, 328
    Responding.......................................................   260
    Retention........................................................   295
    Shaping..........................................................   257
    Space based infrared system (SBIRS)..............................   307
        High cost increase...........................................   315
    Spare parts......................................................   247
    Supplemental requirements......................................322, 331
    Suppression and destruction of enemy air defenses (SEAD).......328, 331
    UAE F-16/Air Force F-16 derivatives............................314, 324

                             Department of the Army

                            Office of the Secretary

    Additional committee questions...................................   425
    Apache problems..................................................   430
    Armament Retooling and Manufacturing Support Program...........427, 437
    Armored gun system...............................................   416
    Army Heritage Center and National Army Museum....................   426
    Army posture.....................................................   396
    Army Transformation..............................................   404
    Arsenal utilization..............................................   423
    Aviation modernization--Blackhawk helicopter.....................   436
    Ballistic missile defense acquisition............................   440
    Biometrics initiative............................................   426
    ``Black Hawk Down''............................................421, 422
    Bradley M2A2 ODS.................................................   437
    Brigade locations, interim.......................................   439
    Digitized corps fielding.........................................   413
    Directed energy master plan......................................   432
    Fiscal year 2001 funding.........................................   385
    Food stamps....................................................410, 432
    Force strength...................................................   409
    Forces Command staffing impact on Training and Doctrine Command..   438
    Fort Leonard Wood and Army Transformation........................   435
    Full-time support................................................   436
    Funding requirements.............................................   387
    Green to Grad Program............................................   438
    High energy lasers...............................................   410
        Technologies.................................................   440
    Information operations vulnerability.............................   432
    Infrastructure...................................................   417
    Joint Stars (JSTARS).............................................   441
    Leader development...............................................   411
    Legacy Force.....................................................   406
    Military housing.................................................   418
    Mounted urban combat training facility...........................   437
    Objective Force..................................................   405
    OPTEMPO/retention................................................   407
    Pay raise........................................................   432
    Plan Colombia....................................................   427
    Power projection.................................................   424
    Recruiting and retention goals, fiscal year 2000.................   438
    Reserve component deployment.....................................   412
        And retention................................................   412
    School of the Americas.........................................414, 428
    Science and technology...........................................   413
    Solid state laser................................................   431
    Supplemental, fiscal year 2000...................................   419
    Tactical high energy laser.......................................   431
    Technology investments...........................................   439
    Test and evaluation..............................................   433
    Theater high altitude area defense system fielding...............   440
    Transformation and Army aviation.................................   439
    Transformation and biometrics....................................   430
    U.S. Army Corps of Engineers, management reforms regarding the.429, 429
    Unfunded requirements............................................   419
    White Sands/high energy laser weapons............................   430
    Wolverine and Grizzly Program cancellation.......................   425

                             Department of the Navy

                             Secretary of the Navy

    Additional committee questions...................................    71
    AV-8B............................................................    85
    Blount Island, Florida:
        Acquisition brief to the Jacksonville, Florida Chamber of
          Commerce, March 1, 2000....................................    29
        National strategic asset.....................................    36
        Strategic national defense asset.............................    28
    Chemical and biological incident response force..................    53
    Department of the Navy 2000 Posture Statement....................    10
    F/A-18E/F........................................................    79
    Futenma Air Base, Okinawa........................................    63
    Joint direct attack munition.....................................    80
    Joint Strike Fighter.............................................    54
    Legacy systems and infrastructure................................    10
    LHD-8............................................................    71
    Marine Corps modernization.......................................    27
    Navy theater wide................................................    75
    Opening remarks--readiness overview..............................     7
    Operational readiness............................................    51
    Our culture: the qualities of a naval expeditionary force........    42
    Our direction: new capabilities for a new century................    45
    Our focus: the operating forces..................................    43
    Our future: past is prologue.....................................    48
    Our legacy: Vanguard of the new American century.................    41
    Our role: A ready and relevant force.............................    40
    Readiness/air combat training....................................    72
    Recruiting.......................................................    65
        And retention................................................     9
    Roles and missions...............................................    86
    Sea-based NMD....................................................    76
    SLAM-ER..........................................................    80
    T-45.............................................................    80
    USMC ECP-583.....................................................    85
    V-22.............................................................    54

                          Deputy Secretary of Defense

    Additional committee questions...................................   117
    Airborne laser...................................................   117
    Army:
        Trailers.....................................................   115
        Transformation...............................................   108
            Air transportability and.................................   112
            Funding..................................................   111
    Army Vision......................................................   123
    C-17.............................................................   113
        Production and costs.........................................   113
    Defense reform...................................................   105
    Directed energy..................................................   121
    Directed energy programs.........................................   107
    DOD funding increased............................................    96
    DOD news briefing, Monday, September 8, 1997, acceptance speech..    94
    Fiscal year 2000 supplementals...................................    97
    Force initiatives, manning the...................................   123
    Housing increases................................................   100
    Iowa Army Ammunition Plant.......................................   114
    Kirtland AFB, release of funds...................................   106
    Kosovo, police operations in.....................................   111
    LHD-8............................................................   120
    Military construction............................................   122
        Funding......................................................   107
    Missile defense..................................................   104
    National missile defense (NMD).................................119, 123
    O&M funding trends...............................................    99
    Overseas U.S. commitments........................................   110
    Pay raises.......................................................   101
    Putting people first.............................................   100
    Quadrennial Defense Review (QDR) priorities......................    98
    RD-180 rocket engine.............................................   119
    Readiness, current...............................................    98
    Recapitalization progress........................................   103
    Science and technology...........................................   120
    Science and technology funding...................................   106
    TACCSF, release of $14 million for...............................   122
    Technology.......................................................   124
    Theater high altitude area defense (THAAD).......................   118
    Unutilized plant capacity (UPC)..................................   124

