[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-
[email protected]), 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.
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    \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.
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    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.
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    \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.
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    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.
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    \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\
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    \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\
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    \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.
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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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