                                Medical Programs

    Additional committee questions...................................   208
    Anthrax..........................................................   142
    Medical errors...................................................   143
    Medicare subvention..............................................   213
    Military health system...........................................   137
    Military medicine................................................   130
    Patient medical information......................................   214
    Pharmaceuticals..................................................   140
    Pharmacy costs...................................................   131
    Telemedicine.....................................................   140
    TRICARE..........................................................   145
    TRICARE Senior...................................................   141

                                  Nurse Corps

    Additional committee questions...................................   208
    Army Nurse Corps.................................................   201
    Challenges.......................................................   193
    Command opportunities..........................................194, 195
    Leadership roles and responsibilities............................   189
    Nurse anesthetists...............................................   205
    Nurse Corps....................................................187, 238
        Skill sustainment............................................   237
    Nurse shortages..................................................   207
    Nurses:
        In executive or command positions............................   237
        Leadership training programs for.............................   237
    Nursing research.................................................   191
    Peacetime accomplishments........................................   197
    Population health and health promotion...........................   191
    Readiness........................................................   195
        Accomplishments..............................................   196
    Recruiting.......................................................   194
    Reserve support..................................................   192
    TRICARE initiatives, Navy nurses role in support of..............   189
    Triservice nursing research program..............................   206

                       Office of the Secretary of Defense

    Additional committee questions...................................   509
    Affordability....................................................   513
    Agriculture, threats against.....................................   515
    Airborne laser (ABL)...........................................504, 509
    Arms control, missile defense and deterrence.....................   490
    Base realignment and closure (BRAC) savings and LHD-8............   503
    Bosnia/Kosovo....................................................   486
    Building tomorrow's joint force..................................   474
    Capability required..............................................   513
    China-Taiwan.....................................................   502
    Colombia.........................................................   518
    Defense tactical aircraft and carrier procurement................   511
    European defense capabilities....................................   482
    Force structure..................................................   513
        Increases....................................................   484
    Fort Leonard Wood, joint training at.............................   524
    Full-time support................................................   510
    Healthcare.......................................................   522
    Kosovo...........................................................   517
        Senator Warner's amendment on................................   488
        Supplemental appropriations, fiscal year 2000..............455, 516
    Military health benefits, expanding..............................   501
    Military retirees health care....................................   496
    Missile defense and arms control.................................   526
    Missile defense system, testing a................................   499
    National Guard and Reserves......................................   494
    National missile defense:
        CBO estimate on..............................................   525
        Cost of......................................................   499
        Deployment, preparing for....................................   491
        Options for a second site....................................   525
        Radar construction...........................................   524
    National security strategy, supporting the.......................   465
    Other threats....................................................   514
    Pacific Asian theater, importance of.............................   501
    Peacekeepers forces, dedicated...................................   505
    Plan Colombia..................................................510, 523
    President Clinton's fiscal year 2001 budget......................   456
    President's budget, priorities in fiscal year 2001...............   453
    Procurement:
        Funding......................................................   508
        Increasing spending..........................................   504
    Quality force, sustaining a......................................   463
    Russian Biological Weapons Program...............................   516
    Russian leaders, communicating with..............................   493
    Secrecy..........................................................   519
    Secretary Cohen's opening remarks................................   452
    Ship construction................................................   503
    START II and missile defense.....................................   484
    Strategic warhead levels.........................................   510
    Submarine force structure........................................   512
    Supplemental appropriations, fiscal year 2000....................   453
    Theater war capabilities.........................................   486
    Trailers.........................................................   520
    TRICARE..........................................................   511
    U.S. Balkan deployments, duration of.............................   486
    U.S. military excellence, preserving.............................   508
    U.S. national missile defense....................................   489
    U.S. nuclear deterrent, maintaining..............................   497
    Unmanned aerial vehicles (UAV)...................................   514
    Welfare, troops on...............................................   521

                                Surgeons General

    Additional committee questions...................................   208
    Alcohol problems.................................................   181
    Breast and prostate cancer research programs.....................   219
    Budget, fiscal year 2001.........................................   218
    Budget shortfall.................................................   183
        Fiscal year 2000.............................................   217
    Care, quality of.................................................   221
    Clovis and Cannon--medical facility..............................   234
    Department of Defense/Department of Veterans Affairs partnerships   222
    Health care......................................................   161
    Managed care support contractors, care sent to...................   224
    Medical:
        Errors and patient safety....................................   224
        Facilities...................................................   235
        Medical Service..............................................   181
        Programs.....................................................   232
    Medicare subvention..............................................   233
        Cost of......................................................   218
    MHS, excess capacity in the......................................   224
    Military beneficiaries, quality care for.........................   234
    Nursing standards................................................   184
    Partnerships.....................................................   234
    Pharmacy:
        Formularies..................................................   223
        Restrictions and inconsistencies.............................   235
    Research programs, overhead of...................................   220
    Supplemental funding for fiscal year 2000........................   218
    Tobacco problem..................................................   180
    TRICARE improvements.............................................   181
    Unfunded requirements, fiscal year 2000 and fiscal year 2001.....   218

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